Gary D. Halbert

  • "BREXIT" - Should They Stay Or Should They Go?

    The citizens of Great Britain will make a monumental decision that will be felt worldwide if they vote to leave the European Union (EU) next week on June 23. If the Brits vote for “Brexit” it could eventually lead to the end of the EU and the euro. It could potentially lead to serious turmoil in the world financial markets in the days and weeks following the referendum if the vote is to leave.

    Yet if Brexit passes, it does not mean that Britain will leave the EU immediately. We are told that there will be a transitionary period which could last a year or longer. Maybe this will limit the potential turmoil in the markets, but that’s far from certain. In any event, I think most Americans should understand the long-range implications of next week’s key vote.

    I have read a great deal about what may happen if the Brits vote to leave the EU. It is clear that Brexit is part of a groundswell of dislike around the developed world for all things “Establishment.”  This growing trend also explains in part why characters like Donald Trump and Bernie Sanders did so well in the election primaries.

    To help us understand these trends and the important implications, I have chosen to reprint a very good analysis on this subject today. It appeared in TIME Magazine online last Friday and is written by Frank Luntz.  Mr. Luntz is a well-known political analyst, professional pollster, author and contributor to CBS News and the Fox News Channel among others.

    You should read it. I will be writing more on this key topic in the weeks and months ahead.

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    Posted to Forecasts & Trends by Gary D. Halbert on 06-15-2016
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  • More Young Adults Live With Parents Than Ever Before

    A new report from the Pew Research Center this week found that American adults aged 18 to 34 were more likely to be living in their parents’ home than living with a spouse or partner in their own household. The report, based on Census Bureau data...
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  • Fed: Almost Half of US Households Have Under $400 Saved

    We begin today by looking at the recently released Federal Reserve study on the economic conditions of 50,000 randomly-selected US households. This annual survey attempts to capture a snapshot of the financial and economic well-being (or not well-being) of US households. Let me warn you upfront that some of the findings are really bad.

    Following that discussion, I will reprint a recent study by FORBES which concludes that Americans who make over $100,000 pay almost 80% of all federal income taxes. That’s right. According to IRS data, Americans earning over $100,000 paid 79.5% of federal income taxes for 2014. This proves that top income earners pay more in income taxes than those who earn less.

    Finally, I have two great opinion pieces in SPECIAL ARTICLES at the end that everyone should read, regardless of who you will be voting for in November.

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    Posted to Forecasts & Trends by Gary D. Halbert on 05-31-2016
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  • Gun Sales In America Hit Another Record In March

    Sales of firearms in the US hit an all-time record in March, but that’s not really a surprise since monthly sales of guns have broken the previous record for 11 consecutive months . This year (2016) is widely expected to be the largest year for...
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  • Second-Longest Bull Market Ever, Yet Investors Remain Skittish

    If the US stock markets don’t collapse between now and Friday, this will be the second-longest bull market on record. Really. The current bull market began in March 2009 and will have lasted for 2,608 days (7.2 years) on Friday. If so, it will top the former second-longest bull market which ran from 1949 to 1956 (2,607 days). That’s quite impressive.

    Yet despite the stock market’s very impressive returns since the end of the Great Recession, American investors have unloaded stocks at a near-record pace. According to a new Gallup poll, only just over half of American households say they currently have any money invested in the stock market, matching the lowest ownership rate in the poll’s 19-year history.

    The latest Gallup poll found that only 52% of American households have any money invested in stocks (individual stocks, equity mutual funds, ETFs, etc.), down from a high of 65% in late 2007. Unfortunately, young people are the ones with the lowest investment in stocks. There’s a lot to talk about on this subject.

    Yet before we get to that discussion, I want to bring to your attention a new report which found that almost half (45%) of Americans now pay zero in federal income taxes, according to the Tax Policy Center. The reasons may surprise you. Let’s get started.

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    Posted to Forecasts & Trends by Gary D. Halbert on 04-26-2016
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  • The Unprecedented Real Estate Bubble In China

    Most economists and financial writers agree that the US has the strongest economy among the developed nations, even though we’re only growing at about 2%. Despite the slow growth, most don’t believe we are facing a recession anytime soon. However, most economists and financial writers also agree that a serious external shock could quickly throw the US economy into a recession and take most of the rest of the world with it.

    The question is, what kind of a shock might it be? Some point to Greece, others to Brazil, both of which have flirted with bankruptcy. Others worry about a hard landing for China’s economy, which some fear would be enough to throw the US economy into a recession.

    Yet there is another totally different risk in China that most Americans know nothing about. It’s the bubble in Chinese real estate. Chinese citizens are up to their eyeballs in real estate and almost nothing else. Prices have skyrocketed in recent years into what some are calling a giant bubble.

    If that bubble bursts and home prices plummet, millions of Chinese would see their net worth evaporate.

    This problem is much larger and potentially more devastating than most economists and forecasters realize. My clients and readers need to know about this, so that’s what we will talk about today. But before we do, let’s take a look at the latest economic news out of China from last Friday.

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    Posted to Forecasts & Trends by Gary D. Halbert on 04-21-2016
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  • Emerging Nations Continue To See Huge Capital Outflows

    If you are wondering why the global economy struggled last year and so far this year, one only has to look at the trend in capital flows of emerging nations. After decades of positive capital inflows to most emerging economies, that trend has reversed sharply in the last few years.

    Net capital outflows from emerging markets (EM) weren’t just bigger than expected last year, there’s more pain to come this year, according to the Institute of International Finance (IIF) which monitors such data.

    Emerging markets faced a whopping net $735 billion in net capital outflows in 2015, the IIF, a global financial industry association, reported earlier this year. In October of last year, the IIF had projected $540 billion in net outflows in 2015, the first significant net negative figure since 1988. But in the end, the total outflow was almost $200 billion higher.

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    Posted to Forecasts & Trends by Gary D. Halbert on 04-12-2016
  • Fed Leaves Rates Unchanged, Cuts Number of Rate Hikes Ahead

    As was widely expected, the Fed Open Market Committee (FOMC) left the Fed Funds rate unchanged at 0.25%-0.50% yesterday. What was surprising in the statement and the projections was the fact that the Committee cut in half the projected number of rates...
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  • Foreign Governments Dump US Debt At Record Pace

    I have been traveling the last few days, so I will reprint two of the more interesting articles I ran across in the last week. We’ll start with an article from CNN which confirms that numerous foreign governments are unloading US Treasury debt at a record pace.

    This includes China, the largest holder of our debt, which became a huge seller of Treasuries last year. We will also look at some of the reasons why foreign central banks are dumping Treasuries, many like never before.

    We will finish today with a new report from the Economist Intelligence Unit which has a list of the nine largest risks facing the world today, and how likely each of them is to happen. It is an interesting report, although I would have a few other risks to add to the list.

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    Posted to Forecasts & Trends by Gary D. Halbert on 03-22-2016
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  • Will The Fed Raise Rates Tomorrow? Probably Not

    The Federal Reserve’s policy setting body, the Fed Open Market Committee (FOMC), is meeting today and tomorrow, and there is widespread speculation over whether or not the Committee will vote to raise the Fed Funds rate a second time since lift-off in December.

    Late last year the Fed signaled that it intended to raise the Fed Funds rate four times in 2016, most likely at the March, June, September and December FOMC meetings. Yet the Fed could not have anticipated the global stock market debacle that ensued at the beginning of this year and into February.

    Given the large and unexpected global equity sell-off we saw in January and early February, most Fed-watchers recently concluded that the FOMC would abandon its plans to hike rates four times this year. Many even speculated that the Fed might reverse course and lower the Fed Funds rate back to near zero. Some even suggested the Fed should implement another round of quantitative easing (QE).

    I have been among those who have suggested the Fed should delay any further interest rate hikes until the economy shows more signs of improvement. However, a recent economic report will make it much harder for the Fed to delay another rate hike tomorrow. That will be our main topic today.

    Following that discussion, I’ll have more to say about negative interest rates, the War On Cash and a summary of Stratfor.com’s latest analysis regarding this very concerning global trend. Let’s get started.

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    Posted to Forecasts & Trends by Gary D. Halbert on 03-15-2016
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  • Negative Interest Rate Policy & The War On Cash

    We are living in strange and unprecedented times to say the least. Interest rates on bank deposits have gone into negative territory across much of Europe and more recently Japan. While we have yet to see negative savings rates in the US, Fed Chair Janet Yellen recently warned that NIRP (Negative Interest Rate Policy) is on the table if the economy slips.

    Yet the truth is that NIRP is not working as intended.  I’ll tell you why as we go along today.

    Meanwhile, monetary policy leaders and liberal politicians are increasingly waging a war on cash. Specifically, left-leaning policymakers in Europe and more recently the US want to make it harder for their citizens to hold large amounts of cash. To do so, they have called for the elimination of large-denominated treasury notes such as the €500 bill and the US $100 bill.

    The promoters of the war on cash claim that large-denominated euros and greenbacks are used primarily by criminals, drug dealers, tax cheats, terrorists and bad people in general. They claim that law-abiding citizens around the world have little use for these large-denomination treasury notes and would have little resistance to their elimination over time.

    What these left-leaning groups don’t admit is that it is their goal, ultimately, to eliminate cash altogether over time and convert us to digital currencies which can be used to track all of our transactions, at least those over certain defined amounts.

    Since these two alarming trends are getting very little attention in the mainstream media, that’s what we’ll talk about today. I want my clients and readers to know what is happening and why. Let’s start with NIRP.

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    Posted to Forecasts & Trends by Gary D. Halbert on 02-24-2016
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  • Obama’s $10 Per Barrel Oil Tax Would Increase Price By 33%

    The Obama administration announced last week that it is seeking a new $10 per barrel tax on oil. The huge tax increase is aimed at energy companies that will surely pass this increased cost directly on to consumers. At $30 a barrel, the $10 tax amounts...
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  • Exploding Healthcare Costs Are Out Of Control

    Today I want to address the soaring costs of healthcare, which are rising far more than the Obama administration and the Department of Health and Human Services will admit. While I personally don’t consider healthcare costs to be a political issue, many argue that it is indeed a political issue with regard to “Obamacare.”

    When talking to friends and colleagues, the most frequent comment I get is something like: Obamacare health insurance premiums are much higher than the government says they are – what gives? Today, I will answer that question with some new facts from an independent non-profit on healthcare premiums around the country. Prepare to be surprised.

    The Obama administration’s Health and Human Services Department (HHS) announced on January 21 that healthcare premiums on the Affordable Care Act exchanges rose an average of only 9% from 2015 to 2016. That was highly misleading since the HHS data covered less than half of all consumers buying healthcare on the federal exchanges in the last year.

    The real premium increases, almost across-the-board, are substantially higher in most states this year. A new, independent report from the Freedom Partners Chamber of Commerce includes the weighted-average premiums for all plans available on the Affordable Care Act’s exchanges.

    The findings will shock you, or maybe not, if you have recently renewed your healthcare coverage. In that case, you may already know, especially depending on where you live. In any event, that’s what we’ll talk about today.

    We will also talk about how healthcare costs are by far the fastest growing subset of the US economy. And that’s putting it lightly. The increase in healthcare cost almost doubled the next fastest growing sector’s cost growth last year.  Can you say, out-of-control?

    But before we get to that discussion, let’s take a look at last Friday’s unemployment report for January. The headline unemployment rate dropped to 4.9%, the lowest level since early 2008, but some of the internal numbers were mixed or disappointing.

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    Posted to Forecasts & Trends by Gary D. Halbert on 02-12-2016
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  • Sub-3% GDP Growth: A Lost Decade For The US Economy

    Whew – January is finally over! Up until the last week or so, the downside carnage in January was the worst New Year’s stock market start in history. Thanks to last week’s rebound, it was only the worst New Year’s start since January of 2009 when the Great Recession was unfolding. Still, it was a hair-raising month for stock investors. And no one knows if the damage is over.

    There are many theories as to why equity markets around the world suddenly plummeted in January. I have written about several of them in the last couple of weeks. Most market commentators, including yours truly, have pointed to concerns about China’s economy, the collapse in oil/commodity prices, the strong US dollar, Fed interest rate hikes, etc., etc. as the likely causes for the January implosion.

    Rather than continue that discussion today, I want to point out a milestone that was reached with the end of 2015 and last Friday’s 4Q GDP report – and this milestone was not a good one. With 2015 behind us, it has been a decade since we have seen 3% yearly growth in the economy. The last year we had 3% growth was 2005. Call it America’s “Lost Decade.”

    Near the end of today’s letter, I will make some suggestions on how we could stimulate our now moribund economy – starting with a significant corporate income tax cut for businesses large and small. Republicans complain that they can’t override President Obama’s veto, so they do nothing. Yet with the economy now growing by less than 1%, I think the GOP would be surprised at how much support they could get from Democrats, especially in an election year.

    Before we get to that discussion, let’s take a look at last Friday’s GDP report for the 4Q. The advance report came in lower than expected with growth of only 0.7% for the final three months of last year. The sharply lower 4Q reading suggests yet another year of weak economic growth. And there is now a controversy over how much the economy expanded last year, which I will explain as we go along.

    And finally, I am very excited to announce our latest Special Report: UNDERSTANDING & MAXIMIZING YOUR 401(K). We have worked long and hard on this Report to help our many clients and readers not only understand how their 401(k)s work, but also how to maximize their benefits. If you have a 401(k), you definitely want to download our FREE Special Report.

    There’s a lot to cover in today’s E-Letter, so let’s get started.

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    Posted to Forecasts & Trends by Gary D. Halbert on 02-02-2016
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  • Stock Markets Plunge, Concerns Abound… Recession?

    The first half of January 2016 has been the worst New Year’s opening for the US stock markets in history. Yet nothing much has changed economically since the end of last year. So why is the Dow Jones down 8.24%, the S&P 500 down 8.00% and the Nasdaq down 10.36% in just the first two weeks or so of the New Year? The answer is not yet clear.

    According to the Stock Trader’s Almanac, if US stocks move lower in January, that means a down year for equities 75% of the time. While January is not over yet, it’s hard to imagine that stocks could close up for the month. So are we looking at the first down year for US stocks since 2008? Time will tell, but it sure looks that way.

    Questions abound. Did the Fed make a huge mistake by raising short-term rates by a mere 0.25% in December? Did news that China’s economy grew at only around 6% last year and may be slowing more this year upset the global apple cart? Are plunging oil prices really a bad thing?  Is a new global recession just around the corner? Should we be preparing for a new recession here in the US this year?

    These are the questions everyone is asking in the wake of the plunging stock market prices we have seen from the beginning of 2016. It is true that the current economic recovery which began in 2009 is the weakest in more than a half century, but this is nothing new. Rather than negative growth, GDP has expanded only by about 2% since Obama took office.

    Yet the Fed’s latest estimate of 4Q GDP growth has now fallen from 2.0% on December 17 to only 0.6% in the latest GDPNow estimate in the second week of January. This economy is losing momentum fast. The risks of a recession this year are quickly increasing. This may help explain why equities are tanking so far this year.

    There’s so much to talk about today, I’m not sure where to start. Let’s begin with the case for a recession this year, both globally and here at home.

    We’ll end on a positive note from Mark Hulbert, editor of the Hulbert Financial Digest, who suggests that this latest downward market correction may be over before too long. Let’s get started.

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    Posted to Forecasts & Trends by Gary D. Halbert on 01-22-2016
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