Andy Sutton's Extemporania

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Tags: Economics

Trichet: Signals Flashing Red

by TwoCentsEditor

Published on: 06/23/2011

Categories: Current Events, Economics, Financial Markets

Tags: bailouts, bank failure, banks, dollar, Economics, EU, Euro, stocks

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Editor’s Note: Another bailout anyone???

June 23 (Bloomberg) — European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks.

“On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. “The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union.”

Trichet, who chairs the ESRB, made the remarks as European leaders meet in Brussels to discuss how to stave off a Greek default, while preparing a second bailout. The EU is trying to avoid a repeat of the financial crisis that followed the 2008 collapse of Lehman Brothers Holdings Inc. and resulted in European governments setting aside more than $5 trillion to support banks.

The yield difference, or spread, between 10-year German bunds and Greek securities of a similar maturity was at 1,388 basis points today, up from 1,317 at the beginning of the month. Swaps on Greece rose 25 basis points to 2,012, signalling an 82 percent chance of default within five years, according to CMA.

‘Moral Support’

Greek bonds have been pushed lower as authorities bickered over ways to support the nation. The ECB and the German government have clashed over how much investors should contribute to alleviating Greece’s debt load, which reached 143 percent of gross domestic product in 2010. The German government has argued for an extension of the maturities of Greek bonds, with the ECB saying it opposes anything that could be interpreted as a default.

While Greek Prime Minister George Papandreou earlier this week won a vote of confidence, bolstering his new government’s chances of pushing through austerity measures to secure further financial aid, European finance ministers said earlier this week they would hold off on approving a 12 billion-euro ($17 billion) payment to the country promised for July until passage of the plans to cut the budget deficit and sell state assets.

“European leaders will try and convince Greeks and financial markets when they meet in Brussels today and tomorrow that they have a workable plan to help Athens avoid a debt default,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. They’ll use a “mixture of arm-twisting and moral support” to force Greece to adopt further reform.

‘Serious Threat’

Federal Reserve Chairman Ben S. Bernanke downplayed the risk of a Greek default on U.S. banks, telling reporters yesterday that the impact would be “very small.” With “very few exceptions, the money-market mutual funds don’t have much direct exposure to the three peripheral countries which are currently dealing with debt problems,” he said.

The top U.S. prime money-market funds have about half their assets in securities issued by European banks, Fitch Ratings said in a report on June 21. The Bank for International Settlements estimated European lenders held $136.2 billion in loans to Greece at the end of 2010 and almost $2 trillion in Portugal, Ireland, Spain and Italy. Greece, Ireland and Portugal all received external support.

BNP Paribas SA, France’s biggest bank, and rivals Societe Generale SA and Credit Agricole SA may have their credit ratings cut by Moody’s Investors Service because of their Greek investments, the ratings company said on June 15. German banks could also be at risk from contagion, Fitch said last month.

“The most serious threat to financial stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states and the banking system,” Trichet said. There are “potential contagion effects across the union and beyond.”

Basel Meeting

Part of a wider regulatory overhaul, the 65-member ESRB aims to identify and warn of brewing risks in the financial system. Trichet and Bank of England Governor Mervyn King, vice- chairman of the board, highlighted risks in areas including asset-price imbalances and exchange-traded funds.

King is also at the center of a regulatory overhaul in the U.K. and will hold a press conference in London tomorrow on Britain’s Financial Policy Committee. He said the ESRB meeting highlighted “the ability of banks to reduce maturity and, where relevant, currency mismatches in their funding structures and to absorb losses arising out of the ongoing credit cycle.”

The Frankfurt-based body can pass on matters to the heads of European governments if its warnings aren’t heeded. While the body will monitor macro-prudential risks, it may turn its attention to single institutions deemed systemically important.

The ESRB is one of four bodies in Europe’s financial regulation architecture. The others are the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority.

The Basel Committee on Banking Supervision meets in Basel, Switzerland, today to discuss how much extra capital the world’s largest and most systemically important banks will be forced to hold to avert another financial crisis. Global central bank governors are scheduled to meet under the auspices of the BIS in Basel from June 25.

Andy Sutton’s Liberty Talk Radio Appearance

by TwoCentsEditor

Published on: 06/17/2011

Categories: Appearances, Current Events, Economics, Financial Markets

Tags: alex jones, andy sutton, Economics, joe cristiano, liberty talk radio, precious metals, stocks

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Andy Sutton appears monthly on joe Cristiano’s Liberty Talk Radio. They discuss economic issues, take questions from callers and discuss how the macrosphere will effect Main Street USA.

The most recent installment was 6/15 and can be listened to by clicking here.

A New Mission

by TwoCentsEditor

Published on: 06/10/2011

Categories: Current Events, Economics, Financial Markets, My Two Cents

Tags: andy sutton, Economics, gold, money, My Two Cents, stocks, the centsible investor

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A sabbatical is usually a good thing as it gives a nice opportunity to take a step back, assess, reassess, and potentially relax. I’ve enjoyed the past few months away as I took time to do the above and also to try to impart a little common sense and perhaps some wisdom on the up and coming generation regarding economics, the study thereof, and more importantly, the dire consequences of failing to recognize and follow basic economic laws. So I return, and in many ways, things are not much different than when I took leave back in February. There have been some recurring themes, and in a sad way, it is nice to have been right about so many things, particularly the fraudulent nature of the recovery that was pronounced by the govermedia back in early 2009. Believe me though, for all the people who have had their jobs outsourced, offshored, or eliminated, I’d have much rather been wrong. The same goes for those who are now struggling to support families on a fraction of their prior earnings. I would much rather have had to slink away in disgrace because of a voracious (and healthy) economic recovery than see the suffering endured by so many.

I remember vividly a conversation I had with author Jim Kunstler a few years ago about these matters and we hammered on the need for people to scale down. Sure, we were having that conversation through the lens of the reality of peak oil, but it really applied in the financial sense as well. Perhaps the reality that has struck me the most over the past few weeks is the impact that McDonalds is able to have on the labor market. Who would have ever thought that a fast-food joint would be responsible for half the jobs created in a single month? And that is if you have any reason at all to believe the BLS jobs numbers. I don’t. But that is another story that has been told many times before and we’ll not do it again.

Getting back to my conversation with Kunstler, we talked about the mental paradigm shift necessary to deal with peak oil. The days of the hour-long commute are limited. Driving more than 100 miles a day is going to be a thing of the past soon. Many are now telecommuting a couple of days a week in jobs where that is suitable and that helps. Gas prices were much lower when Jim and I talked than they are now, that is for sure. For the guy who drives 100 miles each day to work, his commuting bill has gone up dramatically while his wages have stagnated. He is pummeled again at the grocery store with increasing prices for quality and quantity of foods that are continuously decreasing. The media and government are doing Joe America a huge disservice by making it sound like these situations are transient in nature, rather than here for the long term. Again, the point of this commentary is not to flesh out the reasons behind what is going on; that’s already been done. The point is that people need to adjust and most simply won’t. It isn’t that they can’t; they just refuse.

Our entitlement society is heading for a brick wall. The major underpinnings of our gimme society are insolvent. Our debt is skyrocketing. Our bonds are junk. Our currency is a joke. Our ‘free’ press is in the pockets of the same people who have brought all of this economic despair to Main Street. Joe America nearly shut down this corrupt system in 2008-09 simply by curtailing his expansion of borrowing. Nobody wants to talk about that. The proof is irrefutable and the connections are clear. America stops borrowing and the fiat system is dead on arrival at the Fed’s triage center: the FOMC. We hear dire warnings about the government’s debt and the statutory debt limit. Threats are made, promises of doomsday echo from the same ratings agencies who saw fit to apply AAA ratings to junk mortgage bonds and will mercilessly downgrade the PIIGS for problems that are several orders of magnitude less than what we face.

Joe America is largely unfazed, however. Sure, there are pockets of hurt, and there are many, many people who have re-evaluated their personal situations and have embraced individual austerity. Yet in the aggregate, we’re back on the credit card. It is hard to discern at this point whether the uptick in borrowing is for essentials or discretionary goods. Based on the anecdotal evidence, it is likely both. People have been trained to borrow, make minimum payments, and to live as a servant to the creditor. When you think about it, the ‘money’ that has been used to create this servitude has been created from nothing, yet must be repaid with something very real – the sweat of one’s brow. Hardly seems like a fair deal to me, yet we not only accept it, we demand it. Have we really spent any time thinking about these matters? It is almost funny when I look at the latest opinion polls regarding the national debt. The vast majority of Americans think that Congress needs to put the country’s fiscal house in order, yet most of those same people refuse to do it in their own backyard.

Yes, America is in dire need of a mental paradigm shift towards a simpler life, with less emphasis on accumulation of toys and materialism and more of an emphasis on stewardship and restoring the economic environment that allowed this country to become what it was. That should be our mandate. However, I am a realist and I know deep down that most will not heed this or any other call for a change of thinking. Unfortunately, history is firmly on the side of this pessimistic disposition. I have decided in my time off to focus at the micro level instead of the macro level. My days of open letters to Congress and calls to economic action are over. My days of open letters to individuals have begun. These commentaries and my firm’s newsletter will be geared more towards helping individuals who recognize our changing world to adjust, cope, and prepare for what is inevitable rather than attempting to convince those who will continue to deny the obvious until the time for meaningful action has long passed.

These words are not meant to be harsh, but have come over months of reflection as I’ve had some time to ruminate over the human condition and its predilection to lemming-like behavior. The one silver lining in all this is that if people live more responsibly and in a simpler manner from a financial perspective, they will be taking many of the steps that will be necessary for the preparation of the effects of peak oil. Yes, peak oil is real. Even the big banks are now talking about ‘resource constraints’ in the energy space and figuring it into their forecasts. Oil companies are hammering like crazy in the Marcellus shales to bring natural gas to market that hasn’t sold for over $5.50 a thousand in what seems to be a dog’s life.

If you are one of those people who understand these matters, then this column and anything else I can do to help are here for you to utilize. From here forward this work will be dedicated to the awakened rather than to the process of awakening. If you’re not there yet, there are plenty of mainstream media outlets that will gladly satiate your desire for information.

This month’s Centsible Investor Keynote will focus on the debt ceiling, government debt in general, and most importantly, some steps you can take on an individual basis to assist you in mitigating the effects of continued runaway borrowing. In addition, we’ll provide our traditional analysis of energy, precious metals, and the major financial markets. For more information, click here.

Global Economy Loses Steam

by TwoCentsEditor

Published on: 05/27/2011

Categories: Current Events, Economics, Financial Markets

Tags: alex jones, bonds, credit, debt, debt limit, Economics, economy, jim willie, max keiser, stocks

Comments: No Comments

Editor’s Note: We told everyone that this ‘rally’ in growth was a sham, bought with debt, and paid for with our kids’ future. Few listened. Now, 2 years later, the MSM is finally starting to admit the truth; always a day late and many, many dollars short.

May 27 (Bloomberg) — The world economy is losing strength halfway through the year as high oil prices and fallout from Japan’s natural disaster and Europe’s debt woes take their toll.

Goldman Sachs Group Inc. now expects global economic growth of 4.3 percent in 2011, compared with its 4.8 percent estimate in mid-April, while UBS AG has cut its projection to 3.6 percent from 3.9 percent in January. Downside risks also include a shift to tighter monetary policy in emerging markets.

“The world economy has entered a softer patch with the incoming growth data mostly disappointing,” said Andrew Cates, an economist at UBS in Singapore. “We suspect this soft patch will endure for longer.”

Data this week backed that outlook as reports showed Chinese manufacturing expanding at the slowest pace in 10 months, orders for U.S. durable goods dropping the most since October and confidence among European executive and consumers sliding for the third straight month. Investors are tuning in, pushing the MSCI World Index of stocks in advanced economies down 4.2 percent this month.

Goldman Sachs economists led by Dominic Wilson and Jan Hatzius said in a May 25 report they now expect “less upside in equities” with their colleagues reducing price targets for most of the major regions even though they still anticipate another 10 percent gain in developed markets this year.

The concern comes as leaders from the Group of Eight conclude a summit in Deauville, France, with a statement that declared the world economy is “gaining strength” and that its recovery will pave the way to debt reduction. They identified commodity prices as a “significant headwind” to expansion.

The MSCI World Index rose 0.6 percent at 6:15 a.m. in New York today, paring its weekly lose, after the G-8 statement.

Energy Costs

Oil prices reached a 31-month high of $114.83 on May 2 as the war in Libya cut supply. Goldman Sachs this week raised its forecast for Brent crude at the end of 2012 to $140 a barrel from $120, suggesting the price’s path will be 20 percent higher than anticipated at the start of the year. That’s enough to shave 0.5 percentage point from U.S. growth over two years and a little less in other wealthy nations, they said.

The fallout from Japan’s earthquake, tsunami and nuclear disaster may also be reverberating, said David Hensley, director of global economic coordination at JPMorgan Chase & Co. in New York, who calculates the international expansion will duck beneath its long-term trend this quarter.

Japan’s Consumers

Japan’s retail sales fell 4.8 percent from a year earlier in April, the Trade Ministry said in a report released today, underscoring the impact on consumers from the March disasters and forecasts for gross domestic product to shrink for a third straight quarter in the three months to June.

While spillover to Asia’s emerging economies has been “surprisingly modest,” Hensley said supply-chain disruption is “likely to rise with time” as Japanese production and exports remain depressed before beginning to recover around September.

“The global economy is losing momentum,” Hensley said.

China, after powering the global economy out of the 2009 recession, may also be slowing. The world’s No. 2 economy has raised interest rates four times since mid-October and boosted banks’ reserve-requirement ratio eight times since November, most recently on May 12.

ING Groep NV this month cut its estimate for China’s full- year growth to 9.8 percent from 10.2 percent and reduced its second-quarter forecast to an annual pace of 9.6 percent, from 10.3 percent. Credit Suisse Group AG adjusted its 2011 expansion estimate to 8.8 percent from 9.1 percent. China’s stocks this week fell by the most in eleven months.

Central Banks

“Investors are worried that the tightening is overdone and concerns have widened to a slowdown in earnings and economic growth from just inflation,” said Wang Zheng, chief investment officer at Jingxi Investment Management Co. in Shanghai, which manages about $120 million.

Emerging-market central banks elsewhere are also throttling back. Those in India, the Philippines, Chile, Poland, Peru and Malaysia all raised their benchmark borrowing costs this month to cool price pressures.

Europe’s 18-month debt crisis is another brake on growth as its policy makers prepare a second aid package to save Greece from default and other so-called peripheral economies deploy austerity measures to slash debt. At the same time, the euro’s 6 percent gain against the dollar since the start of the year and the European Central Bank’s shift toward tighter monetary policy may be slowing expansion elsewhere in the region.

Impact on Companies

The global economy’s change in tone is reflected in some company announcements. Chicago-based Boeing Co., the world’s largest aerospace company, said it received two orders last month compared with 98 in March. Hermes International SCA, the Paris-based maker of Birkin handbags, said on May 11 that its forecast for 2011 is “clouded by geopolitical and economic uncertainties.”

The slower growth may still be short-lived and by cooling the oil price could even provide some support for consumers and inflation relief for central bankers, allowing them to keep monetary policy looser for longer. Other reasons for confidence include job growth in the U.S., expectations for an infrastructure-led bounce in Japan’s economy, supportive equity markets and a likely recovery in inventory accumulation, said Hensley at JPMorgan Chase.

Economists Nariman Behravesh and Sara Johnson of IHS Inc. said in a May 24 report that while they expect worldwide growth to slow to 3.5 percent this year from 4.1 percent in 2010, it will rebound to 4 percent in each of the next two years as the pain of austerity, Japan’s woes and high oil prices passes.

“Assuming these shocks do not get any worse and that the world economy is not hit by additional unforeseen jolts, chances are good that the period of slow growth will be relatively short and that the recovery will pick up steam again,” they said.

May’s Centsible Investor is Available

by TwoCentsEditor

Published on: 05/15/2011

Categories: Centsible Investor Info., Current Events, Economics, Financial Markets, Foreign Exchange Markets

Tags: alex jones, andy sutton, debt, Economics, Federal Reserve, the centsible investor

Comments: No Comments

The May Edition of our premium newsletter, ‘The Centsible Investor’ is available!

Despite the blowout in commodities and the sideways/down action in stocks, the model portfolio lost just .3% in the past month. The portfolio has been bolstered by diversification and also by a few new strategic additions to the dividend section, which we outlined in an earlier dispatch.

This month’s keynote article is an expose of the federal reserve. The article delves into the historical events surrounding the creation of the fed, some comments by various fed officials which lay bare the truth that this was an entity that was created to commit legalized theft via inflation. We explain in easy to understand terms the main mechanisms by which the fed accomplishes this task. Hopefully after reading this piece, you’ll be convinced of the need for a full Congressional investigation (not a whitewash) of this institution and its eventual demise.

The energy update focuses on JP Morgan’s validation of the work we’ve been doing for well over a year – there is a growing disconnect between global oil supply and demand and that we’ve been experiencing supply deficits in the US for some time now.

This month’s metals report is critical in terms of getting a firm understanding of what exactly is going on in the commodities markets recently. The media would have you believe (once again) that the bull market in commodities is over. Why does the media despise commodities so? Because commodities are an excellent proxy of the inflation created by central banks and the bank-sponsored media must do its bidding.

In our equity market update, we look across our full range of indicators: short, medium, and long term and analyze potential disturbances in the markets moving forward. We also outline several triggering mechanisms for these disturbances and give you some signposts to watch for as you navigate through the reams of information you come across daily.

For more information or to subscriber, please click here

Vast Majority of Americans Declare: We’re in a Recession

by TwoCentsEditor

Published on: 04/29/2011

Categories: 'Best of Web', Current Events, Economics, Financial Markets

Tags: depression, Economics, obama, politics, recession

Comments: No Comments

Editor’s Note: Could be that the proletariat is finally waking up to the idea that the economic figures lie and the the political liars use figures. When a million people apply for 60,000 McDonalds jobs, does that sound like a healthy economy to you?

(Reuters) – More than half of Americans say the U.S. economy is in a recession or a depression despite official data that show a moderate recovery, according to a poll released on Thursday.

The April 20-23 Gallup survey of 1,013 U.S. adults found that only 27 percent said the economy is growing. Twenty-nine percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is “slowing down,” Gallup said.

The poll findings have a 4 percentage point margin of error, according to Gallup.

The health of the U.S. economy is expected to be a major issue as President Barack Obama, a Democrat, seeks re-election in 2012.

The government reported on Thursday that U.S. economic growth slowed more than expected to 1.8 percent in the first quarter of the year, as soaring food and gasoline prices drained consumer spending power.

A slowdown in first-quarter growth was acknowledged on Wednesday by the Federal Reserve, which described the U.S. economic recovery as proceeding at a “moderate pace.” That was a step back from the “firmer footing” that Fed officials cited for the recovery in March.

The Gallup poll found that Democrats are the most likely to say the economy is growing. Forty-three percent of Democrats said the economy is in a recession or depression, 13 percent said it is slowing down and 42 percent said it is growing.

Sixty-eight percent of Republicans and supporters of the conservative Tea Party movement said the economy is in a recession or a depression. Fourteen percent of Republicans and 13 percent of Tea Party supporters said the economy is growing.

Fifty-seven percent of independent voters — a crucial segment of the electorate for Obama’s re-election bid — said the economy is in a recession or depression and 24 percent said it is growing.

Walmart’s Core Shoppers ‘Running Out of Money’

by TwoCentsEditor

Published on: 04/28/2011

Categories: 'Best of Web', Current Events, Economics, Financial Markets, My Two Cents

Tags: consumer spending, Economics, gas prices, inflation, walmart

Comments: No Comments

Editor’s Note: But the media pundits, government and bankers all say the economy is good. We are beginning to see just the leading edge of the complete bifurcation of the USEconomy: into the haves (about 5%) and the have nots (95%). Think you’ll end up in the 5%? Think again.

Wal-Mart’s core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

“We’re seeing core consumers under a lot of pressure,” Duke said at an event in New York. “There’s no doubt that rising fuel prices are having an impact.”

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

Lately, they’re “running out of money” at a faster clip, he said.

“Purchases are really dropping off by the end of the month even more than last year,” Duke said. “This end-of-month [purchases] cycle is growing to be a concern.

Wal-Mart brings guns back

Wal-Mart (WMT, Fortune 500), which averages 140 million shoppers weekly to its stores in the United States, is considered a barometer of the health of the consumer and the economy.

To that end, Duke said he’s not seeing signs of a recovery yet.

With food prices rising, Duke said Wal-Mart is charging customers more for some fresh groceries while reducing prices on other merchandise such as electronics.

Wal-Mart has struggled with seven straight quarters of sales declines in its stores.

Addressing that challenge, Duke said the company made mistakes by shrinking product variety and not being more aggressive on prices compared to its competitors.

Wal-Mart’s ready to do battle on prices

“What’s made Wal-Mart great over the decades is ‘every day low prices’ and our [product] assortment,” he said. “We got away from it.”

Now, with its strategy of low prices all the time back in place, Duke said making Wal-Mart a “one-stop shopping stop” is a critical response to dealing with the rising price of fuel.

Americans don’t have the luxury of driving all over town to do their shopping.

Other than competing on prices and products, Duke said Wal-Mart is focused on leveraging technology — especially social networking — more aggressively to drive sales.

“Social networking is much more a part of the purchasing decision,” he said. “Consumers are communicating with each other on Facebook about how they spend their money and what they’re buying.”

Elsewhere, Duke said Wal-Mart is exploring a number of e-commerce initiatives to grow the business such as testing an online groceries delivery business in San Jose.

Economic Growth Slows on Gas Prices, Spending

by TwoCentsEditor

Published on: 04/28/2011

Categories: Current Events, Economics, Financial Markets, Foreign Exchange Markets

Tags: Economics, economy, government propaganda, money, stocks

Comments: No Comments

Editor’s Note: The Fed has printed trillions of dollars driving up the cost of everything and our government has put us trillions more into red ink to ‘stimulate’ the economy and this is what we end up with. Keynesian was a bald-faced lie to begin with and is now completely discredited.

April 28 (Bloomberg) — The U.S. economy grew at a slower pace than forecast in the first quarter as government spending declined by the most since 1983.

Gross domestic product rose at a 1.8 percent annual rate from January through March after a 3.1 percent pace in the last three months of 2010, the Commerce Department said today in Washington. Economists projected 2 percent growth, according to the median estimate in a Bloomberg News survey.

To keep spurring the expansion, Federal Reserve policy makers said yesterday they’ll complete their $600 billion round of stimulus through June. While slower than the previous three months, a reflection of higher gasoline prices, consumer spending climbed more than projected in the first quarter.

“We’ve sputtered a bit here, especially coming off a relatively strong fourth quarter,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who accurately forecast first-quarter growth. Even with the higher costs for fuel and food, “consumers are going to continue to spend. Growth should pick up toward the 3 percent level” later this year, he said.

GDP estimates from 80 economists surveyed by Bloomberg ranged from 0.5 percent to 3.5 percent. The first-quarter pace was the slowest since April through June of last year. For all of 2010, the world’s largest economy expanded 2.9 percent, the most in five years, after shrinking 2.6 percent in 2009.

New applications for jobless benefits unexpectedly rose last week to the highest level in three months. Unemployment insurance claims jumped by 25,000 to 429,000, the Labor Department said. The government anticipates a drop in unadjusted claims during the week leading up to the Easter holiday, something that didn’t happen this year, a Labor Department spokesman said.

Stock-Index Futures

Stock-index futures dropped after the reports and Treasury securities rose. The contract on the Standard & Poor’s 500 Index fell 0.2 percent to 1,348.6 at 8:53 a.m. in New York. The yield on the benchmark 10-year Treasury note, which moves inversely to prices, fell to 3.32 percent from 3.36 percent late yesterday.

Slower first-quarter growth explains why the Fed trimmed its 2011 forecast to 3.1 percent to 3.3 percent, according to its latest so-called central tendency, released yesterday. In January, the central bankers projected 3.4 percent to 3.9 percent expansion.

“I would say roughly most of the slowdown in the first quarter is viewed by most on the committee as transitory,” Fed Chairman Ben S. Bernanke said at a news conference in Washington following the central bank’s policy meeting yesterday.

Consumer Spending

Household purchases, which account for about 70 percent of the economy, rose at a 2.7 percent pace last quarter after a 4 percent gain in the final three months of 2010.

The gain in consumer spending from January through March compared with a 2 percent median forecast in the Bloomberg survey. Purchases added 1.91 percentage points to growth. (Higher gas and food prices account for ALL of this increase). This is not ‘good’ as the spinmeisters would have you believe.

Government purchases fell at a 5.2 percent annual rate, the biggest drop since 1983, after a 1.7 percent decrease in the fourth quarter. National defense spending dropped at an 11.7 percent pace, the most since 2005. Federal government spending fell the most in 11 years.

Residential construction fell at a 4.1 percent rate, while the trade deficit subtracted 0.1 percentage point from GDP, today’s report showed.

Manufacturing Gains

Manufacturing industries, which account for 11 percent of the economy, are likely to remain at the forefront of the recovery on growing demand from abroad and the need to replenish inventories. This is another lie; the sector is shedding jobs – again.

Inventories last quarter were stocked at a $43.8 billion pace, compared with a $16.2 billion rate in the fourth quarter. Excluding inventories, the economy climbed at a 0.8 percent annual rate from January through March, the slowest since the third quarter 2009.

Spending on equipment and software climbed at an 11.6 percent annual last quarter, up from 7.7 percent the previous three months.

“After a period of widely fluctuating demand in late 2008 through last year, we anticipate that 2011 will be the beginning of a period of sustained growth in our truck engine markets in the U.S.,” Thomas Linebarger, chief operating officer of Cummins Inc., said on an April 26 teleconference.

The Columbus, Indiana-based maker of diesel engines projects 2011 sales to be up 30 percent from last year, compared with a previous forecast for a 20 percent gain.

UPS Shipments

United Parcel Service Inc., the world’s biggest package- delivery company, this week bolstered its full-year forecast after revenue per package climbed in all its sectors during the first quarter.

The gains reflect “some of the increased velocity in the core economy with manufacturing and finished goods,” Kurt Kuehn, chief financial officer of the Atlanta-based firm, said in an April 26 telephone interview.

UPS and FedEx Corp. handle goods ranging from financial documents to pharmaceuticals and industrial parts, making them economic bellwethers.

The Fed’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, climbed to a 1.5 percent annual pace. The Fed’s longer term projection for inflation is a range of 1.7 percent to 2 percent. Rising oil and food costs may push up the prices of other goods and services.

Fed on Inflation

“Increases in the prices of energy and other commodities have pushed up inflation in recent months,” the Federal Open Market Committee said yesterday in its statement after a two-day meeting in Washington. Still, “longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued,” the Fed said.

Bernanke has signaled that the Fed will maintain record stimulus until job growth accelerates and the recovery is robust enough to withstand tighter credit.

Andy Sutton to Appear on ‘Liberty Talk Radio’

by TwoCentsEditor

Published on: 04/18/2011

Categories: Appearances, Centsible Investor Info., Current Events, Economics, Financial Markets, Foreign Exchange Markets

Tags: andy sutton, Economics, finance, liberty talk radio, stocks

Comments: 1 Comment

This Wednesday at 8PM EDT, I will have the honor and privilege of appearing on ‘Liberty Talk Radio’ with host Joe Cristiano. While callers often drive the direction of the topics, we are planning on covering the state of the general economy, the labor market, commodity prices, prospects for more inflation from the Fed (QE3, 4, etc), and as many other topics as time will permit. The show lasts one hour.

Joe said to pass along his toll-free call-in number for anyone interested in asking a question or getting into the discussion – (888) 773-4496. The show can be heard on the Internet by visiting blogtalkradio.com

I’ve been appearing on this show monthly for quite a while, but Joe and I both feel that this month’s discussion is going to be key given everything going on, hence the dispatch to everyone. The show will also be posted on our website this Thursday morning for anyone who missed the original broadcast.

April’s Centsible Investor is Available!

by TwoCentsEditor

Published on: 04/15/2011

Categories: Centsible Investor Info., Current Events, Economics, Financial Markets, Foreign Exchange Markets, Podcast Content

Tags: alex jones, andy sutton, Dr. Chris Busby, Economics, investment newsletter, michael ruppert, money, portfolio, stocks, the centsible investor

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April 2011′s Edition of The Centsible Investor is Now Available!

A quick status update on the Original Model Portfolio: Currently, the dividend-producing segment has a total return of 15.74% including dividends. This while the major indexes are off around 15% during the same time period. The precious metals section is leading all segments, up 33% as some of the early silver purchases are now up well over 150%. Our spec REE picks are up 104% and 51% since we added them just a few months ago.

This month’s keynote addresses some key preparation issues that everyone should be considering. The economic picture is pretty much unchanged in terms of direction and velocity since March, so it was a good time to talk at a deep level about why we are where we are and more importantly, the little things you can do that can make a BIG difference moving forward.

The Energy report focuses on gas prices, subsidies for the provisioning system, demand destruction and the importance of the fact that we’re seeing demand destruction much sooner than we did the last time prices spiked in 2008. It is another very clear window into the true state of the US economy.

Precious metals is dedicated this month to currencies, an update on several fronts regarding currencies, the situation with silver backwardation, the prospects for the same in gold and some practical holding tips you can put to use in your own life. Our ‘other’ precious metals focus, REOs, have gotten a nice boost recently from news that the US Government is considering its own stockpile of these critical metals. We explore the prospects for this taking place.

Our interest rate model is close to issuing another short-term signal. We’ve selected the past 80 weeks of the model and put them in their own chart to better illustrate the accuracy of this powerful weapon in terms of predicting rate moves. The last short-term signal, issued several weeks ago, nailed a bottom in rates and the subsequent move has been significant.

We also analyze the correlation between the DJIA and crude oil; something many subscribers have been asking about since they’re hearing it on TV. We found some interesting potential trends over the past decade and discuss them as well.

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