-- Posted Thursday, 16 February 2006 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Thursday, February 16, 2006

For investors who’d rather be smart than lucky 

In his first report to Congress, the new Fed chairman reassured listeners that the American economy was rebounding robustly after a statistical lull in the third quarter. Some astute Fed-watchers took this as a subtle warning to statisticians to produce “friendly” CPI numbers next month, so that the developing, rosy picture is more credibly corroborated by the numbers, most particularly those alleging “productivity gains”. Other observers were quick to point out that America’s negative savings rate and stagnant real income made it most unlikely that any real economic gains had been achieved recently. In fact, they said, the inescapable conclusion was that any economic “growth” said to have occurred, assuming it occurred at all, would have been the result of increased borrowing by consumers from sources outside of the U.S.

No one from the Fed was available to comment on this, although the woman who answered the phone at the central bank’s Washington, D.C. headquarters said, “What are you, some kind of wise guy?” Wall Street investors implicitly shared this sentiment when they pushed the averages moderately higher in dull trading. The Dow Industrials ended the day 30.58 points higher after being down nearly 40 points earlier in the session. Whether the rally is an early harbinger of a “Springtime for Bernanke” efflorescence remains to be seen, however, since the chairman would not rule out the possibility of further increases in administered rates. He said that any decision about this will be based on the statistical picture of the economy that emerges over the next few months. Some Fed-watchers took this to mean that the Fed would consider a Stalinist-style purge of the Labor Department if it fails to come up with “correct” statistical numbers going forward.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com

-- Posted Thursday, 16 February 2006 | Digg This Article | Source: GoldSeek.com

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