Wednesday, October 31, 2012

Our Fully Adjusted Return (TM) Model Predicts Unemployment will be 7.7%

The U.S.Employment Situation report will be released on Friday at 8:30 am. According to the Department of Labor, "Based on the Household Survey, the unemployment rate measures the number of unemployed as a percentage of the labor force." The consensus forecast is for a 7.8% to 8.0% unemployment rate. Our Fully Adjusted Return (TM) Model, combining social and financial data, predicts a 7.7% rate.

As noted in the Washington Post, "Hurricane Sandy could complicate Friday’s release of the October U.S. jobs report, the final snapshot of employment before the presidential election. Labor Department officials are still hopeful that they can release the report as scheduled at 8:30 a.m. Friday. But they acknowledged Monday that the storm could cause a delay." While the storm may impact the report release date, it will have no impact on the report itself. The storm will influence the November jobs figures, to be released on December 7th.

Recent Forecast Track Record

Our last forecast called for a 2.1% rate of growth in GDP, or gross domestic product. We said then that "forecasters estimate that the U.S. economy grew at a 1.9 percent annual rate during the third quarter, from July through September..GDP is the broadest measure of the nation’s economic activity, aiming to capture the value of goods and services produced in the United States during a given time period." GDP was released on Friday, October 26th at 8:30am.

The actual GDP number reported was 2.0%.

Thursday, October 25, 2012

Our Fully Adjusted Return (TM) models predict GDP will be 2.1%.

According to the Washington Post, "forecasters estimate that the U.S. economy grew at a 1.9 percent annual rate during the third quarter, from July through September..GDP is the broadest measure of the nation’s economic activity, aiming to capture the value of goods and services produced in the United States during a given time period." GDP will be released on Friday at 8:30am.

Our Fully Adjusted Return (TM) models predict GDP will be 2.1%. Consumer spending will drive most of the growth. Housing has recovered, adding additional strength to the economy. Government spending and business investment will lag, but will be higher than expected. 

Wednesday, October 24, 2012

Crowdfunding the Supreme Court

Submitting a brief to the Supreme Court

There is a case before the Supreme Court that will allow every person responsible for the recent financial crisis to escape punishment. The case is Gabelli v. Securities and Exchange Commission and "a decision is expected in the court's upcoming term, which ends in June."

I have decided to file a research paper (called an Amicus Brief) with the Supreme Court explaining why letting these guys go might be a bad idea for the rest of us, but I need your help.

Sunday, October 14, 2012

June 18, 1998 opposition to the Citibank/Traveler's merger

On July 25, 2012, Sandford I Weill, former Charman of Citigroup, said it’s time to break up the largest banks to avoid more bailouts. Mr. Weill, you'll recall, spearheaded the Citibank/Travelers, sparking the creation of super large financial institutions and creating the "too big to fail" dilemma. Mr. Weill accomplished this by getting policymakers to first ignore and then repeal the Glass-Steagall Act, a Depression era law designed to separate commercial from investment banks.

In an interview on CNBC, Mr. Weill stated that “ 'What we should probably do is go and split up investment banking from banking'..Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.' ” No kidding. Thank you, Mr. Weill. I suppose 5,151 days late is better than never at all.

An article about this matter on Bloomberg.com quoted Thomas Hoenig, a Federal Deposit Insurance Corp. board member and former head of the Kansas City Federal Reserve, that "There is finally a growing recognition among a wide range of market analysts, financial market participants and policy makers that the repeal of Glass-Steagall was a mistake...It’s time now to restrict banks to core services." 

Growing recognition indeed. It all depends on what criteria you use to restrict the definition of market analysts, financial market participants and policy makers. Mr. Hoenig's definition has a clear cultural bias to it. Given this, I thought I would post my June 18, 1998 opposition to the Citibank/Traveler's merger, online at http://www.creativeinvest.com/FRBtrav.pdf. 

The fact that Mr. Weill's policy, endorsed at the time by the market analysts, financial market participants and policy makers Mr. Hoenig cites, cost the American public $19.2 trillion in lost household wealth (2011 dollars) can be chalked up to, well, market analysts, financial market participants and policy makers. 

Just not this one.