Skip to comments.Obama-in-Wonderland with Special Guest Hillary Clinton and the GOP All-Stars
Posted on 12/30/2013 3:40:52 AM PST by Kaslin
Despite the mixed signals that the economy is flashing, the stock market at least believes that finally the economy is starting to recover.
So does the bond market.
And thats the problem.
Just after making record low yield in the spring near 1.50 percent, the Ten Year Treasury note did an about face and has nearly doubled just in 8 months with rates closing on Christmas Eve at 2.80 percent.
This is significant because if means that the bond market either thinks the economy is gaining steam or it means bonds are predicting inflation. Bond rates tend to go up as the market gains steam in order to contain inflation.
In either case, the stock market looks to be moving higher short term
Dow 20,000 in 2014?
Not likely, but if, if, if, voters, politicians and lobbyists can get their act together and do something to HELP the economy, there certainly is enough money to get a large portion of the way to Dow 20,000.
In order for that to happen, well have to see GDP normalize at 3 percent or higher AND inflation to remain in check.
Thats a tough thing to manage, especially with oil and other commodities trading like financial assets rather than commodities.
Bonds look to me like they are betting on inflation.
But inflation isnt the only thing that stands in the way of the economy and the stock market.
In 2014, many of the headwind provisions of Obamacare will ramp up again. Given the type of dislocation that Obamacare has already had on the economy, there are some predicting 2014 to be worse as the more strenuous parts of Obamacare are contemplated, if not fully enacted.
And despite the lame duck status of Obama, I think that any meaningful changes to Obamacareincluding even repeal, are largely up to the president.
He seems however content to go down with the SS Obamacare, taking both women and children with him.
Real federal government consumption expenditures and gross investment decreased 1.5 percent in the third quarter, says the Bureau of Economic Analysis compared with a decrease of 1.6 percent in the second.
Whatever else might be hurting the economy, its not the decrease in government spending thats holding the economy back.
Its the regulations.
At this rate, I'd like to see more sequester, since it seems to be working out so well for the economy.
How do we sequester Obamacare?Helloooo? Anyone? Bueller? Boehner? Boehner?
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States, writes the BEA, increased at an annual rate of 4.1 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the third estimate released by the Bureau of Economic Analysis.In the second quarter, real GDP increased 2.5 percent.
Those GDP numbers are closer to historic norms for our economy, but in the Obama-in-Wonderland economy nothing necessarily is as it seems.
Weve been in this territory before and have seen the economy stutter, gasp, cough and stop.
In 2011, the 4th quarter poster 4.9 percent and then trailed off posting weaker and weaker numbers until the Fed cried uncle and began the latest round of quantitative easing in the summer of 2012.
GDP is probably expanding because of the little bit of fiscal restraint that weve shown since 2010. Add in the delayed provisions of Obamacare and 2013 GDP performance is credible. But that doesnt mean that it will carry into 2014, an election year and the last of where Obama will control the levers to reward or punish.
Look for Hillary to ride in to the mid-terms on her white horse proposing some final solution for Obamacare (pun intended) that Mitch McConnell, John McCain and John Boehner will gush over publicly in order to poke the eye of Tea Party conservatives.
2014 looks to be a watershed year for the country politically, economically and historically.
The decision will be left in the hands of the voters.
Ouch. And at this point, it shouldnt be that close.
How much does the stock market have to go up to compensate for the devaluation of the dollar since 2008.
The uni-party strikes again.
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