Can the Fed Raise Rates With Construction Spending Tanking?

Yes, on the heels of Yellen's Speech at Jackson Hole and Fisher's jawboning a rate increase. They shouldn't (especially so close to the presidential election).

Last month we highlighted the decline in capital investment from American corporations and the consequences for the manufacturing economy. With this morning's terrible manufacturing activity report, we have confirmation that the manufacturing recession is picking up steam (to the downside). At this early stage, investors still have time to adjust their portfolio exposure and reduce risk. We recommend a healthy dose of cash.

The Economic Reality of America (facts vs. political hyperbole)

Republicans and Democrats have both held conventions, presented their candidates and painted their picture of America today. The next 100 days is certain to be a wild and crazy ride. If one candidate builds a polling lead the other side will hit back hard and ugly. Truth is the first casualty of war and it will be so of this election cycle. Facts don't lie but most politicians do. To remedy this, we have assembled some facts to help you understand where our economy stands. Maybe this will help you choose a candidate that can address these problems.

Since George W. Bush's time in office household income has been stuck in a downward spiral. The financial rewards of Quantitative Easing By he Federal Reserve during Obama's time in Washington enriched upper class asset holders but never made it down to the middle class:

During Obama's two terms in office housing costs have skyrocketed, The median home price in America this year is over $300,000:


No margin for error

As the holiday shopping race kicks off, reports are all over the place about whether consumers are spending more than last year. Online sales are much stronger than last year but bricks and mortar sales are still 3 times online (11 billion versus 4 billion online). This comes on the heels of last weeks report that consumers who have some extra cash are choosing to save it for a rainy day instead of spending it.


By relying on optimistic spending projections, businesses have built inventory levels to the point that they have little room for error in their planning. The Census Bureau reported that the ration of inventory to sales has jumped to its highest level since the great recession. If consumers hesitate in opening their wallets, retailers will have to slash prices to dump some of this excess inventory.

As inventories have continued to build over that last 12 months, we have asked for help in answering the central question that will drive the Fed, the stock market and the economy, "Where is demand going to come from?"

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