Today's Market
by Dr Invest

Ill winds are blowing. The flow of thought is that we have soundly recovered from a 5 year recession, and all this due to the Federal Reserve's "quantitative easing". ALL INDICATORS, according to the government, are pointing to a strong economic recovery. And this is their analysis, after introducing new models for figuring UNEMPLOYMENT and GDP  in 2013 that relaxed the criteria in measuring these areas. Instead of an economy at ESCAPE VELOCITY, we are in an economy that is in tatters. Instead of reporting on the economy in a way that is accurate, many of the CNBC crowd are militantly against anything suggesting a market downturn.

Bernanke only reduced a portion of the Fed's monthly bond buying, resulting in the devastating downturn in the market. It is almost certain that Yellen, the new Fed chairperson, will resume QE and even bolster the program.

Economic Cycle Research Institute's Findings

The ECRI wrote:

Given the consensus that U.S. growth is about to “take off” and reach “escape velocity,” many would just ignore the December payroll jobs data, expecting it to be revised away. Yet, in the preceding 12 months the economy created 194,000 payroll jobs per month according to the establishment survey, but only 101,000 jobs per month according to the household survey, i.e., over a million fewer jobs over that 12-month period. Which is closer to the truth?

As the chart shows, over the past decade, the mean revision to the 12-month moving average of job growth, as measured by the household survey, was only one-twenty-fifth that for payroll jobs. Since their longer-term patterns tend to be similar, the payroll jobs data are more likely to be revised down. 

Separately, the household survey, adjusted to the payroll concept, actually shows a decline in employment since the summer. Bottom line: even ignoring the December jobs data, the trends are worsening, especially for data not subject to major revision.


Please visit their website and select some of the recent videos. Do note the attitude of some of the CNBC reporters. They are almost aghast at the suggestion that there could possibly be a problem with the economy. Their compass is clearly pointed toward the "strong growth" direction.

CLICK HERE: CNBC INTERVIEW

CLICK HERE: FOX NEWS INTERVIEW


Even with continued QE, the economy is tanking. The government's reporting of job increases are realistically much less and will be revised down. We have been in a recession since 2012. Yet the 30% stock market growth, doesn't reflect the REAL GROWTH which has remained flat through out 2013.

My Warning

You should be aware that new stimulus commitments by the Fed may result in arresting the deflation that is already occurring, but the government will not be able to continue that stimulus forever. Continued stimulus will flood the market with liquidity and produce super inflation when the market eventually returns to strength.

Worse case, we are headed for a season of deflation/recession. 2nd worse case, the government will stimulate to slow the deflation and may need to do so for a number of years, the result will be hyper-inflation should we return to seasons of economic growth.

(note: the above information is for entertainment purposes only and not to be used as investment advice.)