Economic Overviews

As the year comes to an end, it is natural to reflect back on what has occurred. From an economic standpoint, there has been no improvement. The economy is barely above water and nearing exhaustion from treading water so long. Will it have the energy to get through 2013 or will it succumb to the forces that are dragging it down? [For the answer] I invite you to look at these 12 charts below. They should disabuse you of any misplaced optimism.

The week leading up to the holidays can be the most hectic imaginable so it is quite possible you didn't find time to keep abreast of recent developments in the economy. Not to worry. Below are introductory paragraphs and links to 8 of the "best-of-the-best" articles on the subject.

Since 2012 is rapidly coming to a close, I’m fielding questions about what the future holds for 2013. My hope? That my answers will be both informative and instructive, and ultimately profitable, of course. Words: 1588; Charts: 2

I use three approaches to shape my world view and then combine them to get a much clearer picture of what likely lies ahead. My goal today is to share with you how I come up with a view of the Big Picture and to share my outlook for 2013. Words: 873

Barron's have just come out with the forecasts of 10 top analysts and ALL their forecasts are positive. There is not a single forecaster who expects the S&P 500 to fall in 2013 and there is only one forecaster who expects the 10 year bond yield to fall from its current level of 1.7% and he only sees a 10 bps decline to 1.6%. [Look at the average forecasts for each item at the end of the post.]

One couldn't imagine any better Christmas gift for hard assets and stocks than Ben Bernanke's surprise introduction of QE4 right on the heels of QE3. Call the duo QE7. "QE7" promises to expand the monetary base far faster than the markets had been discounting [which is great for gold] and also raises the floor under stocks. I suspect we'll close 2012 with a run at the highs, and possibly climb just short of 1,600 on the S&P 500 sometime in Q1. As for Treasury bonds, well, could this spell the end of the bond market? [Let's look at the ramifications of QE4 more closely.] Words: 516

[The just announced] QE4 will see the Fed buying $85B per month in U.S. Tbonds and Fanny/Freddie bonds with newly printed dollars - essentially debasing the dollar by 1 $trillion per year. The cold reality, however, is that each time QE is launched we get less wealth-effect bang for the buck and more inflation and, IMO, by the time it's switched off in mid-2014, we will have a real-world inflation rate of 5%+. (Words: 863; Charts: 2)

As Ayn Rand said “We can ignore reality, but we cannot ignore the consequences of ignoring reality” so, with apologies to Ayn Rand, let’s explore some examples of ignoring reality. (Words: 1132; Charts: 1)

We are in for a tough time for the next four years if the chart below, showing a big dive in economic development expectations, is any indication - ahd here is probably why that is the case. (Words: 200; Chart: 1)

Goldman Sachs has been out with a number of reports in recent weeks highlighting their positioning for 2013. While it's important to keep in mind that these kinds of reports are no holy grail... it is always good for brain storming and, after all, it's not like Goldman Sachs is a bunch of dummies.