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.

Forecasts & Trends

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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.

  • 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.

  • Are Americans Optimistic or Pessimistic About the Future?

    Today's letter will move fast as we touch on several pressing issues of the day, with lots of charts and graphs. We begin with some new polls which indicate that most Americans are pessimistic about the future, even though consumer confidence is up this year. Another major poll finds that only 29.4% of Americans feel the country is headed in the right direction, while 61.4% believe we are on the "wrong track" longer-term.

    From there, we take an in-depth look at last Friday's unemployment report. While the headline unemployment rate unexpectedly fell to 7.4%, there was a lot of troubling data in the report that the mainstream media simply ignored. Not only were new jobs less than expected, they were dominated by low paying and part-time jobs.

    Next, we take a closer look at last Wednesday's 2Q GDP report, which came in a little higher than expected (1.7% vs. the consensus of 1.1%). The media gushed over this number and assured us that the recovery is gaining momentum. But how can you get excited over a report showing growth is still less than 2%? This is still the weakest economic recovery in most of our lifetimes, despite what the media says.

    Last but not least, Congress has figured out that ObamaCare is going to be a "train wreck," this according to one lawmaker who helped write the massive healthcare law. As a result, Congress is trying to find a way to exempt itself from ObamaCare - surprise, surprise! That will be very difficult, so President Obama appears ready to give members of Congress subsidies up to 75-80% to buy health insurance on the exchanges, even though they make $174,000 a year, plus benefits and lifetime pensions. This is outrageous!

  • New GDP Revisions to Boost US Economy by 3%

    Tomorrow morning at 8:30 EST, we get the government’s first look at 2Q GDP. The pre-report consensus is for a rise of 1.1% (annual rate) in the 2Q following 1.8% in the 1Q. Most forecasters agree that the economy slowed somewhat in the 2Q, so a reading of 1.1% shouldn’t come as a big surprise.

    At the end of April, the Commerce Department’s Bureau of Economic Analysis (BEA) announced it would be making some significant revisions to the way it calculates Gross Domestic Product on July 31. It will revise economic growth for all years going back to 1929. This change is somewhat controversial in that it is expected to add up to 3% to total GDP in one fell swoop tomorrow morning.

    The reason for the changes is the fact that our economy increasingly depends on the production of intangible goods, and the BEA believes that the production of ideas is an important form of investment. So in the future, the BEA is going to count a company’s research and development as a form of investment, just like the purchase of a new office building or a new printer. And the creation of a lasting work of art – a painting, a movie, a television series, etc. – that can be sold or viewed year after year will likewise be treated as a capital investment.

    Since the US GDP is increasingly made up of intangible assets, some of these revisions probably make sense. Yet the caveat is that intangible things such as R&D and art are far more difficult to value precisely. So today we’ll discuss the GDP revisions coming out tomorrow and whether or not such changes are a good thing.

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  • Average Gas Price Could Hit $4 by Labor Day... Or Not

    With the recent jump in gasoline prices, several energy analysts are forecasting that prices at the pump will top $4 a gallon (national average) later this summer. On the other hand, some analysts feel that gas prices will only go up another 5-10 cents a gallon just ahead, and then move lower in the fall. Of course, no one knows for sure. Today, we’ll take a look at what’s driving gas prices higher.

    But before we get to that discussion, let’s take a quick look at the latest economic reports, most of which were disappointing. The only good news here – if you can call it that – is the economic data of late is not encouraging enough for the Fed to begin tapering its bond purchases anytime soon, as I discussed at length in last week’s E-Letter.

    The Fed reported recently that Americans’ cumulative net worth has finally hit a new record high of $70.3 trillion in the 1Q, up $3 trillion from the 4Q of 2012. While this is good news on the surface, much of the increase came as a result of Americans spending less and paying off their debts. Slower growth in consumer spending is not good for the economy.

    Last but certainly not least, I will reveal the results from our recent Financial Literacy Test. This quiz was wildly popular with my readers. And today, I’ll tell you how you did – which was really good. You may be surprised at the results, including the two questions that stumped about half of those taking the test. My thanks to all who participated!

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  • Fed’s Gobbledygook - What Do They Really Mean?

    Recent communications from the Fed and comments by Chairman Bernanke cast a great deal of uncertainty on the equity and bond markets in late June. Specifically, Bernanke's remarks in his press conference on June 19 - where he discussed ending its program of quantitative easing - prompted a huge global selloff in the stock and bond markets.

    In response, various Fed officials tried to "walk back" the idea that the Fed was ready to begin scaling back its $85 billion a month in bond and mortgage purchases as early as September and end the program by mid-2014. Based on those reassurances, stock prices recovered, but rumors of the Fed scaling back its stimulus later this year continued to circulate.

    Last Wednesday, the Fed released the actual minutes from the June 18-19 Fed Open Market Committee meeting. Those minutes revealed that the Committee did indeed discuss the possibility of scaling back its QE purchases, and even ending them at some point. However, in the end, all but one member of the Committee voted to continue the $85 billion a month in purchases indefinitely.

    With that news, the Dow Jones and the S&P 500 indexes surged to new record highs last Thursday. It is obvious that the equity markets are addicted to the Fed's stimulus. It remains to be seen, however, what this latest Fed decision will mean for the sagging bond market. So far, not much.

    Finally, there is something REALLY BIG brewing with regard to ObamaCare. President Obama's recent decision to postpone the "employer mandate" by one year to 2015 may have been unconstitutional.

    If you oppose ObamaCare, you absolutely must read the final section of this E-Letter. You won't hear about this in the mainstream media. If you don't read anything else, scroll down to: Delay of ObamaCare May Backfire on the President. You need to know about this.

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  • Are You Financially Literate? Take the Test!

    In late May, the Financial Industry Regulatory Authority (FINRA) released the results of its 2012 National Financial Capability Study, and the news wasn't good. While some areas of financial capability had improved since the last study in 2009, a large part of the American public is still virtually illiterate when it comes to even the most basic financial concepts and practices.

    The consequences of financial illiteracy are many, but they generally involve putting American families at a disadvantage when it comes to borrowing, saving and investing for retirement and other everyday financial matters.

    This week, I'm going to discuss the results of the updated FINRA study and also allow you to take our expanded financial literacy test for yourself. I'll also mention some ways to improve financial literacy, some of which may surprise you. I encourage you to not only take our financial literacy quiz yourself, but also share this E-Letter with friends, loved ones and even school administrators in your local area.

  • Fed Sparks A Stampede Out Of Bonds

    No doubt you are aware that interest rates have spiked higher in the last two months. As a result, there is a stampede to get out of bond funds that have been clobbered recently. I have been warning about this repeatedly since late last year. Now it’s happening and it may well continue. We’ll discuss that more as we go along today.

    With the Fed’s latest decision to start winding down its unprecedented quantitative easing stimulus program later this year, the investment markets are not happy. Stocks, bonds and precious metals have been hit hard in recent days and weeks. While stocks and bonds have recovered modestly, the selling pressure may not be over. Investors are really nervous!

    On the political front, President Obama just can’t help himself. Despite the various scandals swirling around his administration, he has resurrected his formerly failed plan to institute a new tax on carbon emissions. Only this time he plans to circumvent Congress and enact this costly tax via the Environmental Protection Agency and new Executive Orders that are almost impossible to reverse. He apparently does not care that a new carbon tax will increase energy prices for everyone, including low income folks who will be hit the hardest.

    But before we get into those issues, let’s take a quick look at the latest economic reports, including last week’s very discouraging 1Q GDP report that showed the economy is still just limping along. From there, we’ll look at some other economic reports which offer at least a little encouragement.

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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.

  • Will The Fed Tank The Markets Tomorrow?

    The Fed Open Market Committee is meeting today and tomorrow to set monetary policy going forward. The big question is whether or not the Fed will decide to “taper” its monthly purchases of $85 billion in Treasury bonds and mortgage securities, which have driven stocks and bonds higher over the last few years. The decision depends largely on the Fed’s view of the economy, so they tell us.

    No one knows for sure which way the Fed will go, but either way it will have a big impact on the markets. Both stocks and bonds have moved lower ahead of the meeting, and I expect a big move one way or the other depending on tomorrow’s announcement of the Fed’s decision on quantitative easing (“QE”).

    Following that discussion, we’ll look at the annual report from the Social Security Trustees. As usual, the Trustees warn that Social Security is going broke – what else is new? But there is a growing movement to raise the early retirement age from 62 to 64. Will it happen? I doubt it.

    Finally, I will update you on the growing list of Obama scandals and how the buck never seems to stop with the president. The result is that fewer and fewer Americans trust our government.

  • Economy Rolling Over, Obama Scandals Multiply

    There’s a lot to cover today, starting with last Friday’s unemployment report that was hailed by the media and the stock markets. But after looking into the data, I will argue that the report was lackluster at best. From there we’ll look at why the big picture economic outlook is becoming worrisome. We’ll drill down into the data only to conclude that the economy may be rolling over to the downside.

    And we’ll end with some thoughts on the Obama administration’s defense of the growing scandals. The Obama defense, as usual, is that this is nothing different from what George W. Bush did when he was in office. That story is wearing very thin, especially now that we’re five years into Obama’s presidency. The truth is, this is much worse! Plus, we’ll look at some new revelations that further suggest it was President Obama himself who caused the IRS to target conservative groups.

  • Fed Advisory Council Drops A Bombshell

    Last Friday afternoon, the Fed released the minutes from a May 17 meeting of the Federal Advisory Council (FAC) – that you probably never heard of before today. The Council is a group of 12 influential bankers from across the country who meet periodically and give the Fed Board of Governors input regarding the economy, monetary policy, etc. To my knowledge, no one in the mainstream media has reported on what you will read here today.

    Following that discussion, I will review the latest economic reports over the last couple of weeks and let you know what we’re looking for in reports during the balance of this week.

    Finally, I’ll give you my take on the escalating IRS scandal that is now being investigated in Congress. I will suggest to you that the roots of this scandal go all the way back to the landmark Citizens United vs Federal Election Commission decision made by the Supreme Court in January 2010. For whatever reasons, the media hasn’t seemed to make that connection.

  • Investors Shun Stocks But Cling To Bonds - Why?

    This week, the Halbert family is taking it easy in sunny Florida, celebrating our son's graduation from college. Instead of my usual writing, I'm going to reprint an excellent article on investor behavior penned by the Wall Street Journal's Jason Zweig.

    As anyone reading my E-Letter knows, I have been concerned for some time about the effect of rising interest rates on bond prices, yet investors continue to pile money into these investments. Even in the face of a powerful bull market in stocks, investors are ignoring equities and clinging to bonds. It just doesn't make sense - at least not until you read the article below.

    Zweig seeks to answer the question of why investors continue to pile into bonds by examining the field of investor behavior. I think you will find his article to be interesting and perhaps a bit revealing. I have also added a few comments of my own throughout the article. Enjoy!

  • 2013 Federal Budget Deficit Plunges – How, Why?

    It was so tempting to devote today’s E-Letter to a discussion about all of the scandals plaguing the Obama adminstration in recent weeks. In fact, some of my staff were very disappointed that I chose not to go there. My feeling was that the airwaves are so saturated with coverage of the Obama scandals, you might not want to see even more piling on from me, as much as I would like to. (There are some very good stories on the latest scandals in SPECIAL ARTICLES below.)

    Today, we’ll focus on the latest news that this year’s federal budget deficit will likely be significantly lower than previously estimated by the Congressional Budget Office, and the reasons why that is. But let us not be fooled into thinking that falling deficits are a permanent thing. No, in fact, the deficits and the national debt will continue a troubling increase over the next decade and even longer.

    We’ll also discuss the subject of our nation’s “unfunded liabilities” which now stand at a staggering $123 trillion, which is rarely ever mentioned by the media. And there are several other interesting points I will touch on today, but I don’t want to give everything away in this introduction. So please read on.

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