Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

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  • Swiss Franc’s Surge = Chaos In Global Currency Markets

    Last Thursday, the Swiss National Bank stunned the financial world by decoupling the Swiss franc from the euro. This surprise move sent the franc up almost 40% against the euro in one day, although it didn’t close that high (up 19%). Nevertheless, many currency traders, banks and brokerages were left with devastating losses. I’ll give you the details below.

    But first, let’s take a look at the recent US economic data which has been disappointing overall. Following the stronger than expected GDP growth of 5% (annual rate) in the 3Q, the US economy seemed to stumble a bit in the 4Q. We’ll cover the latest reports before shifting our attention to Europe and Switzerland in particular.

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  • Is The US Treasury Market Rigged? Some Say Yes

    The last time federal regulators took a hard look at how Wall Street banks and brokers trade US Treasury securities – the largest bond market on the planet by a longshot – a little company called Google Inc. was just starting out.

    That was 1998, and the technological leaps since then – including ones that are now transforming bond markets – have left government regulators in the dust. In particular, executives from three of the biggest market-making firms in Treasuries say an electronic bait-and-switch tactic known as “spoofing,” – which is already the focus of a manipulation allegation at a major futures exchange – needs to be investigated in cash Treasuries (OTC, etc.) and related futures.

    Rules first enacted in 1986 that have gone virtually untouched since then are allowing certain high-tech firms to outmaneuver less-savvy rivals and are manipulating bond prices. They say a lack of cohesive regulation and technology to monitor “high-frequency traders” is making the world’s biggest government bond market more dangerous for everyone.

    Today I am reprinting an eye-opening article that appeared in Bloomberg/Businessweek on December 11 on the subject of manipulation in the Treasury market. Since then, I’ve seen no one else touch it. I’ve googled this subject dozens of ways… and very little on this topic comes up.You can read it yourself, and I think you will find it very interesting and troubling.

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  • Economic Optimism Abounds As Crude Oil Plunges

    Each year at this time, we see a plethora of fresh forecasts for the New Year, and this year is certainly no exception, especially with the recent implosion in oil prices. There is widespread agreement that sharply lower energy prices will provide a boost to the global economy this year, especially for oil-importing nations including the US.

    As a result, almost all of the New Year forecasts that I have seen in recent days have been upbeat and revised higher with regard to the US economy. With that in mind, I thought it would be a good idea today to revisit the recent developments in the oil and energy markets over the last six months. What we have witnessed since last summer has been nothing short of breath-taking, to say the least!

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  • Handing Down Your Legacy - A Special Gift For Readers

    As we prepare to celebrate the New Year, now is a good time to make sure that your affairs are in order and all of your financial information is recorded in one convenient electronic file that can be updated or changed at any time. And we believe we have developed the best program on the market today to do so.

    Today I am going to address several important financial planning issues everyone should consider, whether you’re young, old or somewhere in between. I will also tell you how you can receive our free E-booklet entitled, “Handing Down Your Legacy” that will help your loved ones manage your finances after your death. Sadly, this is often much more of a difficult burden than most people realize, but it doesn’t have to be that way.

    Our Handing Down Your Legacy is a convenient electronic document that makes it easy to put all of your important information in one place and makes it easy to update. There are several products on the market that allow you to consolidate all of your financial information in one place, but we developed Handing Down Your Legacy to allow you to include not only your investment records but also your final wishes.

    We believe our product is simply the most comprehensive and easy to use program available today. And best of all, it is absolutely FREE and there is no obligation on your part. So do yourself a favor and download Handing Down Your Legacy today. And make it your New Year’s resolution to complete it as soon as possible. Also, feel free to forward this E-Letter to your family and friends who may also benefit from this useful resource.

    HAPPY NEW YEAR!!!

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  • Government Spent $29,000 Per US Household in 2014

    A new study from The Heritage Foundation found that out-of-control spending in Washington amounted to more than $29,000 per household in fiscal year 2014. Today, I will reprint the highlights of that excellent report. As you will see below, government spending has topped $3.5 trillion in each of the six years that President Obama has been in office.

    The budget deficit for FY2009 more than tripled to over $1.5 trillion, thanks in large part to Obama’s $800+ billion “stimulus program” which did little to create new jobs or spark the economy. Budget deficits remained above $1 trillion for 2010, 2011 and 2012. While deficits have come down significantly in the last two years, our debt trajectory remains on a collision course as the latest Heritage Foundation study illustrates.

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  • Plunging Oil Prices Spark Fears of Global Recession

    Today, we touch on several bases. No doubt everyone reading this noticed that stocks tanked last week, and now seem to be moving in lockstep with oil prices. While consumers welcome cheaper gas and heating oil prices, there is a growing fear that the collapse in oil prices may be a harbinger of a global recession.

    Despite worries that the oil price plunge is pulling down stock prices, the latest Reuters/University of Michigan Consumer Sentiment Index soared to a near eight-year high this month. Expectations for a better job market helped power the Index from 88.8 in November to 93.8 this month, well above expectations.

    Finally, I am sad to report that our national debt topped $18 trillion on November 28 according to the Treasury Department. It was not widely reported by the mainstream media, of course. While our annual budget deficits have come down significantly from the first four years of the Obama administration, we are still on-track to hit a whopping $20+ trillion national debt by 2019.

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  • November Jobs Report Wasn’t So Great After All

    Today we'll take a close look at the November employment report last Friday, which was a positive surprise.  The 321,000 new jobs added last month was the highest reading since January 2012 and was substantially above the pre-report consensus of 230,000. The headline unemployment rate remained at 5.8%. The question is, will such job growth continue, or was this a one-month, seasonal anomaly?

    Yet not all of the news in the November jobs report was positive. While the headline new jobs number was 321,000, a deeper dive into the data reveals that there were only 4,000 more Americans working in November than in October (details to follow). Full-time jobs declined by 150,000, while lower-paying part-time positions increased by 77,000 – that’s not good.

    President Obama praised the jobs report and suggested that the economy is nearing full employment. The truth is, the economy is still far from full employment. The unemployment rate would have to fall to 5% or lower for that to happen, and it is not expected to do so anytime soon.

    And speaking of the president, rumors are swirling in Washington that Obama is seriously considering new sanctions against Israel, our strongest ally in the Middle East. The Obama administration is opposed to Israel’s decision to build new homes in East Jerusalem, and that this construction“undermines the peace process.” Now, apparently, they are considering sanctions against Israel. That is preposterous!

    Finally, our recent live webinar with Wellesley Investment Advisors is now available for viewing on our website. Wellesley invests exclusively in convertible bonds and is the only convertible manager we recommend. Whether you are knowledgeable about convertible bonds or not, I highly recommend that you watch this presentation.

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  • On The Economy, Oil Prices & Obama’s Temper Tantrum

    Today we'll touch on several bases, as I'm often known to do. We will start with the latest news on the economy, which is decidedly upbeat, with GDP coming in well above-trend for the last two quarters. The question is whether the latest two quarters of above-average growth are a sign of more good things to come, or are they just the catch-up results of the disappointing 1Q decline due to the severe winter weather?

    Even with the strong growth in the 2Q and 3Q, if we look back further, say to 2010, GDP growth over that period is still below trend at around 2.5% - which is unexceptional. So it remains to be seen if the economy is fully back on track.

    Some argue that the surge in the economy of late is largely the result of the huge decline in oil and gasoline prices. No doubt that has been a significant factor. Some analysts estimate that the drop in oil prices from above $100 a barrel to $67 is the equivalent of a $125 billion tax cut, which is a significant boost to the economy. And most forecasters believe that oil prices will remain low for some time to come, as I will discuss today.

    Finally, I can't help but comment on the deluge of unpopular actions taken by President Obama in just the last month. Unlike most recent presidents who suffered such a defeat in the mid-terms – including Reagan, Clinton and Bush(43) – and then compromised with the opposition, Obama is doubling-down on his unpopular policies. Even worse, he says he's not done yet and promised to veto any bill to build the Keystone XL pipeline.

    To me, this rash of controversial decisions amounts to a “temper tantrum” on the part of the president, in reaction to the drubbing that the Democrats suffered in the mid-term elections. I'll share my thoughts on why this is happening now as we go along today.

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  • Median Household Income Down Last 15 Years - Why?

    One of the most puzzling questions in economics today is why did median household income peak in 1999 and has yet to recover? Most analysts cite the fact that we had two serious recessions in the space of a decade, including the financial crisis of 2008-2009.

    While the Great Recession ended in June 2009, real median household income (adjusted for inflation) remains well below the peak of around $57,000 in 1999 and has been below $52,000 in each of the last three years. The question is, why?

    The standard answers, especially among progressives, are: 1) the sluggish economic recovery; 2) growing income inequality; 3) the failure to raise the minimum wage; 4) globalization and outsourcing; 5) corporate greed; and other variations of economic pessimism.

    However, there are some other very obvious, but mostly overlooked, factors that can help explain why median household income has declined over the last 15 years that have nothing to do with economic stagnation. The fact is that there have been significant demographic changes in the composition of US households.

    Economists Mark Perry and Alex Pollock, who also are contributors at the American Enterprise Institute, offered a very interesting analysis on median household income last week, and I will summarize their latest work for you today. I think you'll be surprised.

    Also, we'll look at the reasons why the marriage rate in the US is now at a 93-year low, according to the Census Bureau. The marriage rate for those 18 and older has fallen to a new low of only 50.3%, down from the peak of 72.2% in 1960.  And finally, we'll end with an interesting article from Larry Kudlow on the subject of marriage.

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  • Global Economy Worsening, But America is on Top

    With President Obama making controversial moves on several fronts this month, it is tempting to go all politics this week. The president is threatening to grant defacto amnesty to five or six million illegal aliens, via Executive Order, even though he knows this is unpopular among the American people. It’s as if he’s in full denial regarding the landslide midterm election results.

    In addition, he signed a controversial climate deal with China that will hurt the US economy and allows China to continue building more coal-fired power plants and increase emissions annually until 2030. Obama and the media hailed it as one of his landmark accomplishments. It wasn’t.

    At the Asian summit he attended last week, Mr. Obama pledged to give $3 billion of US taxpayer money to emerging countries to help them work toward clean energy and tackle climate change. Hopefully, Congress will block that pledge.

    And if you missed it, Obama announced last week that he wants the federal government to regulate the Internet. That would be a disaster! More details as we go along today.

    But rather than devote the entire E-Letter to politics, let’s start with a new report on the slowing global economy. According to the latest survey from Bloomberg, the global economy is in the worst position in two years. Fears of deflation are growing in Europe and elsewhere.

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  • Retirement Saving Crisis is Worse Than We Thought

    Each year Wells Fargo & Company conducts a survey of middle-class Americans of various ages to see how they are faring with saving for retirement. The results of the 2014 survey were just made public late last month. I will summarize them for you below. Let me warn you in advance – they are not pretty!

    But first, let’s take a look at last Friday’s better than expected October unemployment report. The headline unemployment rate fell to 5.8%, the lowest level in almost six years. So far in 2014, new jobs are being added at the fastest pace since 1999. Best of all, the employment rate for young people ages 25-34 rose to the highest level since late 2008.

    To all of our brave men and women who have served in our Armed Forces, we thank you and wish you a Happy Veterans Day!

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  • Consumer Confidence Hit a 7-Year High in October... But

    The two most widely-followed indicators of consumer confidence jumped to the highest levels in seven years last week. The Conference Board reported Tuesday that its Consumer Confidence Index climbed to 94.5 in October, the strongest reading since October 2007 before the economy entered the Great Recession.

    Then on Friday, the University of Michigan’s Consumer Sentiment Index rose from 84.6 in September to 86.9 in October, the highest level since July 2007. Respondents to both surveys cited expectations of better economic growth and job gains in the coming months, along with falling gasoline prices, as reasons for their optimism.

    Yet at the same time, the latest polls on the Direction of the Country show that a whopping 66.0% of Americans believe the country is headed in the wrong direction, with only 27.8% who believe the nation is moving in the right direction. There is a huge disconnect between these measures of consumer confidence versus how Americans feel about the direction the country is headed. Today I’ll take a shot at trying to explain how and why this dichotomy exists.

    Before we get to that discussion, let’s take a closer look at last Thursday’s advance report on 3Q Gross Domestic Product which came in at a better than expected 3.5%. I also have some further thoughts on the Fed's policy meeting last week and the decision to end its massive quantitative easing program.

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  • Americans Even More Pessimistic Ahead of Elections

    We cover a lot of ground in today's E-Letter. We begin with the latest Wall Street Journal/NBC News poll which found that the Republicans have risen to an 11-point lead among “likely voters.” That’s up from only a 5-point lead a week earlier. Some 52% of likely voters want a Republican-led Congress, while 41% favor Democratic control.

    Voters’ excitement about the campaign hasn’t increased as Election Day approaches, defying the trend in recent years. The share of voters who see the country on the “wrong track” has reached the highest level ever in a midterm election year, at 65%,versus only 25% who believe the country is moving in the "right direction." With so many disillusioned voters out there, we could be in for a surprise on Election Day.

    The same WSJ/NBC poll found support rising for the use of US ground forces to fight the Islamic State terrorists. Some 35% in the new survey said military action against the group should be limited to air strikes, with 41% saying it should include combat troops as well. A month earlier, some 40% called for airstrikes only, with only 34% saying the US should use combat troops as well as air strikes.

    Recently, President Obama has been making some flowery speeches about how the economy is doing just great. To rebut the president's argument, I offer over 20 reasons why the economy is nowhere near as healthy as he claims. The American people know this, and it could have a big effect on the elections next Tuesday.

    The Fed Open Market Committee meets today and tomorrow. There has been talk that in light of the recent stock market meltdown, the Fed might decide to continue its QE bond buying program a little longer. I don't buy it, especially now that the stock markets have mostly recovered. I expect the FOMC will vote to end QE tomorrow.

    On Thursday morning, we get the first look at 3Q Gross Domestic Product. The pre-report consensus for the advance GDP report is 3% (annual rate), following the 4.6% rise in the 2Q.

    In my blog on Thursday, I will analyze the Fed's latest decision on QE and share my thoughts on the GDP report. If you haven't subscribed to my free weekly blog, CLICK HERE.

    Finally, Debi and I went to New York City recently to visit the 911 Memorial and Museum. Let me just say that they were both incredible! I have more details at the end of today's letter.

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  • Retirement: How To Avoid Outliving Your Savings

    With over 10,000 Baby Boomers retiring every day, a pattern that will continue for the next 20 years, retirement savings continues to be one of the most important issues of our day. With 76 million Americans born between 1946 and 1964 – the “Baby Boom Generation” – saving enough for retirement is critically important.

    Unfortunately, study after study continues to find that most older adults have not saved nearly enough for their retirement, especially considering that we are living longer due to medical advances and taking better care of ourselves.

    Today, we’ll start by looking at some recent data on retirement saving and how this remains a huge problem for most Americans We’ll also look into why it is that many people overspend in retirement and get into trouble. Following that discussion, we will look at some ways to make sure that you don’t outlive your savings.

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  • How Over-Regulation Hurts Us - Some Eye-Popping Numbers

    Today we'll look at a recent study which quantifies just how much over-regulation hurts the US economy each year. The numbers are incredible! The US economy would be almost double what it is today were it not for the maze of costly regulations that hinder big and small businesses alike.

    Reducing harmful and unnecessary regulations should be a top national priority, but hardly anyone in Washington talks about it. Name me one national political figure that has run on scaling back government regulation in recent years. It’s hard to find one. Presidents John F. Kennedy, Ronald Reagan and Bill Clinton were effective at limiting regulation, whereas President Obama is rated the worst of all time.

    Over-regulation has been a main contributor to the decline in the growth rate for worker productivity. Historically, worker productivity has grown by 2.5% per year. Last year, however, productivity grew by only 1.1%, and it actually declined by 3.2% in the 1Q of this year.

    According to a recent report, the government has implemented almost 90,000 new regulations over the last 20 years (an average of 4,500 per year), and many of these new regulations decrease worker productivity and increase costs for just about everything we buy.

    If that weren't bad enough, the US has seen its "economic freedom" ranking plunge from being in the top ten a few years ago all the way to #12. In fact, the US is the only developed nation to see its economic freedom ranking fall for seven straight years! When it comes to free trade, we've fallen all the way to #36. And I have even more stats on this as we go along today.

    Let's jump right into what should be a very interesting, although discouraging, letter. But we need to know these things.

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