Thu, 7 March 2013
Thanks for joining me again this week on PowerTalk. If your new to the show, this is the place where I bring you my 1-1 conversations with CEOs of public and private companies as well as other key people in business, politics and wherever else might be impacting the stock market and our investing decisions.
I’m your host Chris Versace, editor of the investment newsletter PowerTrend Profits. My goal with PowerTalk is to let you listen in on some of the conversations I’m having each and every week and to take you behind the scenes and in the know.
There’s been a lot of bluster over the recently enacted sequester spending cuts, which are really cuts in the rate of spending growth than true reductions in dollars spent. While there will be sectors of the economy that feel the impact more than others -- defense and government contractors like Lockheed Martin (LMT), Northrop Grumman (NOC) and others -- the underlying economy is in far better shape given the rebound in the housing and manufacturing economies.
Offsetting those favorable economic factors are the impact of higher gas prices and the January tax increase that is putting less money in the average paycheck. Another factor that I am closely watching is the impact of the Affordable Care Act, which is better known as ObamaCare. We knew it would have an impact on business and this week’s Fed Beige Book, which tracks anecdotal economic information from the Fed’s 12 districts, confirms that. In my experience, rising costs -- be it fuel or healthcare costs or both at the same time -- can restrain business investment and hiring.
Discussing all of that and more with me this week on PowerTalk is Stephen Moore, an editorial board member and senior economics writer at the Wall Street Journal. I’ve enjoyed his editorials in the Journal for a long time and it was a pleasure to speak with him. Even though we talked over a number of issues from overhauling the tax code, the rampant use of food stamps and tax inspired migration to Texas and other states from California, Stephen expressed his long-term optimism for the United States and its economy. All that and we also touched on his new book Who’s The Fairest Of Them All?
Stephen and I both agree that the political conflict in Washington has held the U.S. economic engine in check at a time when the Federal Reserve is supply low cost gas to get the economic fire going. Near-term, the average consumer will continue to be The Cash Strapped Consumer that is found in my Rise and Fall of the Middle Class PowerTrend.