The US Industrial economy (if pipeline scheduling is correct) gained more ground last week, even as consumer spending stalled and eased off a notch.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) had its third up-week in a row, rising to 119.7 (vs last weeks revised 118.8). In its raw dailies (above), the measure was mostly flat and followed quite closely the previous weeks numbers.
The Consumption Index, conversely, broke its string of five weekly gains, dropping to 137.5 (from last weeks revised 137.6). In its raw dailies the measure had a flat, somewhat lackluster look.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continues to re-accelerate downwards.
As with last week, food-group scheduling continues to underpin consumption, even as consumption stalls... a sign that consumer confidence, though up, may be more confidence in "the other guy" than self. Steel group receipts (reflective of durable goods) continue to look lousy.
Overall, until steel improves, everything is questionable and Federal-Reserve policy makes it doubtful. My thinking remains that nothing less that a QE-3 will do, and the economy heads south within the next few weeks without the Federal Reserve.
(Political wild-speculation department... my thoughts from a couple months past...)
"Perry campaign gets killed from within (by its own staffers), Romney from without (boredom), and Ron Paul
takes the Republican Primaries and the Presidency in 2012. Possible Democratic "Hail-Mary"... Democrats
accept the Republican balanced-budget amendment idea (it gets forced anyway in next few years) in return
for token higher Republican Taxes, then fire the whole of the Federal Reserve board and ... ... ...) (That is, if
the Federal Reserve is freezing up politically and unemployment retakes double digits.)"
The thoughts on the Perry and Romney campaigns look to right so far, although Ron Paul has yet to emerge. Instead, Herman Cain has come to the top, which I think makes sense given the deep troubles within the gas flows (am thinking all of America is going to be in a real mood to "Roll the Dice") and extremism on taxes (Herman Cain) and a bunch of other stuff (Ron Paul) will actually be liked once the thick of the Republican Primaries and 2012 Elections commence.
(This very much reminds me of the late-1970's malaise when Ronald Reagan was elected, and that little old "Voodoo economics" tag by then-candidate George Bush probably helped to cement Reagan's eventual election by an electorate that then was ready to "Roll the dice" too.)
But will it be Herman Cain or Ron Paul? Tougher question than Perry vs Romney vs Paul, and investing will be a lot different under Herman Cain than under Ron Paul. I am still thinking Ron Paul, but a lot tougher call.
On the Democratic side, nobody should (rationally) want to run against the president (without infuriating a lot of folks and being made to look an out right traitor), although in the end (by looking at the gas flows) the President is toast in the 2012 elections. One would think the Federal Reserve is Republican and trying to undermine the economy to destroy the Democrats in 2012 (judging by the Federal Reserves ending of the Quantitative Easing programs as the primaries approach and the economy slides), and no doubt there is knowledge of all of this at the White house.
So on the Democratic side, one has to risk ones investments outlook to an extreme move on Federal Reserve oversight by the Executive Branch, and I think it more than likely than not that the Federal Reserve gets "Shook up" by the 2012 elections (more likely by the end of 2011) unless the Federal Reserve does something really, really bold quickly before the economy really, really tanks.
-Robry825
