It’s almost here — one of the happiest times of the year for me. No, not Christmas. The start of football season!
I’ve been an NFL fan since I was a boy, so I always get hyped when the season rolls around in September. I’m particularly excited this year, because we’re going to the New England Patriots’ season opener here in Miami! We’ve already frozen our butts off watching Kim’s Bears play in the winter in Chicago … now we’re going to roast watching my Patriots play in the summer in Florida!
|Football season: One of the happiest times of the year for me.|
I’ve been fortunate that my team has been doing well for several years. But that wasn’t always the case. And, of course, other fans of other teams haven’t been as lucky.
They’ve been stuck rooting for bad teams that continually get things wrong, from draft strategy to play calling to penalties. Think the Jacksonville Jaguars, Cleveland Browns or many others over the years.
That brings me to the Federal Reserve. Yes, the Fed. Back in the mid-2000s, they were so utterly wrong about the economy, the housing markets and interest-rate policy that it’s not even funny. They were as “offsides” with their optimism as you could possibly get, like a blitzing linebacker jumping across the line of scrimmage and landing on the quarterback before he even snaps the ball!
Now, it looks like they’re getting things wrong in the complete opposite direction. Every piece of economic data suggests they are way, way offsides with their pessimism!
As I first recapped in my Money and Markets column from last Friday, the economy just grew at a 4 percent rate. That was a huge rebound from the first quarter’s 2.1 percent decline.
And that’s not all. Manufacturing activity is running at the strongest pace since 2011 … labor costs are growing at the fastest rate since 2008 … consumers are feeling the most confident since 2007 … jobless filings are falling to the lowest level since 2006 … and job creation has topped 200,000 a month for six straight months — something that hasn’t happened in 17 years.
Then earlier this week, we learned that factory orders rose 1.1 percent in June, more than twice the 0.5 percent that economists were looking for. The ISM Services Index also jumped to 58.7 in July from 56 in June. That sector of the economy hasn’t grown this strongly since December 2005 — almost nine years ago.
I can’t find a single indicator there that justifies today’s monetary policy — not one. Heck, the last time we saw readings like these, the benchmark federal funds rate was orders of magnitude higher. I’m talking about 4 percent to 5.5 percent, not the current 0 percent to 0.25 percent!
So unless Fed policymakers want to be the Jaguars or the Browns of the monetary policy world, they’re going to have to get back onsides … pronto! Or in plain English, they started tapering QE far sooner than Wall Street’s “experts” predicted (but as I forecast). Now look for them to start raising short-term interest rates far sooner than Wall Street’s “experts” predict.
As for what it means to you, I urge you to rotate out of investments that benefit from low-yield, low-inflation, low-growth environments … and rotate in to those that benefit from higher-yield, higher-inflation, higher-growth ones. Energy, aerospace, manufacturing, health care, and more are some of the top ideas I’ve shared here.
Or for specific names, “buy” and “sell” signals, and more actionable advice, give my Safe Money Report a try. My staff at 800-291-8545 can get you up and running with all the open recommendations, including three brand new ones I just made! (Hint: One exploded to its highest level in a decade on strong quarterly results this week!)
Until next time,