This week's chart shows U.S. economy gradually sliding into recession. This indicator is the average year-to-year change of about twenty measures. Many are real measures, like tons or units, so some of false impressions created by incorrect price calculations are avoided. Only recently has the collapse of the housing sector been acknowledged as a serious negative on U.S. economy. Many have mistakenly believed Wall Street could “feed” the nation.

Then, CAT reported earnings last week, slapping the deluded economic prognosticators awake. Burlington Northern has reported that shipment volumes fell 5% in last quarter. A freight car not carrying corn, is a freight car in a recession. As shown in the chart, the U.S. economy is moving toward stagnation, and will deteriorate further in 2008.

Twiddle Dee and Twiddle Dumb, one at Federal Reserve and other at U.S. Treasury, continue to focus on saving banks from their rather stupid creation of SIVs. Fine if families are thrown out of homes, investment bankers must be rescued. Proper economic response would be to let some of those banks fail! Due to this ineptness, dollar has plummeted and Gold has risen. Much of this has been discounted by currency and Gold markets causing attention to turn to FOMC meeting next week.

U.S. dollar likely started a short-term rally on Monday. Without a major negative announcement or more false data such as that released by U.S. department of labor, FOMC may have little justification for a rate cut. As that would be surprise, further short-term strength in U.S. dollar could develop. Investors should be building cash in order to buy Gold when it becomes over sold or moves lower. Then, hold for $1,400+.

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue write to agrifoodvalueview@earthlink.net

Ned will be exploring the Agri-Food cycle at The Wealth Expo in NYC, 19-21 October.

For information go to www.wealthexpo.net

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.