Do they know the unintended consequences?

"We still have a substantial position in cash. Why? Stockman or Druckenmiller explained it in detail. The main reason is we are uncomfortable with the idea people at the Fed - who never had any responsibility in their life in making business decisions and earning money by being exposed to changing market conditions - can make things right by moving a few “dials”.

They destroyed the pricing mechanism and diverted wealth to those who know how to take advantage of these enormous market distortions. They penalized the masses which are at a loss on how to earn a meager return for their savings.

The latest data show the same frustrating picture. There is no hint of an economic boom in the near future. Employment barely grows enough to keep the unemployment rate unchanged. Retail sales rose a lukewarm 0.2%. Consumer confidence retrenched but the trend is up. This optimism is behind the great performance of the auto sector. The purchasing managers' attitude reflects improving manufacturing and, above all, service sectors. Business sales keep growing above the growth of inventories, forcing business to become more aggressive producers. It is no coincidence industrial output jumped a healthy 0.4% last month. Productivity data were revised, but growth is 0.3%. It points to continued sluggish growth. (From my The Peter Dag Portfolioof 22-Sep-13)

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

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