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MIRA Consulting
909-389-7047
1365 Crafton, Ste. 1062
Mentone, CA 92359
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Economic Outlook
Outlook Through 2006
Inflation is, suffice to say, pervasive. The Federal Reserve lacks
sensibilities by relying upon a lie called "core inflation" -- to which "hot dog
filling" is an equivalent metaphor. It is our opinion that Alan Greenspan,
and collectively, the Federal Reserve's Board of Governors ought to be charged,
tried, and convicted for treason for intentionally destructive acts of economic
sabotage against the citizens of the United States: This includes (1) The
cycling interest rates to a level that destroyed the value of the stock market
between 2001 and 2003 to the tune of $8 trillion US dollars; (2) Manipulating
interest rates to entice central banks to buy treasuries, which had the net
result of artificially propping up the value of the US dollar, discourage US
exports, and increase the US trade deficit to levels that would make the
Rothschilds blush; (3) Failure to conduct an accurate and exhaustive study of
policy analysis on the long-term effects of Fed decisions; (4) Inflating the
housing market to such levels that make it nearly impossible for a new young
family to buy a home; (5) Ignorance via failure to use all of the tools to which
the Fed has at its disposal; (6) Artificially propping the dollar against
foreign currency to levels that has encouraged the export of US jobs, and this
has further contributed to the future failure of the social security system.
Suffice to say, good riddance Alan Greenspan. It's too bad that
Greenspan's successor will be left "holding the bag" (house of cards) created by
Greenspan.
Our investment focus is turning to hard assets, commodities, foods, and durable
goods. If we were into bonds, we would be shorting them now. It can be
said that real wealth can only be created by making goods. After the Fed
finishes (??) with interest rate hikes in January, don't expect it to be over,
as we anticipate the Fed to eventually push rates to 8 percent within three
years (2009), which will effectively make it nearly impossible to retire (hence,
the prospect of fewer people retiring will take the pressure off Washington to
cure the social security dilemma).
Politics -- sorry but we won't go there. Actually, we are quite critical
of the opponents of California propositions 75 through 79. They are quite
clearly desperate to uphold the status quo, given to broadcasting
misrepresentations and distortions.
Hurricane Katrina
The near-term effects of Hurricane Katrina that devastated the gulf coast
poses long-term recovery problems for businesses as well as individuals and the
residents displaced by the hurricane. Oil prices are
expected to decline to about $62 per barrel. Gas prices on a wholesale (spot
market) basis may decline to levels just above $2.00 a gallon for average grade
regular gasoline after a record of $3.06 on September 2, 2005.
Thousands of businesses have been destroyed or severely impaired by Hurricane
Katrina. Essentially, there is no viable economy in the gulf coast for the
moment (barring the oil business). Over time, construction, construction
materials, basic services, and infrastructure opportunities stand the most to
gain through 2007 and 2008. Insurance stocks are expected to decline
significantly due to an overburden of claims.
Precious metals are expected to increase following October 2005 and rise through
mid 2006. For enlightening reporting, we recommend Paul Van Eeden's
reports at Kitco, or subscribe to Van Eeden's reports.
2005 - Foreign trade is undergoing significant changes behind the scenes.
The US Treasury and the Federal reserve have been working hard to support the
dollar. However it is our opinion that the dollar is overvalued and will
need to adjust down as much as 30 - 40% against most foreign currency.
For each time that the Fed has raised interest rates, this has served as an
"enticement" for foreign central banks to trade their dollars for treasuries,
rather than sell them on the FOREX and exchange dollars for their own currency.
The net effect is to see inflated value of the dollar -- because if the dollar
were openly traded on the FOREX instead, there would be an oversupply of
dollars, and hence the dollar would decline. Benefits of a lower dollar
would provide incentives to US Companies to bring manufacturing and service jobs
back into the US and it would also provide a big boost for the tax base and
provide additional funding for Social Security. In addition, a lower
dollar would result in higher import prices. That would be bad news for
retailers such as Wal Mart (largest US importer). Downside of a lower
dollar means probable higher oil and import costs. However, supply/demand of
consumer goods will help to reduce import prices (on a healthier basis than Fed
intervention on currency exchange and interest rates).
*****
MIRA Consulting provides custom economic outlook reports
on an as-needed basis. If you wish to gain a perspective on your industry
from a broad (macro) and specific (micro) economic outlook, give us a call.
Pricing: $793 (one time) or $1,379. (biannually/two reports), or . See
publications. Six product categories priced at $7,930 annually
(quarterly delivery/one year subscription).
Contents of Economic Analysis Reports:
- Category description
- Industry news and trends
- Technology Horizon and Trends
- Economic Drivers
- Producer Price Index
- Pricing Forecast
Equity Markets
Our call for the next twelve months - equity markets
Important Notice and Disclaimer: MIRA Consulting is providing this
information on a free basis. Use of this information constitutes an
agreement to hold MIRA Consulting harmless of any real of potential investment
losses. Further, we strongly and emphatically recommend that you perform
your own research. Any investment decisions should be made via your own
research, discussion with your stock broker, and review of analysts opinions.
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