Storm Watch Update

Fear has returned with a vengeance to the financial markets once again. The media has elevated the threat levels and seems bewildered. Why the sudden change? Less than a month ago it looked like markets were ready to break out to new highs. What went wrong?

The nearly 80 percent rise of the stock market from its March lows is being primarily driven not by sound economic data or a perceived turnaround, but by massive monetary injections into the financial markets. Unfortunately, this artificial--and unsustainable--source of credit merely serves to create distortions that lead to asset booms and speculative bubbles unhinged from the real economy. Because of this, it is important to keep a watchful eye on a number of key indicators going forward...

"Green shoots" has become the new economic mantra used by the media to describe our current economic condition. The recession that began in December, 2007 is now in its twentieth month. You would have to go back as far as 1981–82 or 1973–74 to find a recession that has lasted this long with unemployment rates this high...

Jim lays out a summary of the various potential events and scenarios that could derail the markets in 2007 in light of the current euphoria.

What are the greatest potential rogue waves on the horizon? Rampant debt and speculation, derivatives, and an unsustainable expansion of credit. Jim describes the implications of such events on the financial markets and how the Fed will respond.

The conclusion to a four part series detailing the lives and events surrounding John and Terry Wheeler, J. Gordon Grecko, and WedgeBook Partners.

The third in a four part series detailing the lives and events surrounding John and Terry Wheeler, J. Gordon Grecko, and WedgeBook Partners.

The "core rate" is a fictional concept designed to soothe the financial markets and distract them from the reality of rising inflation. The core rate does not exist anywhere in our economy. It is a fictional concept designed to obfuscate inflation. The next time you go to the grocery store and experience shock and awe as the checker rings up your shopping cart, ask him or her for the "core rate." See what kind of look you get...

Jim outlines how a leveraged carry trade, growing trade deficits, US consumer debt, a potential banking crisis, and reliance on foreign investment are like dominos precariously awaiting a sudden fall.

The second in a four part series detailing the lives and events surrounding John and Terry Wheeler, J. Gordon Grecko, and WedgeBook Partners.

While you may not be able to count on the returns from stock appreciation, something more bankable is the returns you get from dividend payments. Dividends are the closest thing you get in the stock market to a "sure thing." They aren't guaranteed, but they are predictable. A company can always lower its dividend or in extreme cases omit it under financial difficulties. Nonetheless, most dividends arrive like clockwork every quarter. They are bankable and you don't have to sell a stock to receive the cash...

The first in a four part series detailing the lives and events surrounding John and Terry Wheeler, J. Gordon Grecko, and WedgeBook Partners.

We have begun a new bull market in precious metals that will last for many years and are just at the beginning phase of this new bull market. Investing in junior producers and junior exploration companies can become the most profitable way to participate in this emerging bull run. As with the use of options, which offer the investor a way in which to use leverage, junior miners offer investors leverage to the price of precious metals. They represent a call option on the future price of silver and gold. Unlike regular options, they have no time expiration. This makes them "the perfect option."

Anyone who even remotely follows the current state of the U.S. economy realizes one irrefutable fact: our economy is driven entirely by credit. Secondly, we acknowledge the fact that credit feeds on itself and must constantly and consistently expand.

Most economists believe the good times will continue well into next year. The 2001 recession was one of the shortest recessions on record. Despite a recession, the terrorist attacks on 9-11, a stock market crash and a war, the economy has bounced back strongly. The economy has recovered, consumer confidence is high, businesses are building inventories again and housing has replaced the stock market as a wealth generator. What is not to like about this picture? Or put another way, what is wrong with this picture? It is very simple...

Companies, consumers, the government at all levels, the financial markets, and our entire economy are far more leveraged today than we were in 1991 or even 2000. A rise in interest rates of as much as 1, 2, 3 or 4% (as many analysts and economists are indicating) would collapse our economy and financial markets. What is sustaining the U.S. economy, our financial markets, and the American consumer is ever increasing amounts of debt and the asset bubbles that underpin that debt...

Water and energy are moving to center stage and are likely to remain there for the balance of this century. A clash between nature and urbanization is about to unfold. At stake is an industrialized world dependent on growth to support its rising debt levels and an emerging world hell bent on industrializing. Both worlds require energy, water, and food to support a population base that has grown from 3.5 billion humans to today’s 6.4 billion in three decades...

In the last month over 70% of all purchasing managers in this country are reporting price increases for everything they buy. They mean everything from aluminum, coal, corrugated containers, oil and natural gas, to fabricated steel. Natural gas prices, as shown in the chart below, have risen for over 20 months...

Given all of the structural imbalances in our economy and in our financial markets, aggressive rate hikes by the Fed are an illusion. In fact, the Fed is impotent and in want of a policy Viagra. What is more relevant are the actions of the bond market. As shown...

Seven factors are listed providing support for a new super bull-market in precious metals that will turn out to be much bigger than what occurred in the 1970s.