Obama's Economy Is Improving But What About Those Strong Dollar Headwinds? Fed In A Box?

At least Dagny is cheerful and happy!
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OUCH! Snopes says this is not so but I think it is still enlightening and poignant!



 http://www.youtube.com/watch?v=RFN8ahYN1b0


OUCH Again!
                           s

And then how 'bout this in your face messge?  

http://www.cnsnews.com/video/national/oreilly-americas-race-problem

While Obama is busy making everything free to win more blind adherents to the Democrat Party, maybe Obama could start dispensing free prophylactics.  (See 1 below.)

Succinctly Defining America's Dilemma : Too Many dings!

Commitments expanding

Military capability aging

Deficit rising

Dependency on Government wrenching 

Family structure breaking 

Children born out of wedlock exploding church attendance declining

Middle class shrinking

College tuition debt soaring

Interest rates declining

Energy costs dropping

Energy production increasing

Deflation possibly looming

Borders remaining porous

COL outstripping earnings

Taxes rising

Health care costs up, actual care falling

Race relations polarizing

China's influence expanding

Russia and Putin Invading 

Middle East Imploding 

Iran Weaponizing

America withdrawing, it's influence collapsing

Jihadism beheading

Obama continues dodging, patronizing  denying, lying and incapable of defining and leading

Meanwhile, I am seething while my country is bleeding (See 1a below.)

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Obama may claim America's economy is strong and yes, it is better than it has been, but as I pointed out in a recent memo there are clouds gathering on the horizon as well.

A strong dollar cuts both ways.  The recovery has many headwinds and a weaker Europe and China does not bode well for American companies dependent upon exports.  But then, whoever said Obama understood economic. He does understand how to spend money though.

Now think about this.  With slumping corporate earnings can the Fed increase rates making the dollar even more attractive and stronger?   Furthermore, a strong dollar makes energy less expensive for American consumers because the vast majority of oil is priced in US dollar terms.  Just another conundrum for a Fed that eventually wants to repurchase all that debt it issued to save our economy.

So I would argue The Fed is in a box and raising rates will make their problems worse because it will drain money from economies that need capital and send it here which, in turn, makes our ability to export more difficult.

The bond market is responding as yields keep dropping.

The consequences of economic actions never runs in a straight line but again Obama is a politician so economics is irrelevant to him. He just lies, takes credit for everything positive and blames others when things go awry.

Bless his heart! (See 2 below.)
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Hezballah escalates and two Israeli soldiers killed in Golan.  If it continues I believe Netanyahu will be compelled to strike back with a vengeance. (See 3 below.)
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Dick
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1)  Obama's 'Free Stuff Army'

By Robert Knight

America's Founding Fathers apparently underestimated the power of promising something for nothing – which has become politicians' mantra.

Fresh from offering "free" health care, "free" phones and "free" food to the masses, Barack Obama has upped the bribery to "free" community college tuition and "free" child care. It's not that the Clintons oppose any of these; they just need to affect moderation in case Hillary runs for president and has to knock back boilermakers again with the good old boys in Pennsylvania taverns.

Since someone has to pay for these expensive, new entitlements to the Free Stuff Army, Mr. Obama has proposed yet another "tax the rich" scheme that, if enacted (which is unlikely) would eventually plunder working-class families. To liberals, that's what tax "reform" is all about.

Over a few decades, the U.S. government has morphed into a gigantic income-redistribution machine, the ultimate mugger.

Since the New Deal, the only serious challenge to the mentality of plunder in both major parties came during the Reagan administration. To true believers like Mr. Obama, the Reagan years were a speed bump on the way to transforming America, and something to pretend to admire to keep the suckers ignorant.

Government is necessary because men are not angels. Its legitimate role is to secure justice by punishing evildoers, and to protect property and individual rights. Government does other things, such as delivering mail and public works – things like roads, water and sewage.

But its main focus has become redistribution of wealth in the name of "compassion" and "equality." Its sheer growth and trillions of dollars of debt coincides with the rise of the Free Stuff Army, whose ranks have swelled exponentially with Mr. Obama's edicts and economic malaise.

In 1850, faced with a tide of sentiment toward socialism, French legislator Frederic Bastiat confronted the left's claims of government superiority with a timeless critique, The Law. In fact, after the Bible, C.S. Lewis' The Screwtape Letters, and Shakespeare, The Law is arguably the most penetrating analysis of human nature.

Bastiat began by echoing truths about God and man that animated America's Founders:

"[G]ifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place."

Add marriage to that list.

He then explained why governments inevitably fall into redistribution:

"Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property. But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

"Now since man is naturally inclined to avoid pain – and since labor is pain in itself – it follows that men will resort to plunder whenever plunder is easier than work. When they can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit. The annals of history bear witness to the truth of it."

As such, it is easy to succeed by promising something for nothing – the politicians' mantra. A modern, liberal fiction is that government officials are somehow immune to human foibles such as greed. They are nicer than we are – as long as other people pay for it. The system they have built is functionally Marxist, deploying government force to extract "from each according to his ability to each according to his needs."

Armed with an accurate view of human nature, America's Founders did their best to ensure that man's worst tendencies would not lead to tyranny and that man's God-given talents could flourish. Still, they apparently underestimated the power of something for nothing.

The forces cultivating personal responsibility are the church, the family and the American spirit of liberty, all of which liberals have targeted in a relentless culture war. If you still think the drive to legalize same-sex "marriage" is about marriage, you haven't been paying attention to the leftists' war on normalcy, privacy, religion and – ultimately – freedom. Not satisfied with plundering our wallets, they are plundering society's moral capital.

If the Supreme Court does the dirty deed and institutionalizes a counterfeit, it will force tens of millions of Americans to lie. More power will accrue to those who expand the enforcement machinery of "equality" into all areas of life. Resistance to big government will cost far more than it does now.

Leading the charge in this radical remaking of America is Barack Obama, general of the Free Stuff Army, which grows as the moral foundations crumble.

Bastiat perhaps had someone like him in mind when he wrote 165 years ago:

"There are too many 'great' men in the world – legislators, organizers, do-gooders, leaders of the people, fathers of nations, and so on, and so on. Too many persons place themselves above mankind; they make a career of organizing it, patronizing it, and ruling it.

1a

2) S

Why Can’t He Tell the Truth?

By Ben Stein – 1.26.15

Obamadate/January 25, 2015
Captain’s Log:

I have been observing President Obama for a few days and a number of questions have occurred to me:

1. In the President’s State of the Union address, he bragged about how U.S. oil production has surged thanks to shale drilling. Question for Mr. Obama: Does he not recall that he and his followers have been fighting and harassing the oil companies that are finding and producing all of that oil? Does he believe he deserves any credit at all for acts and successes done by people against whom he has waged war since he was a child?

2. In his SOTU, Mr. Obama bragged that the USA now has the highest high school graduation rate in its history. Roughly 80 percent of entering high school freshmen now graduate.

Questions: Is Mr. Obama aware that in the city where he gave his speech, Washington, D.C., only about 53 percent of high school students graduate? Is he aware that in this country the high school graduation rate in predominantly black cities is on average roughly twenty percentage points lower than for whites? Is Mr. Obama in possession of any data that shows whether the students who receive those high school diplomas actually know anything useful?

Mr. Obama boasted repeatedly about his successes fighting terrorists, not some of whom, all of whom are Islamists. Questions: Did he at any point use the word “Islamic” or “Islamist” in referring to terrorists in his speech? Why not? Who is he afraid of? Why can’t he tell the truth?
Is he aware of the near takeover of the strategically key nation of Yemen by Islamic fanatics? Is he aware of any major setbacks to date for the Islamist terrorists in the Middle East or in Nigeria? If he is, would he make them known? Is there anything stopping the Boko Haram from dominating Nigeria? Is he doing anything to stop them? The Islamic State is presently in the approaches to Baghdad. In what way does this show success in the fight against them?

Five years ago, there were dictators in power through the Middle East. They were awful people but their countries were fairly calm. Now, from Algeria to Pakistan, with the exceptions of Israel and Egypt, much of the Arab world is in total chaos and has returned to primitive times in terms of the absence of law.

Question: In what way does this show success for Mr. Obama?

There is now a diplomatic brouhaha about Benjamin Netanyahu, Prime Minister of Israel, coming to D.C. to address Congress at the invitation of Speaker John Boehner. Mr. Obama is apparently furious that he was not consulted beforehand and was unable to veto the event.

Question: When the President of the United States directly or indirectly calls the Prime Minister of Israel, the only law-abiding democracy in the Middle East “a chicken s--t coward,” as Mr Obama did, what kind of behavior does he expect in return?

(By the way, my pal, N. Visser of Alberta, has pointed out something powerful: while Arabs and their courtesans on the left bewail Israeli bullying of the Arabs, has anyone noticed that almost no Arabs in Israel emigrate to the West Bank or Gaza? They know they have it great in law-abiding, free, prosperous Israel. They ain’t leaving. I wonder if the European Union has ever thought of that.)

Finally, Mr. Obama is President of the United States. He is not a minstrel in a traveling show. The day after his SOTU, he had over to the White House an enormous supposedly comical online weirdo woman wearing green lipstick, shown frolicking in a bathtub filled with milk and breakfast cereal, to ask him softball questions.

Now, I think it’s just great that he has offbeat African Americans interviewing him at the White House. They are citizens, too. But on the day Yemen falls, this is how he’s spending his time? He wants respect as President. Hard to believe he gets it frolicking with this green lipstick creature. Hard to believe he has time for the green lipstick comedienne and not time for reaching a better arrangement with Mr Netanyahu (who is by no means perfect himself). Israel is facing an existential threat from Iran. Sanctions are on the table. This is a huge subject and Netanyahu is coming to town. Can they really not find an hour taken away from Green Lipstick for Mr. Obama to discuss how to prevent a second Holocaust? Or maybe Mr Obama really does think he is a character in a frat house comedy. I guess he sees himself as everything.

But how sad that this delusional little man is our President. And how Mr. Putin must sneer when he considers who he is up against. God help us.

The American Spectator Foundation is the 501(c)(3) organization responsible for publishing The American Spectator magazine and training aspiring journalists who espouse traditional American values. Your contributions are tax deductible to the extent permitted by law. Each donor receives a year-end summary of their giving for tax purposes.
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2) Strong Dollar Squeezes U.S. Firms

Rising Currency Takes a Toll on Sales and Profits; Stocks Drop as Capital Spending Slows, Too

By PAUL ZIOBRO,JOSH MITCHELL andTHEO FRANCIS

The stronger dollar is slicing sales and profits at big American companies, prompting them to put renewed emphasis on cost cutting and cramping the broader U.S. economy.

The currency effects are hitting a wide swath of corporate America—from consumer products giant Procter & Gamble Co. to technology stalwart Microsoft Corp. to pharmaceuticals company Pfizer Inc. Those companies and others have expanded aggressively overseas in search of growth and now are finding that those sales are shrinking in value or not keeping up with dollar-based costs.

The pressure on American firms from the dollar wasn’t a bolt from the blue. P&G, for instance, has been warning of impending damage for months. But the severity of the blow appears to have caught companies and investors by surprise. The Dow Jones Industrial Average plummeted 291 points, or 1.7%, to 17387, its steepest decline in three weeks.Even booming companies are contending with the currency fallout: Apple Inc. reported surging profits Tuesday, sparked by demand for its new bigger-screen i Phones, but it also pointed to the dollar as a drag on results.

Worse, the results were accompanied by fresh data Tuesday that suggests the fall in oil prices and the soaring dollar are rippling through the economy in unpredictable ways. U.S. businesses broadly cut capital spending in the final months of 2014, the Commerce Department said Tuesday, raising red flags about the economy’s ability to sustain momentum amid troubles around the globe.

Orders for so-called durable goods such as cars and kitchen appliances fell 3.4% in December from a month earlier, following a sizable decline in November.

Data on durable goods can be volatile, but the weak numbers prompted some economists to downgrade expectations for growth in the current quarter. Many project that gross domestic product grew at a roughly 3% pace in the final three months of 2014 after expanding at a 5% rate in the third quarter. But first quarter estimates are closer to the 2% range.

“The rising dollar will not be good for U.S. manufacturing or the U.S. economy,” Doug Oberhelman , chief executive of Caterpillar Inc., told analysts and investors Tuesday.

ENLARGE

The heavy-equipment maker said a stronger dollar is adding another weight on sales, though its bigger problems are the plunge in oil markets and weaker prices for copper, coal and iron ore. Caterpillar promised further cost cutting in 2015 to offset its weaker markets.

The strong dollar can hurt U.S. companies in several ways. The most typical is the so-called translation effect: Companies’ sales in overseas markets may keep growing in local terms, but they look smaller when converted back into stronger dollars. It also can lead to big mismatches between costs and revenues and make it harder for export-oriented companies to compete.

P&G was hammered by a number of those impacts, as the dollar and a write-down of its Duracell battery business pushed its profit down 31% and its sales down 4%. The company said currencies could reduce its profits by $1.4 billion this year.

Executives outlined the sorts of problems they are facing around the world. P&G is heavily exposed to Russia, for instance, where it sells razors and blades that are made at a Gillette plant in Germany.

The slumping ruble means the company has to jack up prices in Russia to cover the spread, but can’t raise prices fast enough for fear of suppressing demand. Meanwhile, the Russian unit’s bills for those razors—booked in euros—gets bigger if the ruble falls during transit across the border. That sort of damage will force the company to make adjustments to its balance sheet, Chief Financial Jon Moeller told analysts Tuesday.

The company is also exposed to the soaring Swiss franc. P&G’s headquarters for Europe, the Middle East and Africa is in Geneva. The company is a large employer in Switzerland, leaving its business costs in the country much bigger than its sales there.

P&G said the currency impact is largely concentrated in six countries: Russia, Ukraine, Venezuela, Argentina, Japan and Switzerland. It projects the decline in the Russian ruble alone will knock $550 million off its annual profit.

To offset the impact, it is relying on cost cuts including reduced headcount and shifting more of advertising to digital channels, which already account for more than 30% of the total. The company is also raising prices and building about 20 new manufacturing plants, largely concentrated in the faster growing markets, to more closely match its costs and sales. The moves take time, however.

ENLARGE

Pfizer said unfavorable moves in currencies over the last year will take a $2.8 billion bite out of its 2015 revenue. Above, multivitamins on the packaging line at the Pfizer plant in Montreal. PHOTO: GRAHAM HUGHES/ASSOCIATED PRESS

“We have many things at our disposal, which we are obviously engaged in,” P&G’s Mr. Moeller said on conference call with the media. But, he added, “most of them come with some time lag.”

Absent the currency hit, P&G said its business plans largely remained on track, as stronger performance in developed markets like the U.S. offset some of the challenges elsewhere.

Other companies were hurt as well. Pfizer said unfavorable moves in currencies will take a $2.8 billion bite out of its revenue. Microsoft issued a financial forecast that was weaker than analysts had expected, in part because of effects from a stronger dollar. That sent the company’s stock down more than 9% and wiped out nearly $35 billion in market value.

Expectations for the quarter, already low among investors and analysts, have worsened as the results have rolled in. Analysts now expect companies in the S&P 500 index to post a scant 0.5% in sales growth, with per-share profit gains of 3.3%, according to financial data firm Thomson Reuters. The figures reflect actual results for 119 companies and analysts’ estimates for the rest of the index. As recently as Jan. 1, analysts were expecting sales growth of 1.3% and earnings growth of about 4.2%.

Tuesday’s stock-market tumble was driven in part by fears that the poor results foretell a period in which the dollar’s recent gains will boomerang on U.S. multinational companies by reducing international demand for their goods and services and slashing the value of their overseas earnings.

The seven-month-long plunge in oil prices also continues to weigh on investor sentiment despite the savings consumers are reaping at the gas pump, said traders and analysts.

“The two things everyone’s wrestling with is lower oil,” said Joseph Amato, chief investment officer at Neuberger Berman, “and for multinationals, what impact will a stronger dollar have on sales overseas.”

The bad news on the earnings front comes as economists are grappling with mixed signals about the health of the U.S. economy. While broad data on economic growth and jobs creation were strong going into the end of the year, more recent data has been less certain.

Retail sales also fell in December, posting a 0.9% drop that underscored the limits of relying on cheaper gasoline to fuel growth in spending.

Tuesday’s durable-goods data raised more uncertainty about the outlook for U.S. factories. Japan is in recession, China’s growth has cooled and Europe’s economy is stagnating.

Factories are getting a boost from higher demand for cars and other consumer items. But business investment remains uneven. Tuesday’s report showed orders for machinery fell 3.7% in December following declines in November and October.

“Today’s numbers are stunningly soft, which should pour a hefty pitcher of cold water on those optimistic sentiments regarding business investment in 2015,” economist Stephen Stanley of Amherst Pierpont Securities said in a note to clients.

Reports from manufacturers this week have shown the impact of the stronger dollar.United Technologies Corp. , maker of Sikorsky helicopters and Carrier air-conditioning equipment, slashed its projected 2015 sales by $1.5 billion, to a range of $65 billion to $66 billion, almost entirely because of the effects of foreign-exchange rates—a bigger hit than it had forecast in early December.

Emerson Electric Co. , which makes factory-automation equipment and heating-and-cooling systems, said orders in the three months through December fell from a year ago in part because of the stronger dollar. The company said the dollar’s strength would leave its sales 4% to 5% below where they otherwise would have been this fiscal year.

The reports are still coming in, however. 3M Co. , maker of Scotch tape and Post-it notes, reinforced its reputation as a steady performer in turbulent times by posting a 6.9% increase in profit for the fourth quarter and promising further growth in 2015.

“We have nearly 140 companies to get through this week,” Gina Martin Adams, equity strategist for Wells Fargo , said of the ongoing earnings season. “We’ll have a much better idea as to how things are going at the end of this week.”

Corrie Driebusch, James R. Hagerty and Ted Mann contributed to this article.

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2) Hezbollah Escalates Shelling, 2 Soldiers Killed

The IDF confirmed two soldiers were killed when an anti-tank rocket fired from Lebanon hit a military vehicle in the Har Dov area. Mortars also fell in the Hermon region. Several other soldiers were hospitalized and a Spanish member of UNIFIL died of injuries from the crossfire. Israel denied any soldiers were abducted. More on the story at the Times of Israel, Jerusalem Post, Haaretz, and YNet.