The Dow, S&P 500, Nasdaq, and Russell 2000 are all in strong up trends. The Bulls have a strong advantage over the Bears going into trading next week; however, I don’t like it folks.
QE3 is the biggest QE of them all. But it won’t work. We’ve had QE1, QE2, Operation Twist, Dollar Swap, and nothing has worked to bring down unemployment and create jobs. The money from these QE programs doesn’t go to you or I. We don’t see the money in our bank account. We aren’t given a raise at the day job because of QE. In fact, these QEs hurt the U.S. dollar push up commodities like food and energy. So we’re actually having our consumer purchasing power diminished by these QEs. Where is all these trillions of dollars in QEs going? Look at the market. These QEs are helping commodities and stocks as well as banks. It helps make their balance sheets look better but it’s not creating jobs.
Folks, I’m a business owner. Let me tell you the truth. Business owners don’t create jobs. Rich people don’t create jobs. Consumers create jobs through their demand for goods and services. Businesses don’t create jobs because of a tax break. Businesses don’t create jobs because of lower interest rates. Why do you think our economy is still having trouble coming out of this recession? The big corporations are stock piling cash. Why? Because they don’t hire people just because they have more cash. They hire people when the demand for their goods and services increases and they have to. Corporations are stock piling cash because they don’t see an increase in demand of their goods and services.
QE3 does nothing towards increasing consumers purchasing power. Therefore, it will fail like all the other QEs.
If the government really wanted to help the people, they’d send every working American over the age of 18 a check for $10,000. That will stimulate the economy. Think about all the money that has been spent on these QEs. I bet that for the same price they could have sent out checks for $10,000. Some Americans would spend that money to pay down their credit cards. Some would buy a new car. Some would buy a huge flat screen TV. Some would buy a smartphone. Some would move into a nicer rental. Some might even use that $10,000 as a down payment on a new house.
But no. Washington is all about propping up the rich corporations and banks and screw bailing out the people. We need bottom up stimulus. This top down stimulus is not working.
So where does the money from these QE programs go to? Commodities. Gold bugs should love the government. The government continues to prop up their yellow metal. That’s what’s so dishonest about gold bugs like Peter Schiff or Alex Jones. They tell you to buy gold to stick it to the government. Gold is an anti-establishment investment, they say. That’s bull. Their just salesmen trying to get you to buy gold through them. The government purposely pushes up the price of commodities with these QEs. They know that. This is what they intended. The government is the gold bugs best friend. Gold bugs are so stupid they don’t even realize that. They blame the government conspiracy on gold going down, but when gold goes up, well that’s an unintended consequence of QE and printing money. That’s bull! Everything they do is intended. That’s being intellectually lazy and dishonest to admit government influences gold but only if it goes down, not when it goes up. They pushed gold up because they wanted to. They moved a lot of assets into gold and then they pushed the price of gold up. Remember about 6 months ago how central banks were buying up gold? Now you know why. Once the run in gold has topped, central banks around the world will sell out of gold and book incredible profits. They know how the market works a lot better than Peter Schiff or Alex Jones. Come on guys. Less emotion, more thinking.
Fundamental analysis reports that moved markets last week were Tuesday’s International Trade, Thursday’s FOMC Meeting and PPI, and Friday’s Industrial Production, Retail Sales, and CPI.
The U.S. trade balance in July edged up but much less than expected-largely on a downward revision to June and a July narrowing in the petroleum deficit. But it is not looking good for manufacturers as exports declined.
The Fed left policy rates unchanged but engaged in other policy measures. Guidance has been extended to at least through mid-2015. The Fed did move into another round of quantitative easing with so-called QE3. The Fed will purchase additional agency mortgage-backed securities at a pace of $40 billion per month. No end date was stated.
Food and energy costs led to a surge in producer prices in August. Overall PPI inflation jumped 1.7 percent, following a 0.3 percent rise in July.
Manufacturing weakened in August for industrial production overall, weakness was led by mining and utilities.
Despite a strong headline number, underlying retail sales turned soft in August. Total retail sales in August gained 0.9 percent after a 0.6 percent boost the prior month (originally up 0.8 percent).
Higher gasoline prices led to a surge in consumer prices in August. The consumer price index in August jumped 0.6 percent, following no change the prior month.
Fundamental analysis reports with the greatest probability of moving markets next week are:
Wed – Sep 19, 2012 = Housing Starts