Back in December I penned an article about the potential for gasoline prices to rise quickly to catch up with surging oil prices.  We said then "If we look at just the nominal price data going back to 1990 we can see that there is indeed a very high correlation between oil prices and gasoline prices.   While divergences from each other do occur on occassion those divergences tend not to last for very long with gasoline usually correcting towards the price of oil."   That is precisely what has happened since the near $3 per gallon of gasoline this summer, which was an effective $60 billion tax break for consumers...

It's quite amazing actually.   Two weeks ago Barron's ran the cover page of "Dow 15,000".   Over the weekend Alan Abelson ran a column titled "Everyone In The Pool".   Today, CNBC leads with "Dow 13,000 May Finally Lure Investors Back Into Stocks".   Unfortunately, for most investors, the headline is probably right.  Investors, on the whole, have a tendency to do exactly the opposite of what they should do when it comes to investing - "Buy High and Sell Low."   The reality is that the emotions of greed and fear do more to cause investors to lose money in the market than being robbed at the point of a...

The Philadelphia Federal Reserve Board posted their monthly business activity survey this morning.  While the media was quick to jump on the headline number which did show a rise from an anemic 7.5 to 10.2 what was missed was the dive in the expectations of future activity by 16 points.  As you can see in the chart above when future expectations dive - the current index tends to follow.  While the media dismissed the recent economic numbers out of Europe the manufactures in the Philly Fed region haven't.   With big chunk of exports and profits coming from the Eurozone the recession that plagues the region is no...

You have to love the mainstream media.  With each and every data point that is released there is "hopium" sprinkled about as if a new age revolution is upon us.  Of course, in reality the data is just so bad from a historical standpoint that we ALL want the situation to get better.  Housing is a critical component of a long term economic recovery as it has a huge multiplier effect of every dollar spent on the economy.  This is not lost on the powers that be.  The administration has spent hundreds of billions of tax payer dollars to garner some improvement through support programs like HAMP.  The government and...

I have spoken many times on the "Streettalk Live" about the "real" American dream.  The dream I speak of is the dream of opportunity, the dream of freedom and the dream of liberty.   Yes, the real American dream has always been emobodied in the very spirit of this great nation.  That dream found penned ever so eloquently in the Declaration Of Independence: 

"We hold these truths to be self- evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

And again in the Bill of Rights:

"No State...

The media as of late has been replete with a myriad of bullish calls on the economy.  The economic data did improve in the last quarter of which there is no doubt.   However, what we need to know as investors is whether or not it is sustainable going forward.   Industrial production was released this morning and came in unchanged from last month and below overall expectations.   However, what is important about today's release is that it continues to confirm, along with other indicators such as retail sales, that the bounce in the economy in the late 3rd and 4th quarters of 2011 is likely ephemeral due to the...

Recently, Brian Wesbury released his latest piece of economic commentary that paints a rather optimistic spin on the economy entitled "Be Confident In The Economic Recovery"   In the report Brian states:  "Two prominent measures of consumer confidence dropped unexpectedly in recent weeks. This provided plenty of fodder to those who still think the US economy is teetering on the brink of a long awaited double-dip. But when it comes to the consumer confidence data, the only thing we’re confident about is that confidence doesn’t matter. Not one bit. 

There is no consistency between what consumers are actually...

The National Federation of Independent Business released their monthly Small Business Optimism survey today which showed the overall index rising just one tenth of one percent in January to 93.9 from 93.8 in December.   This dovetails with the data that we had garnered earlier in the month from NFIB prior to the BLS employment report which showed that small businesses had no hiring during the latest reported month.  While the increase marks five consecutive months of improvement the issue, as shown in the chart, is that during the past year there has been no net improvement.  Small businesses, while more optimistic...

Over the weekend I received an email from a reader discussing the economy and a series of risk indicators that he follows.  Three are direct measures of financial stress while the other two are focused on the broader economy.   Of course, since finance is the life blood of any economy it is not a big jump to see how an impact in the financial system will bleed into the overall economy.

The five (5) indicators that were sent to me were the St. Louis Financial Stress Index, Kansas City Financial Stress Index, Chicago Fed National Financial Conditions Index, Leading Index for the United States and the Chicago Fed...

This morning's release of the trade deficit numbers were less than impressive.  Even more disturbing are the underlying trends.  In December, the U.S. trade deficit worsened due to a jump in imports outpacing a rise in exports.  That sounds good right?  Not so fast.   Remember, the month to month variations have little to do with discerning future outcomes.  The trends of the data are far more important in this regard.  

The trade gap expanded to $48.8 billion from $47.1 billion in November.  While exports rebounded 0.7% remember that they declined a full 1.0% in November.  Imports advanced 1.3% in December...