economic analysis

Global Economy: Why It Will Get Worse Before It Gets Better

By Friday, August 28, 2015
Global EconomyChina is in deep trouble. Economic activity in the second-biggest economy is plunging and it looks like the situation is only going to get worse. The Caixin Flash China General Manufacturing Purchasing Mangers’ Index (PMI), an indicator of manufacturing activity, now stands at 47.8—the lowest level in more than six years. (Source: Markit Economics, August 21, 2015.) A PMI below 50 means contraction in the manufacturing sector. This year, the .

Economic Collapse Headed for U.S. in 2015

By Monday, August 10, 2015
U.S. Economic Collapse 2015The last thing Wall Street is thinking about is an economic collapse in 2015. After all, the stock markets are at record highs, unemployment is down, and inflation is in check. But the fact of the matter is that these same indicators were also in check before the markets crashed in 1987, 2000, and 2008/09. Back in 2008/09, everyone on Wall Street, save for Michael Lombardi and Peter Schiff, .

Global Economic Slowdown to Take Stock Market Down with It

By Wednesday, July 15, 2015
Global EconomyThe global economy is headed towards an economic slowdown and it will take U.S. stock prices down with it. The growth rates of major economies are anemic. China is growing at its slowest pace in two decades, putting pressure on Australia’s economy. Japan has been going in and out of recession for years now. The crisis in Greece has strained the eurozone’s economic growth even further. And the U.S. economy .

U.S. Trade Deficit Dropped Sharply in April

By Wednesday, June 3, 2015
U.S. Trade DeficitOn Wednesday, June 3, 2015, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis (BEA), through the Department of Commerce, reported the trade balance for the month of April. Results show that the trade deficit shrank more than expected. (Source: Bureau of Economic Analysis, June 3, 2015.) The gap reduced by 19.2% to $40.9 billion, down $9.7 billion from the prior month’s $50.6 billion—which was the widest in .

Fed’s Brainard: Not Seeing Significant Q2 Bounce Back

By Wednesday, June 3, 2015
Feds BrainardOn Tuesday, June 2, 2015, a voting member of the Federal Open Market Committee (FOMC), Lael Brainard said that current economic data does not suggest that the U.S. will see a significant second-quarter rebound. She also stated that a strong dollar delays U.S. interest rates to nominal levels. Despite the disappointing economic data, she mentioned that a 2015 rate hike is still possible. (Source: Federal Reserve, June 2, 2015.) “No .

Chinese Economic Collapse Imminent? How Investors Can Protect Themselves

By Monday, June 1, 2015
Chinese Economic CollapseThe benchmark Shanghai Composite Index cratered 6.5% last Thursday on news of a fund dumping several Chinese banks and the raising of margin requirements. But this doesn’t mean we are in store for a Chinese economic collapse. The Great Wall is not falling. Just like it was in 1987, 2000, and even more recently, Chinese stocks trading in mainland China have vaulted sky-high; driven by easy money, frenzied speculative trading, .

European Economy 2015: Economic Forecasts and U.S. Profits

By Sunday, May 17, 2015
European EconomyMay 13, 2015 was a busy day for the release of European economic results. How did the European economy fare and how do these numbers affect U.S. companies? Forecasts, for the European economy as a whole, call for the region to muddle through a “mild cyclical upswing” driven by cheaper oil, a lower euro, and government spending. (Source: European Commission, May 5, 2015.) The same forecasts expect gross domestic product .

European Economic Forecast 2015: A Story of Inflation

By Saturday, May 9, 2015
European economic outlookOn May 5, 2015, the European Commission released its spring 2015 European Economic Forecast. According to the forecasts, growth prospects haven’t been better in years. Will cheap oil and a devalued Euro help Europe overcome its biggest obstacle? Economic Outlook in Europe The latest economic forecast for Europe states that the region is going through a “mild cyclical upswing” due to lower oil prices, a cheaper euro, “steady” global growth, .

First-Quarter GDP Proves U.S. Economy Fragile

By Wednesday, May 6, 2015
US Economy fragileFor most of 2015, I have been writing about how the U.S. economy is growing at a very slow pace, if it’s growing at all. The just-released U.S. gross domestic product (GDP) numbers for the first quarter of 2015 confirm this; the economy grew at an annual pace of just 0.2% in the first quarter of this year. But a closer look at the GDP numbers reveals something worse than .

Oil Price Forecast for May 2015: the U.S. vs. OPEC

By Friday, May 1, 2015
Oil Price ForecastThe oil price forecast for 2015 continues to be dominated by the actions of the Organization of Petroleum Exporting Countries (OPEC). And its fierce rival, the U.S. Supply, continues to outweigh demand. But oil drifts higher. Where will prices go from here? Oil Price Forecast 2015: Supply vs. Demand The oil market is dominated by the fundamental principle of supply and demand. The oil price forecast for May 2015 and .
Sep. 5, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter) $1014.15
Trailing 12-month Price/earnings multiple (Most Recent Quarter)

17.44

Dow Jones Industrial Average Dividend Yield 2.62%
10-year U.S. Treasury Yield 2.19%

Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.

Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.

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From: Michael Lombardi, MBA
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