Given
the absolute failure of all the intervention and manipulation of the
(formerly) free market system by the federal government and the Federal Reserve, the Boston Federal Reserve is now floating the
idea of permanently
manipulating the monetary system via perpetual Quantitative Easing and perpetual zero
interest rates.
This willful negligence is setting the stage for inflation and the permanent
devaluation of the U.S. Dollar.
Meanwhile, the rich get richer and those of us living in the real economy continue to suffer. During
the first quarter of this year, the stock market roared higher while virtually
every economic indicator headed in the other direction.
- The Gross Domestic Product (GDP) was essentially zero! We saw massive inventory build-up (the largest since 2010) which boosted GDP by nearly 3.0%. Without this build-up, Q1 GDP would have been -2.5%.
- April PMI Manufacturing Flash Index at 54.2 biggest miss ever.
- New home sales tumbled by 11.1% – biggest drop since July of 2013.
- March Durable Goods was up slightly but less transportation, the index unexpectedly declined 0.2% (an indicator of a recession).
- April Service Sector PMI missed lowest expectations at 57.8 – the biggest miss ever.
- Dallas Fed Manufacturing Survey recorded significant drop at -16 (biggest losing streak ever)
Negative
economic news buoys the stock market because it removes fear of interest
rate hikes. Weak economy means more cheap money which means higher stock
prices.
