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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.

    • U.S. Debt To Hit $20 Trillion, Poverty Remains Rampant

      As long-time clients and readers are well aware, the explosion in our national debt has been one of my continuing themes over the last 30+ years, under both Republican and Democrat presidents. So today’s discussion is not a political issue, and it should worry us all.

      By the time President Obama leaves office in January 2017, the US national debt is projected to have almost doubled during his eight years in office. Put differently, Obama will have added as much to the national debt as all presidents before him combined. That is simply staggering!

      Throughout history, no major nation that has accumulated debt of more than 100% of Gross Domestic Product has ever paid it back. Instead, they have defaulted. So will we at some point if we don’t reverse course, which seems very unlikely.  As such, the question is when will the US default and what will trigger it?

      Saddest of all is the fact that, despite almost doubling the national debt over the last seven years, with much of the spending on social programs, the poverty rate in the US is near an all-time high; ditto for those living on food stamps. You would think that doubling the national debt and increasing entitlements should have dramatically lowered poverty and those living on food stamps. It didn’t.

      Over the last decade, we’ve also seen an explosion in the number of Americans who receive disability benefits. Unfortunately, Congress has watered-down the requirements to receive disability payments to the point that many able-bodied Americans are no longer working.

    • Why The US Unemployment Rate May Be Wrong

      Last Friday’s unemployment report for March was a stunner, no doubt about it. After 12 consecutive months of new job creation above 200,000 per month, the Labor Department reported that only a meager 126,000 new jobs were created in March.

      Theories abound as to the cause of the huge drop-off in new jobs last month, but the default reason cited, once again this year, is the severe winter weather. While bitter winter weather is a factor, questions arise as to whether this could be a sign of worse things to come in the US economy.

      We will focus today on the latest disappointing unemployment report and examine what the internals of the latest missive might mean for the economy, and for the Fed’s timing of its first interest rate hike.

      Following that discussion, I want to shift our sights to a new study which suggests that the government’s official unemployment rate, currently 5.5% is significantly lower than reality. This new study concludes that the real unemployment rate in America today is somewhere between 7% and 9% or even higher. I think you’ll find this discussion compelling.

      But before we get to today’s main topic on the latest unemployment report, I want to briefly share with you a new and disturbing economic forecast from none other than the Federal Reserve itself.

      At the end of March, the Federal Reserve Bank of Atlanta released a new forecast for US GDP growth of 0.0% for the 1Q. This surprising new forecast from the Fed itself has sparked a spirited new debate on the subject of where the US economy is headed this year.

    • Unemployment Dips Below 6%, But Incomes Stagnate

      Last Friday’s unemployment report came in better than expected. The headline unemployment rate fell more than anticipated, from 6.1% in August to 5.9% last month. The number of new jobs created last month was also better than expected at 248,000.

      Given that the unemployment rate is now below 6%, and given that 2Q GDP expanded by 4.6%, you might think the economy is finally off to the races. But what is becoming increasingly clear is that wages for most Americans have been stagnant or falling since before the Great Recession began in late 2007.

      As we will see below, this trend of stagnant income has actually been with us since the early 2000s. Without rising incomes, there’s little reason for people to feel like their financial lives are getting better or for the economy to grow at a faster rate.

      Fortunately, not all the news is bad. While the vast majority of Americans believe that we’re either still in a recession or the country is headed in the wrong direction, pessimism in the business community is lifting. Companies are investing more in capital assets. After years of sitting on their hands, companies are beginning once again to build their businesses.

      Finally, recorded versions of our recent webinars with Potomac Fund Management and YCG Investments are now available on our website at Both managers explain in detail how their investment strategies work. I encourage you to watch these videos to see if their strategies are a fit for your portfolio.

    • Labor Force Participation Lowest in 36 Years - Why?

      Last Friday’s unemployment report for August was significantly weaker than expected. While the headline unemployment rate dipped back to 6.1% (same as it was for June), the number of new jobs created last month was substantially below expectations and marked the lowest number of the year.

      Until last Friday’s disappointing jobs report, most economists assumed that job growth would continue at a pace of more than 200,000 new jobs per month. But today we’ll look at five facts which suggest that such an assumption was likely misplaced.

      Our main topic today focuses on the labor force participation rate – the percentage of Americans working or looking for work – which is now at a 36-year low. People are leaving the workforce in record numbers, and it’s not all because Baby Boomers are retiring. Over half of those leaving the workforce have simply given up on finding a job.

      The question is whether this is a “cyclical” phenomenon that will improve when the economy gets stronger, or whether it’s a “structural” problem that will be with us for years. That’s what we’ll explore as we go along today.

    • Consumer Confidence Hits 7-Year High - Really?

      Today we’ll look at several key economic reports over the last week or so. Most have been better than expected. The Conference Board reported that its Consumer Confidence Index surged to the highest level in seven years in July. However, a couple of other reports we’ll look at below paint a very different picture.

      The advance report on 2Q GDP came in well above pre-report estimates. Last Friday’s unemployment report for July was disappointing, but at least new jobs were over 200,000 for the sixth consecutive month. The Fed’s favorite inflation indicator (PCE) climbed to the highest level since 2011 last month. And the ISM manufacturing index surged to a three-year high in July. We’ll analyze all of these reports as we go along today.

      Finally, a recording of our latest WEBINAR with YCG Investments is now available on our website. You’ll definitely want to hear Brian Yacktman and his team discuss their very successful “value investing” strategy.

    • The US Economy – The Good, The Bad & The Ugly

      As is true more often than not, there are mixed signals in the economy. There are indeed some “green shoots” emerging that suggest the economy is finally gaining some momentum. Yet there are also continued troubling signs that, while not warning of an impending recession, suggest we could be stuck in a structural period of continued below-trend growth.

      Today, we’ll look into the latest economic indicators – good, bad and in between – and see if we can make any sense of where we are. My view is that the economy is most likely to remain in sub-par growth (i.e. – below 3%) for at least the rest of this year and maybe longer. Yet as we’ll see below, some others feel that the economy is nearing “breakout velocity.” We’ll see, but I am not so optimistic. Let’s hope I’m wrong.

      A new report finds that President Obama’s economy is the worst in over 80 years. You can read this story at the first link in SPECIAL ARTICLES below.

      Let’s start with the latest good economic news.

    • Why Male Workers Are Disappearing in America

      Last month’s unemployment rate plunged from 7% in November all the way to 6.7% in December, which was lower than any of the pre-report estimates. That should be a great thing, right? Wrong! The unemployment rate fell because more Americans gave up looking for work and dropped out of the labor force entirely.

      Even worse, new jobs created in December were a fraction of what they were in recent months at only 74,000 versus over 200,000+ in the last several months. Even the Obama administration could not avoid admitting that the latest unemployment report was grim when you look into the internals. That’s pretty bad!

      The plunge in new jobs to only 74,000 in December is worrisome enough, but if you dig deeper into the data, you find something even more disturbing. Only 71.8% of working-age men have a job or are looking for work. That’s a huge decline from 80% in 1970! The question is, why are so many men disappearing from the workforce? That’s what we’ll talk about today.

    • Are Americans Optimistic or Pessimistic About the Future?

      Today's letter will move fast as we touch on several pressing issues of the day, with lots of charts and graphs. We begin with some new polls which indicate that most Americans are pessimistic about the future, even though consumer confidence is up this year. Another major poll finds that only 29.4% of Americans feel the country is headed in the right direction, while 61.4% believe we are on the "wrong track" longer-term.

      From there, we take an in-depth look at last Friday's unemployment report. While the headline unemployment rate unexpectedly fell to 7.4%, there was a lot of troubling data in the report that the mainstream media simply ignored. Not only were new jobs less than expected, they were dominated by low paying and part-time jobs.

      Next, we take a closer look at last Wednesday's 2Q GDP report, which came in a little higher than expected (1.7% vs. the consensus of 1.1%). The media gushed over this number and assured us that the recovery is gaining momentum. But how can you get excited over a report showing growth is still less than 2%? This is still the weakest economic recovery in most of our lifetimes, despite what the media says.

      Last but not least, Congress has figured out that ObamaCare is going to be a "train wreck," this according to one lawmaker who helped write the massive healthcare law. As a result, Congress is trying to find a way to exempt itself from ObamaCare - surprise, surprise! That will be very difficult, so President Obama appears ready to give members of Congress subsidies up to 75-80% to buy health insurance on the exchanges, even though they make $174,000 a year, plus benefits and lifetime pensions. This is outrageous!

    • Economy Rolling Over, Obama Scandals Multiply

      There’s a lot to cover today, starting with last Friday’s unemployment report that was hailed by the media and the stock markets. But after looking into the data, I will argue that the report was lackluster at best. From there we’ll look at why the big picture economic outlook is becoming worrisome. We’ll drill down into the data only to conclude that the economy may be rolling over to the downside.

      And we’ll end with some thoughts on the Obama administration’s defense of the growing scandals. The Obama defense, as usual, is that this is nothing different from what George W. Bush did when he was in office. That story is wearing very thin, especially now that we’re five years into Obama’s presidency. The truth is, this is much worse! Plus, we’ll look at some new revelations that further suggest it was President Obama himself who caused the IRS to target conservative groups.

    • 6.7 Million “Missing Workers” – Where Did They Go?

      Today we will touch several bases. We begin with last Friday’s unemployment report which was hailed by the mainstream media, but had a lot of bad news to go with the good. From there we look at the estimated 6.7 million “missing workers” in this economy and ponder if they’re permanently gone from the employment rolls.

      Next we look at the latest Gallup poll showing how many Americans rate the economy as excellent, good, only fair or poor. You may be surprised at the results, which aren’t immediately clear in the chart. Following that, we look at some interesting data on mutual fund money flows which show that the love affair with bonds continues, and investor demand for stocks is waning.

      Finally, the International Monetary Fund downgraded its global economic forecast recently, including its forecast for the US and most of Europe. I have included the IMF’s graphic that lets you look at each country’s forecast for 2013 and 2014.

      By the way, we have a lot of charts and graphs today, so the letter will print longer than usual.

    • Workforce Shrinks, Unemployment Falls – Say What?

      Today we begin by examining last Friday's miserable jobs report. The official unemployment rate edged down fractionally, but it was because almost a half a million people stopped looking for work last month. In fact, the labor force participation rate dropped to the lowest level in 33 years.

      From there, we look at the reasons why the Fed's massive quantitative easing (QE) is doing little to nothing to help the plight of the long-term unemployed. We also look at the growing number of “discouraged workers,” which are defined as those long-term unemployed who have stopped looking for work and the reasons why.

      The number of Americans on disability insurance has increased for the last 16 years, and the total stood at a record 8.85 million people as of March, according to the Social Security Administration.

      Finally, we are hosting a lunch seminar in Austin on May 8th at 11:30 featuring Hanlon Investment Management, a Registered Investment Advisor managing apprx. $3.5 billion in assets. If you live in Austin or will be in the area on May 8, call Joanne at 800-348-3601 to reserve your spot. Seating is limited. The lunch seminar will be at the Westin Hotel in The Domain at 11:30. This is also an opportunity for me to meet you personally.

    • The Truth About Friday’s Unemployment Report

      Last Friday’s unemployment report for September was not only surprising but also controversial. The Bureau of Labor Statistics (BLS) reported that 114,000 new jobs were created in September – no big surprise there. But to everyone’s surprise, the BLS reported that the unemployment rate plunged to 7.8% in one month. That was a shocker, especially given that we’re less than a month from the election!

      Even more shocking, the BLS reported that, according to its household survey, total employment rose by 873,000 in September, much of which was due to an increase in part-time work. That was the largest one-month increase in 29 years! So on the one hand, the BLS said 114,000 new jobs were created in September; and on the other hand said that total employment increased by a whopping 873,000.

      What gives? At the very least, this smells fishy, especially coming only one month before the election! Did the BLS fudge the data to give Obama a boost? Most say no. However, no one is pointing fingers at the Census Bureau that provides key data on household unemployment to the BLS. Maybe they should. I'll explain it all as we go along today.

      Finally, I have a few thoughts on the Obama/Romney debate last week that I think you'll find interesting.

    • Obama Tax Increase to Slash 700,000+ Jobs

      We begin by looking at last Friday’s unemployment report for July. The government reported that the economy created 163,000 new jobs in July, which was a big increase over the last three disappointing months. Yet the report also bumped the national unemployment rate from 8.2% in June to 8.3% in July. We will look into the details of the report as we go along.

      President Obama continues to push for a tax increase on families making over $250,000 starting on January 1. The debate for months has centered on whether or not this tax increase will result in widespread job losses. Well, a new study from the accounting firm Ernst & Young has answered that question definitively – at least 700,000 jobs will be lost if Obama gets his way.

      Finally, a little-known law passed back in 1988 requires companies with 100 employees or more to give at least 60-days notice to their workers if they know in advance that an event is coming that could lead to widespread layoffs. We all know about the so-called “fiscal cliff” that is coming on January 1 if Congress doesn’t do something to stop it.

      So the question is, will we see mass layoff notifications just days before the presidential election? The Obama administration is doing everything it can to avoid this, but the law is clear. I'll explain what's at stake as we go along today.

    • CBO’s New Forecasts & The Unemployment Report

      Today we begin by focusing on the Congressional Budget Office's (CBO) latest long-term economic forecasts. Actually, we will focus most of our attention on the CBO's 2012 and 2013 forecasts, since going beyond the next year or two is really just speculation in these uncertain times. There is a lot to consider in the CBO's latest forecasts.

      From there we move on to some scintillating news that many federal workers, including at least 36 members of Obama's own White House staff, are far behind in their income taxes owed to the IRS. How far behind? Can you say $3.4 billion? Yes, $3.4 billion and counting. President Obama says we all need to pay our "fair share" (ie - higher taxes on the rich), but I would suggest that he focus on those in his Administration and Congress that are behind on their tax payments.

      Finally, I will examine last Friday's unemployment report which surprised just about everyone. There is a reason the unemployment rate is going down, but you may be surprised to learn why. I'll give you the straight story, plus I will review the latest economic reports at the end. Let's get started.