Tag Archives: financial market

Dawn J. Bennett: It’s All Fake News

Dawn J. Bennett, founder and CEO of Bennett Group Financial Services and host of Financial Myth Busting, recently wrote an article, “It’s All Fake News”. In her article, she discusses how there are stories that seem legitimate but were actually fabricated and specifically engineered to go viral and spread through the internet as real news. We’ve seen this particularly throughout the presidential election. Even Facebook has vowed to do something about the spreading of fake news— if that’s even possible.

According to Bennett, exaggerations, lies and setups have been common throughout the history of reporting. For instance, there was the recent Rolling Stone coverage of a gang-rape hoax at UVA; Janet Cooke’s imaginary eight year old heroin addict; the 1993 Dateline episode when a truck was rigged to explode when a presumed safety flaw failed to deliver the anticipated dramatic effect.

“Beyond these specific examples, the glaring fakes and the willful fabrications, there is an even deeper problem that we as citizens and investors must contend with: a systemic and systematic degradation of the quality of the news we receive, a willing collaboration between mainstream media and government institutions that provides all the ‘good news’ that can be manufactured,” said Bennett. “Cable news parrots the relentlessly upbeat message of recovery and growth being spouted by the Fed and the White House, and we are left without facts, having to dig through questionable reports to find the real numbers.”

However, it’s not just the media that lies to us, said Bennett. We lie to ourselves too. Bennett uses the post-election increase in stock prices and bond yields as an example. She explained that Trump’s election resolved a long and ugly period of political uncertainly; relief in the markets has increased but corporate earnings have not. The S&P 500 is trading at 27.9 times the corporate earnings of the past 10 years— a level that was seen just before the market crash of 1929. The financial sector has a lot of problematic stocks that will likely get a beat-down during the earnings reporting season. In addition, many investors are postponing profit-taking for supposed tax reasons and will be stuck amidst a rush to sell, which could make the selloff the worst it’s been since last January. Then, there’s the Federal Reserve’s interest rate hike, which happened just before stock index futures, stock index options, stock options, and single stock futures expired.

“Are we living in a fake news, post-truth world, a post-reality economy?” asked Bennett. “When we can’t agree on basic facts or even that there are such things as facts, you have to ask yourself ‘How do we talk to each other?'”

She continued, “My answer is as it so often is: we must dig for the facts ourselves, be on the offensive against passively receiving news that could truly impact our lives and well-being from our social media feeds, the mainstream media, and even the government and our elected officials. This is not only essential to protect ourselves, but is a basic act of patriotism, of caring for our neighbors and our society.”

Dawn J. Bennett Interviews Ed Conrad on The Upside of Inequality

Dawn J. Bennett, founder and CEO of Bennett Group Financial Services and host of Financial Myth Busting with Dawn J. Bennett, recently interviewed Ed Conard. Conard is the bestselling author of Unintended Consequences: Why Everything You’ve Been Told About the Economy is Wrong (2012) and The Upside of Inequality: How Good Intentions Undermine the Middle Class (2016).  Conrad has also written a number of op-eds for The Washington Post, The Wall Street Journal, Politico, Fortune, Harvard Business Review, and more.

In his interview with Dawn J. Bennett, Conard discusses the theme of his latest book— the upside of inequality.

“If you look at United States, we have a very deep pool of well-trained talent which is taking more entrepreneurial risks than their counterparts in Europe and Japan, substantially more risk, and producing faster growth and higher median wages,” Conrad told Bennett.  “If you look at the U.S., employment growth has grown twice as fast as Germany and France since 1980 and three times faster than Japan, at median household incomes which are 15 to 30 percent higher than those economies.”

The U.S. is generating faster growth at higher incomes, compared to other nations. According to Conrad, the U.S. has too few high-skilled workers and the ratio between high and low is very significant. When you think about what a high-skilled worker can do, they really have three jobs, he explained.

“One is they can create innovation like the iPhone that’s beneficial to everyone; the second is they can be doctors and lawyers that just keep the gears moving, and the third is that they can organize unskilled workers into companies that can serve customers more effectively that increases the productivity of unskilled workers,” he said. “Those are the three functions so, to the extent if we’re short on workers, one of the arguments that the book makes is that properly trained talent and entrepreneurial risk-taking are the binding constraints to growth today, not savings. What we see is savings that are unused and the productivity of our workforce slows down.”

Though many people assume it’s impossible to climb the socioeconomic ladder in societies with large inequality income mobility, Conrad pointed out that that’s actually not the case. He explained that there is are two famous studies, one done by two fairly liberal Harvard researchers and one from the University California, that show mobility has not declined at all relative to the past in the U.S. It’s actually increased overtime, he said.

Conrad also noted that there are studies comparing U.S. mobility to that of Scandinavia, which has the most equally distributed income of all high wage economies. What you find is mobility in the U.S. appears to be a sociological issue more than an economic one.

“What you find is mobility is virtually identical for all Americans except in the bottom 20 percent and if you dig into the bottom 20 percent, the mobility is identical for white Americans, it’s slower for black or African-Americans in the bottom 20 percent,” he said. “And if you dig into that, what you find is that single motherhood and high school dropout rates seem to account for almost all of the differences in mobility and that has profound effect on mobility across all races, across all income groups.”

Conrad also said that the Fed’s actions of raising taxes on the risk, regulations and entitlements only slow down growth, which worsens the initial problem.

“The Fed does come in for criticism in trying to pump up growth by printing money,” said Conrad. “I don’t think it will work. You’ve got to remember that the Federal Reserve doesn’t produce anything, it doesn’t create anything that would actually increase growth. But the argument I made in my first book was that the money would largely sit unused because we’re bumping up into other constraints to growth which is our willingness to take risks so, for example, borrow that money and put it to work. It would sit unused and create neither inflation nor growth. So I think it’s largely to destabilize the economy a bit. It’s made financial markets harder to interpret but it’s had actually very little effect, I think, on the economy, so a lot of risk for not much benefit.”

Dawn J. Bennett Discusses Central Bank-Driven Monetary Policy & Market Manipulation

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Are you familiar with the classic song “I’m Forever Blowing Bubbles”? One verse reads, “I’m forever blowing bubbles, Pretty bubbles in the air, They fly so high, Nearly reach the sky, Then like my dreams, They fade and die.” In a recent article by financial expert Dawn J. Bennett, she explains that this song could well be the theme song for central bank-driven monetary policy and market manipulation. However, unlike the bubbles in the song, asset bubbles won’t fade. Instead, they’ll explode, causing a significant amount of collateral damage, according to Bennett, who says there have been numerous warning signs indicating this will occur soon.

Bennett notes that Mark Spitznagel, billionaire hedge fund manager, told the Financial Times that “markets don’t have a purpose any more — they just reflect whatever central planners want them to.” He then continued to say, “This is the greatest monetary experiment in history. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable.”

Spitznagel isn’t the only one with this perception. In her article, Bennett explains,”The Bank of Japan, acknowledging the violence being done to the yen by years of quantitative easing, said recently that they are setting aside money to prepare for losses on their huge holdings of Japanese government bonds which were put together and purchased through their printing of fiat currency once they are finally forced to stop monetary easing. Easing is a vortex that has sucked in the central banks over the last eight years, forcing them to continue blowing bubbles to follow bubbles to follow bubbles.”

She continued, “There have been calls even for our own Federal Reserve to go beyond QE to ‘helicopter money’, essentially going beyond interest rate manipulation and money printing by injecting ‘permanent’ money directly into private sector. Could this be why China is establishing a yuan-denominated gold benchmark for trading, in order to start backing their currency with real assets instead of academic theories?”

The U.S. derivatives market the largest bubble in history, says Bennett. It’s worth more than $1 quadrillion dollars in total by some accounts— approximately 20x the value of the whole world economy.

“It’s sheer gambling, including not just equities but physical commodities. The legality is questionable in many cases, but the problem is definitely real and indisputable.”

 

Why Gold? Why Now?

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Financial expert Dawn J. Bennett recently wrote an article in which she discusses the rising value of gold. Gold recently exceed its 15-month high of $1300; the last time gold broke that mark was 67 months ago on September 29, 2010. According to a report from RBC Capital Markets, the upward trend in the market could cause gold to go over $1400. In her article titled “Why Gold? Why Now?” Bennett explains why gold will continue to go up from its 15-month high.

According to Bennett, investors are discovering the truth behind the “recovery” and that is that it is not a recovery. They are recognizing the signs that suggest we are nearing an even bigger collapse, despite reports of the contrary from the media and the Federal Reserve.

“In the face of deranged markets, the draw of gold is clear. Gold and silver have held many roles over history, but one significant one has always been as a hedge against turbulent markets,” Bennett wrote. “These days, the role of gold as a currency, competing against the dollar, the euro, the yen, the yuan, is coming back into focus as well: there is a gold-backed cryptocurrency (think Bitcoin) called the Hayek, and the IMF is backing some loans with gold as security against fiat currency.”

Bennett notes that central banks have time and time again inflated asset bubbles through manipulating credit, housing and now equities. Though free money and quantitative easing consistently fail, banks continue to do it, with many citizens even calling for it.

Despite media reports, the U.S. is not outside of the meltdown in “global” markets. Billions of dollars are borrowed by U.S. corporations at barely 1%, so they can buy back shares of their own stock. This dynamic is responsible for almost 50% of the recent increases in the stock market, says Bennett.  Not to mention, about 50% of Americans are on the government dole in some form, whether through food stamps or being paid by the government not to work.

Bennett believes gold and silver are currently in a unique position because they can serve as insurance against the loss of wealth, potential violent turbulence in collapsing markets, and fiscally foolish governments.

“As with any kind of insurance, you can buy it and hope never to need it,” wrote Bennett. “Now is the time to do the research and search for opportunities and protective strategies. If you do your homework and can be comfortable with the fact that gold and silver can be volatile, consider putting 5 to 10% of your portfolio in gold and silver coins, or other investments in this historic and lasting asset.

To view Dawn J. Bennett’s complete commentary, click here.