5.2.13 – QE Continues, Economy Remains Stagnate

Gold prices ended the day with solid gains amid an improved investor risk appetite. Commodities remain bullish after ECB interest rate cut. Gold last traded at $1,467 an ounce. Silver last traded at $23.79 an ounce.

-Jobless claims fall to 5-year low -CNN
-ECB cuts rates as Draghi says more room to act-Market Watch
-S&P 500 closes at record high; Dow jumps 131 -MSN Money
-Why the Fed Worries Inflation Is too Low- Businessweek
-Almost Half of Americans Say Budget Cuts Will Hurt Economy -NY Times
-ECB Under Political Pressure to Do More -CNBC

Sink QE! (the money-printing plan, that is) – NY Post
The Federal Reserve made it official in its recent statement saying they are “full steam ahead” for the money-printing program that has been creating all sorts of financial dislocations without helping the economy grow very much. No one expected anything different but Wall Street had been hoping the Fed policymakers would print even more money.

Quantitative easing has changed the nature of the free-market system and has jeopardized America’s standing as the one safe financial haven in the world. The extra money ended up creating another stock-market bubble and left the economy limping.

The losers in this situation are the majority of Americans who rely on income from savings rates that hover at budget-breaking lows. They have had to cut back on spending and are essentially paying a hidden tax to keep Washington’s debt lower.

middle class Middle class resigned to stagnation – MSN Money
According to a recent survey, no longer does being middle class mean getting ahead, it now means just not falling too far behind. 54 percent of individuals surveyed defined the middle class as those who could still keep up with bills, not get buried in debt, and not lose their jobs.

Once basic economic goals, like paying for a child’s college education, are only realistic for the upper class, according to 40 percent of those surveyed. Some also believe annual vacations, regular pay increases, quality health care, and even basic job security and things only manageable for the upper class.

People surveyed may know more about the economy than economists because they bear the brunt of it. Some considered the middle class a “treading-water position.” Now that the bar has been lowered, almost everyone in America can still consider themselves middle class.

Gold powers ahead after ECB cuts interest rates – Market Watch
Gold futures climbed more than 1 percent on Thursday as the market took in news of fresh stimulus from the ECB in the form of rate cuts. ECB President Mario Draghi vowed that monetary policy would remain accomodative. ECB cut its main refinancing rate by 25 basis point and also cut the interest rate on the marginal lending facility by 50 basis points.

“Central-bank policy announcements over the last couple of days indicate that the era of easy money won’t be ending any time soon,” according to one expert. Analysts have attributed recent strength in gold prices to expectations the Fed and the ECB will continue with their easy-money policies.

Jobless claims lowest since January 2008 – Market Watch
The fewest Americans in more than five years applied for new unemployment benefits last week, a surprising decline that may reflect seasonal quirks more than a sudden improvement. Economists surveyed had expected claims to rise to 345,000 and instead they dropped to 324,000 from 342,000 the prior week.

Claims often gyrate sharply the month after Easter because of the Good Friday holiday and spring break, making it harder to Labor officials to adjust claims for seasonal oddities. Other employment indicators have signaled companies are creating fewer jobs compared to just a month ago.

“The decline in claims suggests that there is no uptrend in hiring but after years of layoffs there are also few workers left to be let go,” said Steven Ricchiuto, chief economist at Mizuho Securities.

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