Economic Rebound Has Obstacles: Fed Will Decide Fate On Wednesday

You are receiving this e-mail as a part of your subscription to Investor's Daily Edge. Your subscription began on Tuesday, March 18, 2008. If you have not already done so, please click here to confirm your subscription. This will help us ensure you get every Investor's Daily Edge issue without interruption.

Forward the Internet's fastest growing financial newsletter, Investor’s Daily Edge.

	Monday, June 23, 2008 Whitelist Us         What A Predicament We Are In By Rick Pendergraft I received an email from our media coordinator the other day.  She sends me emails from time to time, asking for my take on the article.  The article Pam sent me last week was talking about an economic rebound and how a survey of CFOs predicted that the economy would not rebound until mid-2009. The article cited inflation and employment concerns as the main culprits with rising fuel prices as the biggest concern. While I agree with the rising price of oil as a major concern, I would add another item to the list of major concerns, and that is the housing market.  I think we need to see the housing market stabilize and inflation to be reined in before we see a rebound in the economy. The foreclosure numbers just keep going up and this is leading to another problem.  In neighborhoods like mine with a homeowners association, the fees are going up.  Let me explain.  The homeowner’s association has a relatively fixed budget for items like security, landscaping, pool maintenance and so forth.  There are approximately 350 homes in my neighborhood, and just for round number purposes lets say the annual budget for the association is $350,000.  This would mean each homeowner would pay $1,000 per year in HOA fees.  Now comes the problem.  With so many homes in foreclosure, the HOA budget is being divided among a smaller pool of homeowners.  So instead of dividing the $350,000 by 350 homeowners, it is being paid by say 275 homeowners.  I don’t know exactly how many homes are in foreclosure in my neighborhood, I am just illustrating a point.  If you divide $375,000 by 275, the homeowners are now paying almost $1,273 annually. INTERNAL ENDORSEMENT Stock Market Shocker: How a Bunch of 5th Graders Made Fools of the Trading Elite…! Wall Street wants you to believe that you have to entrust your money with the professionals and all their skills, resources and systems, if you want to make money in the markets. It’s what these guys do for a living! How could you possibly beat them?! Nothing could be further from the truth. In fact, I have used an embarrassingly simple secret to make $15,048 in just 30 days... and boost my overall account balance 152% in less than a year. Keep reading to learn how you could join me each month... And this is only part of the problem.  Homeowners in good standing are seeing their monthly expenditures rise as the underlying asset is falling in value.  I know those that are losing their homes are far worse off, but there are ancillary effects.  The inventory of homes on the market is causing values to decline. Now we get the real Catch 22.  The best way for the Fed to fight inflation is to raise interest rates.  But this will make the housing market worse than it already is.  Talk about beating a dead horse. So what is the easy answer?  There isn’t one. The Fed will raise rates in the near future in order to curb inflation.  This might actually cause the economy to get worse in the near term, but in the intermediate term, it will help the economy stabilize.  Stabilizing and rebounding are two different things though.  The rebound won’t happen until the housing market stabilizes.  The housing market won’t stabilize until we see a slowdown in foreclosures and a depletion of the inventory glut.  The only thing that will help this happen is time. I wouldn’t look for a rebound until the second half of 2009, and even then, it might not be a robust rebound. The bottom line is that the economy is being hit from all sides right now and we already have a low interest rate environment.  Raising rates is going to hurt in the beginning, but in the end, it will be the right thing to do.  Kind of like getting the cortisone shots in my knee: they hurt like hell in the beginning and the knee is sore for the rest of the day, but then it feels great. Good Luck and Good Trading, Rick P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. [Ed. Note: Subscribers to Rick’s KISS Investing service recently closed out gains of approximately 105% on the Spyders and 187% on Juniper Networks. Click here to learn more about KISS Investing] Market Watch A Very Important Week for the Market By Christian Hill There are no economic reports released today, but that doesn’t mean the week will be easy. Enjoy the reprieve today, because the rest of the week could be a potential landmine for the markets. The first of many important reports this week is Consumer Confidence for June, which comes out at 10:00 am tomorrow morning. Last months reading was 57.2, and this month expectations are for a slight decline, down to 57. While the decline is mostly expected, I feel the amount of the decline is excessively optimistic. Gas prices keep rising, and May’s unemployment figures showed the highest monthly jump in more than two decades. This leads me to believe there is a very good chance the figure comes in closer to 56, well below expectations. Wednesday gets going quickly with the Durable Orders report at 8:30 am. The report is expected to show zero growth, which would still be an improvement over last month’s contraction. This report is tough to call. Since the Economic Stimulus checks started hitting mailboxes last month, retail sales have improved. But is this increase in spending the reason for the expected improvement from last month’s 0.50 percent drop to this month’s 0 percent growth? Hard to say, but I wouldn’t be surprised to see this report eek out a small gain of a few tenth’s of a percent. On Wednesday, the New Home Sales report for May is expected to show a decline in sales of approximately 16,000 units. Later in the day, the Existing Home Sales report for May is expected to show an increase. I think both will beat estimates, and here is why: last months’ New Home Sales report beat expectations, and the most recent Construction Spending, Pending Home Sales, and Building Permit reports all beat expectations. I think the surprise could come from the fact that the home-buying season is just starting in northern states, which typically grinds to a halt during winter months. Wednesday also has the FOMC Policy Statement, when the Fed will announce if interest rates are changing. Investors are expecting rates to remain the same, but their statement afterwards will be closely monitored.  The explanation of their actions or inaction will cause the market to react.   The week ends with Personal Income and Personal Spending reports on Friday. As expected, the Personal Spending report will likely show a hefty jump from last month. Personal Income is also expected to increase, and I can only think this is due to economic stimulus checks, not from any real, long-term increase in personal income. Date Time (ET) Statistic For Market Expects Prior 24-Jun 10:00 AM Consumer Confidence Jun 57 57.2 25-Jun 8:30 AM Durable Orders May 0.00% -0.50% 25-Jun 10:00 AM New Home Sales May 510K 526K 25-Jun 2:15 PM FOMC Policy Statement - - - 26-Jun 8:30 AM Chain Deflator-Final Q1 2.60% 2.60% 26-Jun 8:30 AM GDP-Final Q1 1.00% 0.90% 26-Jun 10:00 AM Existing Home Sales May 4.96M 4.89M 27-Jun 8:30 AM Personal Income May 0.40% 0.20% 27-Jun 8:30 AM Personal Spending May 0.70% 0.20% 27-Jun 8:30 AM PCE Core Inflation May 0.20% 0.10% INTERNAL ENDORSEMENT Wall Street Lies EXPOSED! They've led you to believe that investors who want outsized gains must take on ridiculous risks. Click here to learn how a Small One-Time Investment Could Grow Until It's Larger Than All of Your Other Investments Combined. If you enjoy IDE's daily investing advice, you'll definitely be interested in checking out our sister publication, Early to Rise. Each morning, you'll get powerful wealth-building advice covering real estate, entrepreneurship, personal finance, marketing, and much more. Sign-Up for Early To Rise today! To unsubscribe, Click here To change your email address, Click here To cancel or for any other subscription issues, write us at: Investor's Daily Edge 245 NE 4th Ave, Suite 201 Delray Beach, Fl 33483 Phone: 1-877-465-1416	The Market Minute One bad apple...can spoil the bunch, and in the markets case over the last few days it has been the financial sector that has been the bad apple.  Merrill Lynch downgraded a number of financial stocks on Friday and that set the tone for a down day.  Continued worries about oil didn't help matters and as a result the market got hit pretty hard on a quadruple witching Friday.     In The Markets   Last Change YTD Dow 11,842.69 220.40 -10.72% Nasdaq 2,406.09 55.97 -9.28% S&P 500 1,317.93 24.90 -10.24% Gold 901.30 3.30 8.16% Silver 17.32 0.00 17.26% Oil 134.80 2.69 40.45% Nat Gas 12.99 0.06 73.66%   Newsworthy One morning last month, the manager of a Stop & Shop in Methuen, Mass., noticed a man, along with his young daughter, leave the store without paying for several bags of shrimp. When police arrived, they found something else on him, too: 20 cans of baby formula. Call it a sign of the times. Steadily and alarmingly, shoplifting seems to be rising at many retail chains, and experts are pointing at a prime cause: the sputtering economy. "Wages aren't keeping up with inflation, especially the price of food and energy," says Diane Swonk, chief economist at Mesirow Financial. "It just leaves less money for everything else, and that breeds a lot of temptation." Retail and law enforcement experts agree that they've seen an increase in store theft during the current slowdown — and not only from customers. "It's clear that both employee theft and shoplifting are up," says Richard Hollinger, professor of criminology at the University of Florida who compiles the annual National Retail Security Survey. "The most recent rise is being driven by the economy. A lot of people are on the financial edge." When 116 retailers were surveyed recently about shoplifting, 74% said they believed that shoplifting incidents last year had risen from 2006, according to the National Retail Federation. And when a smaller group of retailers were asked about shoplifting so far this year, nearly all said it has continued to rise, says Joe LaRocca, vice president of loss prevention at the National Retail Federation. They also said they felt the economy had been a contributing factor. All told, retail theft is estimated to cost about $40.5 billion a year. And the rest of us, already squeezed by higher gas and food prices, end up paying for it: Stores pass on much of their losses to customers in the form of higher prices. --USAToday.com     Meet the Team MaryEllen Tribby - Publisher Jedd Canty - Business Director Rick Pendergraft - Managing Editor Jon Herring - Editor Nicole Reynolds - Marketing Analysts / Editorial Contributors Michael Masterson Charles Delvalle Andrew M. Gordon Dr. Russell Mcdougal D.D.S.

Attention Editors, Publishers, Marketers, and Webmasters! Investor's Daily Edge articles can be republished without charge. Leverage our powerful content on your website or blog! Click here to get the no-hassle details. Copyright © 2008 by Fourth Avenue Financial. All rights reserved. The Fourth Avenue Financial unites the stock-picking talents of several analysts and editors. Each of the services is based on individual trading/investment philosophies or vehicles and specific investment approaches. Fourth Avenue Financials' Investor’s Daily Edge is intended specifically for mature investors with a strong sense of individual responsibility who want to arbitrage different viewpoints to optimize their personal investment strategy. We reserve the right to remove readers we believe do not meet these criteria from our distribution list without prior notice. You are welcome to distribute this message, at your discretion, to others who you believe share the values of the Fourth Avenue Financial. NOTE TO OUR READERS: Fourth Avenue Financial or Early To Rise does not act as an investment advisor or advocate the purchase or sale of any security or investment. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Fourth Avenue Financial expressly forbids its writers from having a financial interest in any security that they recommend to their readers. Furthermore, all other employees and agents of Fourth Avenue Financial and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed publication is mailed. To contact us via the web, Click Here | phone 1-877-465-1416 We respect your privacy. You can view our privacy policy here. © Copyright Early to Rise, LLC., 2008