The crucial year: 1929

Introduction

Almost eighty four years ago, the New York Stock
Exchange experienced the worst financial panic the country had
ever seen. There have been more crashes since — with bigger
numbers and bigger losses — but nothing quite rivals the
terror and devastation of Black Tuesday: October 29,
1929.

When President Calvin Coolidge delivered his 1928 State
of the Union address, he noted that America had never "met with a
more pleasing prospect than that which appears at the present
time." Americans had a lot to be proud of back then: World War I
was thoroughly behind them, radio had been invented, and
automobiles were growing cheaper and more popular. Sure, the
disparity between the rich and the poor had widened within the
past decade, but Americans could now buy goods on installment
plans — a relatively new concept — and families could
afford more than ever before. Stocks were on a tear: between 1924
and 1929, the Dow Jones Industrial Average quadrupled. At that
time, it was the longest bull market ever recorded; some thought
it would last forever. In the fall of 1929, economist Irving
Fisher announced that "stock prices have reached what looks like
a permanent plateau." (See pictures of the stock market crash of
1929.)

Unsurprisingly, this exuberance lured more investors to
the market, investing on margin with borrowed money. By 1929, 2
out of every 5 dollars a bank loaned were used to purchase
stocks.

The market peaked on September 3, 1929. Steel production
was down, several banks had failed, and fewer homes were being
built, but few paid attention — the Dow stood at 381.17, up
27% from the previous year. Over the next few weeks, however,
prices began to move downward. And the lower they fell, the
faster they picked up speed.

In the last hour of trading on Thursday, Oct. 23, 1929,
stock prices suddenly plummeted. When the closing bell rang at 3
p.m. people were shaken. No one was sure what had just happened,
but that evening provided enough time for fear and panic to set
in. When the market opened again the next day, prices plunged
with renewed violence. Stock transactions in those days were
printed on ticker tape, which could only produce 285 words a
minute. Thirteen million shares changed hands — the highest
daily volume in the exchange's history at that point — and
the tape didn't stop running until four hours after the market
closed. The following day, President Herbert Hoover went on the
radio to reassure the American people, saying "The fundamental
business of the country…is on a sound and prosperous
basis."

And then came Black Monday. As soon as the opening bell
rang on Oct. 28, prices began to drop. Huge blocks of shares
changed hands, as previously impregnable companies like U.S.
Steel and General Electric began to tumble. By the end of the
day, the Dow had dropped 13%. So many shares changed hands that
day that traders didn't have time to record them all. They worked
into the night, sleeping in their offices or on the floor, trying
to catch up to be ready for October 29.

As the story goes, the opening bell was never heard on
Black Tuesday because the shouts of "Sell! Sell! Sell!" drowned
it out. In the first thirty minutes, 3 million shares changed
hands and with them, another $2 million disappeared into thin
air. Phone lines clogged. The volume of Western Union telegrams
traveling across the country tripled. The ticker tape ran so far
behind the actual transactions that some traders simply let it
run out. Trades happened so quickly that although people knew
they were losing money, they didn't know how much. Rumors of
investors jumping out of buildings spread through Wall Street;
although they weren't true, they drove the prices down further.
Brokers called in margins; if stockholders couldn't pay up, their
stocks were sold, wiping out many an investor's life savings in
an instant. So many trades were made — each recorded on a
slip of paper — that traders didn't know where to store
them, and ended up stuffing them into trash cans. One trader
fainted from exhaustion, was revived and put back to work. Others
got into fistfights. The New York Stock Exchange's board of
governors considered closing the market, but decided against it,
let the move increase the panic. When the market closed at 3
p.m., more than 16.4 million shares had changed hands, using
15,000 miles of ticker tape paper. The Dow had dropped another
12%.

In total, $25 billion — some $319 billion in
today's dollars — was lost in the 1929 crash. Stocks
continued to fall over subsequent weeks, finally bottoming out on
November 13, 1929. The market recovered for a few months and then
slid again, gliding swiftly and steadily with the rest of the
country into the Great Depression. Companies incurred huge
layoffs, unemployment skyrocketed, wages plummeted and the
economy went into a tailspin. While World War II helped pull the
country out of a Depression by the early 1940s, the stock market
wouldn't recover to its pre-crash numbers until 1954.

The crowds on Wall Street after the stock
exchange crashed.

The New
Deal

In early 1933 nation needed immediate
relief, recovery from economic collapse, and reform to avoid
future depressions, so relief, recovery and reform
became Franklin D. Roosevelt`s goals when he took the helm
as president. At his side stood a Democratic Congress, prepared
to enact the measures carved out by a group of his closest
advisors — dubbed the "Brain Trust" by reporters. One
recurring theme in the recovery plan was Roosevelt"s pledge to
help the "forgotten man at the bottom of the economic
pyramid."

Birth of the "New Deal" The
concepts that became the New Deal had been discussed in earlier
years but without effect. The statement by National Catholic
War Council in 1919, drafted by Father John A. Ryan,
contained recommendations that would later be regarded as
precursors of the New Deal.

The term "New Deal" was coined during
Franklin Roosevelt"s 1932 Democratic presidential nomination
acceptance speech, when he said, "I pledge you, I pledge myself,
to a new deal for the American people." Roosevelt summarized the
New Deal as a "use of the authority of government as an organized
form of self-help for all classes and groups and sections of our
country."

The exact nature of Roosevelt`s intentions
was not clear during the campaign, although his philosophy was
set out in an address that he gave at the Commonwealth Club
of San Francisco on September 23:

The government should assume the function
of economic regulation only as a last resort, to be tried only
when private initiative, inspired by high responsibility, with
such assistance and balance as government can give, has finally
failed. As yet there has been no final failure, because there has
been no attempt, and I decline to assume that this nation is
unable to meet the situation.

At his inauguration in March 1933,
Roosevelt declared in his lilting style, "Let me assert my firm
belief that the only thing we have to fear is, fear itself
— needless, unreasoning, unjustified terror which paralyzes
needed efforts to convert retreat into advance." In his first 99
days, he proposed, and Congress swiftly enacted, an ambitious
"New Deal" to deliver relief to the unemployed
and those in danger of losing farms and
homes, recovery to agriculture and business,
and reform, notably through the inception of the
vast Tennessee Valley Authority (TVA). The New Deal effects
would take time; some 13,000,000 people were out of work by March
1933, and virtually every bank was shuttered.

The New Deal programs were born in Brain
Trust meetings prior to Roosevelt"s inauguration, and also were a
grateful nod to Theodore Roosevelt`s "square deal" of 30
years earlier. Members of the group included Raymond Moley, an
American journalist and public figure; Rexford Tugwell, Adolf
Berle of Columbia University, attorney Basil O`Connor, and
later, Felix Frankfurter of Harvard Law
School. Many of Roosevelt`s presidential campaign advisors
continued to counsel him after he was elected, among them Berle,
Moley, Tugwell, Harry Hopkins, and Samuel I. Rosenman; but
they never met again as a group after his
inauguration.

Herbert Hoover

Opening the way for the New Deal,
President Herbert Hoover was defeated by Franklin D.
Roosevelt in the Election of 1932. Hoover, who had been
blamed for the stock market crash and the Depression,
strongly opposed Roosevelt`s New Deal legislation, in which the
federal government assumed responsibility for the welfare of the
nation by maintaining a high level of economic activity.
According to Hoover, Roosevelt had been slow to reveal his New
Deal programs during the presidential campaign and worried that
the new president would sink the nation into deficit
spending to pay for the New Deal. Roosevelt never consulted
Hoover, nor did he involve him in government in any way during
his presidential term.

The "Hundred Days"

The president called a special session of
Congress on March 9. Immediately he began to submit reform and
recovery measures for congressional validation. Virtually all the
important bills he proposed were enacted by Congress. The 99-day
(March 9-June 16) session came to be known as the "Hundred
Days."

On March 12, 1933, Roosevelt broadcast the
first of 30 "fireside chats" over the radio to the American
people. The opening topic was the Bank Crisis. Primarily, he
spoke on a variety of topics to inform Americans and exhort them
to support his domestic agenda, and later,
the war effort. During Roosevelt`s first year as
president, Congress passed laws to protect stock and bond
investors.

Among the measures enacted during the first
Hundred Days were the following:

? Emergency Banking Act (March 9), provided
the president with the means to reopen viable banks and regulate
banking;

? Economy Act (March 20), cut federal costs
through reorganization of and cuts in salaries and veterans`
pensions;

? Beer-Wine Revenue Act (March 22),
legalized and taxed wine and beer;

? Civilian Conservation Corps Act (March
31). Three million young men, between the ages of 18 to 25, found
work in road building, forestry labor and flood control through
the establishment of the Civilian Conservation Corps
(CCC);

? Federal Emergency Relief Act (May
12), established the Federal Emergency Relief
Administration to distribute $500 million to states and
localities for relief. Administered by Harry Hopkins for relief
or for wages on public works, that federal agency would
eventually pay out about $3 billion;

? Agricultural Adjustment Act (May
12), established the Agricultural Adjustment Administration to
decrease crop surpluses by subsidizing farmers who voluntarily
cut back on production;

? Thomas Amendment to the Agricultural
Adjustment Act, permitted the president to inflate the currency
in various ways;

? Tennessee Valley Authority Act (May
18), allowed the federal government to build dams and power
plants in the Tennessee Valley, coupled with agricultural and
industrial planning, to generate and sell the power, and to
engage in area development. The TVA was given an assignment to
improve the economic and social circumstances of the people
living in the river basin; and the

? Federal Securities Act (May 27), to
stiffen regulation of the securities business. 

The "Second Hundred Days"

Congress also enacted several important
relief and reform measures in the summer of 1935 —
sometimes called the Second Hundred Days.

During the Second Hundred Days, those
measures enacted included:

? Joint resolution to abandon the gold
standard (June 5);

? National Employment System Act (June 6),
to create the U.S. Employment Service;

? Home Owners Refinancing Act (June 13), to
establish the Home Owners Loan Corporation (HOLC) to refinance
non-farm home mortgages;

? Glass-Steagall Banking Act (June
16), to institute various banking reforms, including establishing
the Federal Bank Deposit Insurance Corporation, that insured
deposits up to $5,000, and later, $10,000;

? Farm Credit Act (June 16), to provide for
the refinancing of farm mortgages;

? Emergency Railroad Transportation Act
(June 16), to increase federal regulation of railroads; and
the

? National Industrial Recovery
Act (June 16), to establish the National Recovery
Administration and the Public Works
Administration.

Following Roosevelt`s lead, the government
launched a relief program, the Civil Works Administration (CWA),
in winter 1933-1934. The CWA provided funds to such authorities
as mayors and governors for public projects including road,
bridge, and school construction, park restoration, and others.
Critics castigated the CWA as make-work, much of it
useless.

After a few months, Roosevelt terminated
the CWA, but other programs enjoyed longer lives. The Civilian
Conservation Corps (CCC) lasted from 1933 until 1942. Its members
produced notable and lasting results with flood control, soil
conservation and forestry programs. The Works Progress
Administration (WPA)was established in 1935 to provide work for
the unemployed. Between that year and 1941, the WPA employed an
average of two million people a year. The WPA went on to spend
billions on reforestation, flood control, rural electrification,
water works, sewage plants, school buildings, slum clearance,
student scholarships, and other projects. Their crowning
achievement came in the completion of the Bonneville
Dam on the Columbia in 1937.

The New Deal also greatly influenced
the American Labor Movement, especially through the
following legislation:

? Through the National Industrial
Recovery Act of 1933 the National Recovery Administration
(NRA) came into being. The NRA attempted to revive industry by
raising wages, reducing work hours and reining in unbridled
competition. Portions of the NRA were ruled unconstitutional by
the Supreme Court in 1935; however, the Works Progress
Administration (WPA), which was the second part of the NRA, was
allowed to stand. The majority of its collective bargaining
stipulations survived in two subsequent bills. The NRA — a
product of meetings among such "Brain Trust" advisors as Raymond
Moley, big business leaders, and labor unionists – illustrated
Roosevelt`s willingness to work with, rather than against,
business interests.

? Employees were guaranteed the right to
negotiate with employers through unions of their choosing by
the Wagner Act of 1935, and it established a Labor
Relations Board as a forum for dispute resolution. The act
bolstered theAmerican Federation of Labor, and pointed to the
inception of the Congress of Industrial Organizations (C.I.O.),
another labor movement.

? Workers were given the right to bargain
collectively through the National Labor Relations
Act of 1935.

? The Fair Labor Standards Act of
1938 promulgated a 44-hour workweek with time-and-a-half for
overtime and pegged a minimum wage of 25 cents an hour. The act
also provided that the hours worked would drop to 40 and the wage
would incrementally rise to 40 cents. In addition, the bill made
child labor under the age of 16 illegal. 

The U.S. government could reach out in the
widest way to alleviate human misery — such was an
assumption that underlay the New Deal. Beginning in 1935,
Congress enacted the Social Security Act of 1935 (and
later amendments) that provided pensions to the aged, benefit
payments to dependent mothers, crippled children and blind
people, and unemployment insurance. Small businesses, homeowners
and the oil and railroad industries were given help by other
legislation.

Who paid for the New
Deal?

The foregoing projects, and others, were
expensive, and the government was not taking in enough revenue to
avoid deficit spending. To fund all the new legislation,
government spending rose. Spending in 1916 was $697 million; in
1936 it was $9 billion. The government modified taxes to tap
wealthy people the most, who could take it in stride most easily.
The deficit was made up in part by raising taxes and borrowing
money through the sale of government bonds. Meanwhile, the
national debt climbed to unprecedented heights.

Response in the U.S. Supreme
Court

Supreme Court Chief JusticeCharles Evans
Hughes provided a swing vote during the critical Depression
and New Deal eras, although liberal senators had assumed
that he would hold conservative positions when he was nominated
by Hoover in 1930. Critics have suggested that some of Hughes"
pro-New Deal stances were prompted by a desire to weaken
FDR`s court-packing scheme, not by conviction. He supported
Franklin Roosevelt"s decision not to pay government obligations
in gold, provided a critical vote upholding collective bargaining
rights under the Wagner Act and upheld the controversial Social
Security Act.

On other occasions, however, Hughes dealt
severe blows to the New Deal, most notably in Schechter
Poultry Corporation v. United States (1935), in which
he voted with the majority to strike down the National
Industrial Recovery Act. In 1937, Hughes publicly opposed
Roosevelt"s plan to pack the Supreme Court with sympathetic
justices and offered his opinion in writing to the Senate
Judiciary Committee.

Opponents of the New Deal

By 1934, the New Deal was encountering
opposition from both ends of the political spectrum. All around
the country, brazen unions — some Marxist-influenced
— sparked job actions, including a city-wide
strike in San Francisco. Nevertheless, the most prominent
left-wing threat to Roosevelt was a Louisiana senator, Huey
P. Long, who railed at the New Deal for not doing enough.
Conservatives argued that Roosevelt had done too much. Some of
them organized the American Liberty League in August 1934 to
galvanize the right. However, in the mid-term elections, the
Democrats gained enough seats in both houses of Congress to enjoy
veto-proof majorities.

The nation saw measurable progress by 1935,
but businessmen and bankers increasingly opposed the New Deal.
The president`s experiments alarmed them. The rich,
conservatives, numerous businessmen — and those who were
all three — vigorously opposed the New Deal. They were
dismayed by his toleration of budget deficits and his removal of
the nation from the gold standard, and were disgusted by
legislation favorable to labor.

Election of 1936

The U.S. Supreme Court had been nullifying
crucial New Deal legislation, but the president was re-elected by
a wide margin in 1936. That nationwide endorsement of FDR,
who carried every state except Vermont and Maine, convinced him
that he had popular backing. To capitalize on it, Roosevelt
introduced legislation to expand the federal courts, ostensibly
as a straightforward organizational reform, but actually to
"pack" the courts with justices sympathetic to his proposals. He
was unsuccessful, but constitutional law would eventually change
to allow the government to regulate the national
economy.

Conclusion

As the free world geared up to fight the
Axis powers, Roosevelt began to turn his attention away from
domestic policies and toward helping the Allies, while
maintaining an isolationist position towards entering the
fighting of World War II. With America"s eventual entry into the
war, that nation"s economy continued to improve. Large-scale
production of military equipment and the draft turned America"s
eyes toward a larger enemy than the beast of poverty that it had
once known during The Great Depression, thus closing the
chapter on the New Deal.

U.S.Stock Market
today

US stock markets surged to new record highs as Wall
Street traders seized on a tepid jobs report to engage in a fresh
orgy of speculation.

The official line promoted by the Obama administration
is that the United States is in the midst of an accelerating
economic recovery. For the corporate and financial elite that
runs America, and the section of the upper-middle class that
hangs on its coattails, a soaring stock market is indeed what
defines economic health. For the vast majority of the population,
however, life five years after the Wall Street crash of 2008 is
dominated by the daily struggle to make ends meet.

Official statistics—of poverty, unemployment,
indebtedness, declining wages—give a glimpse of this social
reality, which the mass media does its best to
obscure.

One sobering statistic that emerged on Thursday points
to the social reality that underlies the euphoria on Wall Street.
According to the Centers for Disease Control and Prevention, the
past decade has seen a sharp increase in the US suicide
rate.

Among those aged 35 to 64, suicides soared nearly 30
percent between 1999 and 2010. More people in the US now kill
themselves than die in car accidents. The fundamental cause is no
mystery. It is the economic crisis, which has brought with it a
rise in unemployment, poverty, malnutrition, illness and
homelessness, and all of the personal and family problems that go
along with these scourges.

The social crisis affects all sections of the working
population—young and old, working and unemployed—of
all races, genders and ethnicities.

For millions of older workers, the prospect of economic
security and a decent retirement is growing ever more distant as
the elderly are forced to dip into their savings and take on ever
greater debt just to survive. The debt of Americans aged 65 to 74
is rising faster than that of any other age group, according to
Federal Reserve figures. For a typical household led by someone
65 or older, household debt grew by more than 50 percent between
2000 and 2011.

The already insufficient benefits provided by Social
Security and Medicare, the federal retirement and health care
programs, are being scaled back. Fewer and fewer retirees have a
guaranteed pension. Among those that do, many have resorted to
borrowing against their pensions and paying usurious interest
rates to unscrupulous lenders.

Last week, the New York Times reported that companies
that offer pension advances often charge interest rates, after
factoring in fees, of between 27 and 106 percent. Older
households spent 7.1 percent of their incomes to pay off debt in
2010, up from 4.5 percent three years earlier, according to
figures from the Employee Benefit Research Institute.

Earlier this month, Wells Fargo reported that the number
of older workers borrowing from their 401(k) retirement
accounts—and paying penalties to do so—surged 28
percent at the end of 2012 compared to the same period in
2011.

Conditions are no better at the other end of the age
spectrum. Almost 16 million children in the US, or 22 percent,
live in families whose income is below the federal poverty line,
according to the National Center for Children in Poverty. Last
month, the United Nation"s Children"s Fund released a report
showing that, among developed countries, the United States ranks
26 out of 29, behind Greece and just above Lithuania, Latvia and
Romania, in terms of the percentage of children living in
poverty.

Every year, 1.3 million students drop out of high school
in the United States, and, according to the National Center for
Education Statistics, low-income students fail to graduate at six
times the rate of higher-income youth.

Those students who get to college are increasingly
saddled with student loans they will never be able to pay off.
Between 2003 and 2012, the portion of 25-year-olds with student
debt rose from 25 percent to 43 percent.

In the face of unemployment and falling wages, marriage
and home ownership are becoming too expensive for many. Home
ownership rates are at the lowest level in eighteen years, while
the portion of children born out of wedlock has grown from 31
percent in 2005 to 36 percent in 2011, according to Census Bureau
figures released this week.

The Census report noted, "Children who are born to
unmarried parents are more likely to live in poverty and to have
poor developmental outcomes." In 2010, 42.3 percent of families
headed by single females with children were in poverty, according
to the Demos Project.

Overall, the current US poverty rate, estimated at 16.1
percent, is the highest since 1965. According to the Census
Bureau"s supplemental poverty measure, there are a staggering
49.7 million people in the United States who are in poverty. More
than 48 percent of the population is poor or "near poor," meaning
they make less than double the official poverty rate.

Nor is poverty confined to the unemployed. According to
a report issued last month by the US Census Bureau, the
percentage of the population who are "working poor" rose
dramatically, from 5.1 percent in 2006 to 7 percent in 2011. One
quarter all those in poverty—about 10.4 million
people—are working.

The bulk of new jobs are in low-paid service industries,
and even manufacturing workers increasingly make as little as $10
an hour—a poverty wage for a family of four.

The effects of poverty are myriad. According to one
recent study, 80 million adults in the US, about 43 percent of
the total population, did not get medical care sometime in 2012
because they could not afford it. This is up a shocking 17
million since 2003.

Growing poverty and social distress are treated
essentially as non-issues by the mass media. According to a
recent study by the Pew Research center, the US media focused
just one fifth of one percent of its news coverage on the topic
of poverty. "In no year did poverty coverage even come close to
accounting for as little as one percent of the news hole," Mark
Jurkowitz, the project"s associate director, told Harvard"s
Nieman Foundation.

In an earlier period, such indices of social distress
would have been treated as a national disgrace. Today, far from
proposing any measures to address the social crisis, the
Republicans and Democrats, with the Obama administration in the
lead, vie with each other over how best to slash Social Security,
Medicare and other vital social programs.

There is a deep and growing anger directed against the
entire social system and a ruling elite that grows rich from the
impoverishment of the broad masses of the people. This sentiment
can find no expression within the framework of the existing
political system.

Forecast Summary
and Analysis: Forecast Summary and Analysis of the U.S. Stock
Market

Fifth Year Of Bull Market With The Major Averages
Continuing To Make Gains

For months stocks have been up up and away.  Most
of the market believe a pullback is near,
still.    But as always, the stock market can and
will do what is least expected.

 January Federal Reserve FOMC minutes caused a
hiccup in stocks in late February with the FOMC minutes
indicating that the committee is rethinking Quantitative
Easing.  Global stock markets sold off with the U.S. seeing
two days of negative sentiment.  But as has been the case
after the knee-jerk reaction stocks put on a small rally
regaining lost ground.

 Fed Chief Ben Bernanke to the rescue as he Stumps
monetary policy on the Hill, defending Quantified Easing as
markets weigh that against Cyprus uncertainty and the U.S.
Governments continued inability to get a budget deal
through.  Bulls won out again sending stocks up posting
gains ahead of more uncertainty.

 A good payroll number for February with a net
negative revision for December and January caused stocks to
rally, all the while Sequestration kicked in.  Many months
of good job creation numbers with favorable revisions,
needed for the labor market and the economy to
recover.  Jobless new claims chart show a smidgen
of improvement but still looks like a very difficult recovery for
the labor market.

 The Dow (DJIA) and S&P500 continue to make new
highs, as the S&P 500 breaks through the longstanding October
2007 record high.  It's expected that testing will see a
small pullback initially then either blow by the high or
pullback- It's also conceivable the index to dance around the
October 2007 high.

 Europe is back in focus with Cyprus bailout in
question.  Cyprus Parliament rejected the initial deal, the
so called bank deposit tax levy, but before rejecting it they had
to think about it.  The news broke over the weekend so
traders and investors were ready to hit the sell button when the
markets opened.  So, markets around the globe cratered on
the news only to recover later in the week.  Uncertainty
equals volatility!

 Uncertainty still grips some [global] markets but
the U.S. Stock Market shelved Cyprus and all of Europe's problems
for now.  Cyprus accepted Lender agreement to close the bad
banks and freeze deposits over $129,000.  Banks are open
after weeks of being closed.  For now the drama is over as
the U.S. stock market continues to inch its way
higher.

 The Dow and S&P 500 are making all-time highs
and most everyone is looking for a pullback/ correction. 
Guess what!  Stocks probably will continue inching
higher.

 *The NASDAQ is lagging this year and could
outperform the other indexes by years end.  The tech heavy
NASDAQ is well ahead of the Dow and S&P500 over the course of
the bull market, which started in March 2009.  NASDAQ* up
over 86%, the S&P 500* up over 62%, and the Dow* up over
57%. *data as of 5/4/2013.

 As soon as investors figure out stocks are
continuing higher, they will rally the market, pour even more
money in, then it will tank.  Well maybe not tank. 
Maybe it will pullback slightly and then continue higher. 
Sell in May and go away wasn't the thing to do this
year.

 It's now very clear that the Fed will maintain
monetary policy as long as data supports their position in
purchases/ QE.

 Once the data, especially labor-market data, gets
to a data point that the Fed will want to begin warning of
imminent policy change, traders and investors will reverse their
strategy and begin treating good news, such as jobs data, as bad
news.

 There will be a battle between those that go long
and those that short the market when they see the slightest hint
of stocks giving up.  The stock market is well overdue for a
pullback/ correction and Shorts know that.  Watch Longs or
Short to see who can win the day.

 Bernanke's latest press conference could be
categorized as somewhat hawkish as adjustment, or tapering to
policy bond purchases could happen rather quickly if the economic
recover continues to accelerate.  We could be within months
of the start of the tapering process.  This is where the
stock and bond markets take good news as bad, from here on
out.

 Lackluster data will be good for stocks as well as
the Fed.  Like a lower GDP than expected and a tempered
jobless new claims number will be ideal for the market.  It
would tell traders and investors that the recovery is ongoing but
it would also hold the Fed back from removing or limiting that IV
"sugar" drip.  But watch out for a blockbuster payroll
number/ revisions and a move of the unemployment-rate lower as
these will help the Fed to begin taper, that would be a sell
signal for stocks.

 Earnings are underway with Alcoa setting the stage
for a good reporting season.  Markets don't have to worry
about the Fed tapering, for at least the short-term, so traders
and investors can focus on earning and company outlook/
guidance.

 Market Barometer models downgraded the Short
Term Forecast to caution from positive.

 On Monday, August 5, 2013, the afternoon Market
Barometer model-run triggered a Short Term Forecast change to
caution from positive.  Model data showed weakness in the
S&P 500.  The S&P 500 could continue flat until some
market moving news.

 Earnings will continue to drive stocks but more
volatility can be expected when traders and investors begin
pricing in Fed Chief Bernanke's replacement.

 Data also will continue to play an important role
but meager data-points will continue to hold the Fed on the
tapering sidelines.  But strong reactions can be expected
when data is reported stronger or weaker than
anticipated.

 If news becomes saturated with tapering-talk from
the media talking-heads, expect stocks to react to the downside
when the news gets relentless.  Tapering chatter will pick
up the closer to the actual tapering action.

 Data doesn't support action by the Fed when viewed
by a layman.  But the Fed could begin tapering based on
perceived data trends.  Although Bernanke as much as said
that the unemployment-rate would have to be well below current
levels before monetary policy change- and that hasn't happened
yet.

References

*http://www.time.com/time/nation/article/0,8599,1854569,00.html

*http://www.u-s-history.com/pages/h1851.html

*http://www.marketoracle.co.uk/Article40291.html

*http://www.market-barometer.com/Market%20Memo.htm

Publications

*Latin America and Caribbean Economic
Outlook
http://www.zonaeconomica.com/omar-gomez-castaneda/latin-america-and-caribbean-economic-outloo

*International Economic Outlook

http://www.zonaeconomica.com/omar-gomez-castaneda/international-economic-outlook

*The Commodities
http://www.zonaeconomica.com/the-commodities

*GLOBAL ECONOMIC OUTLOOK FOR 2010
http://www.zonaeconomica.com/omar-gomez-castaneda/global-economic-outlook-2010

*Planning your move into Management
http://www.monografias.com/trabajos95/planning-your-move-into-management/planning-your-move-into-management

*Marketing & Advertising

http://www.monografias.com/trabajos97/marketing-advertising/marketing-advertising

*Who was Peter Drucker? in
/trabajos97/who-was-peter-drucker/who-was-peter-drucker

About the Author

Post-Doctor Omar Gómez
Castañeda,Senior,Ph.D

Programa en "Business
Management"(Gerencia de Negocios) en La
Salle

Extension University de
Chicago,Estado de Illinois,Estados
Unidos.(1981).

La Salle Extension University
Alumni

Chicago, IL-417 South Dearborn
Street

Omar Ricardo Gómez
Castañededa(Student Number 2747760-100) Class of
1981

http://www.allhighschools.com/school/la-salle-extension-university/999037902

Doctorado
en Administración de
Negocios,Mención:Dirección de Negocios con el
grado de "Magna Cum Laude" de University of Aberdeen
International,Registrar Office 560, South Winchester
Blvd.,Aberdeen,South Dakota 57401.

Toll Free.(877)2192187.

Toll
Free Fax.(877)2134578.e.mail:registrar@aberdeen.edu-sd.us

Dirección Electrónica:http://aberdeen.edu-sd.us.

Este título doctoral está
Notariado Legalmente ante la Notaria Pública del Distrito
de Columbia, Washington,D.C el 14 de Enero del 2008 por la
Notaria Pública,Amy Broxterman y certificada su firma en
la misma fecha por el Secretario del Distrito de Columbia,bajo el
expediente Nº 185715,siendo la suscrita,

Stephanie D Scout,expidiendo
respectivamente la Apostilla de la Convención de La Haya
del 5 de Octubre de 1961 donde Venezuela está
adscrita a nivel internacional como país
miembro.

Traducido y Legalizado el Título asi
como las notas en Agosto del 2008 ante la
República Bolivariana de Venezuela por el
Intérprete Público Venezolano,René Ron
Pereira,G O Nº 38040,de fecha 8 de Octubre del 2004,el cual
fué registrado en la Oficina Principal
del Registro Público del
Distrito Capital,bajo el Nº
232,delProtocolo 232,Tomo 7, el 27 de Julio del 2004 e
inscrito en el Juzgado Segundo de Primera Instancia en lo Civil
de la Ciudad de Caracas,el día 13 de Agosto del 2004,bajo
el Número E-6251.

Autenticada la firma
del Profesor René Ron por la Dra Sara A
Dávila Z,Notario Público Trigésimo Noveno
del Municipio Libertador Interino,C.I.V.Nº 12890483, del
Ministerio del Poder Popular para Relaciones Interiores
y Justicia,según planilla 162984 de fecha
5/9/2008,inserto bajo el Nº 47,Tomo 216 de
los libros de autenticaciones,Caracas,Distrito
Metropolitano.

Registrado el Título el 11 de
Septiembre del 2008 en la Oficina Principal de Registro
Público del Estado Lara bajo el Nº 2922,Folio
122,Protocolo Unico,Estado Lara,Venezuela.

Lista de los institutos
acreditados

University of Aberdeen International
(SD)

Acreditados EE.UU.

University of Arizona
Internacional

Acreditados EE.UU.

University of Central Arkansas
(AR)

Acreditados EE.UU.

University of Central Florida
(FL)

Acreditados EE.UU.

University of Central Oklahoma
(OK)

Acreditados EE.UU.

Autor:

Omar Gómez
Castañeda