Category

U.S. Economy

market rally

Stay Away from This Irrational Indulgence

When I see the market rally mindlessly – as it did on Friday, after the jobs report pushed the jobless rate down to 5.4%- I ask myself a set of questions like the following.

Do investors really think it's going to matter if the Fed raises interest rates by a quarter of a point in September instead of June? Do they really think it's normal that €3 trillion of European debt is yielding less than zero? The Swiss National Bank (Switzerland's Federal Reserve) owns $100 billion of stocks…Is that considered normal?

I can't be any more direct than this - sometimes the plane hits the ground before people have a chance to parachute to safety. Investors trying to ride this market to the bitter end are going to find the end is bitter, indeed...

Economy

Here's How Bad Job Layoffs in the U.S. Are Now

Job layoffs in the U.S. soared 68% in April. Low oil prices pressured companies across all sectors to trim headcount.

U.S.-based employers announced a whopping 61,582 job cuts last month. That was up from 36,594 in March. It was also 53% higher year over year, when the job cut tally was 40,298.

Check out this list of employers that are slashing scary high amounts of jobs from their payrolls...

U.S. economy

10 People to Blame for the 2008-2009 U.S. Stock Market Crash

The 2008-2009 U.S. stock market crash saw the Dow Jones Industrial Average plunge 54% in 17 months.

Housing prices fell 30% from their 2006 peak. The unemployment rate doubled from 5% (7 million Americans unemployed) pre-crisis in 2008, to 10% by the end of 2009 (15 million). And U.S. debt rose from 66% gross domestic product (GDP) to 103% from 2008 to 2012.

To blame was a systemic breakdown that encompassed Wall Street and Washington.

We like to call it the "Washington-Wall Street Corruption Corridor" - and these ten players had key roles...

From Complexity to Chaos, From a Trickle to a Flood

As a volatility trader, I loved seeing stocks drop 2% last week after having risen 3%. But as a credit trader and student of market behavior, I know all too well that this type of volatility is a forecast of stormy seas ahead.

Markets were disturbed last week by more evidence that the economy is weak, in spite of the fact that a steady stream of lousy economic news this year has done little to prevent stocks from reaching new highs.

With first quarter GDP increasingly likely to come in at well below 1% - a number that certainly can't be blamed on the weather alone - investors are now starting to sweat. Here's what they'll do next...

The Fed

Use This Strategy to Profit Before the Markets Head South

For the last six months, I have been warning that economic growth is faltering. In November of last year, I predicted that the U.S. economy would experience a "growth scare" in 2015.

This week, we learned that the Atlanta Fed is tracking first quarter GDP growth at a mere 0.3% and that the Federal Reserve's Open Market Committee (FOMC) has significantly downgraded its growth forecast.

Bond yields have plunged and commodity prices have collapsed. Only stocks have failed to figure out that low growth is a recipe for coming disaster.

The Week in Review

Equities Are Riding High on Thin Air

I am often asked by the investors in my funds, "When will markets finally start paying attention to the signs of weak economic growth?" I tell them that the consensus answer is that bull markets only end when the Fed starts aggressively raising interest rates.

I also tell them that when interest rates are at zero, as they have been for the last seven years, the normal answer may not apply. In the meantime, stocks keep hitting new record highs while bonds and commodities are telling a very different story about the state of the economy…

Full Story

U.S. economy

With 40% of Americans One Bill Away from Financial Disaster, What's Next?

Despite hundreds of billions of dollars in bailout money and U.S. Federal Reserve stimulus, the U.S. economy is still not working very well for the average American.

According to a survey by Bankrate.com, 40% of Americans say they are just one big bill away from financial disaster. That tells Money Morning Chief Investment Strategist Keith Fitz-Gerald that the government's efforts to rescue the U.S. economy have failed.

He said there's one figure he's watching this week that will show if there's much hope for Main Street at this point...

In This Market, Don't Drink the Kool-Aid

Stocks hit new records last week as central banks around the world continued writing checks to prop up still struggling economies, the price of oil stabilized, Vladimir Putin lured the West into a phony truce in the Ukraine, and Athens and the EU tried to pretend that Greece isn't hopelessly insolvent or that it even matters if it is or isn't.

In other words, investors were once again all too willing to ignore economic reality and drink the Kool Aid being served by central bankers and politicians.

We might as well call this the "Jonestown Market" because the cult leader Jim Jones could just as easily be handing out paper cups filled with colored water and investors would be swilling it down...

U.S. Economy

2015 Layoffs Blow the Cover Off the Job "Recovery"

Just over a month into the new year, and the 2015 layoffs are already mounting.

What gives? The economy is recovering. The unemployment rate rests at a six-year low of 5.6%. And sinking gas prices have stoked consumer confidence.

The job cuts are evidence that the touted job recovery has been artificially inflated.

Here's a look at 12 recent job cuts across several sectors and what's behind them...

U.S. Economy

Deflation in 2015? These Four Charts Say Yes

Deflation in 2015 seems to be upon us. And while falling prices might seem like a good thing, deflation can wreak havoc on the economy.

In a deflationary period, prices will drop, corporate profits will dry up, wages will shrink, and all of this will reinforce the conditions of recessions.

These four charts show that the U.S. has a real deflation problem now...

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