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  • U.S. Economy

  • We Want to Hear From You: Are You Preparing for a Double-Dip Recession? The "pause" button has been hit on the U.S. economic recovery, fueling worries that we're headed for a double-dip recession.

    "We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," Former U.S. Federal Reserve Chairman Alan Greenspan said in an interview on NBC's "Meet the Press" broadcast Sunday.

    Greenspan touched off speculator interest in a double-dip downturn when he announced that a further decline in home prices could push the economy toward a new recession.

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  • Flat Consumer Spending and Declining Factory Orders Point to Slower Economic Recovery Consumer spending in the United Sates was flat in June and personal savings were the highest in a year, underscoring how unemployment continues to hamstring the U.S. economic recovery.

    Separately, U.S. factory orders fell by more than expected in June from May, and pending home sales continued to plunge as the expiration of a government subsidy for first-time homebuyers depressed housing market activity.

    Taken together with the gross domestic product (GDP) data for the second quarter, the latest string of reports shows a U.S. economy that is drawing closer to a double-dip recession.

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  • Taipan Daily: Zero-Interest-Rate Market Investments We all know the economy has a tough row to hoe... We're facing severe unemployment. Almost 50% of those unemployed have not been able to find a job in six months. We've also seen huge bankruptcies over the past two years, such as General Motors, CIT Group and Lehman Brothers, and more than 100 banks have either closed their doors or have been seized by the FDIC in the past year alone!

    That's why the Federal Reserve has kept rates at near zero for more than a year and a half, and supported all types of stimulus measures.

    We're nowhere near out of the woods yet, and that leaves us to contemplate a "new market."

    With all the... Read More...
  • Insights on ECRI: Is This Stock-Market Prophet Calling for a Double-Dip Recession? The Economic Cycle Research Institute - referred to as the "ECRI" by anyone in the know on Wall Street - has correctly called every U.S. recession during the last 45 years.

    To work its magic, the ECRI charts the weekly changes in an index of Leading Economic Indicators (WLI). Market professionals like myself very quietly use the same group of indicators to call market tops and bottoms. The indicators are so accurate in terms of what they have to say about the future that I refer to ECRI and the WLI as "The Prophet."

    Given the Prophet's 100% hit rate over the last half century, investors should definitely take heed of the warning signals that this economic seer of seers is making right now.

    To see if the ECRI has labeled this as a "double-dip" recession, please read on...

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  • Wall Street's Mood Shift Is Signaling a Profit-Making Price Push Ahead A mood of mild optimism has begun to spread down Wall Street not long after there was nothing but long faces. Fancy that.

    More good news out of Europe, better-than-expected new home sales, and the latest of a solid second-quarter earnings season has helped resuscitate the animal spirits that were missing in action since the spring.

    Stocks rose past some key milestones in their historic July over the past week, pushing the Dow Jones Industrial Average just barely into positive territory for the year. It was a very professional, low volatility rally this week, a welcome change from the intra-day dramatics that had put everyone on edge lately.

    What has really changed from the point of view of government policy or corporate results? Nothing and everything.

    To find out what’s changing on Wall Street, click here.
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  • China Leapfrogs Japan and is Now the World's No. 2 Economy – And is Gunning for the No. 1 United States As the old Avis rental car slogan used to say: "When you're No. 2, you try harder."

    With the growth rates that its economy has turned in the past few years, no economist could ever accuse China's leader of not trying hard. China now claims to have jumped over Japan to take over the No. 2 spot in the world economic pecking order.

    China's next target: The No. 1 U.S. economy.

    In fact, some experts believe that China could catch up to the United States' $14.4 trillion economy in as little as 10 to 15 years.

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  • How to Pick Stocks in the 'New Normal' Economy In today's potentially ultra-slow-growth "New Normal" economy, old stock market multiples do not apply.

    In fact, investors who rely on long-held rules about Price/Earnings (P/E) ratios when they buy and sell stocks are risking a pretty big "haircut:" They may be overvaluing some of their stocks - and the stock market in general - by 17% to 20%.

    Let's take a closer look...

    To understand how to value stocks in the "New Normal" economy, please read on...

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  • History Gives a Reason to Be Hopeful about U.S. Stocks Volatility has hamstrung U.S. stocks recently, but history suggests there's a reason for hope on the horizon.

    The past week and a half has been a welcome reprieve from the extreme volatility we've seen over the past few months. There have been no fewer than 19 days this year in which up or down volume has accounted for more than 90% of total volume.

    The rapid up-and-down, all-or-nothing nature of the stock market has confounded even the most talented, highly paid and well informed traders. The hedge fund industry as a whole has been caught flat-footed - posting losses in each of the last two months.

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  • Defensive Investing: Beware of Municipal Bonds Of the speculative excesses that misguided monetary policy and a prolonged recession has caused, the one that poses the most danger to investor wealth is the financial bubble in state and local municipal bonds.

    Municipal bonds - usually referred to as "munis" - are very popular portfolio plays because of tax advantages that, in effect, enhance their rates of return. There's also an allure because of their local nature: Investors can invest in specific bond issues that provided the money for projects such as schools, highways, bridges, hospitals or housing that actually affects the community in which the investor lives. That makes them a very tangible investment.

    But there's a problem.

    State-and-local-government finances have taken a bigger beating during this economic downturn than during any other recession since World War II. Even worse, that beating came after the easy money available during this stretch encouraged those same governments to venture well beyond any reasonable limits in terms of their borrowing. They're now stuck with a bigger-than-warranted debt load - which can't be covered by the property tax stream that's been reduced by record-level housing defaults.

    The bottom line: At the present time, "munis" may not be the benign - or even alluring - investment that they've been in the past. In fact, thanks to continued fallout from the worst financial crisis since the Great Depression, some munis may be more akin to bombs than bonds - ticking away and just waiting to blow up your portfolio.

    To understand why "muni" bonds may be dangerous, please read on... Read More...
  • What Can 1962 Tell Us About Today's Stock Market? We dove into market history a lot recently with studies of the 3%+ up day a couple weeks ago as well as a look at the growth rate of the index of Leading Economic Indicators. The takeaway: History suggests there are grounds for being optimistic about the stock market.

    Now here's a new reason for optimism: The current situation bears a striking resemblance to the 1962 summer stock market rebound.

    Here's the scoop: In early 1962, a head-and-shoulders pattern emerged that looked very similar to the one that appeared to have taken shape in April-June this year. When the neckline of the pattern was violated in April 1962, stocks fell like a ton of bricks into a June low that was ultimately 27% lower than the January 1962 high.

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  • How to Profit From a Slowing U.S. Economy In the Second Half of 2010 As much as the architects of the U.S. stimulus might otherwise wish, it's becoming increasingly apparent that the U.S. economy won't be hot-rodding its way into a higher gear in the year's second half.

    At best, the U.S. economy will chug along in low gear - managing only minimal overall growth, while bouncing over economic speed bumps that exist in more than a few key sectors. At worst, the engine of economic recovery will sputter, or stall completely - leaving Americans stranded alongside the fiscal roadside, or to roll backward into a double-dip recession.

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  • Is the U.S. Economy Destined for Deflation? With inflation low and the recovery waning, a growing chorus of analysts is beginning to suspect that U.S. policymakers aren't doing enough to head off deflation.

    U.S. producer prices fell for a third straight month in June, sliding 0.5%. That follows declines of 0.1% in May and 0.3% in April. Core inflation, which excludes food and energy costs, managed only a 0.1% increase for the month, and is up just 1.1% in the past 12 months. The U.S. Federal Reserve's preferred target for inflation is 2%.

    Meanwhile a high rate of unemployment continues to jeopardize the U.S. recovery, and economists fear that a significant drop in economic growth could tip the scales toward a deflationary spiral.

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  • The Seven Golden Rules That Will Keep You Safe in Today's 'New Normal' Markets Pundits are talking about the "New Normal," a not-so-subtle hint at the sub-par growth that's expected from the U.S. economy.

    Those pundits have picked the right book. But as far as investors are concerned they're reading from the wrong chapter. The "New Normal" isn't just about the economy. It's an epic story about not-so-great expectations - for the financial markets.

    And - unlike its Dickensian counterpart - this tale doesn't have an especially happy ending.

    For the seven rules that will let you profit in "New Normal" markets, please read on... Read More...
  • The BP Relief Wells … And the Two Nightmare Scenarios to Fear Although the global energy sector is entering its most-promising stretch in decades - with more new technologies and more investment opportunities than ever before - I just can't seem to get away from BP PLC (NYSE ADR: BP) and its problems.

    Take last Thursday, for instance. I began the day at FOX Business News, where the interviewer wanted me to explain what will happen if the BP relief wells fail. Then I spent an hour as the guest on a radio talk show from Johannesburg, South Africa, detailing what options are available to BP. Later still, I served as a consultant to a Wall Street investment crew - via conference call - once again on the status of the BP relief wells.

    The BP relief wells are right now the dominant topic on everyone's mind. But there are two potential scenarios - of "nightmare proportions" - that investors need to know about.

    Let me explain...

    To understand the possible nightmares that BP faces in the months to come, please read on... Read More...
  • Alcoa Earnings Surprise is Positive News for Global Economic Recovery When Alcoa Inc. (NYSE: AA) kicked off earnings season on Monday by soundly beating analysts' expectations, it flashed positive signals for the company and, more importantly, the entire global economic recovery.

    The aluminum giant swung from a loss of $0.26 in the same quarter last year to a gain of $0.13 per share, exceeding by 18% the 11-cent average estimate of 17 analysts surveyed by Bloomberg News.

    "It's a very positive signal for economic growth and the stock market generally," John Stephenson, who helps manage $1.6 billion including Alcoa shares at First Asset Investment Management in Toronto, told Bloomberg. "Maybe end-use demand has not been destroyed. That's a very good sign and a great way to start off this Q2 earnings season."

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