Read this week’s Tea Leaf :

July 1, 2009
“500 Days of Summer”

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Jeff’s presentations

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“Once again, Jeff did an outstanding job speaking to hundreds of our dealers from all across the country.  This time it was over the phone. His command of the facts and his professional delivery of economic information provided our dealers with a dose of reality, yet left them with true optimism for the future of America.”

—Dave Zerfoss, President
Husqvarna Professional Products, Inc.
(the world’s largest producer of lawn mowers, chain saws and portable gas-powered garden equipment)

Wednesday, July 1, 2009

The U.S. economy contracted at a 5.7% real (after inflation) annual rate during 2009’s first quarter. This compares to a 6.3% decline in the fourth quarter of 2008.  According to the National Bureau of Economic Research, a recession officially began in December 2007

The U.S. unemployment rate jumped to a 26-year high of 9.4% in May 2009 from 8.9% in April. The U.S. economy lost another 345,000 jobs in May, much less than expected. A total of 6.0 million net jobs have now been lost since the current recession officially began in December 2007

Consumer prices in 2008 rose a mere 0.1%, the smallest rise since 1954. This follows a dramatic 4.1% increase during 2007, the highest annual climb since 1990. We expect consumer prices during 2009 to rise a very tame 1.0% to 2.0%

The Federal Reserve cut its key federal funds target rate on December 16 to its lowest level on record. The Fed’s new target rate is actually a range of between 0.00% and 0.25%.  This marks the tenth time in this latest cycle that the Fed has cut interest rates to stimulate the troubled economy.

We remain bullish on stocks