Let the Fun Begin

Posted on June 7, 2011 by MN Gordon

Last week Wall Street finally realized something that everyone else has known for some time…this economy stinks worse than rotten tomatoes.  After rising 14 points on Tuesday, the S&P500 dropped 45 points to close out the week.  Then, yesterday, it dropped 14 more…losing 4.6 percent over the last four trading days.

If the market’s supposed to be a forward looking animal, in this instance, it was blind to the obvious.  Namely, that the recovery is a fraud.  Anyone who works in the real world for a living knows that the recovery has been a sham since it began.

Economic growth has hardly budged.  Jobs creation has been nonexistent.  The only thing that’s improved over the last two years is the stock market, which has been boosted up by nearly $2 trillion dollars of funny money from the Federal Reserve.

Without all the heavy handed intervention by the Fed stock prices would be a lot lower.  So, too, it’s possible, after suffering a swift decline, the economy would have landed on solid ground and a real economic recovery would have begun.

Instead, following a two year delay of the inevitable, the government’s up to its eyeballs in debt, and it appears things are setting up for the great double dip. Continue reading →

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Nearing the Boiling Point

Posted on June 3, 2011 by MN Gordon

There’s way more going on in this wild and whacky world than we can keep up with.  We scan the headlines with wide eyes and a gaping jaw…gawking like our four year old son when he first saw the grotesquely large pigs at the LA County fair.

Like the oversized pigs, the headlines are disturbing and hideous… Still, we can’t bring ourselves to look away.  We pinch ourselves on your behalf, collecting our thoughts and connecting the dots…all just for you.

For instance, on Tuesday we learned, according to the World Health Organization, our cell phone is a possible cancer causing agent.  In fact, the health agency’s put it in the same category as gasoline engine exhaust and coffee.  Good grief!

We intentionally drink coffee every morning.  We like the taste and, more importantly, we like its effect.  We unintentionally breathe gasoline engine exhaust every day driving on the 405 freeway during rush hour commute.  We don’t like the smell, or the effect.  But there are those that do…

Last weekend, Sarah Palin told a gathering of motorcycle-riding veterans at the Memorial Day “Rolling Thunder” event at Washington’s National Mall: “I love the smell of the emissions.”  Can you believe it…a gas huffing politician?  We couldn’t make this stuff up if we tried. Continue reading →

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When You Should Buy Stocks

Posted on May 31, 2011 by MN Gordon

“Bad times have a scientific value.  These are occasions a good learner would not miss.” – Ralph Waldo Emerson

Markets Make Opinions

“Market’s make opinions,” say the old timers.  But what are the opinions to be made by this ambivalent market?  Are stocks rolling over for a great fall?  Or are they taking a breather for the next leg up?

No one really knows for certain.  Nevertheless, the opinions out there range as far and wide as Wilshire Boulevard.  “Invest in HUGE Bull Market,” screams one headline.  “Two Big Reasons to Worry About Stocks,” cautions another.

An old friend recently told us he’s bullish.  Obviously, the market’s made his opinion…it’s had a nice run over the last two years.  Here at the Economic Prism we find this reason enough to be bearish.  Market’s go up and they go down.  After going up and up over the last two years stocks will eventually go down…at least they should.

So far the adage to “sell in May and go away” has been a valuable insight.  May is almost behind us and stocks, as measured by the S&P500, have fallen 2.6 percent – the most since last August.  While one month does not make a trend…it could mark a turning point.  In good time we’ll know… Continue reading →

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Why Gold Is Going Higher

Posted on May 27, 2011 by MN Gordon

Several weeks ago the gold market took it on the chin…falling from $1,540 per ounce on May 4 to about $1,480 per ounce on May 17.  Since then gold has quietly been making its way back up the charts. Yesterday it hit sold for around $1,520.

Gold has been in a bull market since early 2001 when it traded for under $275 an ounce.  Back then no one would have thought it anyway possible for gold to rise 560 percent over the next decade.  Remember, that was back when gold was still a barbarous relic from an earlier, less sophisticated time.  Paper money, and a central banker’s power to manage it, was going to bring about the great paradise.

Now, scarcely a decade into the new millennium, it is paper money that’s on the run.  The value of paper, along with the elites who control it, have been debauched by an abundance of monetary shams…namely over issuances in the name of economic stimulus.

The other big trend over the millennium’s first decade has been the massive transfer of wealth from west to east.  This big trend is most obviously evident in the rise of China…now the world’s second largest economy, and rapidly closing on the United States as the planet’s top dog. Continue reading →

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