Is the Economic Reality as Transparent as a Joe Biden Sound Bite?

U.S. Vice President Joe Biden, right, is seen with his son, U.S. Army Capt. Beau Biden, left, at Camp Victory on the outskirts of Baghdad, Iraq, Saturday, July 4, 2009. Biden celebrated the Fourth of July with his son and other American troops in Iraq on Saturday, a day after warning Iraqi leaders that U.S. assistance will be jeopardized if the country reverts to ethnic and sectarian violence. Biden began Independence Day by greeting more than 200 U.S. soldiers who were becoming American citizens at a naturalization ceremony in a marble domed hall at one of Saddam Hussein's palaces at Camp Victory, the U.S. military headquarters on the outskirts of Baghdad. (AP Photo/ Khalid Mohammed, Pool)

I admire the work of the world's oldest news gathering organization, The Associated Press. They also have a good web site worth checking out at www.ap.org/. ; They reported over the weekend a story about US Vice President Joe Biden. I highlight here the section in which he commented about the US economy:

WASHINGTON - Vice President Joe Biden said the Obama administration "misread how bad the economy was" but stands by its stimulus package and believes the plan will create more jobs as the pace of its spending picks up.

Biden, in an interview airing Sunday on ABC's "This Week," said the nation's 9.5 percent unemployment rate is "much too high."

"The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there," Biden said.

"We misread how bad the economy was, but we are now only about 120 days into the recovery package," Biden added. More jobs will be created in coming months, he said.

Biden noted that the $787 billion economic stimulus package was set up to spend the money over 18 months. Major programs will take effect in September, including $7.5 billion for broadband Internet service, plus new money for high-speed rail and the nation's electrical grid, he said.

Biden said it's premature to say whether the country will need a second stimulus package. [I can't help but wonder if the government and the US Central Bank is still misreading how bad the economy is today?]

Today we are seeing investors pull away from stocks again as conflicting signs emerged about the direction the economy is taking.

Energy prices fell as traders bet that continued weakness in the economy would crimp demand. Brent Crude Oil dropped below $65, which was not good for ETFs like USO.

But stocks pulled off their lowest levels after a trade group reported that its index of services industry activity rose to its best level in nine months in June.

Investors are cautious after a strong rally in stocks since March, fearing that they might have been too optimistic in their expectations about how soon the economy can recover from the recession that began in December 2007. Many investors are taking a "wait and see" approach right now, and who can blame them.

William Patalon III, the Executive Editor of Money Morning/The Money Map Report wrote Monday:

"Investors and analysts return from the long holiday weekend only to face a rather light week on the economic calendar – except for the earliest stages of what’s expected to be yet another dismal earnings season for U.S. companies.

"Aluminum giant Alcoa Inc. (NYSE: AA) reports on Wednesday, with analysts expecting a second-quarter loss of 34 cents a share, compared with a profit of 66 cents a year ago. The ongoing worldwide financial crisis has caused demand for its product to collapse, which in turn has caused prices (and the company’s revenue and profits) to do the same. Analysts polled by Thomson Reuters expect Alcoa to post its third consecutive loss, with revenue expected to be nearly halved.

"While Thomson Reuters expects another dismal quarterly showing (down about 20% overall), its analysts are forecasting that strong earnings growth will reappear in the fourth quarter. Investors are trying to make heads or tails of the recent economic data and future earnings reports as they map out the next direction for the markets. Although many believe the euphoric rally of the past quarter ended in recent weeks, some prognosticators remain torn between a retest of the March lows or sideways trading for the foreseeable future (until the “real” recovery emerges)."

The "full story" about the US economy might not be as transparent as the sound bites we receive from V.P. Joe Biden. But the fact that he makes such statements also gives me pause to think

Investors have to be more counter-intuitive then ever, and that is why I'm becoming a "Black Swan Investor".

Today my stop-loss on my position in UNG was triggered because I bought UNG prematurely. I didn't follow my own advice and I paid for it.

"Ready, get set, not yet" might be the clarion call of today's investment markets. Practicing this is easier said than done, but it is more than possible. "Know yourself" as an investor, and be more transparent about your strengths and weaknesses so you can learn from your mistakes and stick to your convictions.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please remember investments can fall as well as rise. And they will! - Advanced Investor Technologies LLC accepts no responsibility for any loss or damage resulting directly or indirectly from the use of this content.

Disclosures: No positions

Comments

[Tony Petroski:]

The Vice President said the Obama administration "misread how bad the economy was..."

Translation: "We still have a few more months of blaming Bush until this is our baby."

Jul 07 07:59 AM

[MichaelJ007:]

yeah, we'll be fine once that stimulus for Broadband Internet Service kicks in. Everyone knows that highspeed internet is the best way to fight the collapse of a worldwide asset bubble. seriously Joe???

Jul 07 08:21 AM

[John Galt:]

If there is a second simulus plan...

At what point does one more piece of straw break the camels back?

Jul 07 08:22 AM

[knight:]

I think the Camels back is already broken they just wont tell you about it on CNBC


On Jul 07 08:22 AM $ John Galt wrote:

> If there is a second simulus plan...
>
> At what point does one more piece of straw break the camels back?

Jul 07 09:15 AM

[Roger Knights:]

""Ready, get set, not yet" might be the clarion call of today's investment markets."

Here is similar advice from the last paragraph of "The Stock Market Philosopher" by Gennady Favel:

"If you find yourself on the brink of making a trade simply for the sake of doing so and in this critical moment can remember only a single word from this book, I hope it's this one: Wait."

Jul 07 09:56 AM

[TCK:]

Please remember this is the same administration that ran their campaign on the premise that the economy is the worst since the Great Depression.

Evidently Obama was not living in this country when Carter was President !

Jul 07 10:23 AM

[Old Trader:]

Given the track record of various pundits/"experts" (i.e "subprime is a small segment of the market", "its contained", etc.), this isn't very promising. I agree with the author that "waiting" can be one of the hardest disciplines in investing to master.

Jul 07 10:30 AM

[Marc Courtenay:]

I couldn't agree more, except it is good to know what we are waiting for. Thanks for your comment.


On Jul 07 09:56 AM Roger Knights wrote:

> ""Ready, get set, not yet" might be the clarion call of today's investment
> markets."
>
> Here is similar advice from the last paragraph of "The Stock Market
> Philosopher" by Gennady Favel:
>
> "If you find yourself on the brink of making a trade simply for the
> sake of doing so and in this critical moment can remember only a
> single word from this book, I hope it's this one: Wait."

Jul 07 07:49 PM

[sethmcs:]

I tend to buy into bears and sell into bulls. Isn't that the idea? Buy low and sell high? Right now I am buying and I don't care if the market goes down. I will buy more. Wait? Wait for what? Prices to increase? That is counterintuitive. I will never be good at picking the bottom or the top (Bought in September, October, December, March, April) and will continue to buy as long as prices are low and people are scared. I am sure enjoying this recession's opportunities and will enjoy the eventual recovery. Recessions do not last forever and this one is long in tooth. For those who are impatient or can't afford to lose a dime don't invest. Period.

Jul 07 09:00 PM

[T.Stamps:]

With Obama change = bankruptcy

Jul 07 11:05 PM