Do Investors Really Have a Reason to be Optimistic?

We’ve heard it time and time again since the start of the new year: the economy is on the upswing; job opportunities are increasing; Americans are optimistic about their chances of finding higher-paying jobs. The economy’s uptick and subsequent increased job opportunities were a main point of emphasis during President Obama’s January State of the Union address, and the media has followed suit with enthusiastic reports regarding expectations of pay increases and hiring sprees over the course of the next two years. But some financial experts and analysts, like Founder and CEO of Bennett Group Financial Services Dawn J Bennett, observes that what the President and the pundits are telling us doesn’t match up with actual economic conditions, and investors should take note.

The University of Michigan’s February consumer sentiment numbers are perhaps most telling of this disconnect between the government’s job prospect narrative and actual job outlook and growth. According to the report, fewer Americans are expecting higher incomes and better business opportunities, as numbers fell approximately 3 points from January. The numbers for actual job growth have also been disappointing. March’s growth numbers came in at just 126,000, far below analysts’ prediction of 245,000. The unemployment rate also has yet to decrease as would be expected in a growing economy, as it remains at 5.5 percent.

The Chicago Business Barometer, which measures business activity in the United States, dropped a substantial 14 points from its January numbers, signaling a marked decrease in the economy’s manufacturing sector. As Dawn J Bennett points out, when the Business Barometer sinks below 50 (as it has this February), it’s typically a sign of an impending economic downturn.

These figures accompany the announcement that the United States GDP fell a whopping 43% from the 3rd Quarter to the 4th Quarter in 2014, a far more marked decrease than what analysts had initially predicted.  Janet Yellen, Chairwoman of the Federal Reserve, gave further indication of a tepid economy by announcing that the Fed did not have any plans to increase interest rates in the coming year, which, were the economy to be improving, would be a logical course of action. Sustained interest rates are a subtle, yet extremely telling, indication that even the Federal Reserve is wary as to whether the economy will truly gain full steam in the coming months.

So what does this mean for the American investor?

Careful analysis of economic indicators like the Chicago Business Barometer, the University of Michigan consumer sentiment report, shifts in the GDP, and Federal Reserve activity will be essential for successful investment in the coming months. We’re currently in an economy in which public narrative and actual economic conditions wildly differ, and the wise investor will be the one who chooses what they pay attention to very carefully.

Owing Ourselves Is Not a Viable Excuse

The U.S. broke $18 trillion debt mark on Friday November 28th 2014.  It was on October 27th 1981 that we broke the $1 trillion debt level for the first time.  One year before November 2014 the debt was at $17 trillion, which means in just one year we added a trillion on to our debt.  When Obama took office the debt was 10.625 trillion – that means in six years the debt has increased 70%.  We are literally drowning in our debt which is now at 103 percent debt to GDP.   The worst part, it doesn’t seem to be slowing down.

Currently, roughly $13 trillion debt is held by the public; this includes Treasury securities and other instruments held by investors outside of the government such as state & local governments, corporations and individuals.  The other $5 trillion is intergovernmental debt; money borrowed from Social Security and Medicare Trust Funds.   Even worse, the Disability Insurance Trust Fund and the OASI Fund owe roughly $2.72 trillion.  This means the U.S. Government owes money to all current and future beneficiaries of those funds.  Dawn J Bennett makes the astute point that it is precisely because we owe ourselves this debt that the U.S. government says it’s alright to keep defaulting and owing a greater debt.

Currently the average debt per citizen is roughly $56 thousand the median household income in 2013 was $51,939.  This means each citizen’s debt is greater than the median household, so how are we supposed to dig ourselves out of this hole?  The government continues to tell us that if we simply raise taxes on corporations and individual corporations that this will solve everything.  This isn’t a viable solution though.  Raising taxes on individuals reduces the amount of money citizens have for investing and buying.   Raising taxes on corporations will only serve to scare them and entrepreneurs away from the U.S. to countries overseas.

What our government needs to be doing is realizing that tax revenue is never going to really jump above 17% of GDP even if taxes are raised.  They instead need to be working to develop policies that support entrepreneurs, reducing corporate tax rates and helping the American tax payer.  Doing these simple steps would attract businesses from around the world and that would help employ American workers.  Who once they have a job that pays well will be able to invest and help continue the cycle of building a stronger healthier economy.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or dbennett@bennettgroupfinancial.com

 

Gold and Silver – How Precious Are They?

A major statement was made 10/29/2014 by Alan Greenspan – he declared that gold was a good investment at the Council on Foreign Relations to Gillian Tett of the Financial Times.  This was quite a surprise coming from the man who started quantitative easing (the printing of paper money) which helped cause the financial disaster we find ourselves in today.  Here’s what Greenspan had to say of gold; “Look, remember what we’re looking at.  Gold is a currency.  It is still by all evidences the premier currency where no fiat currency, including the dollar, can match it.  And so that the issue is, if you’re looking at a question of turmoil, you will find, as we always have in the past, it moves into the gold price.”

Dawn J Bennett has been saying for a while now that precious metals were a sound investment and it seems Greenspan has finally had an epiphany and awoken from his stupor.  The value of investing in gold is why central banks are now putting fiat currency into gold assets.  Even though there are no dividends, no ROR (rate of return) and no interest.  In fact, holding gold incurs a cost because of storage and insurance.  The problem right now with the entire economic system is the belief that we are still operating under free market rules.  These provide the simple guideline that assets in the marketplace are valued based on the law of supply and demand.  Except the market isn’t fair and prices are not accurate reflections.

How is that possible?  Well in the last four years the spot price of gold which is supposed to represent the value society has placed on metal has become distorted.  For example, the COMEX exchange warehouses located in New York see roughly one fourth of all silver come through their warehouses there.  In recent years their warehouses have seen the amount of silver go from one million ounces per week to one million ounces per day.  Despite this massive increase in the amount of silver coming through and an increasing demand the price has continued to drop.  This means the pricing scheme and manipulation is working.

Fortunately, it appears though that the pricing of these metals are beginning to change; at the end of January 2014 we saw gold up roughly 8% in price, $1,183.90 to $1,278.50, and silver up 10.5% in price, $15.56 to $17.19.  This means that the price manipulation is beginning to end, and this is positive for investors.  They need to be aware that there have been policies which have been artificially manipulating the prices of gold and silver.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or dbennett@bennettgroupfinancial.com

Why It’s Time to Brace Ourselves for the Fall of 2015

Like it or not, the economic prosperity the United States enjoys today may dissipate sooner than expected. Come the fall of 2015, we can anticipate that all of the market gains made over the course of the past year will be pulled out from under us, delivering a debilitating blow to the economy.

One of the primary reasons we can expect impending economic fallout? Nobody’s worried. As with silence before a storm, news media and government alike are mum when it comes to any trepidation about the state of the economy, and instead are focused on job growth, the strength of the stock market and lower unemployment rates. There’s no denying that the economy is doing better than it has in years, but even in previous times of prosperity, there was at least a small faction of experts voicing skepticism and doubt. Not so today.

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According to CEO of Bennett Group Financial Services, Dawn J Bennett, this “radio silence,” (with the exception of her own radio talk show), is perhaps the surest sign that something’s being overlooked. And that something, Bennett believes, is a slew of asset bubbles that have been expanding in a number of major industries, including housing (which brought down the economy in 2008). These asset bubbles are the product of unsound policies like the overproduction of money, the Federal Reserve’s hand in the stock market, and the continued presence of incredibly low interest rates.

Consider too that traditionally, commodity prices reflect the health of an economy. When prices or assets increase in value, such is supposed to be a reflection of a strengthening economy. Yet, we know that currently the world market is experiencing low growth and low inflation, and that our stock market in no way aligns with the performance of most major companies. In other words, these rising prices are not an indication of a growing economy. Further, the optimistic economic outlook the media and government continues to promote will only exacerbate the asset bubble conundrum; the more we taut our economic strength, the more investors will invest, the higher prices will rise beyond their actual value, and the sooner we’ll experience a bubble burst.

In all, though many like Federal Reserve Chairman Ben Bernanke will say that asset bubbles are difficult to forecast, the reality is that the “symptoms” of asset bubbles are quite apparent; it just takes a critical eye to be able to see them for what they are.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

 

The Ramifications of Tax Inversions: Is There Anything to be Done?

It’s no secret that tax inversions have become increasingly appealing to U.S. companies in recent years; from Herbalife International’s reincorporation in the Cayman Islands to Medtronic’s merger with a company in Ireland, the opportunity to side-step hefty taxes by merging with companies overseas has proven attractive. However, many in the financial industry, like Dawn J Bennett and President of 21st Securities, Bob Gordon, have their concerns.

The migration of U.S. companies to offshore entities is problematic for a number of reasons, including the fact that such decreases total U.S. federal revenue and can result in an outflow of American jobs. Forbes estimates that U.S. companies are holding approximately $2 trillion dollars in foreign accounts to avoid paying steep corporate taxes back home. As Gordon notes, taking advantage of cheaper alternatives to business operations is a natural consequence of a capitalistic economy, but in the case of tax inversions, it’s the individual American taxpayer that’s footing the bill, specifically the individual shareholder. Why? Interestingly, shareholders are not exempt from taxes on shares of companies that merge with foreign corporations. Even worse, the shares of about one-third of newly merged companies perform worse than they did when in the U.S.  Tax inversions undoubtedly impose negative consequences on the U.S. economy—but what’s to be done about them?

President Obama has recently stated that he would look into an executive order to limit the abilities of companies to move abroad to seek lower rates and has also considered dropping the corporate tax rate to 28%, two proposals he has yet to act upon. However, if we note that countries like Ireland boast a 12.5% corporate rates and the Bahamas have rates as low as 5%, cutting our own by a mere 7% may not be enough to significantly halt inversions.

Gordon notes that lowering the corporate tax rate to a truly competitive figure would indeed only resolve part of the problem. Preventing increases in inversions may also depending upon changing the way in which we calculate our taxes, specifically our practice of taxing a company’s income no matter its location in the world.  Whereas other countries only tax income generated within the confines of its own borders, the U.S. proves a unique exception, spurring companies to completely merge with foreign corporations. Gordon believes that companies are primarily drawn to countries abroad for their territorial tax leverages, for it’s this difference in policy that truly affords companies significant savings on the balance sheet.

Bennett and Gordon agree that reform is imperative and could begin by introducing a revenue-neutral proposal in Congress, a process which ideally would have been initiated years ago. What we need, they argue, is not just the closure of loopholes or the type of partial fixes that have been implemented unsuccessfully for the past few years, but a comprehensive overhaul of the entire corporate tax system.

With the highest corporate tax rate in the world at 35 percent, and revenue less than the average of the entire OECD, the United States has every reason to reconsider policy, and soon.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

What Scotland’s Vote for Independence Revealed about the U.S. Economy

Scotland’s historic vote on independence was wrought with international implications; from foreign policy, diplomacy, international trade and more, the prospect of an independent Scotland raised numerous questions about how all parties, not just Scots, would be affected by the potential change in governance.

Financial experts in the U.S., like CEO of Bennett Group Financial Services Dawn J Bennett, were quick to wonder how this vote for independence could negatively impact the U.S. economy. Leading up the September vote, American investors had pulled out almost $30 billion in UK assets, while Scotland’s potential succession sparked the foreboding possibility of a chain reaction among other dependent nations. Such a movement could ultimately result in global economic destabilization, which the U.S. and Europe, still largely in the throes of a recession, would be ill-equipped to handle.

Bennett noted that she believed Scottish independence would undoubtedly be a risk to financial markets across the globe, especially the fragile U.S. economy. Even more problematic was the fact that should Scotland vote for independence, the Federal Reserve would have little power to save the U.S. economy, as its current attempt at economic stabilization, infusions of cash, have proven ineffective. In fact, the Fed itself has stated that, “What monetary interventions have failed to accomplish is an increase in production to foster higher levels of economic activity.” The Federal Reserve also admitted that what monetary infusions have done instead, is widen the wealth gap between 90 percent of the American public and the top 10 percent of the nation’s investors. What should this communicate to the average American? In short, that the monetary infusions of the past five years, all of which have been in an effort to pull the U.S. economy out of a recession, have been of no value. Yet, we continue to hear in the media of economic recovery and stabilization.

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This disconnect between the actual stability of the U.S. economy and general perception of its health is evident in other financial indicators. In December of 2014, the national debt reached an all-time high at 18 trillion dollars and continues to increase, while the consequences of harboring such massive debt are left largely undiscussed or touted by politicians as being manageable given that a significant percentage is “owed to ourselves.” Even the disparity between portfolio values and stock markets like the DOW and NASDAQ should be warning signs that the economy is approaching a dangerous precipice. How can large companies perform so poorly, yet stock markets boast such exceptional numbers?

Scotland voted against independence on September 19th of 2014, effectively eliminating—for now— worries of a global economic crisis. Yet despite this outcome, this geopolitical situation helped underscore an alarming reality: the U.S. financial market is far more vulnerable than we acknowledge, and should the Federal Reserve continue to prop up our stock markets and engage in ineffective cash inflows, it may not take a major disruption in international policy to thrust the U.S. into financial calamity.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

 

Dawn Bennett Lays Out the Duplicitous Truth on the U.S. GDP

The Gross Domestic Report (GDP) report is, unfortunately, an inaccurate and potentially dangerous number for economic investors. It is the biggest politically manipulated and most massaged of the U.S. economic numbers. In theory it should accurately report the amount of activity occurring in the U.S. economy, but due to a number of flaws with it, it obscures many problems. The formula for it measures the amount of money spent by consumers and the government, the amount of money invested in imports and exports, and the production of widgets and gadgets. This report adds up the value of all work done in the U.S. economy in a three-month time period.

For investors it is vitally important to look at the economic reality of the U.S. in order to make sound and smart investments. This is what the GDP was supposed to do, help investors tackle this challenge; however the GDP distortion creates a false perception of the real economic truth. The Bureau of Economic Analysis (BEA), a U.S. government commerce department, has been taking a creative approach to how it works with the economic numbers it uses in the GDP. Creativity is important, Dawn Bennett isn’t against it, it does great things when it comes to companies like Apple Computers which keep pushing the boundary on technology, but regarding economic numbers it is duplicitous and wrong.

For example, the week of September 22, 2014, the BEA reported that the U.S. second quarter GDP increased by 4.6%, if this report were accurate investors should be ecstatic. Unfortunately, the report has very little bearing on real world activities. As proof of damaging real world activities, the amount of corporate insiders that are selling shares and having their company rebuy them is at a high not seen since 2000. According to Bloomberg, a total of 7,181 insiders bought their own stock in 2014, but 23,323 sold their shares. These kinds of ratios have not been seen since 2000, and this is what is called leveraging up when a company purchases their own stock. What all of this does is boost stock prices of companies, even when they aren’t expanding, hiring, expanding their payroll or expanding CAPEX (capital expenditure).

This style of corporate buy back, on debt, is what helped create the crash of 2008. Along with the misleading numbers by the BEA on the GDP, it is important that we return to dealing with the truth, and not be creative with the numbers just to make investors feel momentarily good.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.
For more information, call 866-286-2268or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or dbennett@bennettgroupfinancial.com