A MARKET ON FIRE

Market hits record levels, finally settling above 2007 levels. Happy Days are here again! The better than expected Unemployment report for February boosted trading to yield a triple digit bump on the DOW index. With 236,000 jobs created in last month, the unemployment rate slips to 7.7%, making it the lowest rate since December 2008. February’s impressive turnout nearly doubled January’s total - making it the second best payroll growth in 12 months. Last month’s triumph may be second to November’s payroll growth - but it’s clearly a more significant milestone, given the political gridlock and sequestration anxiety.

There is no denying, the market is on fire. This begs the question: ”Does this mean we’re officially out of the woods with respect to our struggling economy?” Remarkably, of the trillions of dollars in investment capital that was either lost in declines or fled the market four years ago, it appears to have made its way back into the stock market. As for today, we have sufficiently surpassed the highs of 2007, but we’re looking at levels that bely the overall economic picture - particularly from the standpoint of government debt and anticipated spending cuts.

Market for 2013 is already yielding 10% growth, just in the first two months. We have seen 10% market growth for an entire year.

Is this a repeat of “irrational exuberance”? (a now famous phrase coined by former Federal Reserve Chairman Alan Greenspan). Perhaps you recall - not long after Greenspan warned that the over priced tech stocks was caused by irrational exuberance, the Dot Com bubble burst. This historic occurrence resulted in massive losses that sent investors running for cover. Billions of dollars in losses, rendered many of Silicon Valley’s young millionaires nearly broke. The state of the country’s economy was significantly more stable at that time, thus the Dot Com bust was not nearly as devastating as it could have been. Since the US economy (as it stands today) is still in a rather delicate state, regardless of the zealous market – it wouldn’t easily recover without collateral damage, and a possible slip back into a recession.

The economic indicators are mixed, but there ARE clear signs of stabilization. For example, Manufacturing industry is showing signs of growth, the Housing market is rebounding, and employers are finally feeling confident enough to hire. Nevertheless, the Stock Market is out pacing all indicators, and seemingly ignorant to political issues that threaten fiscal mayhem. Warren Buffet was quoted last week as saying “Markets are Stronger than Government”, and this has proven to be true. Hopefully, we’ve learned from our mistakes, and current market prices are based upon substantiated valuations. My optimism is tempered by reflection.

Back to Home Page

K Reilly
The Cohn-Reilly Report
www.Facebook.com/Cohn.Reilly

________________________ RECOMENDATIONS

Also Check out: Socially responsible Investing site below:
SocialResponsibleInvest.com

Check out the new Music & ArtForum on BlogSpot! "Its a refreshing departure from economics. it's like life's little desert snack." doARTorDIE

-COMMENT HIGHLIGHTS-

________________Comment
Anonymous said......
(1) Great blog right here! Also your web site loads up very fast! What web host are you the usage of? Can I am getting your affiliate link for your host? I wish my web site loaded up as quickly as yours lol my site; aaa fx - March 18, 2013
________________Comment
Anonymous said......
(2) Very nice post. I just stumbled upon your blog and wanted to say that I've truly enjoyed browsing your blog posts. After all I will be subscribing to your feed and I hope you write again soon! Have a look at my homepage: voglio fare i soldi - March 18, 2013
________________Comment
Anonymous said......
(3) Wow, superb blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your website is wonderful, let alone the content! Here is my web-site: cedar finance is it real - March 17, 2013
________________Comment
Anonymous said......
(4) Great submit, very informative. I wonder why the other specialists of this sector don't notice this. You must proceed your writing. I am sure, you have a great readers' base already! my weblog ... binary options canada - March 14, 2013
________________Comment
Anonymous said......
(5) It's a shame you don't have a donate button! I'd certainly donate to this superb blog! I guess for now i'll settle for bookmarking and adding your RSS feed to my Google account. I look forward to new updates and will talk about this website with my Facebook group. Talk soon! My homepage legal ecstasy - March 17, 2013
________________Comment
Anonymous said......
(6) You are actually a excellent webmaster. The web site loading velocity is amazing. It seems that you are doing any distinctive trick. In addition, The contents are masterwork. you've performed a wonderful process in this matter! my web-site :: day trading strategies - March 17, 2013
________________Comment
Anonymous said......
(7) Hi, I do think this is an excellent blog. I stumbledupon it ;) I'm going to return once again since I book-marked it. Money and freedom is the best way to change, may you be rich and continue to help others. Here is my page - binary options uk - March 16, 2013
________________Comment
Anonymous said......
(8) Oh my goodness! Amazing article dude! Thank you, However I am going through problems with your RSS. I don't know why I can't join it. Is there anybody getting the same RSS issues? Anyone who knows the solution will you kindly respond? Thanks!! Here is my homepage automatic forex trading - March 21, 2013
________________Comment
Anonymous said......
(9) Very soon this site will be famous among all blogging people, due to it's pleasant articles or reviews
Here is my homepage :: http://www.youtube.com/watch?v=opdUxdbSOh0 - March 21, 2013

Industry Outlook: Technology Driven Jobs Growth

The Department of Labor names the Service Sector as one of the top five industries that will drive the economy over the next 6 years, out pacing all other industries According to a recent Bureau of Statistics Report, the service sector employs approximately 112.8 million people. Given the continuous advancements of technology, technology related occupations are expected to grow 25.9%, while the service sector (including project management and consulting) will be the driving force in the economic growth through 2018. It is no surprise that the demand for IT consulting and system upgrades will foster increased business, driven solely by the face-paced changes in technology.

This is really good news for a wide range of career paths particularly; project managers, IT consultants, and risk analysts, network security specialists, developers, corporate trainers and recruiters. The Industry Outlook page indicates the Department of Labor anticipates 18 percent growth in the IT management and consulting services through 2020, out pacing all other occupations by 4 percent.

The Department of Labor Industry Outlook page indicates that the service sector will be accountable for employing as many as 131 million people between now and 2018. In their Industry Outlook Report issued the second quarter of this year, the Department of Labor points out that technological consulting services will be among the fastest growing sectors for professional and technical workers. To further support the positive outlook for IT and related Management and Service sectors, a Plunkett Research Report issued earlier this year, reiterated the projected 18 percent growth for the aforementioned industries. Like a super heroe, Technology will impact the overall business community as it continues to drive change, demand and thus economic recovery.

Small and mid-size organizations struggle to keep up with advancements that influence their ability to remain competitive as the market place transforms. For this reason globalization and express technology advancements foster new opportunities for IT consultant firms (Deloitte, 2012). Industry and Occupational Outlook data can be found at US Department of Labor website

Back to Home Page

K Reilly
The Cohn-Reilly Report
www.Facebook.com/Cohn.Reilly

Doin' the Twist: The Federal Reserve Steps in to Spur the Economy

In the beginning of the year, the Federal Reserve indicated their plan was to let the economy stand on its own. By the end of last month, however, the Feds broke down and reduced long-term interest rates in a program they refer to as Operation Twist. In this program, the Feds would drive down interest rates to encourage business activities, such as borrowing and hiring. According to a Wall Street Journal article by Peterson and Hilsenrath, the Federal Reserve officials announced that Operation Twist will be extended through the end of the year, but they’re “poised to do more”.

At the end of the 1st Quarter, the Feds indicated that there was no need for their help. The economic picture appeared brighter following a strong 4^th Quarter, and encouraging jobs report.

By the time the we turned the corner into the 2^nd Quarter, the economic storyline began to change amid heightened pressures from overseas. The market, which had anticipated S&P downgrades for Spain and France, could no longer withstand the push-back stemming from the European Union’s fiscal and political upheaval. Globalization has its rewards, but this isn’t one of them. When the EU sneezes, we are going to get the sniffles, as if the distance were non-existent.

As the Euro fiscal storm brewed, the dismal jobs report and Facebook IPO did its part to shrivel up any confidence Investors might have had left. The market uncertainty lingers, regardless of good economic news. This  depicts the profile of weary investors - possibly suffering from Post-Traumatic Stress Disorder.  Being the eternal optimist, I’m hoping Operation Twist will have us all dancing in the isles by the end of the year.

Back to Home Page

K Reilly
The Cohn-Reilly Report
www.Facebook.com/Cohn.Reilly

________________________ RECOMENDATIONS

Also Check out: Socially responsible Investing site below:
SocialResponsibleInvest.com

-COMMENT HIGHLIGHTS-

________________Comment
Anonymous said......
This blog was... how do you say it? Relevant!! Finally I've found something which helped me. Thanks! Look at my blog post - this link - October 13, 2012

________________Comment
Anonymous said......
Hiya! Quick question, that's entirely off topic. Do you know how to make your site mobile friendly? My weblog looks weird when viewing from my iPhone 4. I'm trying to find a template or plugin that might be able to resolve this issue. - October 14, 2012

The Price of Deception: Settlement for Mortagage Underwriters Finalized

The Price of Deception: Settlement for Mortagage Underwriters Finalized
The big 5 mortgage services are forced to finally face music. In the past several months banks and underwriters were preparing to sign off on the highly anticipated settlement. As Attorney Generals nationwaide descended upon Washington to iron out the details of the settlement last month, industry analyst were left to speculate. We've reported about the widespread abuses in the mortgage industry, which culminated in thousands of forclosures being thrown out of court or temporarily halted. The housing industry which is the last of the economic indicators to show signs of a turnaround, is believed to be the catalyst for the financial callapse of 2008. As the rest of the financial markets began a massive melt-down, the foreclose rate was an an average of 45% nationwide by 2009. The Obama administration tried its best to stop the bleeding with several homeowner assistance programs, but it appeared the abuses had taken its toll on the market. It simply had to run its course.
It was later realized that many of the mortgage documents were not filled out properly, (leaving a questions as to what loan provider was attached to which property). This prompted intensified scrutiny, leading to a long over due investigation. During the investigation a freeze was placed on all foreclosures allowing homeowners to stay put for while until the matter was thoroughly reviewed. The implosion of the housing market slowly revealed a myriad of issues that involved abuse, fraud and deception, causing massive declines in property values. The term upside-down mortgages was commonly used to describe the steep depreciation property values that sank below the underlying mortagage owed. Later, the proliferation of foreclosures uncovered the ROBO signing scandal (mentioned above) involving, forged signatures and flawed paperwork which precipitated unfounded evictions. Imagine the devastation of homeowners being forced out of their homes, only to find it was due to erroneous paperwork.

An effort to correct the abusive behavior illustrated by the mortgage lenders and banks has finally come to a head. The "pow wow" of federal officials and attorney generals from all 50 states resulted in an outline of the terms of the settlement. Mortgage Servicers were bracing for a multi-billion dollar hit, which was announced yesterday (February.9th). The settlement is said to be a painful $25 billion in penalties and fines. News had circulated in December that there are a few sticking points in the deal, which was met with disapproval from a few of the Attorney Generals, namely Eric Schneiderman of New York.
The Obama Aministration was pushing to have the deal signed and sealed before the State of the Union Address, but that was a long shot. Surprisingly, he made no mention of it in his speech. Industry analysts and experts correctly speculated that fines would be around $25 billion, but were unclear as to the specifics of the homeowner assistance programs. I've been anxious to see the details of the settlement doe myself. Some aspects of the settlement will include limited aid from banks to overwhelmed homeowners, by reducing their loan principle. We can expect to see structured Principle Forgiveness programs, which will apply to a small number of mortgages that are wholely-owned by the banks, while Bank refinancings will be another form of aid to home owners.
The housing market woes of the past three years have eroded bank share prices and caused immeasurable blows to their reputation and goodwill. Trust and confidence of the public in Banks may be a thing of the past.


Back to Home Page

K Reilly
The Cohn-Reilly Report
www.Facebook.com/Cohn.Reilly

Crimes & Misdemeanors: FBI Closes in on Large Wall St. Funds

The FBI has arrested key members of a ring woking out of several states, including New York. Similar to the Galleon Group, these guys traded information concerning publicly traded companies in an apparent conspiracy to commit insider trading fraud. This ring was so productive, they were able to generate financial gains that rival the Galleon Hedge fund, who's founder recently received an 11 year sentence for insider trading. One of the hedge funds involved, Level Global Investors, raked in over $50 million in gains alone. The court documents state that a ring of traders and analysts, who formed an insider trading club, swapped information that resulted in over $60 millions in illegal profits.

As the voices of "Occupy Wall Street" draw attention to the stark imbalances of the privileged 1%, the fraud saga continues. According to the , Wall Street Journal the government has already prosecuted 63 people on charges of insider trading, yielding 56 guilty pleas or convictions. This marks an unprecedented number of cases procsecuted concerning insider trading in a three year period. Judging by this unrelenting onslought of crimes and Misdemeanors, it would appear that the Finance Reform Act is about as valuable as wall paper. That is not to demean the efforts of law makers or the Obama Administration, its merely a commentary on the industry's commitment to an "any means necessary" approach to capitalism. The only consolation is that the Feds and the SEC seem to be paying closer attention to the activities and trade patterns of hedge funds and other financial institutions that engage in trading. There's fresh optimism about the economic forecast, as job reports and other market indicators send a strong message of recovery. Neverthless, with the reluctance traders, money managers and banks to change their habits to avoid a repeat of a financial collapse, sends another message altogether: They still don't get it, and its likely that they never will.

Back to Home Page

K. Reilly
The Cohn-Reilly Report
www.Facebook.com/Cohn.Reilly

Reform Bill Signed ..and the Sky is Not Falling

The Bill was finally signed by President Obama on Wednesday July 21st, marking the most extensive financial reform legislation since the great depression. In addition to tougher regulations and fees for large banks, the bill outlines new processes and steps to be taken to address troubled companies, which would break down the business units and sell them off, rather than bail them out. The bill is being heavily criticized for what appears to be the government’s increased role of power and control. Further, despite what we’ve heard from the President and democrats on Capital Hill, the bill does contain language that suggests that the Federal Government still retains the authority to bailout troubled companies. Bloggers are going bonkers over this issue. I, on the other hand, feel otherwise. In all likelihood, the government’s authority is restricted to last resort options, or special circumstances. Let’s face it, no one could have predicted the turn of events in ’08 and ’09. Therefore, to close the door to any alternate options that may save the country from another “never before seen” economic turn of events, would not be wise.

As anticipated, the large financial institutions will be subject to increased oversight. Unfortunately, my understanding is that the Securities and Exchange Commission is going to be the watchdog. Are you kidding me? Now this is a real concern! The SEC, in all due respect, is the very same group that ignored countless warnings about Madoff, slept as the high risk sub-prime were securitized with “A” ratings, while spending thousands of office hours porn surfing. I am not encouraged by this at all.

I'm sure you've heard the "sky is falling!" type reports surrounding the passing of this bill, where market journalists, analysts and self proclaimed finance geniuses speculate that the bill will have a harsh impact on banks, which will stall or reverse the economic recovery. Sure there will be some initial impact, but banks have always found ways and means of navigating around the Regs and pulling out their multi-billion dollar profits. Time will tell, my friend times well tell. In the meantime, I shall remain open minded until I get more information about this historic bill might impact the economic recovery.

K. Reilly
Cohn-Reilly Report

___________Comments

Charlie said......
I agree with you about the SEC. The problem is that companies are concerned about how the financial regulations will affect their businesses going forward, along with the impact of health care reforms. As a result, firms are sitting on trillions of dollars in cash, reluctant to commit to hiring the still 9.5% of the population that is unemployed.

I speak to recruiters frequently and they confirm that employees are still working long hours to make up for the lack of staff in their departments. Hiring managers have numerous open requirements for employee spots to be filled, but until senior management can get over this uncertainty, we still will have major hurdles in putting America back to work.
JULY 23, 2010 6:25 AM

Katherine said......
You're right, Charlie. We don't disagree. Except from my standpoint, the Reform Bill is a key contributor, but there are other factors that come into play with respect to companies sitting on cash, and still reluctant to hire. Overall, the concerns are valid: How stable is the market?, How tight will the banks be with distributing credit? , and Will there be liquidity?, These are significant issues where the corporations are concerned, particularly the small companies, who depend on credit to purchase inventory, and make payroll. I definitely get it. Nevertheless, reform was absolutely necessary. We all know the financial industry was out of control, and now we all have to suffer for it. My old boss used to say "This too shall pass". Corporate America will adjust, survive, and eventually thrive again. Yes the economy may stagnate, but it will prevail.

No doubt there will need to be some changes in the Reform Bill – a few nips and tucks before we can strike a balance between consumer protection and keeping the banks motivated.
JULY 23, 2010 7:35 PM


Anonymous said......
Hey....nothing like a healthy debate, right? You both make solid arguments, but I’m more of the wait and see type. These are scary times, but I hear they don’t compare to the great depression – we have it easy. Look. - it’s not going to be the same no matter what we do, so why whine about it. Let’s just man-up and wait it out. Banks are never going to satisfied, and the Wall Street high rollers are moaning because we're raining on their parade. Wall Street and Main Street will never see eye-to-eye. So how do you write legislature that reflects the concerns of both sides. You Don't!

Federal Tax Increases Could Affect Lower and Middle Income Families

Tax cuts that were put into place by the Bush Administration are scheduled to expire at the end of this year. There could be some significant changes that will take people by surprise. The public has been led to believe that only tax payers in the top two brackets will face higher federal income taxes when the Bush cuts are gone. This may not be the case if Congress and the President fail to act. There are currently six rate brackets - 10%, 15%, 25%, 28%, 33% and 35%. They will be replaced by five new ones: 15%, 28%, 31%, 36% and 39.6%. A few months back it was thought that Congress would keep the old brackets to protect lower and middle-income families. It is now uncertain if this will happen.

There will be higher capital gains and dividends taxes.Right now, the maximum federal rate on long-term capital gains and dividends is only 15%. Starting next year, the maximum rate on long-term gains will increase to 20%. The maximum rate on dividends will skyrocket to 39.6% unless action is taken to limit the rate to 20%, as the President has repeatedly promised. For people in the lowest two rate brackets of 10% and 15%, the current rate is 0% for long-term gains and dividends. Starting next year, those people will pay 10% on long-term gains and 15% and 28% on dividends (compared with 0% now) unless a change is made. Otherwise, taxes on long-term gains and dividends will go up for everyone.

Currently, the standard deduction for married joint-filing couples is double the amount for singles, easing the so-called marriage penalty (see this link for more information http://en.wikipedia.org/wiki/Marriage_penalty) that can force a married couple to pay more in taxes than when they were single. Starting next year, the joint-filer standard deduction will fall back to about 167% of the amount for singles unless Congress takes action and the President approves. If that doesn’t happen many lower and middle-income couples will face higher tax bills. In the current system, the bottom two tax brackets for married joint-filing couples are exactly twice as wide as those for singles. That ratio helps keep the marriage penalty from biting lower and middle-income couples. Starting next year, the joint-filer tax brackets will contract, causing higher tax bills, unless a change is made.

The tax cuts in place now offer tax relief to most Americans who pay federal income taxes. The scheduled demise next year will raise the tax bill of nearly every taxpayer, unless Congress makes changes and the President jumps on board.

C. Cohn
Cohn-Reilly Report

___________Comments

Erin Thak said.....
In the short-term some of the Obama Administration‘s policies and regulations may appear to be more toxic than they really are. Like anything else, time may prove otherwise. I remember thinking that NAFTA was a good, progressive idea, which after 15 years, has proven to have a horrific impact the US. NAFTA commenced an huge increase in outsourcing resulting in the loss of 1.7 million jobs, as well as suppressed wages, due to the extremely low cost of doing business in Mexico. As brilliant as Bill Clinton is, he was unable to see the long-term ramifications of NAFTA, nor was any of the geniuses in his administration. So I remain guarded but hopeful that in the long run, the best interest of the country is being protected. This administration can’t do any worse than the previous one.
JULY 15, 2010 11:27 PM


Charlie said.....
I agree about NAFTA and the prior administration. However, I hope the new regulation laws do not have adverse affects on the many good companies that are not guilty of unethical practices and actually employ most of us. Also, as I mentioned above, I hope the President and Congress are aware of the impact that the reversal of the current tax cuts will have; not only on the wealthier citizens, but on the lower and middle-income tax payers as well.
JULY 16, 2010 10:55 AM

Katherine said.....
I agree 100% with Erin, as you well know Charlie, given our recent debate. However, Your point is well taken regarding the reversal of Bush's tax cuts. I cannot imagine that (with the dozens of economic and financial advisors on the Obama Administration's advisory board) no one is emphasizing this critical issue to the President. Although the Republicans are normally not cheerleaders for the middle class, this is one time that I hope the Republicans make this point loud and clear.
JULY 17, 2010 7:10 AM

Charlie said.....
I agree that the Administration has an ample supply of advisory personnel. However, the year is slipping away and with all the current distractions including a war, regulation, health care, etc., will there be enough time to mount sufficient effort to tackle this issue? Also, it is not just The Administration that must act - Congress has to move too. We all know that nothing gets done overnight in Washington and December 31 is closer than you think.
July 19, 2010 6:03 AM

Independence Day for the Feds: Lawmakers to Let the Federal Reserve Retain Their Independence

Wall Street reform, begins to take shape as the House of Representatives and the Senate attempt to hammer out the details of the much anticipated plan.
The Federal Reserve has been the subject of much sustained criticism for its role in the financial crisis. Eventually the Feds admitted to being complacent and not responding to mitigate mounting housing troubles due to risky lending practices back in ‘2007. Accordingly, there was a not-so-subtle push to make the head of the Federal Reserve Bank a political appointment. This idea was, thankfully, abandoned according to a Reuters report. Nevertheless, the Federal Reserve did not get off completely, as Lawmakers allegedly signed off on a one-time review of its emergency lending during the Crisis, and has ordered them to disclose the Discount Window and Open Market operations on an on-going basis. Even though the information requested is at a 3-year lag, this may come as huge adjustment for the Feds. Hey Feds...you win some, you loose some.
I am guarded but excited about the prospect of Wall Street reform, but I anticipate a difficult road ahead for the lawmakers as they chisel out the historical bill. It will certainly be interesting to see how they revise and attempt to blend the separate(and very different) bills that previously emerged from the House and the Senate. This July 4th weekend, which was the White House dead line, should quickly reveal just how bumpy the road might have been. As of week before last, the key issues were as follows:
1. "Yes" or "No" to a provision that would open the Fed’s interest-rate policy to congressional audits. If not perhaps they would look at examining other less sensitive areas.
2. Establish tighter regulations that would essentially crimp financial firms' profits, but serve to avert a repeat of the financial crisis of 2009.
3. Establish improved consumer protections. This would protect consumers from predatory and unsavory loan rates and fees.
4. Set up a process for dismantling troubled firms, in lieu of costly bail outs
5. Limit the range of high-risk, but profitable trading activities, which played a key role in the financial collapse of banking firms.

Although the Lawmakers differ in the details, both the Senate and the House would like to see funds set aside for dismantling troubled companies, rather than save them because they're “too big to fail. Regulators have also been directed to find ways to eliminate the conflict of interest that may have lead to credit-rating agencies. I wonder why they're ignoring the conflict of interest concerning research analysts who issued “strong buy” reports to stocks and companies that were troubled? Will they be included? You may or may not recall that one of the research analysts of a major investment bank was fired after pressure from Enron, because he did not give them a "strong buy" rating. Once the analyst was fired, Enron rewarded the Investment bank with a $50 million transaction. I can only imagine the numerous stories that have not been made public? At some point this week the details will be made public on this widely anticipated bill.


K Reilly
Cohn-Reilly Report

Post Script

Geithner and Michelle Obama at The U.S. Treasury

The two talk about the hard work of the treadury department employees, and the finance reform programs that are designed to mitigate another financial crisis from happenign again. Mrs. Obama talks about her child obesity initialtive.

Bernanke Goes to Washington

The DOW surpassed 11,000, for the first time since June of 2001. If nothing else, the benchmark boosts investor sentiment. So what does this mean? The market is soaring, and up more than 60% since March of 2009. That is a remarkable showing of market strength. We may well see the DOW vacillate below 11,000 and flirt with the benchmark a while before we can expect to settle in. It is important to note that the market is merely 6 percent below the all time high set in 2000, before the DotCom bubble burst.

According to recent polls, most Americans still believe the economy is in worse shape than a year ago. The financial markets seem to tell a different story. On the surface, the market milestone is an indication that the recession will soon be referred to in past tense. This theory could be further supported by consumers spending surge in the past 5 months. Not so fast….. there are too many other facets of the economy to be considered before we falsely assert “Mission accomplished!”. Let this be a glimpse of how complex interpreting the status of our economy can be. Perhaps we can better appreciate the Chairman's dilemma. When the economy is in better shape, economists, traders and analysts are pretty good as reading the tea leaves and advising on where the trend is heading. The events of the last 24 months have been pretty drastic, yeilding an unusual set of circumstance. The turn of events has has left scores of experts scratching their heads as to what happened, how it happened, and how to fix it.

The Federal Reserve Chairman will go to Capital Hill on Wednesday to give his perspective on the state of the economy. It’s a “good news, bad news” message he’s expected to deliver. Yes, the economy is recovering, but No, it won’t be completely turned around anytime soon. Bernanke will warn Capital Hill that the economy will continue to recover at a sluggish pace.

Therefore, in spite of the DOW industrial average closing above 11,000, and consumer spending increasing for 5 straight months, the lagging economic factors (housing values, unemployment, tight credit)will unfortunately impede the process. The 3rd quarter of 2009 was the turning point for the economy, following four straight quarters of grave losses. In contrast, the 1st quarter of this year showed promise, as job creation for the month of March tipped the scale at 162,000.

Bernanke faces the daunting, but delicate task of ensuring that the economy stays on track amid fading stimulus programs. So, my fellow Americans, there will be no celebrating for quite some time, since unemployment is still regretably 9.7 percent nationwide. According to economists, unemployment is expected to remain high for another 3-4 years before we see 6 percent or less. So why is the market seemingly on fire. Is this a bubble that will correct itself in the months to come – or perhaps later? It just doesn’t add up from where I'm sitting. The market is pumped up, and effectively doing its job to build investor confidence, and sending the global message that the U.S. is "Back". Nevertheless, I somehow feel the stock market is growing too much faster than the economy.

Unwavering in his perspective, the Federal Reserve Chairman‘s concerns are the high unemployment, weak housing values, stagnant wages, tight credit, and the second wind of foreclosures. This is an election year, thus the state of the economy will likely be the focus of many campaigns - you can just imagine how the Republicans will spin the slow churning recovery.


K. Reilly
Cohn-Reilly Report