The Wheels are Coming Off the American Wagon

From the spate of news reports on the state of the US economy, I sense that the wheels are coming off the (hoped-for) endless ride. The employment numbers were just not all that promising, and the trade numbers are suggesting that the US dollar is too high. I am sure that the US authorities would like to see higher interest rates and a lower dollar, higher rates so that if, as, and when a real slowdown [read recession] comes, they have something to fight it with besides monetary stimulus, and a lower dollar to help American business. Of course, what they might wish for and what is possible are two different things altogether.

The failure of the Fed to raise rates when they “had a chance” is a testament to the reality that there really was no chance, despite Janet Yellen’s loud protests to the contrary. That then raises the question, if there really is not strong “recovery” for 2016, then what should we expect? For my part, I look at the financial condition of Japan (awful), Europe (next to awful, especially some countries such as France and Italy), China (perhaps over the Atrill Curve peak and in need to debt reduction), and the US (right on the cusp of their own “black hole” (see Black Hole Economics on this blogsite). I do not see daylight!

I am inclined to be a buyer of gold and gold stocks at the present time, as I think that perhaps they have been in the doghouse for too long and may be about to emerge. Politically, strength in gold prices is an affront to central bankers everywhere and a rebuke of their own incompetency. Both cases are true – they are incompetent, and deserve rebuke. With Japan’s economy on the verge of collapse, and Europe in a mess, gold could shine without US dollar weakness. An about-face and an implementation of additional Quantitative Easing in the US would, I suspect, have a powerful impact on gold prices – and I think that one is coming.

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About rosshealy

C. Ross Healy, MBA, CFA Chairman, Strategic Analysis Corporation Ross Healy began his investment industry career in 1965 as a securities analyst for Midland Osler Securities. He was a co-founder of Sceptre Investment Council in 1970, a leading Canadian money manager. In 1984, he became Director of Research at Merrill Lynch Canada, and during this time provided support for the late Dr. Verne Atrill, the theorist who decoded the mathematics underlying the Theory of Accounting Dynamics upon which the Strategic Analysis Corporation (SAC) methodology is based. After supporting and collaborating with Dr. Atrill for many years, he joined SAC as Chairman and CEO in 1989 following the death of Dr. Atrill. Ross Healy is a past president of the Toronto CFA Society, and served on the board of the Financial Analysts Federation (now the CFA Institute) as Chairman of the Financial Analysts Journal committee, the academic arm of the CFA Society. He has served on the Financial Disclosure Advisory Board of the Ontario Securities Commission, and was a member of the Executive Committee of Trinity College, University of Toronto, chairing the Investment Committee. He currently serves as the Chairman of the Board of Trustees of Eglinton St. George’s United Church of Toronto. He contributes investment analysis to print, radio, and television media, and has been appearing regularly on Business News Network (BNN) for the past 15 years, and the Canadian Broadcasting Corporation (CBC). There is an award-winning book written about his analysis leading up to the collapse of Nortel Networks (The Bubble and The Bear, How Nortel Burst the Canadian Dream, by Douglas Hunter, Doubleday Canada, 2002. He was the “Bear” in the book.). Email Address: rhealy@strategicanalysis.ca Company Website: www.strategicanalysis.ca Telephone (work): 416-498-3604 x 133 Cell: 416-258-8342
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