The United States is about to take off if we could just get government out of the way. Check this out from today's Wall Street Journal.
Companies from the U.S. and abroad have invested or are planning to invest billions of dollars through the rest of the decade in plants that would churn out chemicals, fertilizers, plastics, metals and fuel from gas. Many foreign companies, alone or in joint ventures with U.S. partners, are taking advantage of gas that costs a fraction of what it does in Europe or Asia to expand production in the U.S.
Boston Consulting Group estimates that international companies will invest at least $50 billion through the end of the decade on projects that take advantage of low-price natural gas.
The United States has seen more than a decade of decline, having been ranked 2nd on the index in 2000, 8th in 2005 and 17th in the current report. The average global economic freedom score rose slightly from 6.74 out of 10 in 2010 to 6.87 in 2011, the last year for which data is available. The authors of the report note that the United States has fallen in all areas that the report measures: size of government, the legal system and security of property rights, sound money, freedom to trade, and regulation. Increased spending, a weakening rule of law, worse monetary policy, greater trade barriers, and more regulation are to blame. As the graph below shows, economic freedom in the United States is lower than it was in 1980 and is below that of Canada, New Zealand and even Chile, a developing country on its way to first-world status.
Baby Boomers, "The Generation Where Each Individual Takes Personal Credit for Bob Dylan," are now entering retirement age. They have a lot of time on their hands, and all of America's disposable income. Now, the slavish catering to their every whim really begins.
Bloomberg reports that you, the consumer age 50 or older, have a significantly higher median net worth than either your parents or grandparents' generation did—in fact, Baby Boomers represent $3 trillion worth of buying power in America. They are monied, self-important, and extremely up to date:
In 2017, approaching half of the U.S. adult population will be 50 and older and they will control a full 70 percent of the disposable income, according to data tracker Nielsen. By 2050, there will be 161 million 50-plus consumers, a 63 percent increase over 2010...
Boomers watch 174 hours of television a month, 63 percent more than Millennials, the 18-to-34 year-old generation. More than half of them are on Facebook.
Due to many medical and societal advances, people these days are living longer than ever. As life expectancy rates continue to rise, many retirees find themselves increasingly unable to make ends meet later in retirement.
What can be done to combat this alarming trend? A recent article by Cliff Goldstein on the Wall Street Journal’s website provides some solid suggestions, even if retirees may not be ready for all of them:
One of the most obvious solutions — and a solution many people don’t want to hear — is to delay retirement. The standard 65-year retirement mark may take a bump in the not-too-distant future. The fact of the matter is, not everyone has enough money to retire rich and carry them through 30 years of unemployment. Our current 40-year careers could easily start turning into 45- or 50-year careers. Those who can afford it might ease themselves into retirement by switching from full-time to part-time or taking on a simpler, less-demanding job.
Just as the only way to lose weight is through diet and/or exercise, the only way to fund additional years of retirement is to save more and/or spend less; it may not be fun in the present, but the end result could be well worth your efforts.
The stock market has been in a holding pattern for a little over a month, and it's still down "slightly" from that peak made in the third week of May.
It is somewhat amazing to me to see some of our indicators, which I noted on Monday, showing deep pessimism. But remember overall that our Asset Allocation Model is showing Psychology walking a tight rope between P3 and P4, which is pretty close to the middle of the road, while Monetary and Valuation are extremely bullish.
So, if you are sitting there stewing about the Fed this morning, take a look at the chart below, which virtually guarantees that our Monetary Composite is not even close (in time or amplitude) to creating any bearish tendencies for stocks. The Fed is committed to creating maximum economic activity, while inflation remains moderate. So how does this hit you?
Remember, the green line in the chart above is the Fed's favorite inflation gauge. It is at 1% and falling. So you can listen all you want to the "jabberwocky" about what the Fed's Open Mouth Committee is spouting, the Fed is going to continue to make sure that they keep the pedal to the medal.
The Buy and Hedge Fund called the
ValueAligned Fund is up +11.4% for the year. It is down a bit -0.6% in
June. That compares to other stock hedge
funds that are up +4.6% and are down -1.8% in June through Thursday.
The Buy and Manage Folio account called
the ValueAligned Portfolio (VAP) is up
+17.9% so far this year, flat + in June, which compares to the S&P 500 with
its dividends reinvested up +15.2% for the year, down -0.2% in June.
BERK: Why do lower end consumers keep voting for Democrats? Really why?
We’re also a little concerned about the consumer. This economy’s still not booming particularly for the low-end consumer and we’ve seen some – theme being in a difficult situation now for more than four years, and they’re all still trying to get readjusted to the reinstitution of the payroll taxes.
The bottom line is that all this focus on government actions through the lens of a Keynesian model has been basically worthless. Investors are better served when they follow free-market economic theories that focus on production, not demand-side models that focus on spending and debt. And this appears true in both the long, and the short, run. Brian Westbury from his article today Keynesian Model Blew It Again
Oh no! The Sequester! Fiscal Cliff! Payroll tax rates going back to normal!
BERK: First they told us that the Federal Government must continue spending at the crisis rate. They told us that the dreaded fiscal cliff resolution and its payroll tax rate normalization would derail the economy. Then the "sequester" was supposed to kill the economy...as I say around here the economy is doing ok because the government is cutting back...
“Treasuries in the last few weeks have certainly been the place to be,” Gross said during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Sara Eisen. Stocks, high-yield debt, currency and emerging-market bonds are all in “disarray,” he said.
Federal Reserve Chairman Ben S. Bernanke told Congress on May 22 that the central bank’s policy-setting board could start scaling back its bond purchases in its “next few meetings,” if the U.S. employment outlook shows sustained improvement.
Economists polled by Bloomberg this week predicted the Fed will trim its so-called quantitative easing program to $65 billion a month at the Oct. 29-30 meeting of the Federal Open Market Committee, from the current level of $85 billion.
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