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  • Why Quantitative Easing Didn’t Work

    While equity investors yearn for the Fed’s QE policy to continue, it’s actually a good thing that this unprecedented stimulus looks to be coming to a halt by the end of this year or early next year. Why is that a good thing? Because QE hasn’t worked, certainly not as intended.

    One of the most frequent questions I get from clients, business associates and even friends is: “Why didn’t quantitative easing work to stimulate the economy and create jobs?” It’s a complicated answer, but today I will do my best to explain why.

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  • The Fed’s Dirty Little Secret: QE Does Not Work

    Bernanke speaks and the markets move, but probably not in the direction he expected. It appears that the stock and bond markets are addicted to QE and will crater anytime Big Ben even hints at taking his foot off of the gas.

    However, in this week's e-letter, I'm going to dig deeper into the Fed's activity over the past few years to dispel the myth that the Bernanke's unprecedented quantitative easing has lowered long-term interest rates.  In fact, I'll show how rates have actually risen during all three QE cycles.  You don't want to miss this.

    So how do you invest in this crazy market?  I have two words for you - "absolute returns."  I'll discuss how you need to take your eyes off of the short-term disruptions in the market and instead focus on the long term trends which, by the way, is where bulk of your investment goals likely reside. Plus, I'll show you how to get your FREE copy of my Absolute Return Special Report.

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  • Why America Will Miss the Bush Tax Cuts

    As I discussed in my blog last Thursday, I believe that President Obama is more than happy to see us go over the "fiscal cliff" at the end of this year. Many, including Fed Chairman Ben Bernanke and the CBO, believe that if we go over the fiscal cliff, the combination of tax increases and mandatory spending cuts will send the economy back into a recession next year. At the same time, the stock markets could get hit very hard.

    The president has laid blame for the fiscal cliff (and everything else wrong in America) on President George W. Bush and the Republicans in the House. He has also said that the Bush tax cuts caused our deficits to soar out of control, even though he now says he wants to keep those same tax cuts for all but the “millionaires and billionaires” (defined as individuals making over $200,000 and families making over $250,000 a year).

    The mainstream media have been so critical and dishonest about the effects of the Bush tax cuts that most Americans don’t know about the benefits of lower tax rates, even though they have been in place for a decade or more. I just read the most informative article on the Bush tax cuts that I have seen anywhere. The article is by Peter Ferrara at Forbes.com. I have reprinted it for you below.

    But before we get to that, let’s take a look at the latest economic reports which have been a mixed bag once again.

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  • Desperate Fed Launches Unprecedented QE3

    The Federal Reserve announced a new round of quantitative easing (QE3) last Thursday at the end of its latest policy meeting. While the announcement was widely expected, Fed Chairman Bernanke had some surprises in store. He announced that the Fed will buy $40 billion in mortgage backed bonds every month until the economy gets better. When will that happen? No one knows. So the latest round of QE is unprecedented in that no one knows how long it will last or how much money the Fed will have to print.

    To me and many others, this is a sign of desperation on the part of the Fed. Depending on how large QE3 turns out to be, it could spark the next round of inflation. Even worse, QE3 may not work just as QE1 and QE2 didn't work. Some argue that this unprecedented move by the Fed is an effort to get President Obama re-elected. Yet we are continually reminded that the Fed is non-political. What we do know is that Bernanke is out of a job if Romney wins. So one wonders.

    Today we will analyze the Fed's latest move, the logic (or lack thereof) behind it, why it is dangerous, why it is unprecedented and lastly, why QE mainly helps only the wealthy. It should be an interesting letter.

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  • On the Economy & the Fed - Now What?

    We touch on several bases in today’s letter. We begin with Fed Chairman Ben Bernanke’s key speech at the Fed symposium in Jackson Hole, Wyoming last Friday, which proved to be a yawner despite all the anticipation beforehand. Next, we look at last Friday’s disappointing GDP report which was revised lower, alonng with other recent economic reports.

    Following that, we look at the latest long-term budget forecasts from the Congressional Budget Office. As I will discuss below, the CBO uses so many optimistic assumptions in these forecasts that one wonders if they are even relevant anymore. In any case, I’ll give you the latest numbers.

    Next,I make the case that the US economy has now drifted once again into “stagflation” – defined as slow growth and rising inflation. Expect to hear more references to stagflation in the days and weeks just ahead, but you heard it here first. Finally, we look at the latest chaos in the stock markets.

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  • On The Economy & Waiting For Breakeven

    IN THIS ISSUE:

    1.  A Look at the Latest Economic Reports

    2.  Bernanke Setting Sail on the QE2

    3.  US Dollar Falls in Value

    4.  Waiting, Waiting, Waiting for Breakeven

    5.  The Advantages of Alternative Investments

    6.  Getting Started: How It All Works

    The Latest Economic Reports

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