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Bad Economic News… When It Rains, It Pours – Ep 74

  • Dollar usually drops on bad news but rallies because traders automatically buy on the dip
  • Bad news is dismissed because the first quarter “doesn’t count”
  • This puts greater pressure on the last 3 quarters to make up for the first quarter and still show growth
  • Expectations of a bump similar to last year are based on non-repeatable conditions – Obamacare and inventory build
  • Inventory to sales ratio is the highest it has been since 2009
  • What is the basis for dismissal of the bad news in Q1?
  • Data confirms that the consumer is already broke
  • Consumers will be hit with rising oil prices
  • Traders who are loading up on the dollar are ignoring all the evidence that they are wrong
  • The wake-up call will be like the sub-prime mortgage crisis
  • The same thing will happen in the Foreign Exchange Markets when they realize the story is not about a recovery but about another round of QE
  • Changing trend coming in the dollar
  • Changing trend in the oil market
  • Changing trend in the gold market
  • If we don’t get a recovery in the summer how is the Fed going to raise rates in Q4?
  • Election year 2016 will likely see no rate hikes
  • Retail Sales missed Wall Street expectations with a bounce of only .9
  • March Small Business Optimism fell to lowest level in 9 months
  • Hiring Plans dropped to lowest level in 6 months
  • Business Inventories for February rose to .3 based on weak wholesale sales
  • Inventory to Sales Ratio holding at 1.36 (highest since July of 2009)
  • My radio broadcasts from a year ago predicted that the data was not reflecting reality
  • April Empire State Manufacturing Index missed expectations at -1.9, near a 2-year low
    • Employment down
    • Hours worked down
    • New orders down to 3-year lows
    • Prices paid went up
  • March Industrial Production dropped .6, missing expectations – 4th consecutive month below estimate
  • This news can’t be blamed on April showers
  • Those who have been betting on the recovery are about to realize they made the wrong bet