Chart courtesy of Bespoke
Saturday, June 30, 2012
Best Performing Stocks at 2012's Midpoint
Unfortunately we did not have any names on the Russell 3000 list of the best performing stock of 2012. This could make for the beginings of a good list of short positions.
Chart courtesy of Bespoke
Chart courtesy of Bespoke
Week 26 Performance.....2012 Half Way Point
Ever notice how time begins to speed up the older you get? Or maybe it's just me? Regardless it's hard to imagine but we are already at the mid point of 2012. And what a roller coaster ride it has been.
We started the year off red hot in Q1 up over 20% in the DWCM Fund only to cool off in Q2 with the annual spring swoon down 5.8%. We've still fared very well against our other benchmarks for the year and since starting the DWCM Fund on March 31, 2011.
We started the year off red hot in Q1 up over 20% in the DWCM Fund only to cool off in Q2 with the annual spring swoon down 5.8%. We've still fared very well against our other benchmarks for the year and since starting the DWCM Fund on March 31, 2011.
Yesterday we had what some traders call a "rip your face off" rally" on news of a proposed round of money giving in the EU. We have talked at great lengths that especially during the summer with light trading volumes you can have these massive swings to either the upside or downside on European rumors or so-called plans.
We were actually fortunate yesterday because our plan was to go a bit defensive and short some equity names such as the home builders, Amazon, and a few other high beta names with high P/E's that we just don't believe will hold up. Some times it is better to be lucky than good and thus we did not put on any positions.
It did surprise us that the rally continued throughout the day with markets finishing at basically their highs of the day. We thought that the rally would tapper off in the afternoon as people would come in to start selling into the rally. Depending if anything happens in Europe over the weekend we would suspect that Monday will be a down day as it has typically been over the last two month. After people realize that nothing has changed in the EU and the euphoria of the rally is over we expect the markets to come back in.
One of the reasons why we are looking to short home builders is as follows:
- We believe that there is additional pain left in the housing markets. Inventory is getting tight as we have discussed previously because banks are not letting additional foreclosures hit the market. People that want to move or refinance can't because they are under water. This is causing a temporarily increase in the price of houses seen this week in the S&P Case-Shiller HPI.
- People need income in order to buy a house or keep up with their payments. With a slowing economy we believe that there will be a continued stretch of high unemployment. The jobs report will come out this Friday which has greatly disappointed the last two months while previous months have been revised lower as well.
- From a technical perspective the home builders have been red hot this year some up nearly 100%. These names have just run too far too fast and I believe will start to break down. From a fundamental standpoint I don't believe their valuations can support their current stock price.
We had yet another week with the DWCM Fund where our hands were off of the trading buttons. As I mentioned previously it was our intention to enter the markets on Friday but circumstances could not warrant any action on our part.
We still feel very comfortable owning the names in the Fund as they are aligned with our long-term strategies. My goal with putting on some shorter term trades is to take advantage of what the markets are giving us.
The Week Ahead
Expect another volatile week ahead with European news unfortunately continuing to drive our market action. Also with the US July 4th holiday expect extremely light trading volumes which could spark volatile moves higher or lower.
As mentioned previously the jobs report is out this Friday. For a short week there will be allot of economic data to ignite the markets. Auto sales are out Tuesday which will be key as Ford has already announced this week that they will miss upcoming earnings due to issues in Europe. Like houses, to drive auto sales you need to have income and with a slowing economy and fewer jobs especially good paying jobs, auto sales may be a key indicator to watch.
- Mon - PMI Manufacturing Index, ISM Mfg Index, Construction Spending
- Tue - Motor Vehicle Sales, ICSC-Goldman Store Sales, Factory Orders
- Wed - US markets closed for 4th of July holiday
- Thu - Chain Store Sales, Challenger Job-Cut Report, ADP Employment Report, Jobless Claims, Bloomberg Consumer Comfort Index, ISM Non-Mfg Index
- Fri - Employment Situation
DreamWorks Capital Management
As mentioned last week we have scheduled our next finance lecture & seminar for Tuesday September 18th at the The Community House located in Birmingham, MI. This quarters topic will be Balancing Your Changing Investment Needs: Emergency Fund, Investments, Retirement, Education, and Philanthropy. This is going to be a very broad topic in which we will cover significant points regarding creating, developing, and executing on your wealth management plan. We should have a very interactive group so be sure to sign up by emailing me directly at pfenner@dwcmllc.com or by contacting The Community House at 248-644-5832
Friday, June 29, 2012
Grantham Keynote: Investing in a Slower-Growth World
Famed asset manager Jeremy Grantham of GMO gave the keynote address last week at Morningstar's investor conference. You may have to be a premium member to address the link below.
His speech is fairly lengthy, almost an hour, but it is certainly worth the listen.
Grantham Keynote: Investing in a Slower-Growth World
His speech is fairly lengthy, almost an hour, but it is certainly worth the listen.
Grantham Keynote: Investing in a Slower-Growth World
54 Smart Thinkers Everyone Should Follow On Twitter Read more: http://www.businessinsider.com/smart-people-to-follow-on-twitter-2012-6?op=1#ixzz1zBZ6Iqwv
How many of you use Twitter? And if so how often do you use Twitter and put another way how active are you? Are you a follower, a person who comments on other people's tweets, or poster, or some combination of the three?
Business Insider had a post this morning of 54 "Smart" people to follow on Twitter. Not sure how they came up with an odd number such as 54 but click here to find out.
Every post that will issue on our DWCM website is posted automatically to our Twitter account #PaulFennerDWCM and Facebook Page
Business Insider had a post this morning of 54 "Smart" people to follow on Twitter. Not sure how they came up with an odd number such as 54 but click here to find out.
Every post that will issue on our DWCM website is posted automatically to our Twitter account #PaulFennerDWCM and Facebook Page
Thursday, June 28, 2012
Romney Dropping in Battleground States
I'm not sure how today's Supreme Court ruling over Obama Care will affect voters but from a recent WSJ/NBC poll Romney has gained overall but fallen in key battleground states.
CNBC Ratings Fall to 7 Year Lows
Courtesy of Mark Hanna at Market Montage CNBC ratings are dropping like hot potatoes.
Infotainment financial channel CNBC
continues to see its ratings
plummet. I am sure part of this is just the general
disgust towards equities by Joe 6Pack but the "shout at you" format
(at least in the U.S. version) has to be contributing as well. I continue
to be amazed some of these "emergency weeks" the difference between
CNBC Asia (cordial) v CNBC Europe (intelligent) v CNBC USA (interrupt guests,
yell, make every topic center on how the Democrats are destroying the economy).
On the "sunny side up" perhaps some people are going to the
internet versus the tv channel – that's what I do.
As for Fast Money – the show misses
Dylan Ratigan tremendously, plus in my opinion Eric Bolling who for those who
watch Fox News was actually a great chartist in his previous life.
- Squawk Box (6-9 a.m.) is supposed to prime traders before the bell. The show posted its lowest rated its time block since Q4 2006.
- The Closing Bell (3-5 p.m.) is supposed to wrap up the day’s action. The slot posted its fifth-lowest rating in total viewers and second-lowest ratings in the key 25-54 demographic since 1997.
- Fast Money (5-6 p.m.) is focused almost specifically on swing trading stocks. That time slot showed the lowest rating for the 25-54 demo since 1997 — and lowest in total viewers since Fast Money launched in 2006.
Fidelity's Fiscal Cliff Scenarios
Full disclosure I maintain a personal 401k account at Fidelity and manage client accounts at Fidelity. Hat tip to Josh Brown at The Reformed Broker.
I agree with Fidelity's scenario 1: punt that there will be some type of delay but like the debt ceiling debacle they will run it up to the very end before making a decision. I would expect markets to be volatile likely to the downside leading up and then rally either right before the announcement or just after.
I also agree with Josh that the term "Fiscal Cliff" is now making it into the vocabulary of mainstream America. No different than "Weapons of Mass Destruction".
Fiscal cliff ahead: What it may mean
Risks to the economy and stocks are high if all tax hikes and spending cuts take effect.- Fidelity Viewpoints
- – 06/25/2012
What are the odds that Congress will fail to act? And what could the range of possible congressional actions mean for the economy, and the financial markets? Could we experience a repeat of last year’s debt ceiling drama and credit rating downgrades?
We gathered four Fidelity experts to answer these questions and more.
Capitol scenarios
Gary Blank, senior vice president, public affairs and policy
Federal Reserve Chairman Ben Bernanke and a number of observers have used the term “fiscal cliff” to describe several big fiscal events set to occur in the U.S. at the end of this year and in early 2013. Among them:- The expiration of the Bush-era tax cuts at the end of 2012, including current lower tax rates on capital gains, dividends, income, and estates, as well as number of other measures.
- The expiration of fiscal stimulus measures, such as the payroll tax cut and extended unemployment benefits.
- Spending cuts scheduled to be triggered automatically in January 2013 as a result of the failure of the deficit reduction super committee last year.
Scenario 1: punt
A likely scenario is that Congress and the president agree to punt the issue into 2013. If this occurs, the tax cuts will not expire, tax increases won’t take effect, and the spending cuts will be delayed until after the presidential inauguration and new Congress arrives in 2013.Scenario 2: modest compromise
Congress and the White House reach compromises on some tax and spending provisions, with the election having a significant impact on what those compromises might be.Scenario 3: over the cliff
A less-likely scenario, I think, is that Congress and the White House fail to reach any compromise whatsoever and are unable even to agree on how to delay the looming measures. The economy goes over the cliff.Scenario 4: grand bargain
In my view, the chance of a grand bargain taking place after the election and before the end of the year is a long shot. In this scenario, Congress and the White House would reach a deal addressing tax, spending, and fiscal issues for the medium to long term.In addition to the fiscal cliff, the U.S. will again approach the debt ceiling early next year. While the sequence of events puts the debate over the fiscal cliff before the debt deadline, the two issues are likely to be intertwined.
The outcome of the 2012 elections matters, but the resolution of these issues is tough regardless of whether Democrats or Republicans are in control. That’s because they reflect longstanding philosophical differences between the parties about the proper role and size of the government, and how to grow the economy.
Obama Care aka the Affordable Care Act is upheld by the Supreme Court
I have largely stayed away from this topic because I don't feel as I have much to add. The only thing that I do know about this topic is that the political games being played get us no closer to the fiscal solutions that we desperately need in order to sustain growth and a healthy economy.
I found the following post below on Stocktwits, a financial site that I follow on a daily basis. The blog author Jerry Khachoyan, is a regular poster on the site.
I couldn't have said this better myself Jerry
And This Is Why I Hate Politics
Tomorrow, the Supreme Court of the United States will rule on the constitutionality of the Affordable Care Act (commonly known as “Obamacare”). The ruling will either determine if the whole law is upheld, if the Individual Mandate is struck down (thus upholding parts of the law), or if the whole law is to be thrown out.
One of the major controversial laws in the bill is the Individual Mandate, which requires basically everyone eligible to buy health insurance. The main reason why this is controversial is because it is forcing Americans to buy a service that is pretty expensive. Now, I’m not here to argue about the constitutionality (Most scholars agree it is constitutional) or the economic impact of this.
I’m here to point out the dumb politics being played by both parties. Let’s get somethign straight, The individual mandate was a market-based Republican idea, developed by the conservative Heritage Foundation and endorsed by the many likes of Bob Dole, George Bush, Newt Gingrich and GOP presidential hopeful Mitt Romney.
However, once it was included in Obamacare in 2009, it suddenly turned into a socialist Democratic idea! Now the democrats/liberals support the mandate while the Republicans oppose it. However, I’m not here to only bash the GOP; the Democrats (especially Obama) opposed the idea in 2008! What the hell! As you can see, this has nothing to do with any legitimate economic analysis or on any social-standing (Fairness,etc). This is all politics, whatever gets you the most votes is what you’ll support!
This isn’t only exclusive to the healthcare debate. Remember a few months back, the Republicans were bashing Obama for the high gas prices (as they reached $4). At the same time, the Democrats/Obama were blaming speculators (who I would assume, the republicans wouldn’t bash).
Well now that gas prices have plunged, who gets the blame/credit? Well obviously Obama gets the credit if he deserved the blame back then. And obviously speculators should get the credit as well now that prices are plunging. But of course, that’s not reality, that’s politics and nobody gets the credit (Nobody should get credit/blame, but just pointing out the idiocy). There was ZERO economic analysis done by both sides during the blame game. When prices were high, there was stronger demand, macro supply-disruption worry, and no supply gut, thus higher prices. Now, demand has weakened as global growth is slowing, the macro supply worry has washed away (like it always does, remember the Arab Spring?), and there is a big supply gut. I’m sure there are more factors and I could be slightly off on some of my analysis, but at least there is some basic evidence here to analyze. What do politicians offer? The Blame Game and hopeless promises ($2.50 Gas anyone?).
What should we do about this? As I argued a few days ago, we really need strong fiscal policy in order to achieve high growth and lower unemployment again. The only way we get economically competent politicians who are not playing politics with the economy is to Get Money Out (of politics). Making campaign spending and donations more transparent might help, but wont solve the problem. Voting out all incumbents will only bring in the next batch of incompetent/bought politicians. The only way we can solve our nations woes is to make sure that those controlling the engine of the economy, do not screw it up. And the only way that is possible is to stop this auction commonly known as the US Elections.
I found the following post below on Stocktwits, a financial site that I follow on a daily basis. The blog author Jerry Khachoyan, is a regular poster on the site.
I couldn't have said this better myself Jerry
And This Is Why I Hate Politics
Tomorrow, the Supreme Court of the United States will rule on the constitutionality of the Affordable Care Act (commonly known as “Obamacare”). The ruling will either determine if the whole law is upheld, if the Individual Mandate is struck down (thus upholding parts of the law), or if the whole law is to be thrown out.
One of the major controversial laws in the bill is the Individual Mandate, which requires basically everyone eligible to buy health insurance. The main reason why this is controversial is because it is forcing Americans to buy a service that is pretty expensive. Now, I’m not here to argue about the constitutionality (Most scholars agree it is constitutional) or the economic impact of this.
I’m here to point out the dumb politics being played by both parties. Let’s get somethign straight, The individual mandate was a market-based Republican idea, developed by the conservative Heritage Foundation and endorsed by the many likes of Bob Dole, George Bush, Newt Gingrich and GOP presidential hopeful Mitt Romney.
However, once it was included in Obamacare in 2009, it suddenly turned into a socialist Democratic idea! Now the democrats/liberals support the mandate while the Republicans oppose it. However, I’m not here to only bash the GOP; the Democrats (especially Obama) opposed the idea in 2008! What the hell! As you can see, this has nothing to do with any legitimate economic analysis or on any social-standing (Fairness,etc). This is all politics, whatever gets you the most votes is what you’ll support!
This isn’t only exclusive to the healthcare debate. Remember a few months back, the Republicans were bashing Obama for the high gas prices (as they reached $4). At the same time, the Democrats/Obama were blaming speculators (who I would assume, the republicans wouldn’t bash).
Well now that gas prices have plunged, who gets the blame/credit? Well obviously Obama gets the credit if he deserved the blame back then. And obviously speculators should get the credit as well now that prices are plunging. But of course, that’s not reality, that’s politics and nobody gets the credit (Nobody should get credit/blame, but just pointing out the idiocy). There was ZERO economic analysis done by both sides during the blame game. When prices were high, there was stronger demand, macro supply-disruption worry, and no supply gut, thus higher prices. Now, demand has weakened as global growth is slowing, the macro supply worry has washed away (like it always does, remember the Arab Spring?), and there is a big supply gut. I’m sure there are more factors and I could be slightly off on some of my analysis, but at least there is some basic evidence here to analyze. What do politicians offer? The Blame Game and hopeless promises ($2.50 Gas anyone?).
What should we do about this? As I argued a few days ago, we really need strong fiscal policy in order to achieve high growth and lower unemployment again. The only way we get economically competent politicians who are not playing politics with the economy is to Get Money Out (of politics). Making campaign spending and donations more transparent might help, but wont solve the problem. Voting out all incumbents will only bring in the next batch of incompetent/bought politicians. The only way we can solve our nations woes is to make sure that those controlling the engine of the economy, do not screw it up. And the only way that is possible is to stop this auction commonly known as the US Elections.
Wednesday, June 27, 2012
On Orbitz, Mac Users Steered to Pricier Hotels
This was the week that I was thinking about the big change.
Going from a PC to a Mac. However have you hear about how Mac users
of Orbitz online travel site have been pushed to pricier deals?
According to
Orbitz, Mac computers spend as much as 30%
more a night on hotels, so the online travel agency is starting to show them
different, and sometimes costlier, travel options than Windows visitors see.
So
my question is what other sites are pushing pricier deals for Mac users?
I find it amazing the amount of information that can be gleaned from
company databases that they collect from their users and customers.
At
the end of the day I still plan on making the switch from PC to Mac. If
any readers have any thoughts or opinions on the conversion please let me know.
Tuesday, June 26, 2012
The New Independent Workforce
Click here for the full view infographic.
This shift in independent, freelance, or however you would like to describe this change in the workforce has got to be a boom for corporate America in reducing labor costs, a topic that we have covered extensively, see posts here and here.
Not only do companies likely pay less for freelance work. They are not burdened my medical costs or any retirement costs that they may offer.
This shift in independent, freelance, or however you would like to describe this change in the workforce has got to be a boom for corporate America in reducing labor costs, a topic that we have covered extensively, see posts here and here.
Not only do companies likely pay less for freelance work. They are not burdened my medical costs or any retirement costs that they may offer.
Members of Congress trade in companies while making laws that affect those same firms
It's been a while since we last touched the congressional insider activity. The Washington Post is out with a piece that tries to put the topic back into the forefront. It is still mind blowing to me how trades that members of congress are considered legal.
We featured this topic in posts Jack Abramoff: The lobbyist's playbook and Senate Passes Insider-Trading Ban. This isn't a Democrat vs. Republican issue, both parties are equally involved. If an individual outside of being a congress member had access to this type of information and was trading on it, there would be steep consequences to pay.
Full WP article here by Dan Keating, David S. Fallis, Kimberly Kindy and Scott Higham
One-hundred-thirty members of Congress or their families have traded stocks collectively worth hundreds of millions of dollars in companies lobbying on bills that came before their committees, a practice that is permitted under current ethics rules, a Washington Post analysis has found.
The lawmakers bought and sold a total of between $85 million and $218 million in 323 companies registered to lobby on legislation that appeared before them, according to an examination of all 45,000 individual congressional stock transactions contained in computerized financial disclosure data from 2007 to 2010.
Almost one in every eight trades — 5,531 — intersected with legislation. The 130 lawmakers traded stocks or bonds in companies as bills passed through their committees or while Congress was still considering the legislation. The party affiliation of the lawmakers was almost evenly split between Democrats and Republicans, 68 to 62.
Sen. Tom Coburn (R-Okla.) reported buying $25,000 in bonds in a genetic-technology company around the time that he released a hold on legislation the firm supported. Rep. Ed Whitfield (R-Ky.) sold between $50,000 and $100,000 in General Electric stock shortly before a Republican filibuster killed legislation sought by the company. The family of Rep. Michael McCaul (R-Tex.) bought between $286,000 and $690,000 in a high-tech company interested in a bill under his committee’s jurisdiction.
The trades were uncovered as part of an ongoing examination by The Post of the intersection between the personal finances of lawmakers and their professional duties. Earlier this year, Congress responded to criticism of potential conflicts of interest by passing the Stock Act, which bars lawmakers, their staffs and top executive branch officials from trading on inside information acquired on Capitol Hill.
But the act failed to address the most elemental difference between Congress and the other branches of government: Congress forbids top administration officials, for instance, from trading stocks in industries they oversee and can influence. The lawmakers, by contrast, can still invest in firms even as they create laws that can affect the bottom line of the companies.
“If you have major responsibility for drafting legislation that directly affects particular companies, then you shouldn’t be trading in their stock,” said Dennis Thompson, a professor of public policy at Harvard University’s John F. Kennedy School of Government and author of “Ethics in Congress: From Individual to Institutional Corruption.” “Committee chairs especially shouldn’t be in the position of potentially benefiting from trades in companies that stand to gain or lose from actions the committee takes.”
The Post analysis does not provide evidence of insider trading, which requires showing that lawmakers knowingly used confidential information to make trades benefiting themselves. Instead, the review shows that lawmakers routinely make trades that raise questions about potential conflicts and illustrate the weaker standard that Congress applies to itself.
More than a dozen lawmakers contacted by The Post defended the timing of their trades and the legislation before their committees as coincidental and said they did not know that the companies they traded were registered to lobby on bills they were considering. In interviews and through spokesmen, they said brokers made the trades and they had little or no input. Some said their spouses handled their investments. With diverse portfolios, they said, overlap is inevitable.
Richard W. Painter, who was chief ethics lawyer for President George W. Bush, said those explanations do not provide ethical cover.
“Your wife isn’t a blind trust. Your financial adviser isn’t either,” Painter said. “If you truly want to create some distance, you should set up a blind trust. The rules that Congress has set for itself with blind trusts are a lot more liberal than the rules they created for the executive branch. This should be the route they take if they want the public to believe they don’t know what’s going on with their investments.”
Only six members of the Senate have set up blind trusts that have been approved by the ethics committee. The House does not keep a tally of the number of members who set up such trusts.
Under ethics rules, lawmakers may establish a blind trust by shifting all of their assets into an account managed by a financial adviser. The lawmaker may set general parameters for the blind trust investment decisions, but they surrender control and cannot know the details of the decisions.
Georgia State University professor Alan J. Ziobrowski said lawmakers who own stocks in companies lobbying on legislation before them have built-in conflicts.
“You can’t get into their heads to know what is motivating them,” said Ziobrowski, whose research helped prompt the initial push for the Stock Act by showing that members of Congress outperformed the market as a whole — senators by 10 percent and representatives by 6 percent. “Are they thinking about their investment, or about what is best for their constituents?”
The Post analysis is based on a comparison of federal financial disclosure forms from all members of Congress to a wide array of public records, drawing on work by the Center for Responsive Politics and Govtrack.us to convert paper documents to databases. The analysis does not include 2011 data because they have not yet been computerized.
Under Congress’s interpretation of its own conflict rules, lawmakers can take official actions that benefit themselves as long as they are not the sole beneficiaries.
Former representative Brian Baird (D-Wash.), who co-authored the original, unsuccessful version of the Stock Act in 2006, said members of Congress and their staffs do not understand that public trust is eroded when people see lawmakers take actions that have the potential to benefit themselves.
“They don’t get it, but they need to,” Baird said. “Why? Because people who are taking actions for venal and nefarious purposes might make the same argument you’re making about your innocence. That’s why if there is an appearance of an impropriety, there just might be an impropriety. Members need to bend over backwards to show people they are there for the good of the country.”
Hold on bill lifted, bonds bought
In 2007, Sen. Coburn placed a legislative hold on the Genetic Information Nondiscrimination Act, saying he wanted changes to address fears about exposing employers and insurance companies to lawsuits. The bill prohibited employers and health insurers from using genetic information to discriminate.
After negotiating a compromise on April 22, 2008, Coburn released his hold.
On that day and the day after, Coburn’s financial disclosure form shows a total of three bond purchases in Affymetrix, a pioneering genetic technology firm that was one of 33 companies registered to lobby on the legislation.
Affymetrix lobbied on only a handful of bills that session. Coburn is one of five lawmakers who reported buying and selling Affymetrix stocks or bonds since 2004.
In an interview, Coburn said that he and Sen. Richard Burr (R-N.C.) both held up the bill. “We actually negotiated some better things into the bill,” Coburn said. “I don’t think it had anything to do with Affymetrix.”
Coburn said his Affymetrix bond purchases, worth $25,000, were made without his knowledge by Pinnacle Investment Advisors in Tulsa. The timing, he said, was coincidental.
John Hart, Coburn’s communications director, said that Affymetrix did not lobby Coburn and that his hold had no bearing on the company’s value. Hart said Coburn has placed hundreds of holds since 2005.
“There is no evidence Dr. Coburn had even heard of Affymetrix before his broker made a purchase, and there is no evidence his actions affected the value of the company,” Hart said. “If there was a connection, you could argue it hurt the company — the stock lost half its value. Plus, it would be a stretch to suggest he engaged in procedural gymnastics in order to affect a trade.”
Pinnacle managing partner David Poarch said he didn’t discuss the Affymetrix purchase with the senator. He said Pinnacle bought about $1.7 million worth of convertible bonds in the company on April 22, 2008, for 104 of the firm’s 350 clients. Poarch said the firm sold those bonds for all their clients last year, including for Coburn, who earned a 35 percent profit on his investment.
Poarch said he meets face-to-face with the senator once a year, and they might speak over the phone two or three times during that period to map out investment strategies. The senator rarely directs him to make trades, he said.
“In some of our discussions, he’ll indicate sectors he likes,” Poarch said, noting that the senator rarely directs Pinnacle to make specific trades.
Coburn said he gives Poarch only general advice.
“I’ve never had a conversation with him other than, ‘Here’s what I think is going to happen to the economy, so you guys ought to listen,’ ” he said.
Affymetrix officials did not return calls seeking comment. After the genetic bill became law in May 2008, Affymetrix praised its passage in a news release. “We have actively supported this much-needed legislation for more than seven years and we are pleased to see the U.S. government take steps toward addressing the issues around genetic discrimination,” said Stephen P.A. Fodor, the company’s founder.
Shining light on GE trades
Rep. Whitfield trades infrequently, but several of his transactions have coincided with major legislation before him.
Whitfield is a member of an energy subcommittee that handled the 2008 carbon-cap proposal intended to address rising public concern about global warming. It had the support of major companies and the Democrats who were in charge of both chambers at the time.
General Electric, which had created a subsidiary to help businesses manage carbon emissions, lobbied heavily in favor of the bill.
Whitfield sold his holdings in GE, worth between $50,000 and $100,000, on May 5, 2008, for $32 per share. (Exact amounts are unavailable because members of Congress are allowed to report ranges for the values of their transactions.) He had held the stock for 12 years.
Although the cap had appeared to be gaining momentum, Whitfield’s Republican colleagues in the Senate scuttled the bill in early June with parliamentary actions and a threatened filibuster.
After the bill died, the stock dropped to $26 — $6 less than the price when Whitfield sold.
Whitfield’s spokeswoman, Corry Schiermeyer, said his trade had nothing to do with the legislation, which she said was never going to get past Republican opposition.
The trade was one of the two largest stock sales by Whitfield since 2004.
The other came when Whitfield sold between $50,000 and $100,000 in the defense conglomerate United Technologies in October 2009 — the same day that his subcommittee approved a Democratic bill to strengthen rules requiring companies to secure chemical facilities. United Technologies had registered to lobby on that bill, but Whitfield’s staff members said their records do not show that the company lobbied him.
Altogether, Whitfield made 23 trades worth between $275,000 and $900,000 in companies registered to lobby before his committee, encompassing 38 percent of his stock trades between 2007 and 2010.
Schiermeyer said Whitfield adhered to the relevant ethics rules.
“It’s clear that his role on the Energy and Commerce Committee has no relation to his stock trades,” Schiermeyer said. “The congressman believes the best approach to avoid a semblance of conflict of interest is to follow the rules and be transparent, and that is what he does.”
Lawmakers can affect bills in other ways.
Members of the Rules Committee, for example, have the power to quash amendments and set the terms for floor debate on all bills.
In July 2005, the Rules Committee, chaired by Rep. David Dreier (R-Calif.), blocked an amendment to a medical malpractice bill that ran against the interests of Merck & Co., the giant pharmaceutical company. Five months earlier, the day the bill was introduced, Dreier had purchased between $15,000 and $50,000 worth of stock in Merck.
The bill, which Dreier had co-sponsored, contained medical malpractice limits sought by Republican lawmakers. The legislation included a provision that would shield drug companies from liability. Merck, which was being sued over claims its Vioxx arthritis medication caused heart attacks, had lobbied heavily in favor of the bill.
Democrats unsuccessfully attempted to strip the liability protection from the bill, arguing that it unfairly protected Merck. As the bill moved through the House, the value of Merck’s stock grew by 15 percent.
The bill passed the House but stalled in the Senate.
A newer version of the bill made it through the House this year, but has failed to gain traction in the Senate. Dreier declined requests for comment. His spokeswoman said he could not recall the trade, which was made by an investment adviser.
“In managing his finances, Mr. Dreier abides by the letter and the spirit of the rules,” spokeswoman Jo Maney said. “Day-to-day investment decisions for his account are made by an independent investment professional. His co-sponsorship of the legislation in question was based on long-standing support for pro-market health-care reforms. Furthermore, his actions as Rules Committee chairman have always been guided by his principles and those of the leadership he serves.”
Dreier’s office did not provide access to his investment adviser.
A matter of trusts
Some of Congress’s wealthiest members avoid potential conflicts by putting their assets in blind trusts approved by congressional ethics committees. Sen. Herb Kohl (D-Wis.), for example, reports holding more than $50 million in such a trust. Under ethics rules, Kohl cannot know the nature of his investments and must remain unaware of how they are managed.
Other wealthy members do not have financial portfolios in blind trusts. Their portfolios are so vast that their financial disclosure reports exceed a hundred pages and their holdings overlap with almost every bill they handle.
Sen. John F. Kerry (D-Mass.), who married Teresa Heinz of the ketchup fortune, had the highest value of overlapped trades — between $42 million and $86 million — in companies registered to lobby before him. Kerry said he does not have any conflicts, because he has no control over the assets in his and his wife’s family trusts.
Rep. McCaul, married to Linda Mays, whose fortune traces back to Clear Channel Communications, had the highest number of overlapping trades, totaling between $5 million and $23 million, according to analysis of financial disclosure forms listing his family’s holdings.
Some of those investments were in Thermo Fisher Scientific, which in 2009 had registered to lobby on a food safety bill under the jurisdiction of the Homeland Security Committee. McCaul was a member of that committee. Among other things, the company makes equipment to detect contaminated food.
While the bill was pending, McCaul toured the company’s Austin plant and extolled the technology as “great for food safety and protecting the American people.”
As the bill moved forward, his family bought stock in Thermo Fisher. Trusts for his wife and children bought between $286,000 and $690,000 in nine transactions, the largest being for between $250,000 and $500,000 in November 2010 during final negotiations before the bill passed. The family bought the stock at prices from $33.50 to $44. McCaul’s 2011 financial disclosure showed the family still owned it. The current stock price is a little more than $50.
McCaul said there is no conflict between his legislative duties and his wife’s holdings, because he has no access to her portfolio and he never talks to her about her investment decisions.
“Congressman McCaul . . . is legally precluded from having any involvement or knowledge of specific investment decisions made with regard to securities listed as his wife’s separate property,” said his spokesman, Mike Rosen.
Railroad rules
In 2009, the House Judiciary subcommittee on courts, the Internet and intellectual property discussed the Railroad Antitrust Enforcement Act, aimed at ending rail carriers’ exemptions from federal antitrust laws.
A family trust overseen by Rep. F. James Sensenbrenner Jr. (R-Wis.), a subcommittee member, sold 2,000 shares of CSX after a subcommittee hearing and before the final changes were made to the bill.
The shares generated a $40,000 net profit, records show. The same day, the trust bought $7,700 in Norfolk Southern stock.
The two rail carriers were among 62 companies lobbying on the bill.
Sensenbrenner’s spokeswoman said the trades were initiated by a fund manager who handles the investments for the trust that benefits the lawmaker’s sister.
“Congressman Sensenbrenner’s interaction with the trust is almost nothing,” spokeswoman Amanda Infield said. “He doesn’t benefit from the trust, except for an administrative fee as trustee. He is not a beneficiary, and he doesn’t exercise influence over or give input into the investment decisions. He has to sign off on the decisions, but he hasn’t overridden an investment decision, which is made by JPMorgan Chase.”
Rep. Dave Camp (R-Mich.), a member of the House Ways and Means Committee since 1993, reported making trades in John Deere when the Illinois-based company was registered to lobby on tax and trade legislation before his committee between 2007 and 2010. The biggest single transaction was between $50,000 and $100,000. When the purchase was made in March 2009, Deere stock was $32 a share. The stock now trades at $75 per share.
Camp declined through his spokesman to be interviewed or provide additional information about his trades and how his portfolio is managed.
“All of the Congressman’s financial information are fully disclosed in accordance with the law,” Sage Eastman, a senior adviser to Camp, said in an e-mail. “His stock portfolio is managed by a firm. He does not make decisions about when to buy or sell a stock.”
Deputy graphics director Karen Yourish and researcher Bobbye Pratt contributed to this article.
We featured this topic in posts Jack Abramoff: The lobbyist's playbook and Senate Passes Insider-Trading Ban. This isn't a Democrat vs. Republican issue, both parties are equally involved. If an individual outside of being a congress member had access to this type of information and was trading on it, there would be steep consequences to pay.
Full WP article here by Dan Keating, David S. Fallis, Kimberly Kindy and Scott Higham
One-hundred-thirty members of Congress or their families have traded stocks collectively worth hundreds of millions of dollars in companies lobbying on bills that came before their committees, a practice that is permitted under current ethics rules, a Washington Post analysis has found.
The lawmakers bought and sold a total of between $85 million and $218 million in 323 companies registered to lobby on legislation that appeared before them, according to an examination of all 45,000 individual congressional stock transactions contained in computerized financial disclosure data from 2007 to 2010.
Almost one in every eight trades — 5,531 — intersected with legislation. The 130 lawmakers traded stocks or bonds in companies as bills passed through their committees or while Congress was still considering the legislation. The party affiliation of the lawmakers was almost evenly split between Democrats and Republicans, 68 to 62.
Sen. Tom Coburn (R-Okla.) reported buying $25,000 in bonds in a genetic-technology company around the time that he released a hold on legislation the firm supported. Rep. Ed Whitfield (R-Ky.) sold between $50,000 and $100,000 in General Electric stock shortly before a Republican filibuster killed legislation sought by the company. The family of Rep. Michael McCaul (R-Tex.) bought between $286,000 and $690,000 in a high-tech company interested in a bill under his committee’s jurisdiction.
The trades were uncovered as part of an ongoing examination by The Post of the intersection between the personal finances of lawmakers and their professional duties. Earlier this year, Congress responded to criticism of potential conflicts of interest by passing the Stock Act, which bars lawmakers, their staffs and top executive branch officials from trading on inside information acquired on Capitol Hill.
But the act failed to address the most elemental difference between Congress and the other branches of government: Congress forbids top administration officials, for instance, from trading stocks in industries they oversee and can influence. The lawmakers, by contrast, can still invest in firms even as they create laws that can affect the bottom line of the companies.
“If you have major responsibility for drafting legislation that directly affects particular companies, then you shouldn’t be trading in their stock,” said Dennis Thompson, a professor of public policy at Harvard University’s John F. Kennedy School of Government and author of “Ethics in Congress: From Individual to Institutional Corruption.” “Committee chairs especially shouldn’t be in the position of potentially benefiting from trades in companies that stand to gain or lose from actions the committee takes.”
The Post analysis does not provide evidence of insider trading, which requires showing that lawmakers knowingly used confidential information to make trades benefiting themselves. Instead, the review shows that lawmakers routinely make trades that raise questions about potential conflicts and illustrate the weaker standard that Congress applies to itself.
More than a dozen lawmakers contacted by The Post defended the timing of their trades and the legislation before their committees as coincidental and said they did not know that the companies they traded were registered to lobby on bills they were considering. In interviews and through spokesmen, they said brokers made the trades and they had little or no input. Some said their spouses handled their investments. With diverse portfolios, they said, overlap is inevitable.
Richard W. Painter, who was chief ethics lawyer for President George W. Bush, said those explanations do not provide ethical cover.
“Your wife isn’t a blind trust. Your financial adviser isn’t either,” Painter said. “If you truly want to create some distance, you should set up a blind trust. The rules that Congress has set for itself with blind trusts are a lot more liberal than the rules they created for the executive branch. This should be the route they take if they want the public to believe they don’t know what’s going on with their investments.”
Only six members of the Senate have set up blind trusts that have been approved by the ethics committee. The House does not keep a tally of the number of members who set up such trusts.
Under ethics rules, lawmakers may establish a blind trust by shifting all of their assets into an account managed by a financial adviser. The lawmaker may set general parameters for the blind trust investment decisions, but they surrender control and cannot know the details of the decisions.
Georgia State University professor Alan J. Ziobrowski said lawmakers who own stocks in companies lobbying on legislation before them have built-in conflicts.
“You can’t get into their heads to know what is motivating them,” said Ziobrowski, whose research helped prompt the initial push for the Stock Act by showing that members of Congress outperformed the market as a whole — senators by 10 percent and representatives by 6 percent. “Are they thinking about their investment, or about what is best for their constituents?”
The Post analysis is based on a comparison of federal financial disclosure forms from all members of Congress to a wide array of public records, drawing on work by the Center for Responsive Politics and Govtrack.us to convert paper documents to databases. The analysis does not include 2011 data because they have not yet been computerized.
Under Congress’s interpretation of its own conflict rules, lawmakers can take official actions that benefit themselves as long as they are not the sole beneficiaries.
Former representative Brian Baird (D-Wash.), who co-authored the original, unsuccessful version of the Stock Act in 2006, said members of Congress and their staffs do not understand that public trust is eroded when people see lawmakers take actions that have the potential to benefit themselves.
“They don’t get it, but they need to,” Baird said. “Why? Because people who are taking actions for venal and nefarious purposes might make the same argument you’re making about your innocence. That’s why if there is an appearance of an impropriety, there just might be an impropriety. Members need to bend over backwards to show people they are there for the good of the country.”
Hold on bill lifted, bonds bought
In 2007, Sen. Coburn placed a legislative hold on the Genetic Information Nondiscrimination Act, saying he wanted changes to address fears about exposing employers and insurance companies to lawsuits. The bill prohibited employers and health insurers from using genetic information to discriminate.
After negotiating a compromise on April 22, 2008, Coburn released his hold.
On that day and the day after, Coburn’s financial disclosure form shows a total of three bond purchases in Affymetrix, a pioneering genetic technology firm that was one of 33 companies registered to lobby on the legislation.
Affymetrix lobbied on only a handful of bills that session. Coburn is one of five lawmakers who reported buying and selling Affymetrix stocks or bonds since 2004.
In an interview, Coburn said that he and Sen. Richard Burr (R-N.C.) both held up the bill. “We actually negotiated some better things into the bill,” Coburn said. “I don’t think it had anything to do with Affymetrix.”
Coburn said his Affymetrix bond purchases, worth $25,000, were made without his knowledge by Pinnacle Investment Advisors in Tulsa. The timing, he said, was coincidental.
John Hart, Coburn’s communications director, said that Affymetrix did not lobby Coburn and that his hold had no bearing on the company’s value. Hart said Coburn has placed hundreds of holds since 2005.
“There is no evidence Dr. Coburn had even heard of Affymetrix before his broker made a purchase, and there is no evidence his actions affected the value of the company,” Hart said. “If there was a connection, you could argue it hurt the company — the stock lost half its value. Plus, it would be a stretch to suggest he engaged in procedural gymnastics in order to affect a trade.”
Pinnacle managing partner David Poarch said he didn’t discuss the Affymetrix purchase with the senator. He said Pinnacle bought about $1.7 million worth of convertible bonds in the company on April 22, 2008, for 104 of the firm’s 350 clients. Poarch said the firm sold those bonds for all their clients last year, including for Coburn, who earned a 35 percent profit on his investment.
Poarch said he meets face-to-face with the senator once a year, and they might speak over the phone two or three times during that period to map out investment strategies. The senator rarely directs him to make trades, he said.
“In some of our discussions, he’ll indicate sectors he likes,” Poarch said, noting that the senator rarely directs Pinnacle to make specific trades.
Coburn said he gives Poarch only general advice.
“I’ve never had a conversation with him other than, ‘Here’s what I think is going to happen to the economy, so you guys ought to listen,’ ” he said.
Affymetrix officials did not return calls seeking comment. After the genetic bill became law in May 2008, Affymetrix praised its passage in a news release. “We have actively supported this much-needed legislation for more than seven years and we are pleased to see the U.S. government take steps toward addressing the issues around genetic discrimination,” said Stephen P.A. Fodor, the company’s founder.
Shining light on GE trades
Rep. Whitfield trades infrequently, but several of his transactions have coincided with major legislation before him.
Whitfield is a member of an energy subcommittee that handled the 2008 carbon-cap proposal intended to address rising public concern about global warming. It had the support of major companies and the Democrats who were in charge of both chambers at the time.
General Electric, which had created a subsidiary to help businesses manage carbon emissions, lobbied heavily in favor of the bill.
Whitfield sold his holdings in GE, worth between $50,000 and $100,000, on May 5, 2008, for $32 per share. (Exact amounts are unavailable because members of Congress are allowed to report ranges for the values of their transactions.) He had held the stock for 12 years.
Although the cap had appeared to be gaining momentum, Whitfield’s Republican colleagues in the Senate scuttled the bill in early June with parliamentary actions and a threatened filibuster.
After the bill died, the stock dropped to $26 — $6 less than the price when Whitfield sold.
Whitfield’s spokeswoman, Corry Schiermeyer, said his trade had nothing to do with the legislation, which she said was never going to get past Republican opposition.
The trade was one of the two largest stock sales by Whitfield since 2004.
The other came when Whitfield sold between $50,000 and $100,000 in the defense conglomerate United Technologies in October 2009 — the same day that his subcommittee approved a Democratic bill to strengthen rules requiring companies to secure chemical facilities. United Technologies had registered to lobby on that bill, but Whitfield’s staff members said their records do not show that the company lobbied him.
Altogether, Whitfield made 23 trades worth between $275,000 and $900,000 in companies registered to lobby before his committee, encompassing 38 percent of his stock trades between 2007 and 2010.
Schiermeyer said Whitfield adhered to the relevant ethics rules.
“It’s clear that his role on the Energy and Commerce Committee has no relation to his stock trades,” Schiermeyer said. “The congressman believes the best approach to avoid a semblance of conflict of interest is to follow the rules and be transparent, and that is what he does.”
Lawmakers can affect bills in other ways.
Members of the Rules Committee, for example, have the power to quash amendments and set the terms for floor debate on all bills.
In July 2005, the Rules Committee, chaired by Rep. David Dreier (R-Calif.), blocked an amendment to a medical malpractice bill that ran against the interests of Merck & Co., the giant pharmaceutical company. Five months earlier, the day the bill was introduced, Dreier had purchased between $15,000 and $50,000 worth of stock in Merck.
The bill, which Dreier had co-sponsored, contained medical malpractice limits sought by Republican lawmakers. The legislation included a provision that would shield drug companies from liability. Merck, which was being sued over claims its Vioxx arthritis medication caused heart attacks, had lobbied heavily in favor of the bill.
Democrats unsuccessfully attempted to strip the liability protection from the bill, arguing that it unfairly protected Merck. As the bill moved through the House, the value of Merck’s stock grew by 15 percent.
The bill passed the House but stalled in the Senate.
A newer version of the bill made it through the House this year, but has failed to gain traction in the Senate. Dreier declined requests for comment. His spokeswoman said he could not recall the trade, which was made by an investment adviser.
“In managing his finances, Mr. Dreier abides by the letter and the spirit of the rules,” spokeswoman Jo Maney said. “Day-to-day investment decisions for his account are made by an independent investment professional. His co-sponsorship of the legislation in question was based on long-standing support for pro-market health-care reforms. Furthermore, his actions as Rules Committee chairman have always been guided by his principles and those of the leadership he serves.”
Dreier’s office did not provide access to his investment adviser.
A matter of trusts
Some of Congress’s wealthiest members avoid potential conflicts by putting their assets in blind trusts approved by congressional ethics committees. Sen. Herb Kohl (D-Wis.), for example, reports holding more than $50 million in such a trust. Under ethics rules, Kohl cannot know the nature of his investments and must remain unaware of how they are managed.
Other wealthy members do not have financial portfolios in blind trusts. Their portfolios are so vast that their financial disclosure reports exceed a hundred pages and their holdings overlap with almost every bill they handle.
Sen. John F. Kerry (D-Mass.), who married Teresa Heinz of the ketchup fortune, had the highest value of overlapped trades — between $42 million and $86 million — in companies registered to lobby before him. Kerry said he does not have any conflicts, because he has no control over the assets in his and his wife’s family trusts.
Rep. McCaul, married to Linda Mays, whose fortune traces back to Clear Channel Communications, had the highest number of overlapping trades, totaling between $5 million and $23 million, according to analysis of financial disclosure forms listing his family’s holdings.
Some of those investments were in Thermo Fisher Scientific, which in 2009 had registered to lobby on a food safety bill under the jurisdiction of the Homeland Security Committee. McCaul was a member of that committee. Among other things, the company makes equipment to detect contaminated food.
While the bill was pending, McCaul toured the company’s Austin plant and extolled the technology as “great for food safety and protecting the American people.”
As the bill moved forward, his family bought stock in Thermo Fisher. Trusts for his wife and children bought between $286,000 and $690,000 in nine transactions, the largest being for between $250,000 and $500,000 in November 2010 during final negotiations before the bill passed. The family bought the stock at prices from $33.50 to $44. McCaul’s 2011 financial disclosure showed the family still owned it. The current stock price is a little more than $50.
McCaul said there is no conflict between his legislative duties and his wife’s holdings, because he has no access to her portfolio and he never talks to her about her investment decisions.
“Congressman McCaul . . . is legally precluded from having any involvement or knowledge of specific investment decisions made with regard to securities listed as his wife’s separate property,” said his spokesman, Mike Rosen.
Railroad rules
In 2009, the House Judiciary subcommittee on courts, the Internet and intellectual property discussed the Railroad Antitrust Enforcement Act, aimed at ending rail carriers’ exemptions from federal antitrust laws.
A family trust overseen by Rep. F. James Sensenbrenner Jr. (R-Wis.), a subcommittee member, sold 2,000 shares of CSX after a subcommittee hearing and before the final changes were made to the bill.
The shares generated a $40,000 net profit, records show. The same day, the trust bought $7,700 in Norfolk Southern stock.
The two rail carriers were among 62 companies lobbying on the bill.
Sensenbrenner’s spokeswoman said the trades were initiated by a fund manager who handles the investments for the trust that benefits the lawmaker’s sister.
“Congressman Sensenbrenner’s interaction with the trust is almost nothing,” spokeswoman Amanda Infield said. “He doesn’t benefit from the trust, except for an administrative fee as trustee. He is not a beneficiary, and he doesn’t exercise influence over or give input into the investment decisions. He has to sign off on the decisions, but he hasn’t overridden an investment decision, which is made by JPMorgan Chase.”
Rep. Dave Camp (R-Mich.), a member of the House Ways and Means Committee since 1993, reported making trades in John Deere when the Illinois-based company was registered to lobby on tax and trade legislation before his committee between 2007 and 2010. The biggest single transaction was between $50,000 and $100,000. When the purchase was made in March 2009, Deere stock was $32 a share. The stock now trades at $75 per share.
Camp declined through his spokesman to be interviewed or provide additional information about his trades and how his portfolio is managed.
“All of the Congressman’s financial information are fully disclosed in accordance with the law,” Sage Eastman, a senior adviser to Camp, said in an e-mail. “His stock portfolio is managed by a firm. He does not make decisions about when to buy or sell a stock.”
Deputy graphics director Karen Yourish and researcher Bobbye Pratt contributed to this article.
Monday, June 25, 2012
The Virginia Fracas
I came across this interesting article on the WSJ covering an uprising at the University of Virginia. From what I glean from the article here is that the University President was fired due to not following through with the trustee's plan to reduce costs.
I'm sure that UV is not the only university or college that finds itself in such disarray. With the economic recession and lack of a robust recovery states have slashed funding to it's colleges and universities. According to the WSJ piece University of Virginia funding courtesy of Virginia taxpayers has dropped to $8,300 per student from $15,300 in 2000.
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| Associated Press
University of Virginia's former president Teresa Sullivan in center.
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Three Key Reasons Housing Not Coming Back: Demographics, Student Debt, No Jobs
Below is a post by Mish Shedlock who puts together some very daunting statistics in support of his thesis that housing is not coming back.
I will say that sooner or later for those who can qualify for a mortgage at these historical lows, it may prove better to buy a house vs. rent depending upon your specific situation.
Three Key Reasons Housing Not Coming Back: Demographics, Student Debt, No Jobs
I will say that sooner or later for those who can qualify for a mortgage at these historical lows, it may prove better to buy a house vs. rent depending upon your specific situation.
Three Key Reasons Housing Not Coming Back: Demographics, Student Debt, No Jobs
Consumers Not Ready to Borrow Again
Ben Bernanke is trying like
mad to stimulate credit and lending but to no avail. It's an uphill battle
because of demographics, student debt, and lack of jobs.
Citing falling debt-service needs, some economists think consumers may be ready to go on a borrowing spree. They are badly mistaken.
I agree with Jed Graham on Investor's Business Daily who says falling debt-service needs is an illusion. Graham makes the case in Consumer Credit Impaired By Under-45 Job, Debt Woes.
Graham's analysis is correct. Here are some points from the article that will explain why.
Demographics
The number of full-time workers younger than 45 has fallen by 9 million, or more than one in seven, Labor Department data show.
Student debt has soared to nearly a trillion dollars. About two-thirds of it is held by those under 40.
To Graham's analysis I would add the jobs picture is bleak.
Unemployment insurance has expired for millions: 200,000 Lose Unemployment Benefits This Week, Nearly Half From California
Housing
Let's put it all together and look at the picture from the point of view of housing.
Kids are graduating from college deep in debt with poor job prospects.
Nonetheless, I believe housing is bottoming. I made the case in New American Dream is Renting; Reflections on Renting Houses, Cars, Books, Clothes; Will Rentership Fuel the Next Boom? What About Home Prices?
However, even "if" housing is bottoming, don't expect either housing or the economy to go anywhere fast. Prospects for family formation are fundamentally very weak and overall economic fundamentals are very weak as well.
Citing falling debt-service needs, some economists think consumers may be ready to go on a borrowing spree. They are badly mistaken.
I agree with Jed Graham on Investor's Business Daily who says falling debt-service needs is an illusion. Graham makes the case in Consumer Credit Impaired By Under-45 Job, Debt Woes.
Nearly four years after a borrowing binge gave way to financial crisis, have households slashed enough debt to take on new credit and start spending again?Not Ready to Borrow
Yes, says a growing chorus of economists, with some evidence to back them up. The Federal Reserve's ratio of debt service payments to disposable income is at its lowest level since 1994.
But that traditional measure is a poor guide today, as credit-hungry adults under 45 bear the brunt of the jobs, housing and student loan crises.
Considering where more of the income is coming from (government supports), who's earning a bigger share of wages (baby boomers) and which type of debt has been on the rise (student loans), re-leveraging may be a long way off.
Graham's analysis is correct. Here are some points from the article that will explain why.
Demographics
The number of full-time workers younger than 45 has fallen by 9 million, or more than one in seven, Labor Department data show.
- The number of full-time workers ages 55 and older has climbed by 8.5 million.
- The 35-44 population has shrunk by 4.5 million over the past 12 years.
- The huge baby boomer cohort has aged while Generation X is unusually small.
Student debt has soared to nearly a trillion dollars. About two-thirds of it is held by those under 40.
- Among those age 30-39, 25% have student loan debt, with an average balance of $28,500.
- New York Fed research shows that of 37 million student loan borrowers last fall, only 39% were paying down their balances.
To Graham's analysis I would add the jobs picture is bleak.
Unemployment insurance has expired for millions: 200,000 Lose Unemployment Benefits This Week, Nearly Half From California
- Self-Employment desperation: 100% of U.S. Jobs Added Since 2010 Have Been Self-Employment, Contractor, or Other Jobs Without Unemployment Insurance Benefits
- Last two jobs reports have been dismal: Another Payroll Disaster: Jobs +69,000, Employment Rate +.1 to 8.2%, April Jobs Revised Lower to +77,000; Long-term Unemployment +310,000
- The 4-week moving average of weekly unemployment claims is at the highest rate of the year, at 386,250.
Housing
Let's put it all together and look at the picture from the point of view of housing.
Kids are graduating from college deep in debt with poor job prospects.
- Those with too much debt and too little income are sharing apartments or moving back home, not buying homes and starting families.
- Boomers are looking to downsize, not buy more toys and larger houses.
- Shadow inventory of sellers waiting for higher prices is immense, yet generation X and Generation Y represent small pools of potential buyers
Nonetheless, I believe housing is bottoming. I made the case in New American Dream is Renting; Reflections on Renting Houses, Cars, Books, Clothes; Will Rentership Fuel the Next Boom? What About Home Prices?
However, even "if" housing is bottoming, don't expect either housing or the economy to go anywhere fast. Prospects for family formation are fundamentally very weak and overall economic fundamentals are very weak as well.
John Mauldin's Weekly Newsletter: Daddy’s Home
Here is the link to John Mauldin's weekly newsletter. Below are my highlights although there is a section of his newsletter that covers the European crisis and specifically what Germany is doing which is worth the read.
- So why did the Fed continue Operation Twist? Because the market (that amorphous, omnivorous blob) expected something from the Fed. This summer’s version of Twist and Whisper was about the least they could do.
- This is the economic equivalent of walking into a room full of your anxious children, patting them on the head, and saying “Daddy’s home; everything will be OK now.” It was basically all they could do short of another full-blown quantitative easing, and I believe they think they really need to save the QE psychological bullet for another time, when we may be in even more serious straits. (Which if you buy their rationale is the correct thing to do.)
- I have never been a fan of the phrase “the market is a forward-looking indicator.” What was it telling us the summer of 2007? It was certainly not signaling a recession within a few months. The NYSE index was only 3% off its low and climbing in 2000, and we were already in recession. Did we have a recession in 1998 or 1987 following those bear markets?
- Maybe I don’t have the volume turned up, but I just can’t hear the market telling us anything about the future that we can hang our hats on. Over the shorter term it is very good about giving us clues about current emotional drivers and momentum investing, but for the direction of the economy we need to look elsewhere.
- My last observation about Fed interest-rate policy is that it is punishing those who have worked and saved all their lives and had hoped to retire and be able to clip coupons. Unless you have a large amount of money, you can’t live off the interest income you get on what used to be the standard bond portfolio that was recommended for those who were either retired or close to retirement.
- But low rates punish savers and leave them with less money, so that hurts retirees’ final consumer demand – or that is the view from the cheap seats where I sit. And retiree income and spending is a growing portion of the economy. Hurt that, and it’s a sector big enough to have consequences. I know that economists can argue that the trade-off is positive, but it seems to me we are defrauding a generation or two of hard-working savers. You did what you were supposed to do, and your reward is a ten-year bond at 1.5%. Since you paid off your mortgage a long time ago, the lower rates don’t help you either! So you either cut back or move out the risk curve. While better yields can be had with some serious research and homework, it is not easy.
- It was not just in Wisconsin that voters said Tuesday a week ago that deficits matter. I think those municipal votes are highly indicative of a tectonic change, as voters look to the future of government deficits and start to say “Enough! Stop!” It can’t happen too soon, as our train chugs on toward the debt cliff.
Sunday, June 24, 2012
New Housing Crisis: Not Enough to Buy
There is a common misconception out there regarding the housing crisis which is there are too many homes for sale. Reality Check.....there aren't enough home for sales.
We have talked about this point in previous points and more specially I have personal experience when it comes to this issue. When my wife and I were looking for a new house in Metro Detroit last year we were shocked to find the low level of inventories of houses on the market.
To find a house that was in a good neighborhood, good school district, and didn't need a major makeover was extremely hard to find regardless of the price range. We were finding situations with houses that had multiple offers, houses on the market for days not weeks.
Speaking with one of my realtor contacts last week she had confirmed that he market was even tighter this year than last year. My contacted noted that people were in for a rude awakening given the perception that it was still a buyers market. In some areas bidding wars are back which isn't the headlines you necessarily read about.
So what gives? This situation certainly does not mean that the housing crisis is over, far from it. People are still upside down on their mortgages, people are still in the foreclosure process, but it is the banks who are still upon piles of houses that they aren't ready to release back into the market. If banks were to flood the market with inventory that would have to take the hits as actual loses which aren't showing up on their balance sheets currently. It's the whole mark to market conundrum.
Diana Olick Real Estate Reporter for CNBC filed this report covering this very topic.
We have talked about this point in previous points and more specially I have personal experience when it comes to this issue. When my wife and I were looking for a new house in Metro Detroit last year we were shocked to find the low level of inventories of houses on the market.
To find a house that was in a good neighborhood, good school district, and didn't need a major makeover was extremely hard to find regardless of the price range. We were finding situations with houses that had multiple offers, houses on the market for days not weeks.
Speaking with one of my realtor contacts last week she had confirmed that he market was even tighter this year than last year. My contacted noted that people were in for a rude awakening given the perception that it was still a buyers market. In some areas bidding wars are back which isn't the headlines you necessarily read about.
So what gives? This situation certainly does not mean that the housing crisis is over, far from it. People are still upside down on their mortgages, people are still in the foreclosure process, but it is the banks who are still upon piles of houses that they aren't ready to release back into the market. If banks were to flood the market with inventory that would have to take the hits as actual loses which aren't showing up on their balance sheets currently. It's the whole mark to market conundrum.
Diana Olick Real Estate Reporter for CNBC filed this report covering this very topic.
- There are currently 2.49 million for sale, a drop of 20 percent from a year ago. To make matters worse, supply is lowest on the low end, where so much of the investor activity has been over the past several years.
- The median price of an existing home, as reported by the Realtors, rose 7.9 percent in May annually, but NAR chief economist Lawrence Yun was quick to point out that this does not mean the average home owner gained that much equity; it is simply a big shift in the type of home that is selling. Sales of homes priced under $100,000 dropped two percent from a year ago, while sales of homes priced between $250,000 and $500,000 shot up nearly 29 percent (though still at low volumes historically). Again, this is due to lack of supply on the low end, specifically distressed homes.
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| NicK White | Cultura | Getty Images |
- Fear is clearly a factor, as is negative equity. Between 11 and 12 million borrowers still owe more on their homes than they can sell them for, and many more borrowers in a near negative equity position; that means they can’t get enough equity out of their homes to cover the Realtor fees and the moving costs, nor to put down on a new home. That’s why the market is ripe for first time buyers, but they are not stepping up either, at just 34 percent of purchases. In a normal market, they would make up 45 percent. That, again, is part fear, but largely tight credit.
Saturday, June 23, 2012
How Eli Broad Works 24/7--And Still Gets 8 Hours Of Sleep Every Night
Lessons from Eli Broad, the philanthropist and founder of KB Home. Broad featured his expertise in this Fast Company piece.
- I try to be in control of all of my time--from the first hours after I wake, to the slower hours before bed, to all those little minutes that get eaten up by idle chatter during meetings. Being stingy with your time is the key to working 24/7 but still getting 8 hours of sleep, as I do almost every night. The best way to take control of your time is to know what you must do.
- I also know I’m happiest when my work and my life feel like one and the same, not like two opposites to be balanced. I am a workaholic because I consider everything I do part of my work. It’s one reason I put our family name on buildings. I’m proud of what I do in the office and outside it.
- Anyone in any job can narrow his or her task list to the one that really matters. That’s the job that should get your greatest--in fact, undivided--attention. It’s the decision you want to make at your most alert moments. It’s the task that earns you your salary, pays for your free time, determines the success of your company, and--when you do it right--makes you feel the most capable and proud.
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- Without adequate rest, it’s hard to take a disciplined approach to using your time or to setting priorities, which is what makes effective use of your time possible.
- Prioritizing isn’t just about making a list and checking off the boxes. It is something you should be doing constantly. Circumstances change throughout the day--emergency meetings are called, colleagues dream up new initiatives, a sudden inspiration comes to you at the coffeemaker--and your priorities can’t stay rigid. Be flexible but also keep in mind what’s most important.
- Find the best people to whom you can delegate, and know their strengths and weaknesses. If you think you can do it better, delegate anyway and try as hard as you can to close that gap by giving your colleague or employee the right feedback. Then recognize and accept that just because someone does something a little differently than you would, that doesn’t mean it’s wrong. What counts is that your goals get accomplished at a sufficient level of quality.
- As much as I value my time, I value everyone else’s too. A lot of executives act like their time is worth more than anyone else’s. But I always respect an employee who guards his or her time, even from me. I start meetings punctually, and if I don’t, I apologize. When I say, “Let’s move on”--and you should try saying it a lot more--I’m protecting my time and yours.
Week 25 Performance.....Every Week is a Roller Coaster
We knew it was going to be a volatile week with the Greek election results affecting Monday's trading action and then the FOMC release on Wednesday which extended "Operation Twist". However what most did not expect was the further erosion of US economic data.
Markets reacted favorably to the Greek election results as the pro-bailout candidate was elected and began forming a new government. However that good news did not last long as the Spanish bond auctions that were taking place ended up sending Spanish yields above 7%. The 7% yield is seen as a tipping point, a threshold if you will that Spain cannot maintain.
Mid week results were expected as usual from the Fed as they almost always telegraph what they will be doing. It was no surprise that "Operation Twist" was extended although the market which opened down rebounded to flat levels when the announcement came out. The key with "Operation Twist" is that it doesn't inject the markets with any new stimulus which the markets do not like.
Jeff Lacker president of the Federal Reserve Bank of Richmond dissented from the Fed’s $267 billion extension of its Operation Twist program believing it would spur inflation and not significantly help the economy. “I do not believe that further monetary stimulus would make a substantial difference for economic growth and employment without increasing inflation by more than would be desirable,” Lacker said in a statement today from the Richmond Fed. Lacker went onto say, “While the outlook for economic growth has clearly weakened in recent weeks, the impediments to stronger growth appear to be beyond the capacity of monetary policy to offset.”
What really sent the markets spiraling was on Thursday when a host of US economic data came out showing further deterioration in the economy. You'll want to review the post on Friday via Mish Shedlock 12 Reasons US Recession Has Arrived (Or Will Shortly). See also Drawing meaning from the Fed's fcast as the Fed lowered it's forecast for GDP and Inflation but increased the forecasted Unemployment rate.
It was a quiet week in the DWCM Fund. We have two option positions expire but other than that we were not active in the markets again this week. If you recall we made some major moves last week reducing out tech holdings in order to build our cash reserve back up. In additional tech stocks looked to be breaking down.
The Fund was basically flat for the week but that was good enough to beat the DJIA and S&P 500 which finished lower. Only the NASDAQ and Russell 2000 finished in the black.
The Week Ahead
This week boasts a plethora of economic data releases. If last week was any indication as to what to expect from the data it could be another rough one. I would expect as is custom over the past three summers that the equity markets will continue to be turbulent. Both with the ability to spike up a couple percentage points and down like we saw this week.
The DJIA has already had 7 trading days with 100 points moves and a few just slightly below that mark in the month of June. There have been 3 trading days with moves above 200 within the month.
Have a Great Week!
Markets reacted favorably to the Greek election results as the pro-bailout candidate was elected and began forming a new government. However that good news did not last long as the Spanish bond auctions that were taking place ended up sending Spanish yields above 7%. The 7% yield is seen as a tipping point, a threshold if you will that Spain cannot maintain.
Mid week results were expected as usual from the Fed as they almost always telegraph what they will be doing. It was no surprise that "Operation Twist" was extended although the market which opened down rebounded to flat levels when the announcement came out. The key with "Operation Twist" is that it doesn't inject the markets with any new stimulus which the markets do not like.
Jeff Lacker president of the Federal Reserve Bank of Richmond dissented from the Fed’s $267 billion extension of its Operation Twist program believing it would spur inflation and not significantly help the economy. “I do not believe that further monetary stimulus would make a substantial difference for economic growth and employment without increasing inflation by more than would be desirable,” Lacker said in a statement today from the Richmond Fed. Lacker went onto say, “While the outlook for economic growth has clearly weakened in recent weeks, the impediments to stronger growth appear to be beyond the capacity of monetary policy to offset.”
What really sent the markets spiraling was on Thursday when a host of US economic data came out showing further deterioration in the economy. You'll want to review the post on Friday via Mish Shedlock 12 Reasons US Recession Has Arrived (Or Will Shortly). See also Drawing meaning from the Fed's fcast as the Fed lowered it's forecast for GDP and Inflation but increased the forecasted Unemployment rate.
It was a quiet week in the DWCM Fund. We have two option positions expire but other than that we were not active in the markets again this week. If you recall we made some major moves last week reducing out tech holdings in order to build our cash reserve back up. In additional tech stocks looked to be breaking down.
The Fund was basically flat for the week but that was good enough to beat the DJIA and S&P 500 which finished lower. Only the NASDAQ and Russell 2000 finished in the black.
The Week Ahead
This week boasts a plethora of economic data releases. If last week was any indication as to what to expect from the data it could be another rough one. I would expect as is custom over the past three summers that the equity markets will continue to be turbulent. Both with the ability to spike up a couple percentage points and down like we saw this week.
The DJIA has already had 7 trading days with 100 points moves and a few just slightly below that mark in the month of June. There have been 3 trading days with moves above 200 within the month.
- Mon - New Home Sales, Dallas Fed Mfg Survey
- Tue - Redbook, S&P Case-Shiller HPI, Consumer Confidence, Richmond Fed Manufacturing , State Street Investor Confidence Index
- Wed - Durable Goods Orders, Pending Home Sales Index
- Thu - GDP, Jobless Claims, Bloomberg Consumer Comfort Index, Kansas City Fed Manufacturing Index
- Fri - Personal Income and Outlays, Chicago PMI, Consumer Sentiment
DreamWorks Capital Management
I wanted to thank everyone who attended out first finance seminar, 401k and 403b Plans: You have Options this past Monday at the The Community House located in Birmingham, MI. We had a very interactive group and we appreciate everyone's support. Our next seminar will be on September 18th and the focus will be Balancing Your Changing Investment Needs: Emergency Fund, Investments, Retirement, Education, and Philanthropy. More detail to come but we certainly hope that you will be able to join us.
Friday, June 22, 2012
How to Treat Life Like An Experiment
Life as an experiment? Someone has probably written extensively on this topic or question but no one probably addresses a topic such as this like James Altucher.
Here is the link to his latest post. I usually copy it into word and re-format to make it easier to print which you can get here.
Below are the benefits that Altucher finds in this experiment.
1) Improve the world
2) Curiosity
3) Self-improve
4) Detachment
5) Share the Results
6) Focus
7) You can Change Contradictory Beliefs
8) Going Deeper
9) Keeps me Grounded
10) Mystery
Here is the link to his latest post. I usually copy it into word and re-format to make it easier to print which you can get here.
Below are the benefits that Altucher finds in this experiment.
1) Improve the world
2) Curiosity
3) Self-improve
4) Detachment
5) Share the Results
6) Focus
7) You can Change Contradictory Beliefs
8) Going Deeper
9) Keeps me Grounded
10) Mystery
12 Reasons US Recession Has Arrived (Or Will Shortly)
Below is a post this morning from Mish Shedlcok a finance expert that I tend to follow on a daily basis. I believe that articles and posts such as these could start seeing an increase in volume. What I like about Mish's points are how well they are laid out with much analysis and thought behind each call or point.
The more data that we receive the more it seems to be flashing lights of caution. Like yesterday when you receive a string of bad news equity markets could be down 2.5% plus. But on the flip side you could also get a snap back rally.
In any case it forces you to keep a closer eye on things in case the trend lines break which leads to greater losses. Some of these are recent lessons learned from the great recession that started in 2008 but signs could be seen earlier if you were watching.
This doesn't mean that you need to be completely out of the market. What we suggest is to have some clearly defined entry and exit points around position that you either want to be in for the long-term and position you are trying to liquidate in the short-term.
Remember one of the issues today is that cash has no real safe place to go that will return any yield. You need to weigh your needs with your ability or desire to maintain capital. You can partially thank the Fed and their easing monetary policies that have arbitrarily forced rates to historical lows
Full link here to Mish's post
I am amused by the Shadow Weekly
Leading Index Project which claims the probability of recession
is 31%. I think it is much higher.
When the NBER, the official arbiter of recessions finally backdates the recession, May or June of 2012 appear to be likely months. Let's take a look at why.
US Manufacturing PMI
Markit reports PMI signals weakest manufacturing expansion in 11 months
Key points:
When the NBER, the official arbiter of recessions finally backdates the recession, May or June of 2012 appear to be likely months. Let's take a look at why.
US Manufacturing PMI
Markit reports PMI signals weakest manufacturing expansion in 11 months
Key points:
§ PMI lowest since July
2011, suggesting slower rate of manufacturing expansion
§ Rate of output growth
broadly unchanged
§ New orders rise at
weakest pace in four months
§ Input costs fall for
first time in three years
Durable Goods Orders Plunge
Those numbers do not look good but they are hardly disastrous. Here are some numbers that are disastrous.
Philly Fed Survey
For the second consecutive month the Philly Fed Survey has been solidly in the red.
click on chart for sharper image
Those numbers are nothing short of a disaster.
The survey’s broadest measure of manufacturing conditions, the
diffusion index of current activity, fell from a reading of ‐5.8 in May to ‐16.6, its second consecutive negative reading. Nearly 40 percent
of the firms reported
declines in activity this month, exceeding the 22 percent that reported
increases in activity.
Indexes for new orders and shipments also showed notable declines, falling 18 and 20 points, respectively. Indexes for current unfilled orders and delivery times both registered negative readings again this month, suggesting lower levels of unfilled orders and faster deliveries.
Firms’ responses suggest steady employment this month but shorter hours. The percentage of firms reporting higher employment (14 percent) edged out the percentage reporting lower employment (12 percent). The current employment index increased 3 points this month. Firms indicated fewer hours worked this month: the average workweek index decreased 14 points and posted its third consecutive negative reading.
Indexes for new orders and shipments also showed notable declines, falling 18 and 20 points, respectively. Indexes for current unfilled orders and delivery times both registered negative readings again this month, suggesting lower levels of unfilled orders and faster deliveries.
Firms’ responses suggest steady employment this month but shorter hours. The percentage of firms reporting higher employment (14 percent) edged out the percentage reporting lower employment (12 percent). The current employment index increased 3 points this month. Firms indicated fewer hours worked this month: the average workweek index decreased 14 points and posted its third consecutive negative reading.
Misguided Optimism
click on chart for sharper image
Note the misguided optimism about six months from now. It's not going to happen.
Why?
1. Europe is a disaster.
2. US manufacturing is
cooling rapidly
3. China is cooling
rapidly: China Manufacturing PMI 7-Month Low, Sharpest Decline in New Export
Orders Since March 2009
4. US Monetary policy is at
best useless, but more likely net harmful, especially to those on fixed income.
5. First year presidential
politics are frequently recessionary
6. US still needs fiscal
tightening
7. Unemployment insurance
has expired for millions: 200,000 Lose Unemployment Benefits This Week, Nearly Half From California
8. Self-Employment
desperation: 100% of U.S. Jobs Added Since 2010 Have Been Self-Employment, Contractor,
or Other Jobs Without Unemployment Insurance Benefits
9. Last two jobs reports
have been dismal: Another Payroll Disaster: Jobs +69,000, Employment Rate +.1 to 8.2%,
April Jobs Revised Lower to +77,000; Long-term Unemployment +310,000
10. The 4-week moving
average of weekly unemployment claims is at the highest rate of the year, at
386,250.
11. New home sales cannot
gain significant traction: New Home Sales Hype vs. Reality
12. Tax Armageddon
Deficit spending has carried this "recovery" further than I thought it would, but the party is now over.
It will be difficult if not impossible to overcome the above set of circumstances regardless of what anyone feels about economic back-tested recession probabilities.
Taxmageddon
Please consider Taxmageddon
The Tax Foundation reports that because of higher federal income
and corporate tax collections, Tax Freedom Day came four days later this year
than last. And the bad news is that unless Washington takes action, it will
take working Americans 11 more days to meet next year’s tax burden.
That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend.
That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend.
Taxes Will Go Through the Roof
PolicyMic reports When the Payroll Tax Holiday Ends in 2013, Taxes Will Go Through the Roof
PolicyMic reports When the Payroll Tax Holiday Ends in 2013, Taxes Will Go Through the Roof
Without significant tax code changes, in 2013, America is
scheduled to get hit with what would be the largest tax increase in our
history.
Not only will the $1,000 per year tax holiday for a $50,000 income household disappear, come 2013 all Americans will see the tax on their first $8,700 of income jump from a 10% rate to 15% rate.
That hike will cost the majority of filers an additional $435.
For those eligible for child care tax credits that deduction will drop from $1,000 to $500. The marriage penalty will roar back into effect. The AMT, alternative minimum tax, will finally kick in.
Roll those changes up and a family filing as married with two children making $50,000, will see their taxes increase by basically $2,700.
Regardless
of whether or not you feel taxes need to be raised, a big set of tax hikes is
scheduled to happen.Not only will the $1,000 per year tax holiday for a $50,000 income household disappear, come 2013 all Americans will see the tax on their first $8,700 of income jump from a 10% rate to 15% rate.
That hike will cost the majority of filers an additional $435.
For those eligible for child care tax credits that deduction will drop from $1,000 to $500. The marriage penalty will roar back into effect. The AMT, alternative minimum tax, will finally kick in.
Roll those changes up and a family filing as married with two children making $50,000, will see their taxes increase by basically $2,700.
To be sure, some of those hikes will be undone in compromises, but many if not most will sneak through.
Who is to blame for Taxmageddon?
Republican are to blame. They accepted this silly deal instead of a far better one that Obama would actually have signed.
But No! Republicans insisted on no tax hikes at all in 2012, putting everything off until after the election, believing Romney would win in a cake-walk.
However, if President Obama wins, certainly not at all an unlikely possibility, he is going to drive a much harder bargain this go around.
Regardless of tax consequences, the US is headed for recession, if not already in one. 2013 rates to be a disaster regardless who wins.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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