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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  • Nuclear Deal With Iran - Don’t Give Away The Store

    Obama administration representatives are quietly negotiating with Iran in an effort to stop its nuclear program. Under the proposed agreement, the US would relax or eliminate some of the tough sanctions that have crippled Iran’s economy. This is happening at the same time Congress is threatening to impose even tougher new sanctions on Iran.

    One question about this new negotiation is whether or not it’s a good deal for America and our allies in Europe. Another is, how will we be able to enforce its terms if Iran decides to cheat? And finally, why would Iran agree to halt its nuclear program at this time? The answers may surprise you. In any event, you need to know what is happening with Iran and why.

    At the end of today’s letter, there is a reminder for any of you who may not have ordered our new Handing Down Your Legacy, a free e-booklet in which to store all of your important investment/financial information in one place. Handing Down Your Legacy will help you manage your affairs now and will benefit your family too should you become temporarily or permanently disabled, as well as help them when it is time to settle your estate.

    Finally, what if there was a way to participate in the stock market’s rally without the worry of getting creamed when the Fed eventually takes its foot off of the monetary pedal? Be on the lookout tomorrow for an e-mail from me in which I will tell you about a specialized asset with the potential to do just that.

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  • Will 39% Hike in Minimum Wage Tank The Economy?

    President Obama called for a whopping 39% increase in the minimum wage from $7.25 to $10.10 per hour last Thursday. There is already a bill working its way through in the Senate to do the same thing. If this legislation passes, the minimum wage will be increased 95 cents each year for the next three years starting this year, to bring it to $10.10 by 2015.

    Many argue that this will be a huge job killer and could thrust the economy back into a recession. However, some of the critics I’ve read don’t consider that the 39% increase in the minimum wage will be phased in over three years. Supporters of the wage hike argue that the seemingly huge increase merely restores the purchasing power for the low-paid workers in America. We’ll look into both arguments today.

    Before we get to that controversial topic, let’s take a look at last Friday’s surprising unemployment report, last Thursday’s better than expected GDP report and the continued slide in consumer confidence.

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  • Thank The Fed For Big Stock Market Gains

    My guess is that just about everyone reading my E-Letters would agree that the Fed’s massive “quantitative easing”(QE) program has had a bullish effect on the stock markets over the last few years. Several new reports conclude that the Fed’s unprecedented QE bond buying program is responsible for ALL of the stock market advance since the bottom in early 2009.

    No doubt, the stock markets have shown a strong tendency to rally during weeks when the Fed is making its huge QE bond and mortgage purchases. But is this the only thing driving the stock markets to record highs? That’s what we’ll look into today.

    On a related note, Senator Rand Paul has recently threatened to block the nomination of Janet Yellen as the next Fed chairperson – unless he can get a Senate vote on his new bill to “audit” the Fed. Of course, the Fed claims that it is already audited. So what gives? This is an interesting story that we will want to follow as it plays out; I’ll break it down for you today.

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  • US Economy Mired in a Sea of Contradictions

    Consumer confidence has plunged over the last month, due in large part to the government shutdown and fear that the US might default on its debt – because of the ineptitude of our leaders in Washington. Normally, when consumer confidence plunges, we would expect a significant slowdown in consumer spending, which accounts for 70% of GDP.

    Yet according to the latest Gallup poll, consumers plan to spend even more this coming holiday season than in the past two years. This would seem to be a major contradiction. However, what this tells me that most Americans have figured out that there was never really a threat that the government would default on its debt, as I opined recently. That’s the good news.

    The bad news is that the delayed September unemployment report was yet another disappointment, even though the headline unemployment rate inched down to 7.2%. New jobs created in September were well below expectations. More importantly, the Census Bureau reported last week that there are now more Americans on welfare than those who have full-time jobs. That is very disturbing.

    Finally, I presume you noticed that our national debt skyrocketed by a record $328 billion in one day following the lifting of the debt ceiling earlier this month. The Treasury had to replenish all those “extraordinary measures” it used to fund the government  since we hit the previous debt ceiling back in May. Our national debt is on-track to nearly double under Obama.

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  • Is Your Stock Portfolio Up Over 30% This Year?

    This week’s Forecasts & Trends E-Letter beings with a simple question, but it’s one that can have a major effect on your financial well-being. Given that government intervention in the markets now seems to be built into our expectations, I’m going to recap one of our recommended money managers that has been able to navigate the QE3-induced market rally and is up over 30% year-to-date as of September 30.

    More importantly, the money manager I will talk about today - Niemann Capital Management - has significantly outperformed the S&P 500 Index since the company's inception in 1996, both on the upside and the downside.

    Yet return is only half of the equation. The other half is whether an investment strategy has the ability to manage risks by moving to cash when the market takes a downturn, which it eventually will. Niemann also covers both bases by offering a momentum-based strategy on the upside, and the ability to move to cash during downward corrections and bear markets.

    Best of all, Niemann’s not an amateur in this business.  Don Niemann and his staff have been successfully managing their Risk Managed Program for 17 years, so they’ve seen several different market cycles. I’m highlighting Niemann today because I think they are a viable alternative for investors who are in the market and getting nervous about a pullback, as well as investors on the sidelines who fear that the market may have risen too far too fast for them to participate.

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  • Consumer Confidence Plunging – Recession Ahead?

    The stalemate in Washington continues, the government remains in partial shutdown and the debt ceiling looms on Thursday. A bipartisan deal to fund the government until January 15 and raise the debt limit until early February is working its way through the Senate and could be voted on later today or tomorrow. It is unlikely that the Senate bill would pass in the House, which is reportedly working on yet another bill (see link below) that is unlikely to pass in the Senate.

    The mindless gridlock continues and the Treasury Department warns that it will run out of “extraordinary measures” by the end of this week and the statutory debt ceiling will be eclipsed on Thursday or Friday. While this will technically be a “default,” the Treasury will continue to collect enough revenue each day to pay the interest on all of our outstanding debt. Still, things are likely to get increasingly crazy in the next few days.

    As a result of all the hype and anguish over the shutdown and the debt ceiling, consumer confidence has plunged since the beginning of this month. The confidence index, as measured by Gallup, has declined by the most since September 2008 when Lehman Brothers went bankrupt at the height of the financial crisis. And it continues to fall. This raises fears that consumer spending will drop significantly and a recession could unfold just ahead.

    Following that discussion, we’ll look at some interesting facts surrounding our national debt which now stands at a mind-boggling $16.965 trillion. Since our national debt is Issue #1 on the minds of most Americans, the discussion below should be very timely.

    Finally, today’s E-Letter will print longer than usual because we have lots of charts and graphs.

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  • The U.S. Can’t Default On Its Debt… Right?

    The Treasury Secretary has warned that his agency will exhaust the “extraordinary measures” it has used to fund the government on October 17. On the Sunday talk shows, he warned of “catastrophic consequences” if Congress doesn’t raise the statutory debt ceiling by then. So, over the next nine days, you’ll be hearing ominous forecasts of what will happen if the US defaults on its nearly $17 trillion national debt, or even some of it. Sound familiar?

    Late last week, President Obama warned that he would not negotiate on the debt ceiling until Congress passes a “clean” continuing resolution to get the government funded and fully open again. Most Republicans are hanging onto their demand that the Obamacare mandate for individuals be delayed a year. If both sides hold out, increasing the debt ceiling could be tough.

    Somehow, these debt ceiling fights seem to get resolved at the very last minute, but the uncertainty can be brutal for the markets. In 2011, stocks lost around 19% of their value as this game of chicken played out. Some expect the current debt ceiling fight will be even more harrowing since Obama doesn’t have to worry about re-election.

    We’ll talk about all of this and more as we go along. Let’s begin by looking at the latest economic reports, or lack thereof, as was the case with last Friday’s unemployment report that was furloughed by the Obama administration, supposedly due to the government shutdown.

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  • Handing Down Your Legacy - A Special Gift For Readers

    This week I'm going to cover a topic that is likely to be unpopular but vital to any financial planning process - death. In our culture, we often put off talking about a time when we will no longer be around to enjoy family and friends. Yet it's important to plan for the inevitable and take steps to help ease the strain on loved ones left behind.

    There are many times when surviving spouses contact my firm after the death of a loved one with no idea how the family's finances are organized. Many times, they don't even know where important papers are located, much less how to manage the assets they represent. Because death is so difficult to talk about, those left behind often find themselves in the dark about what to do in case of an untimely death.

    Along with this week's E-Letter, I'm offering a FREE gift of our Handing Down Your Legacy e-booklet. This booklet serves as a resource that you can use to record all of your financial information so it will be available in one convenient place for loved ones left behind upon your death. While it's not pleasant to think about your own death, having your financial information in one place for your loved ones will prove invaluable when that time comes. Because this planning tool is so valuable, I encourage you to forward this E-Letter to your family and friends so they can also take advantage of this free offer.

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  • Another Budget & Debt Ceiling Fiasco Starts Now

    With the Fed's surprising decision not to "taper" its monthly QE bond and mortgage purchases, at least for now, the markets' attention now will focus on the upcoming federal budget and debt ceiling battles. Either one could lead to a government shutdown, and even if a shutdown is avoided, it will be a nervous few weeks in the markets just ahead.

    Fiscal year 2013 ends next Monday, and FY2014 begins on Tuesday. Not surprisingly, we do not have a federal budget for FY2014, so last Friday the House of Representatives passed a temporary "continuing resolution" to fund the government through mid-December. However, that resolution contained a provision to cancel funding for Obamacare indefinitely.

    That provision will definitely not survive in the Senate, so it remains to be seen what happens between now and next Tuesday. Almost certainly, we'll see another political battle and the threat of a government shutdown. Then two weeks later, we will see another political circus over raising the debt ceiling, which could also trigger a government shutdown.

    President Obama has repeatedly warned recently that he will not negotiate with House Republicans on raising the debt ceiling, so another political fiasco is virtually assured around the middle of October when the Treasury will run out of money to pay the nation's bills. This fight will not be good for the stock markets. Here we go again.

    Finally, the Congressional Budget Office just released a new report which warns that our spiraling national debt is "unsustainable." Imagine that! We'll take a look at the report's latest findings as we go along.

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  • Stock Funds’ 5-Year Track Records Set to Double

    Many investors focus on the previous five years annualized return when analyzing which mutual funds to buy. We also pay a good deal of attention to the 5-year performance number when analyzing mutual fund and ETF returns at Halbert Wealth Management. And currently the 5-year average returns for most equity mutual funds are not all that attractive.

    But what if I told you that between now and the end of the year, most funds’ 5-year track record will double or more! And that will happen even if the funds don’t make another penny this year. How can this be, you ask. It just so happens that some of the worst losing months for stocks occurred during the latter part of 2008 when the Dow and the S&P 500 were on their way to 50+% drawdowns (losses). We all remember that gut-wrenching period!

    But guess what? Those terrible losing months in late 2008 will steadily be falling off of 5-year performance records between now and year-end. As a result, most 5-year performance records are about to skyrocket due to nothing other than the passage of time. You can bet the mutual fund companies are licking their chops in anticipation of new brochures showing the much higher 5-year returns! I will explain how this will happen in detail below.

    Finally, I would be remiss not to discuss the key Fed policy meeting that starts today and ends tomorrow. It is widely expected that the Fed will announce plans to “taper” its monthly QE purchases of Treasury bonds and mortgages. That decision could have significant market implications, which I will discuss as we go along today.

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  • Some Scary Bumps in the Road Just Ahead

    The major stock indexes moved lower after setting new record highs in early August, although prices have recovered somewhat in the last few days. So was the weakness in August just an overdue correction before moving even higher? Maybe, but there are a number of things coming up in the next month or so that could rattle the markets even more, including whether or not we go to war with Syria.

    Clearly, the stock and bond markets continue to be nervous about the Fed cutting back on its QE bond and mortgage purchases, perhaps as soon as the Fed’s next policy meeting that ends on September 18. There is also some anxiety about who will be the next Fed chairman (or woman).

    Yet there are other upcoming concerns that the markets seem to be worried about, as well they should. Certainly, the continued rise in interest rates is a serious issue for the markets and the economy. The yield on 10-year Treasury notes has soared from 1.6% back in May to near 3%. Long bond yields are nearing 4%. Investors don’t know what lies ahead.

    The markets are also starting to factor in the looming battle in Washington over the federal budget for FY2014, which begins on October 1. President Obama vows he won’t negotiate this time around. Also, there is another battle over the debt ceiling coming by mid-October and yet another threat of a government shutdown.

    We'll look into all of these issues today and how they may affect the markets.

    But before we get into those issues, let’s examine last Friday’s jobs report for August. The White House and the media hailed it as a success since the headline unemployment rate fell from 7.4% to 7.3%. What they failed to point out was the decline occurred because a lot more folks dropped out of the labor market. Truth is, the report was once again a disappointment.

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  • How Syria Could Spark New Middle East War

    What does the stand-off in Syria have to do with the investment markets? Potentially, a lot. As I have argued in recent weeks, if the Middle East devolves into another military quagmire, it could be quite bearish for the US stock and bond markets going forward. That’s why we will talk about the implications today.

    President Obama is hell-bent on attacking Syria for gassing over 1,400 innocent citizens on August 21. Normally, it would not be unusual for an American president to want to respond to such a humanitarian outrage. But it is still not clear why this liberal president – who’s mandate was to get us out of war – is now so intent that we need to attack Syria militarily.

    We begin our analysis today by briefly examining how the civil war in Syria began and why. From there, we examine whether the US has any justified reasons to get involved or to punish Syria’s president Bashar al-Assad for the recent chemical attacks on his own people. For whatever reasons, President Obama initially felt that he alone had the authority to take the US to war with Syria, and made plans to do so last week.

    However, an NBC poll released last Friday revealed that almost 80% of Americans believe that the president must get congressional approval before taking the nation to war. Other polls showed that a majority of Americans don’t want the US to attack Syria, period. So on Saturday, Obama backed down and said he would wait for Congress to have its say next week.

    But before we get to that discussion, let’s take a quick look at the latest economic reports, including last Thursday’s 2Q GDP estimate, which was revised up from 1.7% to a more healthy 2.5%, and a few other recent reports. Let’s get started.

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  • America is Turning Into a "Part-Time Nation"

    Part-time work accounted for a whopping 77% of the jobs the US economy created from January through July, according to household survey data from the Bureau of Labor Statistics. Last year during the same time period, part-time jobs were only 53% of the total versus 47% full-time jobs. This trend toward part-time, low paying jobs is accelerating rapidly.

    A rising number of companies are citing healthcare reform as the reason for the growing part-time workforce. As a result, the US labor pool is rapidly restructuring toward “29-ers” – employees working just under the 30-hour full-time threshold. This meteoric increase in part-time versus full-time new jobs has been happening since 2009.

    Next, we look at the latest clues as to when the Fed will start to “taper” its monthly bond and mortgage purchases. The minutes from the Fed’s July 30-31 policy meeting indicated that a growing number of FOMC members are leaning toward reducing purchases before year-end. But we still don’t know when Bernanke & Co. will pull the trigger.

    Finally, in my blog last Thursday, I wrote about a new study which found that, in at least 35 US states, a person on welfare can get more cash benefits than a person working 40 hours a week at the minimum wage. In some states, a whole lot more than the minimum wage. Today, we explore this dangerous trend and why we have a record number of Americans on welfare.

    But first let’s take a quick look at the latest economic reports and what’s ahead this week.

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  • The Big Secret Mutual Fund Companies Are Hiding

    Do you know that most (if not all) mutual fund and ETF sponsors are keeping vital information about their funds secret from you? We’ll start today’s E-Letter with a discussion about what that valuable information is and why fund companies don’t want you to know about it. I'll also tell you how you can download my latest FREE Special Report entitled, "The Secret That Mutual Fund Companies Don't Want You to Know."

    Better yet, after you read my latest Special Report, I’ll show you how to beat the fund companies at their own game by learning this secret about the actual mutual funds (or ETF’s) in your own portfolio. This is information you really need to know, and you may be very surprised by what you learn!

    From there, we shift our focus to the Fed. As you will recall, Fed Chairman Ben Bernanke first hinted of reducing “quantitative easing” (QE) bond and mortgage purchases in late May, and stocks and bonds took an immediate hit. In late June and July, Bernanke tried to walk-back the idea of “tapering” Fed purchases, and stocks soared to new record highs. However, in the last few weeks, “taper-talk” has become widespread again.

    Most forecasters now believe that the Fed will cut its monthly QE purchases from $85 billion to around $65 billion at its next policy meeting on September 17-18. That prediction sent stocks reeling last week, and 10-year and 30-year Treasury bonds plunged to their lowest level in two years. We'll talk about this and a lot more today. Let's get started.

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  • Middle East Is A Looming Tinderbox – Think Egypt

    Today, we depart from our usual topics and focus on why the Middle East could soon deteriorate into a full-blown crisis that could affect markets around the world. We begin by looking into the latest unprecedented embassy closures across the Middle East and North Africa. Did President Obama take the appropriate actions, or were the closures a sign of weakness to our enemies in the region? Or maybe both?

    From there, we turn our attention to the worsening political tensions in Egypt. There is a real threat that Egypt could deteriorate into a full-scale civil war in the months ahead. Egypt controls the Suez Canal through which the majority of the oil produced in the region passes to get to the West. While the military controls the country for now, a civil war could threaten oil flows and send crude prices through the roof. As investors, we absolutely need to keep a close eye on the unrest in Egypt.

    And finally, did President Obama break the law in his press conference last Friday when he revealed that the US has a “sealed indictment” against some of the perpetrators of the attack on our consulate in Benghazi last year? Divulging the existence of a sealed indictment is against the law. The media is largely silent on this, but I will give you the details today.

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