Financial Sense Newshour on the Economy

Jim is pleased to welcome back Dr. Oliver Inderwildi PhD, Research Fellow at Smith School of Enterprise and the Environment, University of Oxford, UK. Dr. Inderwildi speaks to the high degree of oil price volatility over the past four decades, and its damaging and destabilizing effects on the global macro-economy. He discusses the main drivers of oil price volatility and how it has influenced both the level of inflation and the level of unemployment within economies affected by it. Dr. Inderwildi notes while there is no energy “silver bullet”, he discusses economic policies that could help prevent or minimize oil price volatility.

In the first Big Picture topic this week, Jim looks at the next stock market rotation. He believes it will focus on the energy, technology and materials sectors, all of which are currently unloved, unappreciated and undervalued. The next topic will be the monthly conversation, On The Record, where John asks Jim questions of timely and topical importance. Some of the topics covered include why Jim is optimistic on stocks, why you don’t want to store your bullion at a Wall Street bank, what distinguishes Jim’s practice from others in the industry, and why QE will end badly.

In this week’s first Big Picture topic, Jim sees another soft patch ahead for the economy, as the Leading Economic Indicators are starting to roll over, anticipating a slowdown ahead. In his next topic, “Another Government Manufactured Crisis” Jim looks at the Air Traffic Controller mess that the FAA claims is a result of Sequestration. As is frequently the case in governmental actions, common sense seems to be in short supply. Jim also answers your Q-Calls in this segment of the program.

Jim’s Big Picture topic this segment focuses on the recent budget “negotiations” going on in Washington. Jim pulls back the curtain on Washington’s budget games and gives his perspective on the current budget process. Jim sees it as 21^st century feudalism, as budgetary policies favor big government and big business over small business, which has always been the engine for job creation. He also takes the main stream media to task for allowing Washington to use “Orwellian Newspeak” to describe the budgetary process. Jim will also answer your Q-Calls in this segment of the program.

Jim welcomes back Barry Ritholtz, CEO and Director of Equity Research at Fusion IQ, an online quantitative research firm. Barry discusses how the many economic “crises” today are overblown and essentially driven by the media and Washington. Barry sees the vast majority of “news” today as simply gossip. As to stocks, Barry believes they are not as cheap as 3 years ago, but still reasonably priced. He much prefers the dividend theme to stock buy-backs by corporations. Barry also discussed a long term secular trend in demographic changes that will be a negative for employment longer term, as increasingly more productive companies need fewer workers to stay profitable.

In this week’s first Big Picture topic “Wash, Rinse and Repeat – that was then, this is now” Jim looks at a repeat of the Petro Business Cycle pattern for the fourth year in a row. The familiar economic scenario features a strong start to the year, then the LEI’s roll over and the economy starts to slow, which is followed by more Federal Reserve stimulus, which leads to a strong finish to the year. Wash, rinse and repeat. The next topic, “Has the glitter faded? Why gold prices can go higher” is in response to the weak precious metals market. Jim continues his thesis that you don’t need a Doomsday scenario to see rising gold prices in the future. This topic also leads into Jim’s in-depth conversation with John Kaiser on gold in the next segment of the program. Jim also answers some of your Q-calls in this segment.

Jim welcomes back David Nicoski CMT, Director of Research at Vermilion Technical Research LLC. David sees no sign of a top, with financials, energy and industrials doing very well and the transports confirming the uptrend. He believes that blue chip stocks are still cheap, and US economic growth is right now the best on the planet. Also, Ryan Puplava has this week’s market update, Erik Townsend and Jim discuss commodities, and Rob Bernard has the Fixed Income Report. 

Jim welcomes Doug Short, VP of Research at Advisor Perspectives. Doug sees the US markets as having room to grow and are above trend. He also discusses the Alternate CPI statistics, which Doug believes do not add up, and are out of sync with reality. Given the alternate CPI inflation levels, Doug notes that the current S&P 500 would be considerably more undervalued than in 1982. However, he notes that it still feels like a recession, since comsumer income has not kept up with inflation. Median household income is down 8.4% since 2000. This is among the reasons that many investors are scared, and remaining on the sidelines.

In this segment, Jim’s first topic is “Are we in a Recession?” Jim discusses a recent ECRI report that says yes, but Jim and The PFS Group say no, at least not yet. Jim notes that 60% of the leading economic indicators are still positive. Jim’s next topic is “What if they held a Bull Market and nobody came?” Jim notes that this past week set a record for the lowest participation rate from individual investors. Jim looks at valuations and notes that the P/E ratios on stocks have come down substantially since 2000, although many blue chip stocks have not moved substantially in price. Jim also answers your Q-Calls in this segment.