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U.S. Economy

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...

Jobs

The Scary Wage Growth Story in the December Jobs Report

The December jobs report released today (Friday) by the U.S. Department of Labor highlights what’s missing in the job market’s recovery: wage growth.

According to the report, the United States added 252,000 jobs last month, ahead of consensus estimates of 240,000. That was enough to push the unemployment rate down to 5.6%.

But those impressive numbers were not enough to distract from the bigger story of falling wages…

Jobs

October U.S. Jobs Report Shows a Scary Truth About Wage Growth

Historically, low unemployment has led to faster wage growth. But that hasn’t been the case over the last six years.

The October U.S. jobs report shows the unemployment rate is down – but wage growth does not look good.

Here's what that means for our economy.

Stock Market Today

Stock Market Futures Love Today's Fresh Unemployment Data

Stock market futures rose Friday morning following strong October unemployment data. Watch for the report to positively affect markets throughout the day.

Here are today's other top stories, including stock news for RIG, ANF, DIS, and more...