October 2011 - Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

Forecasts & Trends

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    • 72% Say US Headed in the Wrong Direction

      As is often the case, we will cover several different topics this week. We begin with some new Associated Press polls released last Friday. Lead among them is the poll which found that 72% of Americans now believe that the US is headed in the “wrong direction.” From there, we move on to the news that the so-called “Misery Index” rose to a 28-year high in September due to a higher than expected rise in the Consumer Price Index.

      Following that discussion, I will summarize the latest economic reports, most of which were disappointing, but there were at least a few bright spots. The key will be this Thursday’s first (advance) report on 3Q GDP. The pre-report consensus suggests a rise to 2.0-2.3% (annual rate) from 1.3% in the 2Q.

      Finally, I will address a political issue that is just beginning to make the rounds in the media. Namely that the Republican presidential hopefuls are gravitating to a “flat tax” and “jobs growth” agenda that could stand up very well against President Obama’s tax-and-spend, punish- success policies in the 2012 election. I think you'll find this discussion very interesting.

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    • Is the Debt "Super Committee" Doomed to Fail?

      The so-called congressional "Super Committee" that was set up during the debt ceiling battle back in August is charged with finding $1.5 trillion in federal spending cuts over 10 years, and the deadline to do so is November 23 - just over a month from now. If the Super Committee fails to come up with $1.5 trillion in cuts, then some nasty triggers come into play to automatically cut spending across-the-board at the beginning of 2013.

      Obviously, the Super Committee has a gargantuan task ahead of it and on a very short fuse (i.e. - Nov. 23) to find $1.5 trillion in spending cuts over the next 10 years. Will the 12 committee members (6 Republicans and 6 Democrats) be able to reach such a historic agreement in time before the mandatory triggers and spending cuts go into place? Frankly, I doubt it.

      The mainstream media has been largely silent in recent weeks on this looming controversy. So, in today's E-Letter I will succinctly get you up to speed on the pertinent issues surrounding the Super Committee and the challenges it faces. This is definitely something you need to know about and understand as the debate in Washington unfolds in the weeks just ahead.

    • Should You Abandon the Market?

      A recent article in the Wall Street Journal documented how more and more investors are choosing to opt out of the stock market, vowing never to return. With the market's direction lately being more of a function of what's going on in Greece than on Wall Street, it's understandable that investors are getting tired of up and down swings of over 200 points in the Dow.

      The most troubling aspect of the article, however, is that many of the Baby Boomers who are bailing out of the stock market have not saved enough for retirement. With yields at all-time lows in most fixed-rate investments, it's going to be hard to obtain much growth outside of the equity market. The result could be a retirement crisis in the making.

      It's a tough choice - stay in the market for growth and risk fierce bear markets, or remain on the sidelines and pare back your plans for retirement. Fortunately, there's an answer to this dilemma in the form of the Metropolitan Capital Strategies managed accounts. Metropolitan stays in the safety of a money market account until it's proprietary system signals a 90% confidence level of a near-term gain. Best of all, it places the decision of when to enter and exit the market in the hands of experienced professionals. This week, I'll explain why Metropolitan is definitely a money manager you should look into.

    • CEOs More Negative on the Economy & Jobs

      We begin today with the latest results from the Business Roundtable survey which goes out to 140 top CEOs around the country each quarter. The 3Q survey found that more than double the number of CEOs plan on layoffs just ahead than in the 2Q. The CEO Economic Outlook Index fell for the second quarter in a row to the lowest level since late 2009.

      Following that discussion, we look at the latest economic reports. While there were a few encouraging spots, most of the reports indicate that the economy is slowing down. Consumer confidence remains in the tank. Last Friday, the Economic Cycle Research Institute (ECRI) declared that a new recession has begun. That news sent stocks sharply lower yesterday - what else is new?

      Next, we move on to President Obama's $450 billion jobs bill. Few people know it, but this bill would allow unemployed people applying for jobs to sue those employers if they are turned away because they've been unemployed for a while. I'm not for job discrimination of any kind, but this is ridiculous. Fortunately, the jobs bill is "dead-on-arrival" in the Congress.

      In closing, I will update you on the wildfire epidemic here in Texas. Thanks to all who have called or e-mailed to check on us!

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