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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    • Investment Scams Are Alive and Well

      Introduction During the 6+ years of the new millennium, we have experienced the end of one of the longest bull markets in history, a devastating bear market, a brief rally, and more recently a "sideways" period where the markets seem to be just...
    • Obama On Course To Double National Debt

      Based on the Obama administration's own spending forecasts, the US national debt is projected to double over the next 10 years. Currently at over $11.4 trillion, the national debt is projected to balloon to at least $22.5 trillion over the next 10 years, according to the non-partisan Congressional Budget Office. The CBO now forecasts the fiscal 2009 budget deficit at a record $1.845 trillion alone, with another deficit of $1.4 trillion in fiscal 2010. If our national debt in fact doubles in the next 10 years (and it could more than double), this will be bad news for the US dollar and interest rates, which in turn is bad news for stocks. As you might expect, the liberal media is not talking about these new debt numbers, so I will lay it all out for you this week. Feel free to pass this week's E-Letter on to others - we need to get out the word!...
    • Yes, Republican Leaders Are Pushing For New Tax Increases

      Whether you are a Republican or a Democrat, conservative or liberal, you will want to be aware of what I write about below. The “Establishment” Republican leaders are quietly pushing for a huge tax increase that has yet to get much attention in the mainstream media.

      This new tax increase is called the “Border Adjustment Tax” (BAT). In essence, the BAT would impose a 20% tariff on all imports to the US.  If enacted, it will mean significantly higher prices for imports and anything made in America that includes imported goods.

      You probably haven’t heard about this trade-killing tax since its main proponents, House Speaker Paul Ryan and House Ways and Means Committee Chairman Kevin Brady (both Republicans), have done their best to keep this effort quiet.

      The good news is that if enough Republicans oppose Ryan, Brady and their backers, this anti-trade tax will not see the light of day. Like I said, whether you are a liberal or conservative, you need to know about this since it could mean a big cost-of-living price increase for all of us.

      Sadly, the BAT is not the only bad tax being promoted by Republicans. Another group of Republicans is lobbying President Trump for a new “carbon tax” in exchange for a “significant” rollback in EPA regulations. The GOP promoters of this new tax claim it will help the economy and benefit working-class Americans. A closer look finds it will do neither and is another very bad idea. I’ll fill you in below.

    • Will the US Dollar Lose "Reserve Currency" Status?

      The US dollar has been in a multi-year decline since peaking in 2001. While there was a temporary 'rush to safety' rebound in the dollar due to the global credit crisis in 2008, the dollar has resumed its long-term downtrend as of early March of this year. Now, more and more forecasters are suggesting that the dollar may lose its global "reserve currency" status if it continues to decline. Some are even calling for the establishment of an all-new global currency to replace the dollar entirely.

      This week, we will explore how the US dollar came to become the world's reserve currency and how difficult it would be to replace the dollar as the reserve currency, or replace it entirely with a new global currency. We will look at the major price trends in the dollar over the years and try to put the current decline into perspective. I will make the case that the US dollar will remain the global reserve currency for at least several more years. It should make for an interesting letter, so let's get started.

    • Cap-and-Trade: Bad For The Economy & Us

      On June 26, the Democrat-controlled House narrowly passed sweeping legislation that calls for the government's first limits and taxes on carbon emissions, the so-called "Cap-and-Trade" bill that President Obama has insisted on. Experts on both sides of the issue, including President Obama, agree that Cap-and-Trade will result in higher energy prices, and that means higher prices for fuel, home heating and cooling and many other things we buy from food to cars to movie tickets, etc., etc. Cap-and-Trade will be a disaster for the economy. Hopefully, the Senate will not pass this bill, especially in light of news that the EPA has suppressed a major new study which argues that global warming in NOT happening, and recommends against Cap-and-Trade. This may be one of the most interesting and important E-Letters I have ever written... But it will likely make you angry!...
    • The Democrats' Plan To Highjack Your 401(k)

      Well, election day is upon us. While the mainstream media would have us believe that the results are a foregone conclusion in Obama's favor, recent polls have indicated a narrowing of his lead over McCain in some battleground states. Obviously, we'll all just have to wait and see how the votes turn out. In the meantime, I think it's important that we conservatives notice some of the trial balloons that are being floated by the Democratic leadership. One recent proposal that would eliminate the favorable tax treatment of 401(k) plans shows us that, no matter how the election turns out, we have plenty to fear from the liberals who are already in office....
    • Insurance Companies - The Next Shoe to Drop?

      Over the last year, the financial media has focused primarily on the major banks and their solvency issues. We have heard relatively little about the major insurance companies, which were not eligible to participate in federal bailout programs such as the TARP. As I will detail in the following pages, most of the major insurance companies are in financial trouble due to the recession and the credit crisis; some major insurers are large players in derivative instruments such as Credit Default Swaps and Collateralized Debt Obligations which have gone bad. In addition, many property and casualty insurers were dealt a blow by the natural disasters (hurricanes) that occurred last year. Some in the industry predict that if we have another bad hurricane season this year, a number of the nation's largest insurers will go out of business entirely.

      The publicly-traded insurers will be releasing their required 10-Q financial statements for the 1Q in the next few weeks, along with their 10-Ks for all of 2008. I am told that these reports are going to look very negative on balance, and this could be quite disturbing to the financial markets including stocks. As we go along, I will tell you specifically what to look for in these financial reports to judge the credit worthiness of your particular insurer. This may be one of the most important and timely E-Letters I have published....
    • Global Bonds In Worst Selloff In 13 Years - How Come?

      Bond investors have had a rough ride in November. The Barclays Global Aggregate Bond Index plunged by 5% during the last two weeks just before and after the election – its worst such drop since March 2003, according to Dow Jones data. When yields rise, bond prices fall, and vice-versa.

      As you know, interest rates have been falling for over 35 years since peaking in 1980. It has been a spectacular bull market for bond investors, that is until just recently. To say that the reversal over the last few weeks came as a surprise to bondholders around the world is an understatement.

      More than $77 billion in assets are benchmarked to the Barclays Global Aggregate Bond Index, according to Morningstar, making it one of the most widely followed in the fixed-income world. It incorporates investment-grade debt denominated in 24 different currencies. Sovereign bonds have historically been the Index’s most heavily-weighted constituent, followed by asset-backed securities, corporate bonds and government-related debt.

      Global bond yields have been edging up since falling to historic lows in late June/July following the UK’s vote to leave the European Union. But the selloff accelerated aggressively after Donald Trump won the US presidential election – an outcome that took most bond market participants around the world by surprise.

      The sharp selloff was predicated on the notion that Donald Trump’s campaign promises to rebuild America’s infrastructure, cut taxes and raise trade barriers, would – if they become reality – drive up inflation, and possibly force the Federal Reserve to raise interest rates much more aggressively than had been expected.

      In just the two days following Trump’s election, global bonds shed an estimated $1.1 trillion in value, the worst rout in a year and a half as investors sold bonds and bought stocks in many cases. The stampede out of bonds propelled US Treasury yields to their highest levels since January.

    • Obama's Tax Policy: None Dare Call It Welfare

      We have recently learned the details of President-elect Obama's massive income tax overhaul, and the plan is much worse than we had anticipated. Obama's liberal tax plan would give annual tax rebates to millions of Americans who already pay NO income taxes whatsoever. Giving government tax rebate checks to those who already pay zero income taxes is nothing short of expanding the welfare state (or socialism as I prefer to call it). Worst of all, if Obama gets his massive tax plan approved, it will mean that a majority of Americans will pay little or no income taxes, while the so-called "wealthy" will foot the rest of the bill. If we reach such a point, there will be little to no chance of true tax reform for the foreseeable future. Read what follows very carefully....
    • The End of America's Financial Independence?

      President Barack Obama recently set the wheels in motion to render the ultimate control of our large financial institutions, large insurance companies, large hedge funds and quite possibly our financial markets as well, to a foreign entity. A new international regulatory agency was created at the recent G-20 Summit in London, and all G-20 countries signed onto it. Sadly, you probably have not heard a word about it until now. Prepare to be outraged as you read what follows....
    • Will Baby Boomers Wreck the Market? (The Sequel)

      Almost six years ago, I wrote an article about whether the Baby Boomers would crash the stock market when they retired. That dated article is still among the most viewed by visitors on our website even though a lot has happened in the financial world since it was written.

      The premise is that as Baby Boomers retire, they will cash in stocks in favor of lower-risk investments, thus tanking the stock markets. In my earlier E-Letter, I analyzed this claim and concluded that retiring Baby Boomers were not likely to negatively affect the stock markets in a major way for a variety of reasons.

      However, since writing that article in August of 2006 we've experienced a global financial crisis and major bear market in stocks. Would my advice be the same today?

      Because of the popularity of this topic, I am going to revisit the idea that retiring Baby Boomers may crash the stock market. Now that the oldest Boomers are actually retiring, it will be interesting to see if the answer is any clearer now than in 2006.

    • Bernie Madoff - How To Avoid A Ponzi Scheme

      This week, I'm going to address the $50 billion "Ponzi Scheme" allegedly masterminded by Bernard Madoff. The question we receive most often is how a Wall Street icon like Madoff got away with such a huge fraud for a period of decades? As you'll see in this week's E-Letter, the answer lies in a structure that lends itself to conflicts of interest, plus a lack of regulatory scrutiny. The lesson to be learned by all investors is to be sure to conduct due diligence on any money manager, no matter how famous they may be. I'll also review the many steps we go through in our due diligence process before recommending a money manager....
    • Best Critique of Obama I’ve Ever Read

      The holidays sneaked up on me faster than usual this year, what with a couple of extra business projects that required a lot more time than I expected over the last few months. Given a number of year-end deadlines, I have elected to reprint an excellent article today by Peter Ferrara that is perhaps the best critique of President Obama that I have ever read. If you are an Obama fan, you probably don’t want to read this; on the other hand, maybe you should.

      Ferrara succinctly examines Obama’s upbringing, his early professional life, his liberal ideology, his ascendency into politics, his becoming President of the United States and his policies since occupying the White House. This is a very interesting and insightful read, especially in light of the challenging economic and financial times we find ourselves in.

    • Small Business Optimism Soars to Highest Level Since 2004

      Small businesses and entrepreneurs have had a rough time of it for these past eight years. New startups and entrepreneurial activity have pretty much been stagnant, weighed down by heavy regulation, high taxes and an economy that’s just been stumbling along. Yet in November and again December, there were signs of optimism and business renewal that could mark a real turnaround in the fortunes of small business.

      The National Federation of Independent Business (NFIB) reported last week that its Small Business Optimism Index soared in December by the most in one month since 1980, a year when another maverick conservative-leaning candidate surprised everyone and won the presidency. His name was Ronald Reagan.

      Another report out last week found that small businesses are now in the best financial shape since before the Great Recession based on revenues, cash-flows and sales.

      While the economy is still far from healthy, we have seen more positive news since the election. Today we’ll look at these two latest reports on small businesses -- and what President Trump will, and will not, be able to do with regard to rolling back onerous regulations early-on in his administration.

      Finally, we’ll look at an Investor’s Business Daily editorial last week that blows out of the water the liberals’ scare tactics when it comes to repealing Obamacare.

    • The Largest Tax Increase in US History

      Back in 1948, President Harry Truman nicknamed the 80th Congress the 'do-nothing Congress.' Today, we sometimes find ourselves wishing that we could return to the days when Congress was accused of inaction. Unfortunately, the stage may now be set for that wish to be granted, but the consequences will be far from favorable. By allowing the Bush tax cuts to expire, Congress could levy one of the largest tax increases ever, all by just doing nothing.

      While President Obama and the Democratic leadership claim that they want to keep all of the Bush tax cuts in place for everyone making under $250,000 per year, they also know that they are going to build up huge budget deficits unless they find ways of generating some tax revenues. With cap-and-trade legislation and its expected tax revenues all but dead, the Dems are going to have to figure out some other way to pay for their march toward socialism.

      The expiration, or 'sunset', of the Bush tax cuts could provide the necessary tax revenues they seek and all without having to cast a vote in favor of a tax increase. This week, I'll discuss the possible effects of a huge tax increase during a fragile economic recovery as well as the possibility that Congress may just sit on their hands and do nothing in order to fill their insatiable need for tax revenues.


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