Powell Puts It to Congress – Ep. 448

* Poland became the 21st country to lower interest rates this year * New record low to 1.5% * Polish economy is strongest in three years * Growing faster than the U.S. economy * Policy conundrum: what is inflation target? * Low inflation stimulating Polish economy * Yet Central Bankers look to illogical Keynesian textbooks * Where is the evidence that deflation is undermining the economy? * There is no magical point where a good thing becomes a bad thing * If they overcompensate and weaken the economy, they will be raising interest rates on an already weak economy * Poland could afford to raise rates, however, if this policy fails, because their debt is low * U.S. debt is so high, we can't afford to raise rates in order to support the dollar * When inflation picks up in the world and other central banks raise rates, the dollar will decline * The Fed will be unable to curb inflation because we can't afford to service our debt * Ultimately this will precipitate a currency crisis when it becomes apparent that the Fed has run out of options Privacy & Opt-Out: https://redcircle.com/privacy

5 Maalis 201521min

* First trading day of march - NASDAQ closed above 5000 for the first time in 15 years * Each time the market goes up with crazy valuations, pundits say, "This time it's different." * This time the Fed is under more pressure to create the illusion of prosperity * Today's rally came against the backdrop of weak economic data * The only way this bubble won't burst is if the Fed intervenes with more stimulus * Bubbles force you to make an important decision: * Look like a fool before they pop, or look like a fool after they pop * It doesn't matter how much money you make, it's how much money you keep Privacy & Opt-Out: https://redcircle.com/privacy

3 Maalis 201526min

* Government released revised estimate for Q4 GDP * Initial estimate was 2.6; revised down to 2.2 * Economic growth dipped from 5% in Q3 to 2.18% in Q4 * PMI was expecting 58.7 but plunged to 45.8, indicating contraction * Alan Greenspan commented that the U.S. economy is weak * Greenspan cites declining U.S. productivity * Points to declining gross domestic savings brought on by entitlement programs * Greenspan refuses to blame Fed policy for productivity and savings declines * He predicts continued low interests rates to create the illusion of wealth * In 1966, Alan Greenspan blamed the Fed and their cheap money policies for stock market bubble and economic imbalances * Today, he still believes this to be true, but no longer cares about the consequences of reckless economic policy * The Fed's job now is to just do whatever it takes to postpone the pain * Inflating bubbles with the certain knowledge that the outcome will be bad, while pretending that they will eventually raise rates Privacy & Opt-Out: https://redcircle.com/privacy

28 Helmi 201523min

* Janet Yellen's prepared remarks were the most dovish yet * If economy is improving, why do we still need "a high degree of accommodation?" * There is still room for "substantial improvement in the labor market" * Any modification of guidance will not necessarily indicate rate increase * Yellen states lower energy prices is positive for the economy, yet looks for higher inflation * The Fed says outlook is data dependent and the data is getting worse Privacy & Opt-Out: https://redcircle.com/privacy

26 Helmi 201530min

* Patricia Arquette claims that there is a still an unfair gender wage gap in the labor market * If that were true, all employers - male and female - would hire women first, because they are more cost effective employees * But they don't * Women who choose to balance family with career often accept lower-paying positions * Women do not make less money for the same work * They make less money for different work * In Hollywood, youth is an asset for women - for men, not as much. * Male action movie stars can earn more because action movies earn more. * Liberal spin promotes a government "solution" for a free market system that is working Privacy & Opt-Out: https://redcircle.com/privacy

24 Helmi 201529min

* Two days of bad economic news this shortened week * The Fed still says the economy is recovering * Recent FOMC minutes maintains pretense they can raise interest rates * FOMC members are worried about raising rates "too soon" * The Fed is worried about how to remove the word "patient" from communications * How confident can the Fed be in the "recovery" if they still fear raising interest rates? * The "recovery" was just a bubble masquerading as a recovery * If we had a real recovery the Fed could have already raised rates * They are now concerned about weakness overseas * They are worried about a strong dollar * They expressed concerns about the risks of lower oil prices * Low inflation causes concerns * The Fed is clearly paying attention to the negative economic news * Empire State Manufacturing down * Home Builder Confidence at 4-month low * Industrial production weak * PPI number declined .8 * Eventually the economic numbers will force the Fed to acknowledge weakness and resume stimulus Privacy & Opt-Out: https://redcircle.com/privacy

19 Helmi 201520min

* Friday 13th was not unlucky for Wall Street * S&P 500 traded to an all-time record high * The Dow closed above 18,000 * NASDAQ at almost a 15-year high * Despite overall trend of weak corporate earnings * Weak economic data does not dampen Wall Street's spirits * Central Banks are behind the surge with excess liquidity * Wednesday - Mortgage Applications plunged 9% * Purchases declined 7% following a 2% decline prior week * 10% decline in Mortgage Refinances * Jobless claims up 25,000 from prior week * Biggest back-to-back decline in Retail Sales since October of 2009 * Consumer Confidence is down 2 weeks in a row * Business Inventories rose by just .1% contrary to expectations * Inventory to sales ratio highest since July 2009 * Huge drop in Consumer Sentiment * Jobs number is a lagging indicator * Part-time economy is a double-edged sword Privacy & Opt-Out: https://redcircle.com/privacy

14 Helmi 201521min

* China announces a record trade surplus * Media reports surplus as bad news for China * Because of the strength of the Yuan, Chinese can buy more imports for less * Chinese consumers purchasing more * Chinese businesses manufacturing more * Contrary to press reports these factors point to a strong economy in China * U.S. has record deficits along with a strong dollar * The short term effect of a strong currency is that trade deficits should go down because imports are cheaper * The fact that our trade deficit continues to rise illustrates underlying economic weakness * Media double standard: China trade surplus is bad but U.S. trade deficit is good * Media reports "low rate of unemployment" among college grads, however: * Record number of college graduates are under employed * Only 44% of employed Americans work 30 hours or more per week * In future, the smarter students will skip low-value degrees in favor of work experience * Shake Shack IPO valuation $1.5 billion on $5 million profits * Grilled Cheese Truck: valued at $100 million on negative revenues * Black is white and white is black: Twilight Zone Privacy & Opt-Out: https://redcircle.com/privacy

10 Helmi 201527min