Financial Sense Blog

The latest reports show consumer sentiment to be optimistic and rising, great for the economy, and investor sentiment to be at extreme levels of optimism, which might not be so good for the stock market as we swing into the new year.

Hopefully, those of you celebrating Christmas included lots of clothing in your gift shopping. Reason for that is giving or buying clothing is likely to become considerably more expensive in 2011. Our first chart below portrays the rather dramatic move in U.S. cotton prices over the past 90 weeks. Most noticeable is the price burst since late Summer, when the world discovered that global demand for cotton exceeded the global supply of cotton.

A review of sentiment indicators.

The recently released base case that will be used in the upcoming Annual Energy Outlook 2011 from the US Department of Energy’s Energy Information Administration (EIA) paints a future of cheap and abundant energy for the US economy over the next quarter of a century. But its underlying assumptions are no more credible than those that underpinned the equally optimistic forecasts released by the International Energy Agency.

The census numbers were a surprise to me. Our population is growing at a much smaller rate than I had thought. Less than 1% per annum, the lowest since the 30s. My first thought was that this was probably not anticipated 10 years ago. So I looked up one credible source for population forecasts. The Social Security Trust Fund lives and breathes this stuff. I looked at the 2000 base case (intermediate) assumptions for population in 2010.

With all the rumors since early fall that the Fed would be adding liquidity with Treasury purchases, I developed a projection of what the future Fed balance sheet would hold, and we published the graph below in...

Investors are bailing out of bonds after a decline, and pouring into stocks with abandon. Are they selling one low and buying the other high?

Investors should be gravely concerned about the future of their portfolios, according to a newly released report from Bullion Management Group Inc (BMG). The reason? Because today’s fiscal and monetary policies have set the stage for a wrenching period of currency devaluation, portfolio destruction and potentially devastating inflation.

We lay out our Strategy set in the context of our updated semiannual Overview of Cartel Intervention. We identify the Sectors with the Greatest Profit Potential and Greatest Risk in what promises to be a very Volatile 2011.

My biggest complaint in regards to the current economic expansion is that it hasn't been standing on its own two feet but rather hanging completely on the twin shoulders of Uncle Sam and Uncle Ben. Without the massive fiscal stimulus from the Obama Administration and two rounds of quantitative easing by Fed Chairman Ben Bernanke, it is highly unlikely that we would have had much, if any, recovery; the current expansion has been entirely artificial.