GDP, Damn Lies & Other Government Statistics

ICangles Investment Post…

With the media focused on the political circus around the debt ceiling, not much attention was paid outside of financial circles to the newest GDP data announced late in July. But it is likely of more concern than the government’s self imposed borrowing limit. The first six months of 2011 were estimated to be the weakest in terms of economic growth since the recovery began. The first quarter is now estimated to have posted annualized growth of just 0.4 percent with the second delivering an uptick of only 1.3 percent. As a result economic forecasts are being lowered for future growth.

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Beware Greeks Bearing Debts?

ICangles Investment Post…

Concerns over the debt situation in Greece spiraling out of control and roiling financial markets around the world, including banks and investment companies with exposure to Greek debt, has been in the headlines lately. Some even worry the current situation could spark another global downturn. Among their number is Alan Greenspan who stated a default by Greece is a near certainty and could drive the U.S. economy into a recession. Counter-intuitively all of this concern, especially worries emanating from the fraternity of central bankers, is reason to not worry at present over the situation.

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Painted in a Corner

ICangles Investment Post…

The Federal Reserve has painted itself into a corner, where there is no easy way out. The current global monetary system is headed for trouble. Dangers around rising inflation coupled with a weak employment environment, aka stagflation, are building. America already has the weak job market, and now as my previous post pointed out there are warning signs that the Fed’s latest policy moves are translating into inflationary forces. Having already focused on some of those signs, I am going to take a moment here to describe the dynamics of the problem. Although the leaders of the Fed not surprisingly argue there is nothing to worry about, there are three compelling reasons to believe otherwise.

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Things Fall Apart

ICangles Investment Post…

It is increasingly clear that the arrangements at the center of the world’s monetary system are fraying. On Monday Standard & Poor’s cut its outlook on the credit rating of the United States to negative indicating there is a very real possibility for a downgrade. By Tuesday gold prices topped $1,500 an ounce. Also last Friday China admitted inflation was picking-up steam, as it announced an official annual uptick of 5.4 percent that almost surely understates the true amount. On the European front Moody’s downgraded Ireland’s credit rating last Friday. That action followed earlier comments from Germany’s finance minister that Greece may default on its debts. All of this came despite the world being in the midst of an economic recovery.

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Forecasting the Reckoning

ICangles Investment Post…

There has been a lot of worrying in financial markets over the past few months. In fact quite a long list of looming disasters has been assembled. Will destabilization in the Middle East, especially if unrest reaches Saudi Arabia, send oil prices skyrocketing and the global economy spiraling? Could this wave of unrest spread to China? Will the earthquake in Japan trigger a financial crisis in that country, as more debt is added to an already formidable mountain of debt? Is Bill Gross signaling a debt crisis in the U.S. is eminent, as he pilots the world’s largest bond fund out of U.S. Treasuries? Irrespective of the U.S. Treasury market is a wave of defaults on its way in the municipal bond market? And what about real estate—are we now on our way to a second bottom with prices headed for a 20 percent or greater decline?

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Don’t Fight the Fed

ICangles Investment Post…

Prospects are excellent for a positive year in the stock market in 2011. Odds are good also for that strength to carry over into 2012, although it’s a bit early to prognosticate on next year. This bull market is still relatively young and should have further to run.  Although I am no fan of the accommodative monetary policy of the Federal Reserve believing it led to the housing bubble and is fueling rises in commodity prices today, I am also quick to admit that in the near term it is a positive for the stock market.  “Don’t Fight the Fed” is a popular saying among investors for good reason. The economy is growing, stock prices are rising and these trends will likely continue for a time.

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More Money Problems

ICangles Investment Post…

For the current secular bear market asset inflation trouble comes in threes. Too much liquidity in the global economy in the late 90’s fueled the Internet bubble of bad corporate investments that popped in 2000. To avoid the necessary restructuring pain around a recession, more liquidity was injected into the global economy leading to unsustainable growth around the residential real estate bubble that popped along with related credit markets in 2007. In another attempt to avoid restructuring pain and alleviate the following recession more liquidity is being injected into the global economy notably by the U.S. and Chinese governments. Today that capital is fueling more unsustainable price appreciation or levels in bonds, emerging markets and commodities.

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The Next Big Thing

ICangles Investment Post…

Periods of prolonged economic prosperity are driven by technology innovations. Today’s low growth economic paradigm stems in large part from the absence of such a driver. Growth in the nineteen eighties and nineties was driven by microprocessor innovation. In the middle of the twentieth century it was the oil economy characterized by the internal combustion engine. Preceding this, the Roaring Twenties witnessed the electrification of the world. It’s a regular pattern of periods of wealth creation around disruptive technologies interspersed with periods of economic turbulence. The good news is despite today’s poor economy this long cycle argues that another innovation and period of growth isn’t that far off. Some educated guesses about the nature of the next big thing driving a prolonged boom in the stock market can even be made.

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Contests & Giveaways that Work

ICangles Communications Post…

With the holiday season of giving now upon us it seemed the perfect time to write a post on designing a corporate contest or giveaway. The best corporate contests draw interest, clearly distinguish your company and educate audiences about your products. Of course doing all that is easier said, and many companies resort to giving away pens or bouncing balls featuring their logo at trade show booths. Nevertheless the contest giveaway this year of a client I work with serves as an excellent case study of how to creatively market not just a product, but a new technology, and to go beyond the traditional trade show in doing so.

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Attack of the Economic Zombies

ICangles Investment Post…

Last Friday’s government report on the economy, detailing Q3 GDP growth of only 2.0 percent, confirmed that the U.S. remains mired in a low growth, high unemployment paradigm. In a viewpoint I wrote for EE Times in February 2009 I predicted as much noting that the government’s economic stimulus package was more likely to make things worse than better and that strong sustainable economic growth requires a powerful technology innovation, like the internal combustion engine or microprocessor, being in its growth stage. I argued since 2000 there has been little real sustainable growth. I focused that short viewpoint on the impact of technology on the future growth potential of the economy. But with poor economic performance now confirmed it is worth spending some time on how government intervention can actually make things worse by among other things fostering economic zombies.

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