US Economy Grinding To Halt
Jeffrey C. Borneman | October 2, 2014
Orders for durable goods, items expected to last at least three years, fell a record 18.4 percent in August while orders to U.S. factories fell in August by the largest amount on record.
From Yahoo News today, "(Factory) Orders declined 10.1 percent in August after a record increase of 10.5 percent in July, the Commerce Department reported Thursday."
We knew the July numbers could not have been not real and today's print cannot be accurate either. What the real factory order number is unclear but following the standard modus operandi of reporting bogus economic statistics to maintain the idea that "all is fine," the real factory order number must be much worse than a 10.1 percent decline.
What most investors are missing is the world's economies are grinding to a halt because the US has stalled. As predicted here earlier this year, this report (and subsequent ISM, unemployment, etc.) supplies the Federal Reserve the green light for yet more QE to begin in early 2015. Remember, stoking Inflation (the slower death) is much preferable to the alternative. Central banks fear Deflation like Dracula fears the dawn, so expect the Federal Reserve to try once again to drive asset prices higher while attempting to constrain any rise in interest rates.
This money game will be played out like a chess match long determined. Investors must be keen to watch the rotation of investment capital out of non-essential goods and into essential goods.
If you want to know more about how the MDEF™ Investing strategy is positioned in this, or other geopolitical possibilities, please contact us directly.
Many economists are looking for more uniformity in the second half of the year, forecasting a rate above 3 percent for both the third quarter and the October-December period. That would be a marked improvement from the sub-par growth rates of around 2 percent that have been logged during the first five years of recovery from the worst recession since the 1930s.