Tag: quantitative easing (QE)

Is The Recent Economic Slowdown Temporary?

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Federal Reserve Chair Janet Yellen noted Thursday that some recent economic data have pointed to weaker-than-expected gains in consumer spending and job growth. She said the Fed will be watching to see whether the slowdown proves only a temporary blip caused by severe winter weather.

Yellen told the Senate Banking Committee that the Fed will be alert to upcoming data to make sure that the economy keeps strengthening.

"We have seen quite a bit of soft data over the last month or six weeks," Yellen said. "We need to get a firmer handle about how much of the softer data can be explained by the weather."

Responding to a question, Yellen repeated the Fed's assurances that its pullback in stimulus for the economy is "not on a preset course" and could be modified if there was a "significant change" in the Fed's outlook. The Fed is gradually reducing its monthly bond purchases, which have been intended to keep long-term loan rates low to encourage spending and growth. Continue reading "Is The Recent Economic Slowdown Temporary?" →

After A Roller-Coaster Month, Is A Bear Market On Its Way?

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If the market was looking to get our attention, it has it now.

Since Jan. 13, the SP has dropped at least 1% on three occasions. It now stands nearly 5% below its 52-week high.

At this point, investors have begun to wonder if the market choppiness is a sign of a looming correction, which is defined as a 10% pullback (a bear market is a pullback of 20% or more).

It's been quite a while since we've had a market correction: It happened once in 2010, 2011 and in the middle of 2012, but it hasn't happened since.

Notably, each correction has been followed by an impressive rebound, and some investors would welcome such a purge. In a market where values remain hard to find, pullbacks create solid openings. If we are entering into a corrective phase, history suggests it would last a couple of months. (The 2011 correction was quite rapid and due solely to the government shutdown.) Continue reading "After A Roller-Coaster Month, Is A Bear Market On Its Way?" →

How to Prosper in the Coming Downturn

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The Gold Report: In your latest book, "The Demographic Cliff: How to Survive and Prosper During the Great Deflation of 20142019," you write about the aging of the Baby Boomers and the wave of Gen-X'ers that follows. What does that tell you about the next five years?

Harry Dent: I discovered this relationship, which I call the spending wave, in 1988. Peak spending happens at about age 46 in the U.S., Japan and most developed countries. That is when a generation will earn, spend and borrow the most money. After that age, spending declines.

More than 20 years ago, we predicted Japanese spending would peak in the late 1980s, and U.S. spending around 2007. Now, Europe is hitting its demographic peak and will start dropping off. The drop off will be especially steep in Germany, the United Kingdom, Austria and Switzerland some of the strongest economies in Europe. How will Europe's rebound continue with these countries plunging in the years ahead?

TGR: Much of Germany's economic strength is based on exports. Would that protect Germany through the decline? Continue reading "How to Prosper in the Coming Downturn" →

Happy 100th Birthday, Fed

Posted on by The INO.com Team

Excerpted from Elliott Wave International's market analysis

By Elliott Wave International

On December 23, the U.S. Federal Reserve celebrated its 100th birthday. When legislation creating its existence was signed on December 23, 1913 (in a sneaky move during a holiday week), Congress granted the Fed a monopoly on creating dollars backed by debt.

The ongoing QE program is an unprecedented use of that power. This chart of the Fed's stated capital of $55 billion compared to its total assets of $4 trillion shows the extent to which the Fed is the focal point of dollar creation and therefore credit creation.

As John Hussman at HussmanFunds.com points out, this ratio puts the Fed's leverage at a mind-boggling 73-to-1, making the average hedge fund manager (at 2.48-to-1, according to BofA Merrill Lynch's November survey) look like a conservatively invested widow by comparison. Continue reading "Happy 100th Birthday, Fed" →

Lack Of Demand, Not Manipulation Is Behind The Gold Price Drop

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The Gold Report: This year has been difficult for gold investors. The price went from a high of almost $1,800/ounce ($1,800/oz) to where it is now, in the mid-$1,200/oz range. You have written extensively about the supply and demand forces of precious metals. What is behind the drop in the gold price?

Jeffrey Christian: The single most important factor has been a massive decline in the investment demand for gold. In 2013 investors have bought about 30 million ounces (30 Moz) gold on a net basis globally. That's down from about 39 Moz in 2012 and 31 Moz in 2011, but it is still at a very high level compared to historic investment demand. The net purchases are down 24% because some investors are selling gold.

TGR: Are they putting their money into other investment vehicles or are they sitting on their cash? Continue reading "Lack Of Demand, Not Manipulation Is Behind The Gold Price Drop" →