More Than...Less Than...

Well I guess if I'm going to do the "More Than...Less Than..." I have to report both sides of the story. For the first time in a long time it looks like the "economists" were overly pessimistic. I'm shocked. A Bloomberg head line reads:

"Jobless rates in U.S. unexpectedly drops; countering slowdown speculations."

The jobless rate fell 4.5%, approaching a 5-year low. The study also showed that average weekly earnings rose, and even the trade deficit even narrowed. I'm not taking this one in stride though, I think something is up here. I found some numbers for this statistic and it shows there was a 39,000 increase in government jobs while private jobs only increased by 58,000. That is the lowest increase in private employment since October 2005. Manufacturing actually cut jobs by 14,000. The study also showed that 190,000 people have left the labor force, which helps explain the drop in unemployment. If I had to guess, I would bet that the monetary base, or money supply, has got the printing presses running on overdrive. I do make a personal guarantee: The longer that the Feds/Politicians, try and keep this economic mess "looking good," the worse this whole thing will be when it breaks down...much worse.

Let's look at the trade deficit for a second. It 3.8% from $61.5 billion to $59.1 billion. That's a monthly statistic, which means that our trade deficit falls short $197 million short EVERY DAY. That speaks for itself.

This whole thing smells fishy to me, and let me tell you why. I watch CNBC's "Closing Bell," and "Kudlow & Company" every day. Larry Kudlow is the single most economically optimistic person I have ever seen. The guy has never once acknowledged that anything is wrong in the economy. He remains amazingly bullish on the stock market and expects GDP growth to return above 3% anytime now. What I'm getting at, is that even Larry freckin Kudlow expected an ugly number to come from this report. Like I said, the whole thing smells fishy to me but I have to look into it further and I will give an updated report on the situation.

I know this post is really all over the place but I would like to talk about one more thing. It's looking more and more likely that the Feds will be cutting interest rates AT LEAST once in 2007. Now all of the Phd. economists working at the Federal Reserve know the implications this will have on the USD. They will wait until the very last minute to do cut rates. I believe that they are firmly setting the table to be able to do this and here's why:

Inflation is out there and running wild. It may not seem like anything crazy in the CPI, but wait another year or so. It's there and it can only be contained for so long. Two days ago, Bernanke spoke at Stanford University. Try not to laugh, but he said that the CPI OVERSTATED true inflation levels. Yeah, right, whatever you say Mr. Chairman. Anyways, he has to convince the public that inflation is not a dire problem in order to justify a rate cut. So you can see how he's setting the pins up to knock them right back down.

Like I said, expect a rate cut this summer, probably late summer, and another cut towards the end of the calendar year in 2007. When this happens the dollar will decline and gold will rise. Both actions will be sharp.