July 9, 2012 By gpc1981
http://albertpeia.com/usenteringrecessionworstinpostww2.htm
‘Most of my (Summers’) recent analysis has
pertained to Europe.
However, on the other side of the pond, the US economy is
showing major signs of deterioration. The jobs data, even after the BLS
massages it, is awful. Secondly, 1Q12 GDP estimates have been revised
lower. We’ve also seen the two consecutive bad Philly Fed surveys, including
the fact that the average workweek has shortened for two months now. We’re also
seeing a drop in the Empire Manufacturing index.
In addition to this, we’ve seen the following companies cut their
forecasts for 2012: Pall (PLL), Nucor (NUE), Ryder Systems (R), Proctor &
Gamble (PG), Cardinal Health (CAH), Texas Instruments (TXN), Starbucks (SBUX),
Autodesk (ADSK), FedEx (FDX), Jabil Circuit (JBL), Bed, Bath & Beyond
(BBBY), and Adobe Systems (ADBE).
Many of these are economic bell-weathers. And anyone in the
financial space can tell you, companies only lower their forecasts if things
are going to get a lot worse (executives are highly incentivized to maintain
positive outlooks for fear of their company’s shares collapsing on downgrades).
In simple terms, we’re getting many signals that the US economy may
in fact be slipping into a second recession in the context of a greater DE-pression. Once it’s confirmed that we’re back in
recessionary territory (we already are, but it won’t be confirmed by Government
officials until after the US
Presidential election) then this will mark:
1) The first time in the post-war period that the US has entered
a recession in which industrial production failed
to exceed its previous peak:
2) The first time the US entered a recession when average
unemployment duration was already at record highs:
3) Moreover, the civilian employment-population ratio is
at levels not seen since the ’70-’80 (meaning that fewer and fewer Americans
are in the workforce).
4) And a recession in which food stamp usage is already
near record highs:
To make matters worse, all of this is happening at a time when the US Federal Reserve, which has been the
life-support for the US
economy (for better or for worse), is finally discovering that its policies and
theories don’t actually apply to the real world:
Fed Wrestles With How Best
to Bridge U.S.
Credit Divide
Fed officials have been frustrated
in the past year that low interest rate policies haven’t reached enough
Americans to spur stronger growth, the way economics textbooks say low rates
should.
By reducing interest rates—the cost of credit—the Fed encourages
household spending, business investment and hiring, in addition to reducing the
burden of past debts.
But the economy hasn’t
been working according to script.
http://online.wsj.com/article/SB10001424052702303505504577403970826823032.html?mod=googlenews_wsj
This confirms what I’ve been saying for months: the Fed has realized
that the consequences of QE (higher cost of living) outweigh the benefits. This
is why the Fed only decided to extend its Operation Twist program during its
June FOMC: the political climate in the US will not tolerate a large-scale
move by the Fed unless a major bank collapses or some kind of systemic risk
hits.
This means… that the primary prop underneath the US stock market
and financial system (namely Fed intervention) is slowly being removed. What
follows will not be pretty and smart investors should be taking steps now to
prepare in advance.With that in mind, I’ve begun
positioning subscribers of my Private Wealth
Advisory for the next leg down. We’ve already locked in over 30
winning trades this year by finding “out of the way” investments few investors know
about and timing our positions to benefit from the various developments in Europe. When
you combine this with our 2011 track record, we’ve had 65 straight winners and
not one closed loser since July 2011. If you think this is sounds “too good to
be true,” you can Click
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learn more about Private Wealth Advisory and lock
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Summers, Chief Market Strategist, Phoenix
Capital Research’
