Tuesday, November 5, 2013

If You're Keeping Score...L&C

The fiscal year just ended and the Obama administration is hailing the large reduction in the deficit to $680.3billion, as if it was forgotten that this figure is added to the nation's total which is over $17trillion with a Capital T. How amazingly sad it is that our leaders can crow about this. I thought you got to brag when you won something and in this case, it would be a surplus. I could even see a moral victory with breaking even. By the way this is the first time that Obama has had deficits under one trillion.
One other thought about the above info: was it Obama or the Sequester that achieved a lower deficit?
Nevertheless, we have a new fiscal year; let me add up the credits and debits.
A big plus is in the stock market with new highs in the Dow and S&P 500. NASDAQ continues to rise, although it has a long way to go to get back to the highs, but it is very close to 4K.
Unemployment, a figure to which I disagree, is down to 7.3% and jobs are being created.
Inflation is low, but here again, I disagree with the way it is calculated.
The government allowed social security a 1.5% raise for the cost of living increases. This is also manipulated, but something is better than nothing which is exactly what recipients received in 2010 and 2011.
Housing has stabilized and prices have increased three straight years.
Car sales will exceed 15million this year which is quite an accomplishment.
In the global outlook, China claims it had a 7.8% GDP increase. Spain had its first plus quarter in years. Iceland has recovered and Germany continues to be an export machine with low unemployment. Yes, even Greece says it can see a light in the tunnel.
Although the stock market is at new highs, the trading volume has declined four years in a row and with double digits. If you look at two important indicators, the Baltic Dry Goods and Copper, you will find a different outlook.
The $BDI is down to 494 and in the growth years it was over 4K. It had rallied to 2127, but in the last few weeks, it has come straight down. Not good. Dry good shipping is in essence, all commodities which indicates a broad decline in the global GDP. Doctor Copper is down to $3.29, but this figure represents a two year decline, straight down, from $4.60. This effects housing and almost everything else which is why copper has a PHD in economics.
Unemployment forgets that 12million people have given up looking for work. The government does not count them, but they are out of work. This means unemployment is 19%. The agencies that release this data is the most manipulated and corrupt within the government. Consider this aspect: A report on middle class wages. Middle class pay falls between $14-21 dollars per hour and because of the recession, 60% of these jobs were lost. This report went further to say that only 27% have been recaptured.
Car sales are good, but people have been putting off new car purchases because cars are priced too high. The reason car sales are so good is the fact that the average car on the road is over 11 years in age. They had no choice, but this means a scale back in other areas, especially since gasoline is so high. People in Europe will dismiss Americans complaints over gas prices because there, prices are twice as high. However, they get full medical for their taxes while we get Zip.
Housing prices have reached $168K, but they still are $50K short of peak. Consider all the government and the Fed have done to help the industry which is at the crossroads due to price increase and possible rate increases. Not good. One other indicator is the home builders index($DJUSHB)and it is below its 200 day moving average and within 2 points of its 50 day moving average at 424. Keep in mind if interest rates were to rise, this could drop like cement in a river.
The COLA increase for social security shows how false the government reports on inflation within our economy. They don't include food and energy which always go up, but other things like child care, education and insurance.
The global info looks good, but can you believe China's results? Also, the light in the Greek tunnel is the color of money because they indicated that they will need more money from the EU in 2014 and more money from the IMF in 2015. I wish there was a map to show me the way to this tunnel.
Finally, JPMorgan released a future GDP report on the US economy. It stated that it sees only 1.75% growth rate for the next decade. Keep in mind that this figure represents average growth which means there will be down years or another recession. I see a big correction coming in the stock market, but that is me and you can read the tea leaves any way you desire. However, when you couple this report with the aspect that no matter who is running the show in Washington, our government has failed to balance the budget for 25 years and all we have accomplished is violate the concepts of Jefferson, to which he felt it was a crime to pass on your debt to future generations. As the debt figures continue to grow, the global community will develop fears about our ability to pay our debts and talk of ending the dollar as the world's reserve currency could arise and that would devastate our economy if we lost that status.
Liars & Crooks: the first day of the newly raised debt ceiling saw our government spend a record $328billion, which means that the government took that much money from funds illegally and they were ready to take more if they needed it. This is putting citizens benefits in jeopardy.