Bullion Vault
"The more Washington spends like a drunken sailor, the more I want to own Gold…"
The MAJORITY of ECONOMIC DATA now supporting the “green shoots” crowd are in fact being driven by the rising stock market, writes Dan Amoss for The Daily Reckoning.
The US Index of Leading Economic Indicators, which has been pointing up for a few months, is heavily influenced by the stock market. Yet stock market bulls are pointing to the Leading Economic Indicators as a reason to buy stocks!
It’s circular reasoning, plain and simple, and it is now in vogue to the extent that now is a very dangerous time to be holding stocks.
Here are six lawn mowers in the real economy – those parts that don’t revolve around Wall Street or Washington, DC – that could easily mow down the green shoots:
Stabilizing numbers for continuing unemployment claims are painting a misleading picture. In reality, hundreds of thousands are rolling off of the traditional six months of benefits into extended unemployment benefits rolls. The recent payroll data was temporarily inflated by a rebound in auto production from depression levels, and the government’s hiring of census workers. Also, the unemployment rate fell because the number of people actively looking for work keeps falling. There are absolutely no signs that those who were laid off will find a new job anytime soon.
The federal government’s income tax receipts are still collapsing. Paycheck withholding tax receipts are still falling sharply. As data services like TrimTabs have demonstrated, income tax receipts are far more accurate gauges of trends in personal income than the highly massaged employment figures from the government. Falling tax receipts translate into a higher threat of confiscatory marginal tax rates in the future, deficit monetization and more inflation.
Read more….
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