September 2012 - 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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    • Inflation Jumps in August - Implications For Bonds

      Today we look at the latest economic reports and in particular, the housing market where there are some encouraging signs. Among the reports we look at today are the latest inflation figures for August, both of which surprised on the upside. Both consumer prices and wholesale prices were well above expectations last month.

      As we all know, rising inflation is bearish for most bonds, especially Treasury bonds. Interest rates on intermediate and long-term bonds have been rising since late July. While some believe this jump is only a temporary "correction," we cannot rule out the possibility this may be a new trend in interest rates. If so, that will be very bad news for millions of investors who are overloaded in bonds.

      There are some good alternatives to long-only bonds and bond mutual funds. In a new SPECIAL REPORT, I explain what some of those alternatives are and how you can get them in your portfolio before it's too late. Near the end of today's E-Letter, I give you a link to the new SPECIAL REPORT and best of all, it's free.

      But before we get to all of that, I must bring you the bad news that the United States has fallen precipitously to #18 on the "Economic Freedom of the World Report," down from #3 in 2000. You will definitely want to read this! I have summarized this alarming report for you, and we'll start today's letter with that disappointing news.

    • Desperate Fed Launches Unprecedented QE3

      The Federal Reserve announced a new round of quantitative easing (QE3) last Thursday at the end of its latest policy meeting. While the announcement was widely expected, Fed Chairman Bernanke had some surprises in store. He announced that the Fed will buy $40 billion in mortgage backed bonds every month until the economy gets better. When will that happen? No one knows. So the latest round of QE is unprecedented in that no one knows how long it will last or how much money the Fed will have to print.

      To me and many others, this is a sign of desperation on the part of the Fed. Depending on how large QE3 turns out to be, it could spark the next round of inflation. Even worse, QE3 may not work just as QE1 and QE2 didn't work. Some argue that this unprecedented move by the Fed is an effort to get President Obama re-elected. Yet we are continually reminded that the Fed is non-political. What we do know is that Bernanke is out of a job if Romney wins. So one wonders.

      Today we will analyze the Fed's latest move, the logic (or lack thereof) behind it, why it is dangerous, why it is unprecedented and lastly, why QE mainly helps only the wealthy. It should be an interesting letter.

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    • Will America Be Greece in Four Years?

      The US national debt topped $16 trillion last week, and it was almost as if no one paid attention. At the rate we are going, the national debt will top $20 trillion just four years from now in 2016. Despite four years of trillion-dollar budget deficits, the US economy remains stagnant with sub-2% growth in GDP – the worst post-recession recovery since the Great Depression.

      You would think that our leaders in both parties would figure out that trillion-dollar deficits are NOT the answer, and that they are the problem. This is not really a political issue, because both parties in Washington have been guilty of spending us into oblivion. The difference is, now we're talking about trillions, not billions.

      Last week, I read a great article in Forbes on what to do about the economy. I wish I had written it myself. But since I didn’t, I have reprinted it for you today. The author really tackles what it will take to turn our economy around. Not surprisingly, the author's suggested solution does not in any way look like President Obama's economic policies.

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    • September: A Rough Month for the Markets?

      September is often a bad month for the stock markets, historically speaking, and this year it could be especially turbulent. In addition to all the uncertainty about the weak US economy, there is uncertainty about what the Fed may do just ahead and what, if anything, will be done to address Europe’s recession and debt crisis. In addition, there is the looming presidential election which no doubt will go hyperbolic this month.

      We begin today by looking at the situation in Europe, now that the August vacations are over. It remains to be seen if European leaders can make good on their promises earlier this summer – I doubt it. From there we look at the latest US economic reports, which were a mixed bag. Next, we consider Fed Chairman Bernanke's speech last Friday and the probability of QE3 when the Fed next meets on September 12-13.

      We end today with some of my thoughts on the Republican National Convention last week, which I thought was very good. It remains to be seen how the Democrat Convention will go. I find it very odd that Hillary Clinton will not be there at all. And finally, I once again recommend that all of you go see "2016: Obama's America" movie. It's not what you think it will be.