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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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Condensed Articles

May 28, 2015

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STOCK PRICES AND GDP
By Michael Pento

(condensed)

On a fundamental basis stock prices are reflective of both economic and earnings growth.  When growth is strong, stock prices should increase in value. And when economic activity decelerates or turns negative, stock prices should go down.  Of course nothing is that simple – especially today, when all markets are so highly manipulated by governments and central banks.  Beginning in 2008 the markets followed the Fed on a magical journey down the rabbit hole into a wonderland where bad news is good news; and economic fundamentals and stock prices no longer move in tandem. 

Welcome to the worldwide equity bubble brought to us courtesy of central banks, which has caused the complete decoupling of stock prices from underlying economic activity. This delusion has been fomented by the notion that QE and ZIRP will eventually cause economies to catch up to record-high stock valuations.

While world-wide markets are cheering central bank QE – sending stock markets sky rocketing – our Fed is quickly running out of credibility and tools to fight another economic downturn. Zero percent interest rates for 7 years and a $3.7 trillion QE bail-out from the Great Recession have not done anything to improve economic growth. Central banks have merely re-inflated old bubbles and then created a new one in global sovereign debt. What happens when investors reach the epiphany that all of the central banks’ interest rate manipulations and money printing didn't work? The U.S. Federal Reserve isn’t able to lower interest rates any further.