Nine weeks ago weekly initial claims for jobless benefits hit 294,000. That’s nearly 90,000 claims per week lower than the mean since 1980. Since then the number of claims has trended upward and today the number came in above estimates at 339,000. Is it possible that the number of jobless claims has bottomed? If so, how long can the number of claims remain this low? … [Read more...]
Archives for November 2013
Janet Yellen Confirmation Hearings Begin
Today Janet Yellen will go before the Senate Banking Committee to introduce herself (again) and be questioned by the panel of Senators. Her prepared remarks give us a good indication of her probable philosophy during her tenure as Fed Chair (assuming she is confirmed, which is likely). We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, … [Read more...]
VIDEO: QE cannot continue forever: Yellen
From CNBC: Fed Chair nominee Janet Yellen says her staff is monitoring the risks to the bond-buying program, and "does not see the program continuing indefinitely." Brilliant insight from the next Fed Chair. … [Read more...]
Watch Out! Big Drop in Small Business Optimism
Small businesses are the engine of the American economy. Today’s NFIB Small Business Optimism Index dropped from 93.9 to 91.6. It appears that the index is having a very hard time breaking out above 95, even though its historical average is 98.1. The greatest contributors to the index’s drop was a decline in hiring plans and worsening expectations for small business conditions. A record high number of the surveyed—37%—cited the political climate as a reason for their pessimism. A 2012 report from the SBA found that small business generated 46% of American GDP in 2008 (the latest data … [Read more...]
The Shocking Reality for the Average Duration of Unemployment
How does this chart of the Average Duration of Unemployment look to you? The beard scratchers at the Fed can’t be thrilled about their $85 billion-a-month boondoggle. The Wall Street Journal details the ugly news: The U.S. economy added 204,000 jobs in October, the Labor Department said on Friday, much higher than the 120,000 expected by economists. The unemployment rate rose to 7.3%. The stronger data could heighten the prospect that the U.S. economy may be healthy enough for the Fed to soon begin withdrawing, or "tapering," stimulus from its $85 billion-a-month bond-buying program, … [Read more...]
Approaching 100 Years of the Fed
December 23rd is the 100th Anniversary of the Federal Reserve. The chart below is a measurement of the value of a 1913 dollar today. As you can see the value has dropped some 95.7%. If the Fed’s dual mandate includes preserving the value of the dollar, it’s not performing its job. In contrast, according to Oxford Economics, the value of gold has remained remarkably steady over the centuries. “In the 1830s the price of gold in 2010 dollars was around US$450 per troy ounce, with the real terms price much the same in 2005, more than a century and a half later.” So while the value of the … [Read more...]
Who’s the Richest Person in Your State?
When the Fed starts pumping money into the economy, two groups of people tend to gain the most, the already wealthy and the government. Prices for assets like land and stocks are shooting up. So who’s the richest person in your state likely taking advantage of the Fed’s largesse? Below are each state’s wealthiest person according to Weath-X. State Person Net Worth (Billion) Alabama Marguerite Harbert 1.5 Alaska Robert Gillam 0.4 Arizona Bruce Halle Sr. 4.4 Arkansas James Walton 37.1 California Lawrence Ellison 46.4 Colorado Charles … [Read more...]
Short-termism Reigns at the Fed
For those of you who know our philosophy on investing, you know that we are regular critics of the short-termists on Wall Street, focusing their decisions on quarterly earnings data without taking into view the bigger picture. But perhaps the worst short-termist of all is the Federal Reserve. Take a look at the chart below of non-farm payrolls, released today, to get a clearer picture of what we’re getting at. The Fed has continued its quantitative easing based on what initially looked like slowing employment growth. But after revisions, payroll growth has been much stronger than initially … [Read more...]
VIDEO: Jim Rogers – Central Banks are Making a Terrible Mistake
Investor Jim Rogers shares his views on how Fed tapering will affect the world as it 'floats on a huge artificial sea of liquidity.' … [Read more...]
Your Personal Financial Security Part I
Your personal financial security may not be as strong as it should be. You may be more vulnerable than you think. I called a client yesterday to review his portfolio and his wife quickly said he’d have to call me back because the police were at the house. He was filing a report because his debit card had been compromised. It turns out that over the weekend a waiter had held the card longer than normal (obvious after the fact) and had used the card numbers to make purchases online. Thankfully their bank was able to notify them and quickly canceled the card. I’m sure many of you have been in a … [Read more...]