President Obama is on the campaign trail promoting the Buffett Rule that the Senate will likely vote on in coming days. The Buffett Rule would slap a minimum tax rate of 30% on anyone who makes more than $1 million per year. Billionaire Warren Buffett came up with the idea. Apparently, he was disturbed by the fact that he pays a lower tax rate than his secretary. Why Buffett is focused on his rate rather than the $7 million he forked over to Uncle Sam is, well, confounding, but I’ll come back to that. If implemented, the Buffett Rule wouldn’t even begin to make a dent in the budget deficit. … [Read more...]
Facebook’s Fatal Flaw Exposed
Has he gone mad? Mark Zuckerberg, Facebook’s CEO announced this week that his social networking company is buying Instagram. Facebook is paying $1 billion—a 100% premium to the company’s valuation only one week ago. Instagram is the creator of the identically named photo sharing / editing app for Apple and Android mobile devices.. Instagram was founded by two twenty-something Stanford grads about 18 months ago. The company only has about a dozen employees and by all accounts it generates almost no revenue. I am no Instagram expert. I didn’t even know the company existed until this week. But … [Read more...]
Hubris and Monetary Policy: A Toxic Mix
I stumbled upon this video of Laurence Meyer, the Co-Founder and Senior Managing Director of Macroeconomic Advisers, a mainstream economic modeling and forecasting firm. Meyer served as a member of the Board of Governors of the Federal Reserve from 1996 to 2002. Like Chairman Bernanke, Mr. Meyer received his Ph.D. in economics from MIT. Mr. Meyer is about as mainstream an economist as they come. Having served on the Federal Reserve Board he is intimately familiar with the Fed’s economic models and the nature of discussions at policy meetings. Mr. Meyer works from the same type of economic … [Read more...]
Top 10 S&P 500 Stocks: 2012
Valuable insights on the character of a bull run in stocks can be gained by investigating the companies leading the rally. The table below lists the 10 best performing S&P 500 stocks since the October 3,2011 low. My table shows the market’s biggest winners are among the most speculative—homebuilders, distressed financials, and tech companies. What does that say about the 28% rally in the S&P 500 since the October 3 low? Speculative sentiment is the dominant force in the stock market today. Invest accordingly. … [Read more...]
Bernanke’s Clever Ruse
It’s official. The Bernanke Fed has gone mad. Less than 24 hours after the biggest stock market sell-off of the year (a scant 1.5% drop) Bernanke & Co. are out floating trial balloons on possible QE3 mechanics to remind investors that a third round of money printing is still on the table. The intention is, as usual, to prop up the stock market. The Fed is trying to setup a no risk proposition for investors. If the economy weakens, the Fed will print more money to prop up stocks. If the economy strengthens, the hope is that the stock market will rally on improving economic data. The … [Read more...]
Dr. Bernanke’s Scorched Earth Monetary Policy Claims another Victim
It seems the Fed’s perpetual zero percent interest rate policy is not only robbing retirees and responsible savers of income; it is also costing companies billions and putting the corporate pension system at risk. Thomas Black from Bloomberg writes: General Electric Co. (GE), Boeing Co. (BA) and 3M Co. (MMM) will join big U.S. employers in making a record $100 billion in 2012 pension contributions, 67 percent more than two years ago, as low interest rates boost companies’ liabilities. Payments may total $400 billion from 2011 through 2015 to ease underfunding at the 100 largest … [Read more...]
Video: Bears Take on the Bulls
Lakshman Achuthan, Chief Operations Officer of the Economic Cycle Research Institute David Rosenberg, Cheif Economist Gluskin Sheff … [Read more...]
Currencies in Crisis, Oil Spiking: Time to Buy?
The Dow Jones Industrial Average and S&P 500 have staged impressive rallies to begin 2012. As of this morning, the Dow was up more than 6% YTD. Improving economic data and a flood of global central bank liquidity have helped levitate stock prices. Volatility has also declined markedly in recent weeks and now sits at an eight month low. As stock prices have risen, economic data has improved, and volatility has dropped, investors have become more bullish. Our chart on the spread between the percentage of bulls and bears in the American Association of Individual Investors sentiment survey is … [Read more...]
The Looming Threat to Gas Prices: Strait of Hormuz Explained
Coordinated Currency Devaluation: Time to Buy Gold
Not to be outdone by Europe or the U.S., the Bank of Japan announced yesterday that it would print an additional 10 trillion yen ($128 billion) to expand the size of its asset-purchase program. The BOJ’s decision comes on the heels of the European Central Bank’s December decision to massively expand its balance sheet and the Bank of England’s decision to increase the size of its own money printing campaign. The yen tumbled vis a vis the U.S. dollar and the euro on the news. The BOJ’s decision is yet more evidence of coordinated global fiat currency devaluation by the world’s largest central … [Read more...]
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