Unlike a machine, an economy was neither designed by anyone nor built in a factory. There are no plans... no owner's manual... no guide to troubleshooting problems... and no website where owners go to talk about the problems they've had and the tricks they've used to fix them.
First, stocks hit new highs on Friday. Gold lost $22 per ounce. But believe it or not, our new Trade of the Decade is going well. As you may recall, we began a "Trade of the Decade" back at the start of the 21st century. "Buy Gold. Sell Stocks." That was it.
Even dumbbell economists believe lower deficits are bad news... but for an entirely different reason. They believe lower deficits will reduce GDP and jobs. They think the only reason the economy is doing so well is that the feds have been willing to spend money they didn't have on things they didn't need.
A friend in Washington had promised to introduce us to Neil Barofsky, inspector general of the TARP program. You remember TARP? It was the feds' $700 billion program to rescue the US economy from a correction. Neil Barofsky was in charge of it. So we decided to go down and ask him how it turned out...
We may all be doomed! Not just you... not just us... but the whole friggin' human race may soon be on the endangered species list. Boohoo! We're going extinct. So says an article in Newsweek. (More below...)
If you're a movie goer, you've probably seen trailers for Brad Pitt's zombie movie, World War Z. Pitt plays a United Nations employee forced to deal with a global zombie pandemic of epic proportions. Hollywood is picking up on a theme we've been discussing in these pages at some length...
Not much action following the new Dow high. Not much follow-through. But no big breakdown, either. As near as we can tell, the Fed's EZ money has driven up stock prices. Investors expect more EZ money. So they think stocks will go up more.