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Q4: A Look at the Post-Hurricane Economy

As Q3 ended, the economy continued on its tepid growth path.  Unknown is the value of the economic carnage of two hurricanes that hit the mainland and a third that completely devastated Puerto Rico.  The bond and foreign exchange (FX) markets have a sense that all is not well, but, the equity indexes haven’t yet espoused that viewpoint. Meanwhile, at its last convocation in mid-September, the Fed’s Federal Open Market …Read More

Waiting for Market Rationality

Equity markets have yet to recognize the fragility and softness of the underlying economy, although they do appear to be somewhat sensitive to geopolitical issues (North Korea). The incoming data continue to confirm: that the consumer has little spending capacity remaining; that inflation’s roar is nowhere to be found (except, perhaps, in hot dogs); that the detail underlying the headline employment number (209,000) show labor market deterioration; that the equity …Read More

CPI Says “Deflation,” But U.S. Households Face Inflation

Angst exists in the capital markets over the “deflation” issue. Basically, the markets are worried about a lack of demand which forces prices down, causes consumers to wait longer for the prices to fall further before they purchase, and ends up in a downward price spiral which leads to recession or worse. I’ve read plenty of this lately. This is simply not the case. Oil prices are a result of …Read More

There are pros, cons to lower oil prices

Originally published on Tahoe Daily Tribune http://www.tahoedailytribune.com/news/opinion/14348757-113/oil-energy-price-prices At the recent FOMC meeting, Janet Yellen stated that the Fed does not expect to start raising interest rates for at least the next couple of meetings. The Fed has its next meetings scheduled in January and March of 2015. One of the main factors she cited in not raising rates was inflation. The Fed would like to see inflation running at about …Read More

Measuring inflation is inexact, biased process

I have written extensively about how “official” inflation is dramatically biased. I have often quoted figures published by economist John Williams (Shadowstats.com) that indicate how the CPI would be significantly higher if the 1980 computation methodology were used. To further this argument, Ed Butowsky (Chapwood Investments, Dallas), has created an alternative Consumer Price Index (CPI). On a semiannual basis, for America’s 50 largest cities, the Chapwood Index measures the change …Read More

Hedging against oil spikes

The recent turmoil in Iraq has led many people to believe that the price of crude oil could spike and derail the economy. Jay Leno once joked, “There was a sign at the gas station near by my house that said, ‘We take Visa, MasterCard, Discover Card, and American Express.’ After I filled up, they took my Visa, Master Card, my Discover Card, and my American Express.” The price of …Read More