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- Fiscal Cliff 2013: How Investors Can Prepare
- Disastrous U.S. Jobs Report Pummels the Market
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- Big Banks May Be Forced to Buy Back Bad Mortgage Loans
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Economist Steen Jakobsen just issued a sobering warning for investors who are feeling euphoric about the “Trump bump”: Don’t get too comfortable.
In fact, Jakobsen believes a recession is “more likely than not” to occur.
Pundits and analysts make new calls for a recession every year. But this time, there's a warning sign backing up their claims.
An economic recession in the U.S. could be right around the corner. This one chart of your tax data shows why.
First-quarter earnings season got underway in earnest this week and the overall outlook for S&P 500 companies is glum.
That's left investors asking us "what is an earnings recession and is this one?"
The new rules from the U.S. Treasury and Congress on tax inversions will hurt U.S. corporate profits.
The Allergan/Pfizer deal makes these problems clear.
The Dow Jones Industrial Average is off nearly 13% from its May highs. And the Nasdaq is down 17% from its July highs. The steep drop in the major indexes has investors worried about a recession in 2016.
But first, what is a recession?
A recession is two consecutive quarters of negative economic growth, which is measured in gross domestic product (GDP). Our last major recession was in 2008.
Recent events only add to speculation that we're headed for a global recession as soon as 2016.
Here U.S. Global Investors CEO Frank Holmes looks at how previous recessionary periods have affected stocks.
The government keeps telling us that the economy has turned a corner, that growth is picking up, that people are going back to work, that consumers are more optimistic. But we've got cold, hard numbers that tell an entirely different story...
From April to June, gross domestic product (GDP) in the ailing Eurozone region withered 0.2%.
That compares to the prior three months where there was no growth as the area was besieged by the ailing economies of Greece, Italy, Spain and Finland, which all sharply contracted.
"[The contraction] confirmed that the Eurozone is to all intents and purposes in recession, even if it has avoided the technical definition of two successive quarters of negative quarter-on-quarter GDP," Howard Archer, an economist at IHS Global Insight wrote in a note to clients.
The only thing preventing the Eurozone from contracting more in the second quarter and falling back into its second recession in three years was a buoyant economic performance from Germany.
Healthy investment and domestic consumption boosted the German economy and helped it grow 0.3% in the second quarter, topping expectations of 0.1%. The Netherlands also beat expectations, reporting growth of 0.2% for the quarter.
Meanwhile, French GDP didn't budge, sidestepping a highly anticipated contraction.
The fiscal cliff is a real crisis looming at year's end. The fragile U.S. economy could face an unparalleled fiscal punch of as much as $720 billion if the scheduled changes go through as planned. They include the Bush-era tax cuts set to expire Dec. 31 and billions of dollars in programmed federal spending cuts.
U.S. Federal Reserve Chairman Ben Bernanke has warned that shocks from such changes will most likely cause the economy to contract, causing a recession.
And without cooperation from Congress, there's no alternate route for the U.S. economy to take.
Ernie Gross, Ph.D., MacAllister Chair and professor of economics at Creighton University, told Forbes, "The fiscal cliff is an almost 100% certainty."
American businesses in May added the smallest number of workers in a year, only 69,000 - less than half of the median analysts' estimate of 150,000.
The unemployment rate unexpectedly ticked up from 8.1% to 8.2% as job seekers returned to the workforce, the Labor Department report revealed.
In addition, revisions from previous months showed the economy gained fewer jobs in March and April than originally believed. March's employment numbers were reduced by 11,000 jobs to total 143,000, while April's plunged by 38,000 to total a lousy 77,000.
The disappointing numbers cast doubt on the strength of the U.S. economic recovery, and also overshadow any evidence that the labor market is improving.
The news sent the Dow Jones tumbling some 160 points on the open and more than 220 points by noon, with the other indexes following. While many traders were anxious to see May end, June hasn't started off in the right direction.
"Yuck, this is really not good," Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust, bluntly told Bloomberg News. "We're at a very precarious point right now as far as investors' psyche is concerned."
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I can't say I am entirely surprised.
As prices for "must haves" like gasoline and food continue to rise, consumers are digging into their savings to cope. This is not small potatoes, given that the average family saved a mere $38 out of every $1,000 in take home pay last month, according to the U.S. Commerce Department.
I can't help but have huge concerns about Team Bernanke's plan; no amount of stimulus is going to overcome the struggle most families are having - which is to boost savings and shed debt.
Here's the thing... if consumers can't save, then they can't buy. And if they can't buy, they can't build up the nation's wealth, which is predicated on consumer spending.
All three sets of figures in isolation really don't tell you much. But when taken together - spending, income, and GDP - they suggest our economy is too weak to put millions of Americans back to work, much less in jobs for which they are appropriately qualified.
So, from this mushrooming roster of new ETFs - now covering virtually every market sector, both domestic and international - how do you select the right one (or, more likely, ones) for your portfolio?
If you're not already familiar with ETFs, here are four reasons why you should consider adding some balance to your portfolio.
In the latest effort, a group of investors with roughly $500 billion invested in 2,300 mortgage securities is trying to force the large banks that originated or are now servicing faulty subprime-mortgage loans to repurchase or modify them, The Wall Street Journal reported.
Some investors "had no idea that their money was being invested in mortgage-backed securities," Dallas-based attorney Talcott Franklin told The Journal. "And yet somehow these people are now the ones being punished, and that's just not right."