Author Topic: US Economy, the stock market , and other investment/savings strategies (Read 484316 times)

G M · « **Reply #250 on:** February 27, 2012, 07:26:49 PM »

LOL

This recovery is so awesome, only Wesbury and Obozo can see it!

ccp · « **Reply #251 on:** February 28, 2012, 07:44:24 AM »

"but it’s the long-term bulls, who believe in the steady progress of technology and wealth creation, that make money most consistently."

I thought the same thing just before the tech crash and lost a lot.

Of course one can do index funds, berkshire hathaway stuff that was not "dotcom".

Crafty_Dog · « **Reply #252 on:** February 28, 2012, 07:46:03 AM »

And the NAZ is still down 40% from its peak.

That said, the fact remains that Wesbury has called the past year better than we have.

JDN · « **Reply #253 on:** February 28, 2012, 07:52:52 AM »

Quote from: Crafty_Dog on February 28, 2012, 07:46:03 AM

And the NAZ is still down 40% from its peak.

That said, the fact remains that Wesbury has called the past year better than we have.

Actually, the Nasdaq is at or near an 11 year high; not bad.....

ccp · « **Reply #254 on:** February 28, 2012, 08:57:29 AM »

"Wesbury has called the past year better than we have"

Absolutely.

This time.

Crafty_Dog · « **Reply #255 on:** February 28, 2012, 10:25:40 AM »

Ummm JDN. The NAZ peaked at 5K and last I looked sits just under 3K. That is a 40% drop.

ccp · « **Reply #256 on:** February 28, 2012, 11:30:41 AM »

I would also add that when the consensus is the market is going higher that might be an indicator to sell.

In any case Webury on one hand states one cannot predict the future so long term holding is the answer.

OTOH he predicts we are going up another 20% this year.

Well, if we do I hope its after November 2 - not before.

Crafty_Dog · « **Reply #257 on:** March 02, 2012, 11:33:39 AM »

Personal income increased 0.3% in January while personal consumption rose 0.2% To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/1/2012
Personal income increased 0.3% in January while personal consumption rose 0.2%. Including revisions for prior months, income was up 1.0% and consumption up 0.4%. The consensus expected a gain of 0.5% for income and 0.4% for consumption. In the past year, personal income is up 3.6% while spending is up 3.8%.
Disposable personal income (income after taxes) was up 0.1% in January (1.1% including revisions for prior months) and is up 3.0% from a year ago. Increases in worker compensation led the way in January. Social security payments increased 2.8% (retirees finally got a COLA), but overall government transfers declined.

The overall PCE deflator (consumer inflation) was up 0.2% in January and 2.4% versus a year ago. The “core” PCE deflator, which excludes food and energy, was up 0.2% in January and is up 1.9% since last year.

After adjusting for inflation, “real” consumption was flat in January, but is up 1.4% from a year ago.

Implications: Personal income and spending were up modestly in January itself, with both rising but moving up less than the consensus expected. However, consistent with yesterday’s update on quarterly GDP and income, prior months were revised up. As a result, income was 1% higher than we previously thought, while spending was 0.4% higher. “Real” (inflation-adjusted) consumer spending was unchanged in January, just like November and December. But this recent trend is unlikely to last. Excluding transfer payments, “real” (inflation–adjusted) personal income was up 0.2% in January and up 1.9% from a year ago. Meanwhile, in the past year, real private-sector wages and salaries plus real small business profits are up 3.2% - that means this income is rising 3.2% faster than inflation. In addition to these income gains, consumer spending will be supported by the large reduction in households’ financial obligations the past few years. Recurring payments like mortgages, rent, car loans/leases, as well as other debt service, are now the smallest share of after-tax income since 1993. On the inflation front, overall consumption prices are up 2.4% in the past year, above the Fed’s supposed target of 2%. “Core” prices are up 1.9% from a year ago, the most since 2008. Given the loose stance of monetary policy, we expect inflation to accelerate in the year ahead, both overall and for the core. In other news this morning, new claims for unemployment insurance declined 2,000 last week to 351,000. The four-week average dropped to 354,000, the lowest since March 2008. Continuing claims dipped 2,000 to 3.40 million, the lowest since August 2008. These data suggest we had another month of robust payroll growth in February.

G M · « **Reply #258 on:** March 03, 2012, 06:39:16 AM »

http://www.cbsnews.com/8301-505144_162-57387655/inflation-not-as-low-as-you-think/

Over the past year, the EPI is up just over 8 percent, according to the economics group. The biggest factor: Motor fuel and transportation costs are up 21.06 percent from year-ago levels. The cost of food, prescription drugs, and tobacco also have increased faster than the government's inflation measure, rising 3.56 percent, 4.21 percent, and 3.4 percent, respectively.

Crafty_Dog · « **Reply #259 on:** March 05, 2012, 12:14:38 PM »

The ISM non-manufacturing composite index increased to 57.3 in February To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/5/2012
The ISM non-manufacturing composite index increased to 57.3 in February, beating the consensus expected decline to 56.0. (Levels above 50 signal expansion; levels below 50 signal contraction.)
The key sub-indexes were mixed in February. The new orders index rose to 61.2 from 59.4 and the business activity index increased to 62.6 in February from 59.5. The employment index fell to a still strong 55.7 from 57.4 and the supplier deliveries index fell to 49.5 from 51.0.

The prices paid index rose to 68.4 in February from 63.5 in January.

Implications: Great news on the service sector! The ISM services index once again beat consensus expectations, coming in at 57.3, the highest level in a year. The sector has now shown expansion for 26 straight months and is growing at a very rapid rate. The business activity index, which has an even stronger correlation with real GDP growth than the overall index, boomed in February, coming in at 62.6. With the exception of one month back in early 2011, this is the highest level for the activity index since 2005. The new orders index also took off, rising to 61.2, the highest level in a year. Although the employment index fell, it still shows expansion. Pending Wednesday’s ADP Employment report, we expect this Friday’s official Labor Department report to show a gain of 240,000 in private sector payrolls. On the inflation front, the prices paid index rose to 68.4 after rising to 63.5 last month. These reports signal increasing inflation pressure and make it harder for the Federal Reserve to justify the very loose stance of monetary policy. Bottom line: with an improving pace of economic growth and more inflation, another round of quantitative easing is simply not going to happen.

DougMacG · « **Reply #260 on:** March 05, 2012, 12:46:45 PM »

"Bottom line: with an improving pace of economic growth and more inflation, another round of quantitative easing is simply not going to happen."

So the downward spiral of the dollar will be limited to the recklessness already done. (I don't know which emoticon to follow that with.)

Wesbury has a current job with an investment house that is (mostly) non-political, but he knows that the economic answer to what is happening is political. We chose this disaster; now we argue and track tenths of a percent of low single digit growth up from the worst economy since the great depression. At this rate the economy will be hitting on all cylinders by when??

The more 'growth' we have without solving other underlying problems, the more gas prices will go up over the summer and kill off more and more industries - like travel, tourism, manufacturing, product delivery, and commuting to work. Aka: an economy 'built to last'?

Growth and inflation/devaluation occurring simultaneously without tax brackets indexed to inflation guarantees that a higher proportion of resources is moved over to the public sector - working against the possibility of sustained private sector growth.

It is hard to be optimistic about investment performance before reforms are seriously contemplated.

G M · « **Reply #261 on:** March 05, 2012, 02:17:39 PM »

http://blog.american.com/2012/03/for-99-of-americans-the-obama-recovery-has-been-no-recovery-at-all/

Click to view the charts.

Crafty_Dog · « **Reply #262 on:** March 09, 2012, 08:36:22 AM »

Non-farm payrolls increased 227,000 in February To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/9/2012

Non-farm payrolls increased 227,000 in February and were up 288,000 including revisions to December/January. The consensus expected a gain of 210,000.
Private sector payrolls increased 233,000 in February. Revisions to December/January added 42,000, bringing the net gain to 275,000. February gains were led by health care (+49,000), temps (+45,000), restaurants/bars (+41,000), professional & technical services (+34,000), and manufacturing (+31,000). The weakest sectors were department stores (-25,000), non-residential construction (-13,000), and government (-6,000).

The unemployment rate held steady at 8.3%.

Average weekly earnings – cash earnings, excluding benefits – rose 0.2% in February and are up 1.9% versus a year ago.

Implications: Another major step forward for the job market. Payrolls were up 227,000 in February (288,000 including upward revisions to prior months). Meanwhile, civilian employment, an alternative measure of jobs that includes small business start-ups, increased 428,000. Some of that gain was weather-related. The household survey shows weather kept 178,000 people away from work last month; in a typical February, this number averages 311,000. But even if we subtract the difference (133,000) from civilian employment, we’re still left with a gain of 295,000 – strongly supporting the case that the payroll data, if anything, are under-reporting improvement in the labor market. Payrolls gains have averaged 168,000 in the past year, versus a gain of 193,000 per month for civilian employment. Meanwhile, the labor force increased 476,000 in February and is up 1.3 million in the past year. As a result, the unemployment rate held steady at 8.3% in February, despite robust job gains. Total hours worked increased 0.2% in February and are up 2.7% from a year ago. That, combined, with continued increases in wages per hour, means total wages are up 4.6% in the past year, more than enough to outpace inflation (for the time being). One detail in the report might capture the improvement best: the share of unemployed who quit their prior job is up to 7.9%, the highest since late 2008. That’s what we should expect to see as attitudes about the job market improve: more workers who are confident they can leave their current position and find a better one. Meanwhile, the share of unemployed workers who are either new entrants to the labor force or re-entrants hit 36.6%, the highest since August 2008. In other recent news on the job market, initial claims for unemployment insurance increased 8,000 last week to 362,000. The four-week moving average held steady at 355,000. Continuing claims for regular state benefits increased 10,000 to 3.42 million, although the four-week average was also 3.42 million, the lowest since August 2008. The odds of another round of quantitative easing are very close to zero.

G M · « **Reply #263 on:** March 09, 2012, 08:41:51 AM »

http://blog.american.com/2012/03/the-real-unemployment-rate-its-sure-isnt-8-3/

Even if it were a legit number, the 8.3% February unemployment rate, released today by the Labor Department, would be simply terrible – and unacceptable. It would still extend the longest streak of 8%-plus unemployment since the Great Depression. The U.S. economy hasn’t been below 8% unemployment since Obama took office in January 2009. And back in May 2007, unemployment was just 4.4%.

But, unfortunately, the true measure of U.S. unemployment is much, much worse.

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.4%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.5%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.9%.

5. Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment. According to their model – as displayed in the above chart, updated – unemployment should be around 6% today.

6. As Ed Carson of Investor’s Business Daily points out, it’s been a whopping 49 months since the U.S. hit peak employment in January 2008. The average job recovery time since 1980 is 29 months, not including the current slump.

7. And how long might it take to get back to the 4.4% unemployment rate that existed under President George. W. Bush? Well, let’s say the goal was to get back to that rate in 5 years. And let’s assume the LFP rate returns to the CBO trend. According to a jobs calculator created by the Atlanta Fed, the U.S. economy would have to generate about 225,000 jobs a month, every month, for the next 60 months to hit that target. But few economist think we’ll see sustained job growth like that, especially since it assumes the economy would avoid recession during that span.

Crafty_Dog · « **Reply #264 on:** March 09, 2012, 08:56:19 AM »

Several excellent and persuasive points in that.

I would also add the matter of the impending tax increases in January 2013. The Bush tax rates will expire. The holiday from the Social Security Insurance premiums (a.k.a. the dishonestly called "payroll tax") will expire. Various additional Obamacare taxes will come on stream.

This is a huge deal and I am in agreement with Art Laffer that this means that a part of what we are seeing is an anticipatory acceleration of economic activity that will be paired with an attendant decline in 2013.

Crafty_Dog · « **Reply #265 on:** March 13, 2012, 10:34:03 AM »

Data Watch
________________________________________
Retail sales grew 1.1% in February To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/13/2012
Retail sales grew 1.1% in February (1.6% including upward revisions to December/January). The consensus expected an increase of 1.1%. Retail sales are up 6.5% versus a year ago.
Sales excluding autos rose 0.9% in February (1.7% including upward revisions to December/January). The consensus expected an increase of 0.7%. Retail sales ex-autos are up 6.4% in the past year.

The increase in retail sales in February was led by gas stations, motor vehicles and general merchandise stores. Most other subsectors rose as well.

Sales excluding autos, building materials, and gas rose 0.5% in February (1.0% including upward revisions for December/January). This calculation is important for estimating real GDP.

Implications: Great report on retail sales today. Sales grew a strong 1.1% in February, the fastest pace in five months. Sales are up in 19 of the last 20 months and 6.5% above where they were a year ago, easily outstripping retail inflation. Auto sales were strong and higher gas prices were a factor as well, but the gains were widespread across most sectors. For example, spending on building materials rose 1.4% in and is accelerating, up 13.8% from a year ago, but up at an even faster 26.8% annual rate over the past three months. Some of this is probably due to warm winter weather. Also important were the upward revisions for prior months. Including those revisions, overall sales were up 1.6%. And "core" sales, which exclude autos, gas, and building materials, were up 1%. Assuming that the level of retail sales for March is unchanged from February, sales will be up 6.7% at an annualized rate in the first quarter from the fourth quarter, a great sign for nominal growth. Between increasing incomes and smaller debt repayments, the US consumer is able to ramp up spending. We expect all of these trends to continue.

Crafty_Dog · « **Reply #266 on:** March 15, 2012, 05:28:46 AM »

I could be wrong (again

) but I am sensing that we are about to see the reversal of a decades long trend of downward interest rates.

If I am right, a lot of people will be wanting to sell bonds.

Will this money then be a source of funds flowing into equities?

G M · « **Reply #267 on:** March 15, 2012, 05:42:18 AM »

Quote from: Crafty_Dog on March 15, 2012, 05:28:46 AM

I could be wrong (again ) but I am sensing that we are about to see the reversal of a decades long trend of downward interest rates.

If I am right, a lot of people will be wanting to sell bonds.

Will this money then be a source of funds flowing into equities?

If by equities, you mean shotgun shells and dehydrated food, then yes.....

DougMacG · « **Reply #268 on:** March 15, 2012, 07:57:38 AM »

"sensing that we are about to see the reversal of a decades long trend of downward interest rates.
If I am right, a lot of people will be wanting to sell bonds.
Will this money then be a source of funds flowing into equities?"

Oops, I am trying to quit agreeing with GM but sometimes he nails it... Yes, interest will have to go up, but nothing good in equities comes out of financial panic or collapse in the world's largest economy.

Interest rates can only be super low now if we are not selling all the bonds required to cover current deficit spending. (QE-to the umpteenth power is already/still happening.) The market force interest rate right now without central bank manipulation would be a scary high number IMHO.

Crafty_Dog · « **Reply #269 on:** March 16, 2012, 09:05:08 AM »

Industrial production was unchanged in February To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/16/2012
Industrial production was unchanged in February, but up 0.3% including upward revisions to prior months. The consensus expected a gain of 0.4%. Production is up 4.0% in the past year.
Manufacturing, which excludes mining/utilities, rose 0.2% in February but was up a very strong 0.7% including upward revisions to prior months. Auto production fell 1.2% in February while non-auto manufacturing rose 0.4%. Auto production is up 13.3% versus a year ago while non-auto manufacturing is up 4.6%.

The production of high-tech equipment fell 0.6% in February, and is down 0.8% versus a year ago.

Overall capacity utilization ticked down to 78.7% in February from a revised 78.8% in January. Manufacturing capacity use increased to 77.4% in February from 77.3% in January.

Implications: Today’s report on the factory sector was very deceptive. Industrial production was unchanged in February, much less than the consensus expected, but prior months were revised up by 0.3%. Strength in the factory sector was obscured by a 1.1% drop in mining output. In addition utility output, because of warmer weather, was unchanged. Taking out utilities and mining leaves just the manufacturing sector, which rose 0.2% in February and 0.7% including upward revisions for prior months. Higher production is making factories use higher levels of capacity. Utilization in manufacturing is now at 77.4%, the highest since March 2008 and near the 20-year average of 77.7%. As capacity use moves higher, firms have an increasing incentive to invest in more plant and equipment. Meanwhile, corporate profits and cash on the balance sheet show they have the ability to make these investments.

Crafty_Dog · « **Reply #270 on:** March 19, 2012, 07:48:51 AM »

Monday Morning Outlook
________________________________________
The Fed's March Madness To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/19/2012
With two #2 seeds going down on the same day (Mizzou and Duke), and four Ohio teams in the Sweet Sixteen, March Madness is in full swing. Nonetheless, the Federal Reserve added to the madness last Tuesday when it released its latest assessment of the economy.
After months of living in denial, the Fed finally admitted the economy has improved, while, for all intents and purposes, it also took additional quantitative easing – QE3 – off the table. The best news was that the Fed ignored the ridiculous idea of “sterilized” bond buying, which it floated in the Wall Street Journal a week ago. We can assume that idea is now dead.

The impact on the markets was dramatic – stocks rallied, bonds got crushed, and gold fell again.

For several months, many analysts argued that the only reason to buy stocks was the potential of another round of quantitative easing. If the economy wilted, they thought, the Fed would ride to the rescue, so there was no reason to get too bearish. The “Bernanke put” had replaced the “Greenspan put.”

We’ve been bullish for completely different reasons. We believe the recovery is real and sustainable and that profit growth will continue. We have also believed that stocks are undervalued. Yes, monetary policy has been accommodative, but monetary policy alone is not the driving force behind the bull market, profits are. We have never believed that Quantitative Easing (or the anticipation of QE) has driven stock prices up – if it had, price-earnings ratios would have risen, but they haven’t.

The proof is in pudding. As the odds that the Fed will embark on a new round of quantitative easing decline, the stock market has moved higher. Equity investors now realize they don’t have to pray for more Fed ease to keep the bull running.

Bonds certainly got the message. The 10-year Treasury was 1.93% a month ago, 2.03% on Monday, and then closed at 2.30% on Friday. We see this as a sign investors anticipate the Fed will start to raise short term rates before the late 2014 date it wanted markets to believe.

The expectation of less Fed accommodation is why gold got hit, dropping $56 per ounce in two days. Gold is now 12.5% below its record close on Labor Day 2011. With gold still at $1659 as we write, gold investors are still speculating on a major wave of 1970s-style inflation, but the message from the Fed is that the monetary spigot will not gush forever.

Once the Fed finally realizes that economic growth and inflation are not following the Keynesian script, rates will move higher. This won’t happen as soon as we would like, but soon enough to prevent the kind of inflation some gold investors have been hedging against. Gold bugs beware: gold prices are headed even lower.

What this means is that the best currency to be in over the next year or so is the US dollar. Yes, the Fed is loose, but everyone already knows that. It’s priced in. The issue today is whether the Fed tightens policy faster than investors previously thought. And that looks increasingly likely.

Meanwhile, Europe’s troubles are not over and neither are Japan’s. Socialist European economies are making some improvements, but debts are still high and not every country can be saved with an aid package from abroad. The European Central Bank will face great pressure over the coming year to stay easy to help Italy, for example, and that means a lower Euro. In Japan, a political consensus is forming in support of higher taxes, which means more pressure on the Bank of Japan to stay loose.

Momentum is now shifting toward the US, with some global investors looking at equity returns sweetened by currency gains. Add higher US bond yields and emerging markets should be even more willing to buy US assets.

A self-sustaining, virtuous cycle is emerging, the kind that often forms in long-term bull markets. It’s time to get on for the ride.

DougMacG · « **Reply #271 on:** March 19, 2012, 12:03:05 PM »

"...the Fed finally admitted the economy has improved, while, for all intents and purposes, it also took additional quantitative easing – QE3 – off the table."

This is not Fed-speak but Wesbury's words. Does this mean that right now the U.S. is selling US Treasury bills, bonds, notes, IOUs in the full amount required to cover all of our trillion plus dollar per year deficit spending habit with no further monetizing of the debt? (I highly doubt it.)

Crafty_Dog · « **Reply #272 on:** March 19, 2012, 05:40:06 PM »

In answer to your question Scott Grannis says:

"Forget about QE3, it's not going to happen. Inflation expectations are picking up and so is the economy. The Fed would be criminally negligent to engage in another round of QE at this juncture. See my posts today for more details.

"The Fed is not monetizing an inordinate amount of debt, and you can see that in the relatively tame growth of M2. That's not to say it won't happen, just that so far, the Fed's willingness to supply liquidity has roughly matched the market's demand for liquidity. That is what the Fed is supposed to do."

Crafty_Dog · « **Reply #273 on:** March 19, 2012, 06:25:07 PM »

I then asked Scott:

"Thank you for helping me with me education Scott.

"So, what are the banks doing with the money they hold in reserve? Do they then tend to loan in to the US Government at a higher rate of interest? Is this what is meant by the carry trade? What happens when the banks do begin to lend to the private sector?"

He replied

"The banks hold the reserves at the Fed and the Fed pays them an interest rate that is currently 0.25%. That is better than they can get on the interbank market, where Fed funds only pay about 0.15%. So banks are apparently content with getting 0.25% on an essentially riskless instrument, instead of using the reserves to make loans (which however they are doing at a fairly brisk rate). Still, the vast majority of the extra reserves are held at the Fed where they earn interest. The Fed has been making a huge profit in the meantime by doing this (about $60 billion last year I believe, which gets handed over to Treasury), since they are effectively borrowing $1.6 trillion of bonds that yield about 2% and paying out only 0.25%"

Crafty_Dog · « **Reply #274 on:** March 19, 2012, 07:02:57 PM »

MD:

Thank you.

Let me see if I have this right:

The Fed gives money to the banks (Where does this money come from? The printing press?) , , , for free? The banks then are meeting their reserve requirements so the Fed (or the FDIC?) doesn’t have to take them over. Then the Fed borrows the money from the banks?!?

I am sorry to be so thick, but I really want to understand and appreciate your patience.

Somehow I have a sense of this defying the laws of gravity or supply and demand or somehow being akin to a perpetual motion machine.

What am I missing?

Could you give me a step by step of this please?
==========

SG:
The Fed has the power to "create" bank reserves in order to purchase assets (notes, bonds). Bank reserves are a liability that must be matched by assets held. The Fed bought $1.6 trillion of notes and bonds in QE1 and QE2, and "paid" for them with bank reserves.

Bank reserves can't be used to buy anything, and they only exist at the Fed. Until the Fed decided to pay interest on bank reserves, their only role was to ensure that banks' deposits were backed up by something "solid" (i.e., reserves). In order to lend an additional $10, banks had to acquire $1 of non interest bearing reserves. So they only acquired reserves if they had a reason to lend. The Fed restricted the supply of reserves and that restricted the supply of money. Now however reserves are like T-bills and thus they have some intrinsic value.

Crafty_Dog · « **Reply #275 on:** March 19, 2012, 09:34:29 PM »

MD:

I’m still not getting it. Let me see if I have this right:

a) The banks’ ratios were fuct;
b) The Fed gives (?!?) them reserves;
c) These reserves restore their ratios to the point where they can lend money;
d) Instead they deposit the money with the Fed for a small but guaranteed return and savers, e.g. my elderly mother or panic-stricken me, get fuct by the low/quasi-negative interest rates created by the Fed to fatten the banks;
e) The Fed puts these deposits to use , , , , somehow that means they too have a sure thing to the tune of $60B a year?
f) If the banks start lending based upon these massive reserves they got from the Fed, then there will be a credit bubble anew? Or , , , the economy will finally take off? Or , , , the Fed can take the reserves it gave the banks back?

“Somehow I have a sense of all this defying the laws of gravity or supply and demand or somehow being akin to a perpetual motion machine. What am I missing?”

SG:

hedge funds typically use leverage (sometimes lots), and they will buy and sell all sorts of assets, including bonds.

The Fed is very much like a hedge fund since they can borrow unlimited amounts of money to buy anything they want. (The Fed borrows by paying for things with bank reserves that they create.) Their cost of borrowing is determined by them (the Federal funds rate), so theoretically they could never have a negative cost of carry (i.e., never pay more than they earn on their assets). But in practice the Fed could lose on a mark to market basis because the value of the notes and bonds they own can fall, as they are now. If bond yields went to the moon, the Fed would have a gigantic mark to market loss, and if that happens, one can only speculate as to the consequences.

The Fed supplies reserves to banks in exchange for notes and bonds.

Every dollar of reserves is backed by a dollar of notes and bonds, most of them treasuries.

The risk of all of this QE has always been that it's possible that the banks could all of a sudden start making massive amounts of loans. This would require a willing banking industry and willing borrowers, of course, and so far that has not been the case.

G M · « **Reply #276 on:** March 24, 2012, 04:50:31 AM »

http://www.ruger.com/corporate/news/2012-03-21.html

, Ruger & Company, Inc. Reports Strong First Quarter Bookings
March 21, 2012
Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for the first quarter 2012, the Company has received orders for more than one million units. Therefore, the Company has temporarily suspended the acceptance of new orders.

Chief Executive Officer Michael O. Fifer made the following comments:

The Company's Retailer Programs that were offered from January 1, 2012 through February 29, 2012 were very successful and generated significant orders from retailers to independent wholesale distributors for Ruger firearms.
Year-to-date, the independent wholesale distributors placed orders with the Company for more than one million Ruger firearms.
Despite the Company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders. Consequently, the Company has temporarily suspended the acceptance of new orders.
The Company expects to resume the normal acceptance of orders by the end of May 2012.
The Company will announce its results and file its Quarterly Report on Form 10-Q for the first quarter of 2012 on Tuesday, May 1, 2012, after the close of the stock market.

G M · « **Reply #277 on:** March 24, 2012, 05:40:40 PM »

http://www.nationalreview.com/blogs/print/294304

The Sun Also Sets

By Mark Steyn

March 24, 2012 4:00 A.M.

I was in Australia earlier this month and there, as elsewhere on my recent travels, the consensus among the politicians I met (at least in private) was that Washington lacked the will for meaningful course correction, and that, therefore, the trick was to ensure that, when the behemoth goes over the cliff, you’re not dragged down with it. It is faintly surreal to be sitting in paneled offices lined by formal portraits listening to eminent persons who assume the collapse of the dominant global power is a fait accompli. “I don’t feel America is quite a First World country anymore,” a robustly pro-American Aussie told me, with a sigh of regret.

Well, what does some rinky-dink ’roo-infested didgeridoo mill on the other side of the planet know about anything? Fair enough. But Australia was the only major Western nation not to go into recession after 2008. And in the last decade the U.S. dollar has fallen by half against the Oz buck: That’s to say, in 2002, one greenback bought you a buck-ninety Down Under; now it buys you 95 cents. More of that a bit later.

I have now returned from Oz to the Emerald City, where everything is built with borrowed green. President Obama has run up more debt in three years than President Bush did in eight, and he plans to run up more still — from ten trillion in 2008 to fifteen and a half trillion now to 20 trillion and beyond. Onward and upward! The president doesn’t see this as a problem, nor do his party, and nor do at least fortysomething percent of the American people. The Democrats’ plan is to have no plan, and their budget is not to budget at all. “We don’t need to bring a budget,” said Harry Reid. Why tie yourself down? “We’re not coming before you to say we have a definitive solution,” the treasury secretary told House Budget Committee chairman Paul Ryan. “What we do know is we don’t like yours.”

Nor do some of Ryan’s fellow conservatives. Texas congressman Louie Gohmert, for whom I have a high regard, was among those representatives who appeared at the Heritage Foundation to express misgivings regarding the Ryan plan’s timidity. They’re not wrong on that: The alleged terrorizer of widows and orphans does not propose to balance the budget of the government of the United States until the year 2040. That would be 27 years after Congressman Ryan’s current term of office expires. Who knows what could throw a wrench in those numbers? Suppose Beijing decides to seize Taiwan. The U.S. is obligated to defend it militarily. But U.S. taxpayers would be funding both sides of the war — the home team, via the Pentagon budget, and the Chinese military, through the interest payments on the debt. (We’ll be bankrolling the entire People’s Liberation Army by some point this decade.) A Beijing–Taipei conflict would be, in budget terms, a U.S. civil war relocated to the Straits of Taiwan. Which is why plans for mid-century are of limited value. When the most notorious extreme callous budget-slasher of the age cannot foresee the government living within its means within the next three decades, you begin to appreciate why foreign observers doubt whether there’ll be a 2040, not for anything recognizable as “the United States.”

**Read it all.

Crafty_Dog · « **Reply #278 on:** March 24, 2012, 09:44:24 PM »

Crafty_Dog · « **Reply #279 on:** March 28, 2012, 09:41:49 AM »

New orders for durable goods increased 2.2% in February To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/28/2012
New orders for durable goods increased 2.2% in February, coming in below the consensus expected gain of 3.0%. Orders excluding transportation rose 1.6%, almost exactly matching the consensus expected gain of 1.7%. Overall new orders are up 12.2% from a year ago, while orders excluding transportation are up 8.5%.
The gain in overall orders was led by machinery, civilian aircraft and motor vehicles. Most categories of orders showed gains in February.

The government calculates business investment for GDP purposes by using shipments of non-defense capital goods excluding aircraft. That measure increased 1.4% in February.

Unfilled orders increased 1.3% in February and are up 10.5% from last year.

Implications: New orders for durable goods were up a solid 2.2% in February, showing broad gains across many categories. Orders are up 12.2% in the past year, 8.5% excluding transportation. And remember, this is all in the very early stages of a home building recovery. As housing picks up steam, orders for durables should pick up as well. As a result, we expect more gains in the year ahead. Orders for “core” capital goods, which exclude aircraft and defense, have been running consistently above shipments for the past two years. Unfilled orders for core capital goods are at a new all-time record high and up 9.5% from a year ago. Meanwhile, monetary policy is loose, interest rates are extremely low, and businesses are reaping record profits while they already have record amounts of cash on their balance sheets. Moreover, capacity utilization at US factories is approaching its long-term norm, meaning companies have an increasing incentive to update their equipment. In other recent news on the factory sector, the Richmond Fed index, which measures manufacturing activity in the mid-Atlantic states, declined to +7 in March from +20 in February. The index has been in positive territory, signaling growth, for the past four months. On the housing front, pending home sales, which are contracts on existing homes, slipped 0.5% in February but are up 13.9% versus a year ago. The Case-Shiller index, which measures home prices in the 20 largest metro areas, was unchanged in January (seasonally-adjusted). Nine of the twenty metro areas had price increases. Home prices in Phoenix, which led the pack in January with a 2% increase, are up at a 17.6% annual rate in the past three months. Nationwide, home prices are down 3.8% from a year ago, but we expect a slight increase over the full course of 2012.

Crafty_Dog · « **Reply #280 on:** March 29, 2012, 10:19:15 AM »

Real GDP growth in Q4 was unrevised at a 3.0% annual rate To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/29/2012
Real GDP growth in Q4 was unrevised at a 3.0% annual rate, exactly as the consensus expected.
Business investment was revised up, both for equipment & software and commercial construction. Net exports and inventories were revised down.

The largest positive contributions to the real GDP growth rate in Q4 came from consumer spending and inventories. The weakest component of real GDP was government purchases.

The GDP price index was unrevised at a 0.9% annualized rate of change. Nominal GDP growth – real GDP plus inflation – was revised down slightly to a 3.8% annual rate versus a prior estimate of 3.9%. Nominal GDP is up 3.8% versus a year ago.

Implications: Real GDP growth in the fourth quarter was not revised at all from the prior estimate of a 3% annual rate. However, the mix of growth was more favorable, with business investment revised up and inventories revised down. More business investment means more productive capacity for the future; lower inventories means more room on shelves to fill in future quarters. The new information in today’s report was that corporate profits increased at a 3.5% annual rate in Q4 and are up 7% from a year ago. The gain was all due to domestic activity; profits from abroad fell in Q4. Overall profits, as well as profits from domestic non-financial companies, are both at a record high. Gains in profits and worker income suggest the economy is growing faster than the GDP numbers show. What we produce adds up to GDP, which is the report most analysts focus on. But the government also calculates gross domestic income (GDI), which is supposed to equal GDP. When there is a discrepancy, the government tends to later revise GDP toward GDI. Real GDI grew at a 4.3% annual rate in Q4 and was up 2.4% in the past year, easily beating real GDP of 1.6% in 2011. This suggests growth in 2011 was probably better than 1.6%. It would also help explain why the unemployment rate has been dropping faster than one would expect given modest GDP growth. Meanwhile, nominal GDP was up at a 3.8% rate in Q4 and up 3.8% in the past year, which means that a zero percent federal funds rate is too loose and quantitative easing is not needed. In other news this morning, new claims for jobless benefits declined 5,000 last week to 359,000. Continuing claims for regular state benefits fell 41,000 to 3.34 million. These figures are consistent with a gain of about 200,000 in March payrolls.

G M · « **Reply #281 on:** April 03, 2012, 02:11:25 PM »

Quote from: G M on March 24, 2012, 04:50:31 AM

http://www.ruger.com/corporate/news/2012-03-21.html

, Ruger & Company, Inc. Reports Strong First Quarter Bookings
March 21, 2012
Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for the first quarter 2012, the Company has received orders for more than one million units. Therefore, the Company has temporarily suspended the acceptance of new orders.

Chief Executive Officer Michael O. Fifer made the following comments:

The Company's Retailer Programs that were offered from January 1, 2012 through February 29, 2012 were very successful and generated significant orders from retailers to independent wholesale distributors for Ruger firearms.
Year-to-date, the independent wholesale distributors placed orders with the Company for more than one million Ruger firearms.
Despite the Company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders. Consequently, the Company has temporarily suspended the acceptance of new orders.
The Company expects to resume the normal acceptance of orders by the end of May 2012.
The Company will announce its results and file its Quarterly Report on Form 10-Q for the first quarter of 2012 on Tuesday, May 1, 2012, after the close of the stock market.

http://seriousgun.com/ammunition-sales-soaring/

April 2, 2012
Ammunition Sales Soaring

It’s not just firearms anymore. Ammunition sales are skyrocketing and one of the firms making a huge dent in the pockets of customers is Federal:

Federal Cartridge is the centerpiece of Alliant Techsystems’ commercial division, whose plants nationwide make 21 brands of ammunition and accessories like holsters for non-military customers.

For the last few years, commercial ammunition has been Alliant’s fastest-growing business, fueled in part by Americans’ increased concern over their safety and fears that stricter gun control laws could be ahead, company officials say. The segment’s performance has helped Alliant offset declines in its aerospace and defense segments due to federal budget cuts and the end of the U.S. war in Iraq.

Ammunition is a safe, economic security blanket.

ccp · « **Reply #282 on:** April 21, 2012, 10:39:04 AM »

One liberal who is honest and makes sense:

http://www.usnews.com/opinion/mzuckerman/articles/2012/04/20/mort-zuckerman-president-obamas-economic-programs-have-failed

Crafty_Dog · « **Reply #283 on:** April 21, 2012, 01:15:21 PM »

That was really depressing , , ,

DougMacG · « **Reply #284 on:** April 21, 2012, 07:02:09 PM »

"... in 2010, months into our recovery, growth was about 3 percent, followed by 1.7 percent growth in 2011. The rate for 2012 could be about 2 percent—below the 3.4 percent throughout the postwar period."

It should be 4.5% or greater with this much idle capacity. Growth below 'break-even growth' is not growth in my book.

"private sector hiring through June 2011 was 10 times slower following the passage of President Obama's healthcare bill compared to the prior 16 months."

Unemployment is twice what it should be. You don't ever get it back at this growth rate. The federal budget - same thing. We do not have the internal strength to handle the next external shock. Another term of this and we might jeopardize our economy for more than a century.

We don't need an election win. We need a win with a real mandate for change.

The world does not have a contingency plan for American collapse.

Crafty_Dog · « **Reply #285 on:** April 22, 2012, 12:31:40 AM »

Speaking of idle capacity, IIRC I have been reading of capacity utilization being rather high, with univested profits sitting on the sidelines.

DougMacG · « **Reply #286 on:** April 22, 2012, 07:41:32 AM »

"Speaking of idle capacity, IIRC I have been reading of capacity utilization being rather high, with univested profits sitting on the sidelines."

Yes. I was referring more generally to the quantity of money and workers on the sidelines, not the utilization of factories already built.

Productivity of employed workers I think is at record highs. Improving with each new layoff.

I read in some commentary yesterday we need to be starting 1 million new businesses per year and the current number is 400,000. A couple years back I posted analysis that we need to be starting a certain number(150?) of companies every year that will grow to a billion dollars, bringing with them the employment that entails and the wealth it creates. Instead we demagogue wealth and business, hire new IRS agents to address 'healthcare' and tell our young to go into social work.

G M · « **Reply #287 on:** April 24, 2012, 11:48:24 AM »

This may or may not be the company, but this is where I'd look at investing! Do your due homework before spending a penny.

http://www.planetaryresources.com/

Redefining natural resources.

Planetary Resources is establishing a new paradigm for resource discovery and utilization that will bring the solar system into humanity’s sphere of influence. Our technical principals boast extensive experience in all phases of robotic space missions, from designing and building, to testing and operating. We are comprised of visionaries, pioneers, rocket scientists and industry leaders with proven track records on—and off—this planet.

ccp · « **Reply #288 on:** April 24, 2012, 12:14:27 PM »

GM,
Do you mean personal investing or for the future of the US?

I guess one could invest in something like this for their descendants.

Of course I might live to 200 years old.

G M · « **Reply #289 on:** April 24, 2012, 12:18:31 PM »

Both, perhaps. Our future, if we are to have one, is to be a spacefaring species. There is a near infinite supply of raw materials in space, and the people who make that happen will make Bill Gates look like a minimum wage worker.

Crafty_Dog · « **Reply #290 on:** April 25, 2012, 03:04:41 PM »

New orders for durable goods fell 4.2% in March

Data Watch

New orders for durable goods fell 4.2% in March To view this article, Click Here

Brian S. Wesbury - Chief Economist
Robert Stein - Senior Economist

Date: 4/25/2012

New orders for durable goods fell 4.2% in March, coming in well below the consensus
expected decline of 1.7%. Orders excluding transportation fell 1.1%, also coming in
well below the consensus expected gain of 0.5%. Overall new orders are up 2.7% from
a year ago, while orders excluding transportation are up 5.0%.
The decline in overall orders was mostly due to civilian aircraft, although most
other categories of orders declined as well.

The government calculates business investment for GDP purposes by using shipments of
non-defense capital goods excluding aircraft. That measure increased 2.6% in March
and was up 1.7% at an annual rate in Q1 versus the Q4 average.

Unfilled orders were flat in March but are up 9.7% from last year.

Implications: New orders for durable goods fell an ugly 4.2% in March, the most in
three years, showing broad losses across many categories. A 48% drop in civilian
aircraft orders led the way, which was expected. However, despite the decline in
March, the underlying trend remains favorable, with overall orders up 2.7% in the
past year and 5% excluding transportation. Don’t forget that orders are
extremely volatile from month-to-month and the data we are seeing now reflect the
very early stages of a home building recovery. As housing picks up steam, orders
for durables should pick up as well. As a result, we expect gains in the year
ahead. The details of the report were not as bad as the headline. Shipments of
“core” capital goods were up 2.6% in March, hitting a new record high,
and are up 7.2% from a year ago. Meanwhile, orders for core capital goods continue
to outpace shipments, as they have for the past two years, meaning business
investment will keep moving upward. Unfilled orders for core capital goods are at a
new all-time record high and up 9.7% from a year ago. Monetary policy is loose,
interest rates are extremely low, and businesses are reaping record profits while
they already have record amounts of cash on their balance sheets. Moreover,
capacity utilization at US factories is approaching its long-term norm, meaning
companies have an increasing incentive to update their equipment. In other words,
the large decline in new orders for March does not change our forecast for a
continued recovery.

Crafty_Dog · « **Reply #291 on:** April 25, 2012, 03:34:36 PM »

Hard to describe what ChangeWave is as an investment newsletter. I'm not that impressed with it for picking/timing stocks, but I think it quite good in the material which is the subject of this issue:

========================

April U.S. Consumer Spending Report

Consumer Spending Holds Steady this Month Even as Confidence and Expectations Drop
Jean Crumrine and Paul Carton

Overview: After major upticks over the previous two months, the U.S. consumer
spending growth rate is simply holding steady for April according to the latest
ChangeWave survey results. However, durable goods, household repairs, and autos
are seeing spending improvements. ChangeWave Research is a service of 451
Research.

On a more cautious note, the April 3 – 16 survey of 2,541 consumers
points to a decline in consumer confidence and expectations. And while
inflation and gas prices appear to be stabilizing, the survey shows
consumers are still changing their habits due to the price increases
they’ve encountered in previous months. Travel and vacation spending
have been particularly hard hit.

On the home entertainment front, Apple (AAPL) and Amazon (AMZN) continue to
outperform while Best Buy (BBY) has hit a new all-time low. Among the
major retailers there are few notable signs of change this month.

Whether the sideways growth we’re seeing in April is a temporary
respite before spending heads up again or is the beginning of a new
consumer slowdown is uncertain at this point. While spending remains
unchanged this month, the overall outlook is certainly more mixed.

Consumer Spending Holds Steady

A total of 34% of U.S. respondents now say they'll spend more over the next 90
days than they did a year ago – up 1-pt since the previous ChangeWave
survey in March. Another 26% say they'll spend less, which is 1-pt worse than
previously.

Putting the Findings in Context. As the following chart shows, after upticks
in three of the past four surveys there is no net change this month.

Note that a year ago we also saw consumer momentum flatten out in April,
followed by four consecutive months of decline.

Historically, ChangeWave’s monthly consumer spending surveys have
proven highly accurate indicators of the directional movement of the S&P
500 Index and the overall U.S. economy.

The following chart shows ChangeWave’s U.S. Consumer Behavioral Data
since May 2007 collapsed into a single line (i.e., % of consumers spending
More over the next 90 days minus % spending Less). We have compared the
ChangeWave U.S. Consumer Behavioral Data with the movement of the S&P 500
index:

As the chart shows, ChangeWave’s U.S. Consumer Behavioral Data has been
an accurate indicator of the direction of the S&P 500 Index and the
overall U.S. economy throughout one of the most volatile economic periods of
the last 75 years.

A Drop in Consumer Expectations and Confidence

Consumer expectations with regards to the overall direction of the economy
are showing a downtick for the first time in eight months, while confidence
is registering its second consecutive monthly decline.

Consumer Expectations. A total of 26% now believe the overall direction of
the economy will worsen over the next 90 days, which is 3-pts more than
previously. And while 31% still think it will improve, that’s 4-pts
worse than previously.

Stock Market Confidence. Nearly one-in-three (32%) now say they’re
Less Confident in the U.S. stock market than they were 90 days ago –
8-pts worse than in March. Only 25% say they’re More Confident –
down 11-pts from previously. All-told, we’ve seen a huge net 27-pt
decline over the past two months.

Respondents were also asked about their investing plans going forward, and
the rate of money inflow into U.S. Stocks (+6; down 7-pts) has slowed since
last month. Non-U.S. Stocks (-1; down 3-pts) are once again registering a
money outflow.

The Impact of Higher Energy Costs

Higher energy costs and inflation continue to weigh upon consumers, but there
are some signs of stabilization.

Among consumers who are spending less, Inflation (40%) remains a top reason
why – up another 1-pt since March. Higher Energy Costs (30%; up 1-pt)
is also a top reason for why consumers are spending less, but after a huge
leap last month that does appear to be leveling off.

We also looked at the impact of rising gas prices on actual consumer behavior.

Coping With Higher Gas Prices: Consumers Cut Back on Travel

A total of 36% now say rising prices at the gas pump have caused them to make
changes to their normal routine – up 8-pts since March.

Among this group, we're seeing a serious cutback on normal travel-related
activity, with more than four-in-five (83%) saying they're Consolidating
Multiple Errands into One Trip. And while 43% also report they're Eating Out
Less, other travel-related changes include Working More From Home (22%),
Walking and Riding Bikes More Often (15%), Taking Fewer Long Vacations and
More Weekend Trips (11%), and Changing the Way They Commute to Work (11%).

We asked respondents whether the rise in gas prices has affected how much they
drive.

A total of 8% of consumers now say rising gas prices are Very Much affecting
how much they drive, 2-pts more than a month ago. Another 53% say rising gas
prices are Modestly affecting how much they drive – up another 3-pts
since March.

Has the rise in gasoline prices affected how much you drive?

Despite these increases, the current results are still well below the impact
we saw at the peak of the surge in energy prices back in July 2008, when 12%
said rising gas prices were Very Much affecting how much they drive and 64%
Modestly affecting how much they drive.

We also asked consumers to tell us the impact energy costs are having on their
discretionary spending.

What effect - if any - are energy costs (i.e., gasoline, heating oil, natural
gas, electricity) currently having on your discretionary spending plans for
the next 90 days?

A total of 10% say their discretionary spending will be Much Lower due to
energy costs, which is the same as in March. Another 40% say their
discretionary spending will be Somewhat Lower going forward – a 2-pt
improvement.

Importantly, the impact of rising energy costs on discretionary spending is
considerably less than when oil prices were peaking at $150 per barrel back
in July 2008. Here’s a comparison of the current survey results with
our July 2008 findings:

Individual Spending Categories

In one of the most encouraging findings, a handful of individual spending
categories are showing an uptick, led by durable goods, household repairs/
improvements and autos.

Durable Goods is registering its best reading in 17 months, with 13% saying
they’ll spend more over the next 90 days compared to 20% less – a
3-pt improvement from last month.

For Household Repairs/Improvements this is the fourth consecutive monthly
uptick – with 36% of respondents now saying they’ll spend more
compared to just 13% less – also a net 3-pt improvement since March.

Spending on Automobiles has improved 1-pt since March, and is tied with its
best reading in more than a year.

In terms of other categories, Restaurants and Travel/Vacation are each down
2-pts, while Consumer Electronics has declined 3-pts this month.

Retailer Trends

After its explosive jump a month ago, Apple (AAPL) remains unchanged at its
all-time high in the Home Entertainment retail sector, with nearly
one-in-four (23%) saying they’ll shop there for home entertainment and
computer networking products in the next 90 days.

While Amazon (AMZN; 44%) has experienced a slight 1-pt decline in the home
entertainment market, it’s still the overall leader in this space and
only 3-pts below its best ever reading during the recent holiday season.

Best Buy (BBY; 28%) has declined 1-pt since March to a new all-time low in a
ChangeWave survey.

Amazon and Online Shopping. Recent ChangeWave surveys have shown
Amazon’s momentum can be attributed to multiple factors, including the
rapid consumer shift to online shopping and the successful market launch of
the Kindle Fire Tablet device.

In the current survey we asked shoppers where they’ll be spending their
online shopping dollars over the next 90 days, and we find Amazon continues
to dwarf all other major online retailers in terms of online spending going
forward.

We want to learn more about how Alliance members will be spending their
online shopping dollars over the next 90 days. For each of the following
websites, please tell us if you will be spending more money, about the same
amount, or less money over the next 90 days compared with the previous 90
days.

A total of 19% of respondents say they’ll spend more money online at
Amazon.com vs. just 6% less – a net 4-pts better than three months ago.

Major Retailers. The spending picture for April is mostly flat for the major
retailers, with a couple of exceptions.

Costco (COST) is registering a 1-pt uptick and continues to lead in terms of
overall spending growth.

Bloomingdale’s (M) also shows a slight 1-pt improvement.

Bottom Line: The overall consumer spending growth rate held steady this month
– although durable goods, household repairs and autos managed to
register upticks.

On a down note, the survey shows a decline in consumer confidence and
expectations. And even as concerns over inflation and higher gas prices
appear to be stabilizing, consumers are still changing their behavior because
of the price increases experienced in previous months.

Whether the sideways movement we’re seeing in April is temporary before
spending heads up again or is the beginning of a new consumer slowdown, the
overall outlook is far more mixed than previously.

Summary of Key Findings

U.S. Consumer Spending Holds Steady in April...

• 34% of U.S. respondents say they'll spend More Money over
next 90 days than they did a year ago – up 1-pt since
March

• Only 26% say they'll spend Less Money – but that's
1-pt worse

• There has been no net change since last month

Individual Spending Categories With Momentum

• Durable Goods (+3)

• Household Repairs (+3)

• Autos (+1)

Other Categories

• Travel Vacation (-2)

• Restaurants (-2)

• Consumer Electronics (-3)

...But Confidence and Expectations Decline

Consumer Expectations

• 26% believe the overall direction of economy will worsen
over next 90 days, 3-pts more than previously

• 31% think it will improve, which is 4-pts worse than
previously

Confidence in Stock Market

• 32% now say they're Less Confident in the U.S. stock
market, an 8-pt jump since March

• Only 25% say they're More Confident – down 11-pts

• Money inflow into U.S. Stocks (+6; down 7-pts) has
slowed; Non-U.S. Stocks (-1; down 3-pts) are again registering a
net money outflow

Inflation and Higher Energy Costs

• Inflation (40%) is up 1-pt as a reason why consumers say
they're spending less

• Another 30% say Higher Energy Costs is a key reason why
they're spending less – up just 1-pt since last month

Retail Store Trends

• Costco (up 1-pt)

• Bloomingdale's (up 1-pt)

• Other major retailers are mostly flat for April

Home Entertainment Shopping

• Apple (23%) remains unchanged at its all-time high

• Amazon (44%) is down 1-pt -but is only 3-pts below its
December all-time high

• Best Buy (23%) down 1-pt to a new ChangeWave low

ccp · « **Reply #292 on:** May 01, 2012, 08:48:56 AM »

In progress. Gigantic fortunes to be made (never by me):

The third industrial revolution
The digitisation of manufacturing will transform the way goods are made—and change the politics of jobs too
Apr 21st 2012 | from the print edition

..

THE first industrial revolution began in Britain in the late 18th century, with the mechanisation of the textile industry. Tasks previously done laboriously by hand in hundreds of weavers’ cottages were brought together in a single cotton mill, and the factory was born. The second industrial revolution came in the early 20th century, when Henry Ford mastered the moving assembly line and ushered in the age of mass production. The first two industrial revolutions made people richer and more urban. Now a third revolution is under way. Manufacturing is going digital. As this week’s special report argues, this could change not just business, but much else besides.

A number of remarkable technologies are converging: clever software, novel materials, more dexterous robots, new processes (notably three-dimensional printing) and a whole range of web-based services. The factory of the past was based on cranking out zillions of identical products: Ford famously said that car-buyers could have any colour they liked, as long as it was black. But the cost of producing much smaller batches of a wider variety, with each product tailored precisely to each customer’s whims, is falling. The factory of the future will focus on mass customisation—and may look more like those weavers’ cottages than Ford’s assembly line.

In this section
»The third industrial revolution
Cristina scrapes the barrel
Beyond battlefield medicine
Flip back please
Never again?
Reprints

--------------------------------------------------------------------------------

Related topics
China
Technology
Science and technology
Digital Fabrication
Henry Ford
Towards a third dimension

The old way of making things involved taking lots of parts and screwing or welding them together. Now a product can be designed on a computer and “printed” on a 3D printer, which creates a solid object by building up successive layers of material. The digital design can be tweaked with a few mouseclicks. The 3D printer can run unattended, and can make many things which are too complex for a traditional factory to handle. In time, these amazing machines may be able to make almost anything, anywhere—from your garage to an African village.

The applications of 3D printing are especially mind-boggling. Already, hearing aids and high-tech parts of military jets are being printed in customised shapes. The geography of supply chains will change. An engineer working in the middle of a desert who finds he lacks a certain tool no longer has to have it delivered from the nearest city. He can simply download the design and print it. The days when projects ground to a halt for want of a piece of kit, or when customers complained that they could no longer find spare parts for things they had bought, will one day seem quaint.

Other changes are nearly as momentous. New materials are lighter, stronger and more durable than the old ones. Carbon fibre is replacing steel and aluminium in products ranging from aeroplanes to mountain bikes. New techniques let engineers shape objects at a tiny scale. Nanotechnology is giving products enhanced features, such as bandages that help heal cuts, engines that run more efficiently and crockery that cleans more easily. Genetically engineered viruses are being developed to make items such as batteries. And with the internet allowing ever more designers to collaborate on new products, the barriers to entry are falling. Ford needed heaps of capital to build his colossal River Rouge factory; his modern equivalent can start with little besides a laptop and a hunger to invent.

Like all revolutions, this one will be disruptive. Digital technology has already rocked the media and retailing industries, just as cotton mills crushed hand looms and the Model T put farriers out of work. Many people will look at the factories of the future and shudder. They will not be full of grimy machines manned by men in oily overalls. Many will be squeaky clean—and almost deserted. Some carmakers already produce twice as many vehicles per employee as they did only a decade or so ago. Most jobs will not be on the factory floor but in the offices nearby, which will be full of designers, engineers, IT specialists, logistics experts, marketing staff and other professionals. The manufacturing jobs of the future will require more skills. Many dull, repetitive tasks will become obsolete: you no longer need riveters when a product has no rivets.

The revolution will affect not only how things are made, but where. Factories used to move to low-wage countries to curb labour costs. But labour costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labour, of which the final assembly in China accounted for just $8. Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand. And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020, boosting American output by $20 billion-55 billion a year.

The shock of the new

Consumers will have little difficulty adapting to the new age of better products, swiftly delivered. Governments, however, may find it harder. Their instinct is to protect industries and companies that already exist, not the upstarts that would destroy them. They shower old factories with subsidies and bully bosses who want to move production abroad. They spend billions backing the new technologies which they, in their wisdom, think will prevail. And they cling to a romantic belief that manufacturing is superior to services, let alone finance.

None of this makes sense. The lines between manufacturing and services are blurring. Rolls-Royce no longer sells jet engines; it sells the hours that each engine is actually thrusting an aeroplane through the sky. Governments have always been lousy at picking winners, and they are likely to become more so, as legions of entrepreneurs and tinkerers swap designs online, turn them into products at home and market them globally from a garage. As the revolution rages, governments should stick to the basics: better schools for a skilled workforce, clear rules and a level playing field for enterprises of all kinds. Leave the rest to the revolutionaries.

Crafty_Dog · « **Reply #293 on:** May 01, 2012, 10:22:38 AM »

Very good piece. I am going to paste in on Economics or maybe create a Technology thread on SCH.

The ISM manufacturing index increased to 54.8 in April To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 5/1/2012
The ISM manufacturing index increased to 54.8 in April from 53.4 in March, coming in well above the consensus expected 53.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)
The major measures of activity all increased in April and most remain well above 50, signaling growth. The production index rose to 61.0 from 58.3 and the employment index increased to 57.3 from 56.1. The new orders index also gained to 58.2 from 54.5. The supplier deliveries index rose to 49.2 from 48.0.

The prices paid index was unchanged at 61.0 in April.

Implications: Manufacturing was much stronger than expected in April, with the ISM report beating the estimate of every single one of the 79 forecasting groups polled by Bloomberg. At 54.8, April’s reading was the highest in ten months and has now remained above 50 for 33 straight months. And just in case you still think a double-dip is possible, the new orders index, came in at a stellar 58.2, the highest in a year, suggesting more growth in production ahead. The employment index rose to 57.3, the highest level since June last year, and is consistent with our view of private payrolls rising 175,000 in April. The index level for inventories dropped to 48.5 and is once again contracting. The reluctance of manufacturers to accumulate inventories may hold back GDP in the short term, but we view this reluctance as temporary and indicative of better future growth. On the inflation front, the prices paid index remained at an elevated 61.0 in April. Given the loose stance of monetary policy, this index should move higher in the year ahead. In other news this morning, the Census Bureau reported that construction spending increased 0.1% in March, although it dipped 0.1% including revisions to prior months. The slight increase in March itself was a combination of a 0.7% increase in private construction, while government projects fell 1.1%. The rise in private construction was a due to single-family homes and office buildings; the drop in government projects was led by public colleges.

Crafty_Dog · « **Reply #294 on:** May 04, 2012, 09:52:40 AM »

A Copernican revolution is under way in the global market for corporate bonds.

A system that once revolved around banks willing to "make a market" by matching bids and offers for thousands of fixed-income securities is being overhauled. Wall Street institutions, known as dealers, are being pushed away from the center of the fixed-income galaxy by regulations, market turmoil and financial constraints.

Investors, high-frequency traders and exchange operators are scrambling to replace them in this enormous universe; companies around the world issued more than $1.5 trillion of bonds last year, according to Dealogic.

The battle for the future of fixed-income markets will play a part in shaping the "new Wall Street" of the postcrisis era. The outcome will have a profound impact on companies' ability to raise debt, investors' trading costs and financial groups' profitability.

Banks for decades have placed themselves at the crossroads of buyers and sellers, charging a fee for putting them together. To smooth the process, they would stock up on bonds, which are more difficult to find than shares because they come in a mind-boggling array of issue dates, maturities and interest rates. That way, if a buyer or seller wasn't forthcoming, banks could step in and take the other side of the trade.

The Street's service was akin to the one provided by a wine merchant: Banks held bonds of different vintages in their cellars, or balance sheets. When customers came along, they delivered the bond and charged them for holding it in a safe place. The deals were bilateral, over the phone and not public, but investors felt safe in the knowledge that dealers were there.

This system is being threatened by three forces: the "Volcker rule" that will ban U.S. banks from trading on their own account, more stringent capital requirements, and regulatory efforts to inject more transparency into bond and derivative trading.

The result has been a collapse in the amount of bonds held in Wall Street's cellars. Dealers' inventories of corporate bonds nearly halved in the past 12 months, according to Tabb Group, to around $47 billion, their lowest level in a decade and some 22% below the crisis-time nadir. Wall Street is dumping bonds like there is no tomorrow, starving the market of liquidity.

With banks less willing to make a market and lubricate the system, trading costs have spiked. A large fund manager estimated the gap between the price to buy and sell the bonds for investment-grade bonds has risen nearly 40% since 2007. The corollary is clear: As trading expenses rise, so will the interest rates demanded by investors, eventually increasing borrowing costs for companies.

The lure of juicy revenues and the need to replenish lost liquidity is prompting other players to try to fill the void.

Investors, for one, are trying to trade with one another. The most visible attempt has been the "Aladdin" trading platform being tested by BlackRock Inc., BLK -0.61%which aims to directly match buyers and sellers among pension funds.

Exchange operators and banks have also set up electronic marketplaces to trade bonds without a middleman. And some hedge funds and high-frequency traders are considering setting up old-fashioned phone-based market-making units.

The problem with bonds is that they don't lend themselves to electronic exchanges like, say, stocks and currencies, because of their diversity and relative lack of liquidity. Trading General Electric Co.'s shares is easy, but how about finding exact matches of buyers and sellers for each of GE's 200-plus bonds? Indeed, of the 19,000-plus bonds that traded in the U.S. last year, less than 2% traded every day.

Furthermore, if fund managers are to be persuaded to reveal bids and offers in an open forum, such as BlackRock's platform or an electronic exchange, they will need to believe that the trades will be executed quickly and that declaring an interest in buying or selling won't cause prices to move against them.

Unless someone ensures a smooth functioning of the market, the new initiatives will never take off.

In the long run, perhaps, markets will consolidate around fewer bonds. But in the current fragmented environment, and with liquidity being drained by a shrinking Wall Street, investors and companies have to contend with higher prices and more cumbersome trading.

The revolution in the constellation of fixed-income traders has begun. But as Copernicus knew all too well, the new order, with its bright stars and dying planets, won't be known for quite some time.

ccp · « **Reply #295 on:** May 08, 2012, 09:20:53 AM »

GM scores a three pointer against Wesbury:

http://www.cnbc.com/id/47337188

Crafty_Dog · « **Reply #296 on:** May 09, 2012, 02:52:58 PM »

Washington's can-kickers are lacing up their boots, increasingly confident they will be playing a familiar sport come November. It may turn out to be a dangerous game of chicken instead.

Enlarge Image

CloseREUTERS

Federal Reserve Chairman Ben Bernanke
.The federal budget is headed in less than eight months for what Federal Reserve Chairman Ben Bernanke calls "a massive fiscal cliff." Yet stock markets seem to be operating under the assumption that a postelection, lame-duck Congress will take the sting out of expiring tax cuts and spending restrictions.

It might even seem that economic data are raising the odds of that happening. Following two months of disappointing jobs data, the release Thursday of April budget data from the Treasury Department is expected to see the first monthly surplus in 3½ years. The Congressional Budget Office forecasts it will come in at some $58 billion. Meanwhile, the rolling, 12-month deficit, while still massive at $1.15 trillion, would be the lowest since May 2009.

But a positive budget number would be an island in a sea of red ink caused by the timing of receipts and payments. Another $450 billion or so in deficits are projected for the remaining five months of fiscal 2012, ending in September.

In other words, no improvement is seen between now and then. This will make it difficult to postpone most of the looming budget changes, barring the unlikely event comprehensive reforms of entitlements and popular middle-class tax breaks are agreed upon.

.Equity and debt markets seem diametrically opposed in handicapping the situation. Treasury yields are negative after inflation—hardly a sign of robust growth ahead funded by yet-more government spending.

But equity investors seem unfazed by the economic hit posed by the combined expiring measures, equal to about 4% of gross domestic product. That would result in recession, upending equity analysts' forecasts, which currently predict corporate revenue rising slightly faster in 2013 than this year. That depends on decent economic growth, less likely with austerity.

Of course, much hinges on politics. Citigroup Inc. C -2.78%executive and former Obama budget chief Peter Orszag lamented recently that the most likely option is that no compromise is reached, allowing all the measures to expire.

Equity investors must hope he is wrong or, come January, they'll be kicking themselves.

Crafty_Dog · « **Reply #297 on:** May 09, 2012, 06:09:28 PM »

A newsletter is touting CVD Equipment Corp. (CVV).

Crafty_Dog · « **Reply #298 on:** May 10, 2012, 08:06:50 AM »

The trade deficit in goods and services came in at $51.8 billion in March To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 5/10/2012
The trade deficit in goods and services came in at $51.8 billion in March, larger than the consensus expected deficit of $50.0 billion.
Exports increased $5.3 billion in March, led by fuel oil and a widespread gain in capital goods. Imports increased $11.7 billion, led by consumer goods, oil, autos, and computers.

In the last year, exports are up 7.3% while imports are up 8.4%.

The monthly trade deficit is $5.8 billion larger than a year ago. However, adjusted for inflation, the trade deficit in goods is $1.6 billion larger than last year. This is the trade measure that is most important for measuring real GDP.

Implications: Imports and exports both rose to new record highs in March, but imports increased more than exports, so the trade deficit expanded. Not only was the level of imports the highest on record, but the increase in imports was the most for any month on record, in part a result of a bounce back in shipments from China following Lunar New Year celebrations. The best news in today’s report was that exports to Europe, including the Euro area, hit a new all-time record high. (This is true even if we exclude Germany.) The large depreciation in the exchange value of the dollar in the past decade means the US is a much more attractive place from which to export. That’s why many foreign automakers are increasingly using the US as an export hub. Because productivity is so high, unit labor costs are low in the US relative to other advanced economies. Nonetheless, reviving US consumers still like imported goods, which will boost imports. On net, trade was a neutral factor for real GDP in Q1, but should be a slight drag on growth in Q2. In other trade news today, import and export prices reflect the recent lull in inflation. Import prices were down 0.5% in April and are up only 0.5% from a year ago. Excluding oil, import prices were unchanged in April and are up 0.7% in the past year. Prices for exports are similarly quiet, with overall prices up 0.7% in the past year and 1.2% excluding agriculture. However, given the stance of monetary policy, we expect these products to show more inflation later this year. In the labor market, new claims for unemployment insurance dipped 1,000 last week to 367,000. Continuing claims for regular state benefits fell 61,000 to 3.23 million, the lowest since July 2008. These figures suggest faster payroll growth in May then in March/April.

Crafty_Dog · « **Reply #299 on:** May 21, 2012, 05:10:07 PM »

Monday Morning Outlook
________________________________________
The Plow Horse Rolls On To view this article, Click Here
Brian S. Wesbury - Chief Economist
Bob Stein, CFA - Senior Economist
Date: 5/21/2012
Turn on the television, pick up the newspaper, search the Internet and you will find story after story about Greece, JP Morgan, austerity, the labor force, student loans, California, the G-8, or the Facebook IPO. Just about every bit of the coverage is negative.
Replace that list with Tunisia, Egypt, China, oil prices, foreclosures, deleveraging, and Ireland; or Dubai, tsunami, earthquake, copper, Baltic Freight Index and Portugal…and you get the picture. For three years, the news has been relentlessly bearish.

And yet, amid all this, our “plow horse economy” keeps moving forward – through the stumps and rocks and mud. It’s certainly not I’ll Have Another, who, with one more win, can take the Triple Crown – a measure of strength, courage and greatness. But it ain’t headed for the glue factory either.

Consumer spending is at a record high (whether measured on a real or nominal basis). Retail sales were up in April for the 21st time in the past 22 months. In terms of consistency, this rivals the 1998-99 streak of 16 straight monthly gains, a period everyone looks back on as a boom. Real (inflation-adjusted) retail sales are up 4% from a year ago. If this is the new normal, let’s have more of it.

Private payrolls are up 26 consecutive months, hours of work are rising, and consumers’ financial obligations are the smallest share of income since 1984. No wonder sales of autos and light trucks are up almost 10% from a year ago.

Meanwhile, business investment is soaring. While overall industrial production is up a robust 5.2% from a year ago, the production of business equipment is up a stellar 12%. This is why we believe productivity growth, which has slowed down the past couple of years, is destined to get a second wind.

Capacity utilization hit 79.2% in April, equal to the average of the past twenty years. What this means is that firms have an increasing incentive to build out capacity by investing in plant and equipment. At the same time, profits and balance sheet cash are at record highs. In other words, prospects in the business sector look good.

And, despite all you hear about banks not lending, commercial and industrial loans are up 13.6% in the past year. The story about banks not lending to companies is getting very stale, the bottom for these loans dates back to late 2010.

And to top it all off, housing is clearly on the mend. Starts are up 30% from a year ago. Every major region of the country shows growth in the past twelve months, for both single-family and multi-family homes. Residential investment (home building) has been a positive factor for real GDP growth in each of the past four quarters and looks poised to do it again in Q2.

What we have on our hands is a sustainable, self-reinforcing economic recovery. It could be better. What’s holding it back is bad policy choices coming out of Washington, DC. Government spending is robbing the economy of potential and uncertainty about future taxes and regulation is a wet blanket.

Amazingly, the plow horse keeps moving forward. That’s the real news here - unending pessimism being defeated by the American entrepreneurial spirit.

News:

Author Topic: US Economy, the stock market , and other investment/savings strategies (Read 484316 times)