The Big Picture |
- The American People are the Big Losers In The Cliff Deal
- Chris Christie Goes Postal on GOP Leaders
- People to Ignore in 2013
- 10 Mid-Week PM Reads
- Details of the New Fiscal Deal
- Long Interest Rates, 1790 to Present
- House passes Fiscal Cliff bill
- 10 Welcome Back AM Reads
- 2012 Year in Review
- Planetary Nebula NGC 5189
- Keep Investing Simple
- Optimal Oil Production and the World Supply of Oil
| The American People are the Big Losers In The Cliff Deal Posted: 02 Jan 2013 10:30 PM PST Bipartisan Hosing of the American PeopleThe "fiscal cliff" deal will raise taxes for 77% of the American public. It will add $4 trillion dollars to the deficit over the next 10 years. It will create a drag on the economy equal to 1% of the grodd domestic product. It creates uncertainty in the following areas:
Blackrock's Larry Fink is correct when he says:
Fortunately, though, the deal gives Puerto Rican rum makers a tax subsidy. History repeats … The entire "fiscal cliff" is a ruse to fleece the people. Once again, the government has pimped us out. |
| Chris Christie Goes Postal on GOP Leaders Posted: 02 Jan 2013 06:45 PM PST |
| Posted: 02 Jan 2013 05:05 PM PST Each year, David Weidner of MarketWatch puts out a list of folks in finance that you should pay no attention to. This year’s list is out, and its a doozy:
* Bair was on his Do Not ignore list. (2012′s list is after the jump.) Who did he miss this year?
Previously: Source:
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| Posted: 02 Jan 2013 01:30 PM PST My afternoon train reads:
What are you reading?
Initial public offerings |
| Details of the New Fiscal Deal Posted: 02 Jan 2013 11:30 AM PST |
| Long Interest Rates, 1790 to Present Posted: 02 Jan 2013 09:00 AM PST click for larger chart
The great irony of the fiscal cliff settlement is that US borrowing rates are as cheap as they have been throughout the History of the US. Now would be the least expensive time in most of your lifetimes to:
At some point int he future, your kids are going to ask — “Wait, you could have upgraded _______ and it only would have cost you 2.5% in borrowing costs?!?”
~~~ Shorter term rate chart after the jump
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| House passes Fiscal Cliff bill Posted: 02 Jan 2013 08:05 AM PST Japan's population continues to decline – it fell by 212k last year, the largest decline on record and the 6th consecutive annual decline. The Japanese population is expected to decline sharply in coming years, making a recovery of the country that much harder, especially as the population is also ageing materially; Taiwanese manufacturing PMI came in at 50.6, the first time it has been above 50.0 in 7 months. I watch Taiwanese data as Taiwan is a particularly good indicator of global demand. Exports to both China and the US rose; Chinese December HSBC manufacturing PMI came in at 51.5 M/M, higher than the 50.9 expected and 50.5 in November and the strongest since May 2011. The official December PMI data came in at 50.6 M/M , in line with November’s number, though marginally below expectations of 51.0. Generally, the official data, which reflects the larger SOE's rather than the smaller/medium sized private businesses, comes in better than the HSBC data. Exports remained weak, with much of the improvement attributable to increased domestic activity. The increased government spending in Q4 is being reflected in the better PMI numbers, as is the improvement in the residential housing market. I remain positive on China for the time being. The Shanghai Composite has rallied by over 16% in December and closed just over 3.0% higher for 2012, its 1st rise since 2009; The FT reports that land prices are soaring in Beijing. The recovery in prices, which began in Q4 last year, will enable the provinces to increase revenues, as land sales are a material element of their overall revenue. Prices have risen as the authorities have limited sales of land, a practice that could create another bubble, though I expect that the experience gained by developers (and banks) over the last few years will make them more cautious; Indian December PMI rose to 54.7 in December M/M, from 53.7 in November, the fastest rate in 6 months; German December flash CPI increased to +2.1% Y/Y (+0.9% M/M), higher than the +1.9% expected and +1.9% in November. A bit of a disappointment as inflation was expected to decline, which would provide the ECB more room to cut interest rates. Given the somewhat higher inflation, I do not expect the ECB to cut rates imminently; EZ final December manufacturing PMI's fell to 46.1, from 46.2 in November, slightly below the initial estimate of 46.3. The data is further confirmation that the EZ economy will decline in Q4, by around -0.3%. Spain continued to decline with PMI's coming in at 44.6, as opposed to 45.3 in November. Italy, however, posted better numbers with December PMI coming in at 46.7, higher than the 45.3 expected and 45.1 previously. However, Italian PMI's have been below 50.0 for 17 consecutive months. The final German December PMI was marginally weaker than initial estimates, coming in at 46.0 M/M, as opposed to 46.3 expected and 46.3 in November. French December PMI came in at 44.6, in line with the flash estimates; UK December PMI came in at 51.4, materially higher than the 49.1 expected and 49.2 in November and the highest since September 2011. Once again, UK data is all over the place, but I continue to believe that official data prepared by the ONS is consistently more bearish than is the case. However, the better data suggests that UK GDP could avoid a contraction in Q4 last year, though manufacturing represents just a small fraction of the UK's GDP. Sterling rose to a 16 month high and is currently trading at US$1.63. I am positive of UK equity markets this year, given its weightings in financials and materials in particular, both sectors which I believe will outperform; The US House of Representatives finally passed the legislation which has averted the fiscal cliff, though decisions on US$110 of automatic spending cuts and raising the debt ceiling were postponed for 2 months. The bill was passed by a majority of 257 to 167, with Democrats overwhelmingly in favour and a majority of Republicans opposed, as was expected. The opposition by Republicans represents a setback for the House Speaker Mr Boehner, who seeks re election tomorrow. Interestingly, the influential Republican Eric Cantor and the Republican Chief Whip voted against the bill, as did Paul Ryan. There will be no respite however. The politicking now moves on to the measures to cut spending and raising the borrowing limits, both likely to prove even more contentious issues. These issues need to be resolved in the next 2 months, as the flexibility of the US to take "extraordinary measures" to meet expenditures comes to an end by early March at the latest; US final December PMI came in at 54.0 M/M, higher than the 53.6 expected, though lower than the 54.2 in November and the highest reading since May last year. Importantly, the new orders and employment components came in marginally higher than before and the highest since April last year; US December ISM manufacturing came in at 50.7 M/M, slightly higher than the expected 50.5 and 49.5 previously. The employment component came in stronger at 52.7 M/M, higher than the 48.4 in November and the highest since September last year. New orders were in line with expectations. However, prices paid rose materially to 55.5 M/M, as opposed to expectations of 50.5 and 49.5 in November; US November construction spending declined by -0.3% M/M, worse than the +0.6% expected and the revised increase of +0.7% in October. The numbers were probably impacted by Hurricane Sandy; Canadian December manufacturing PMI came in at 50.4 M/M, in line with expectations and matches a 2 year low; HSBC Brazilian manufacturing PMI came in at 51.1 M/M, as opposed to 52.2 in November. I continue to be bearish on Brazil, preferring China and India of the BRIC countries; Outlook Asian markets opened the year materially higher, following the passage of the legislation relating to the fiscal cliff by the House last night. European stocks have followed and are sharply higher, with the DAX and the FTSE up over 2.0%. US markets have opened some 2.0% higher, with the Nasdaq up +2.6%. Financials and the base metal miners are the outperformers today and I continue to be positive on both sectors. Iron ore prices have risen to a 10 month high and are up over 65% over the last 4 months. The market expects China to import a record amount of iron ore this year. However, the rise in prices seems overdone and I would not be surprised by a pull back shortly. Some consolidation should be expected over the next week or so. In addition, uncertainty over the political bickering in respect of the spending cuts and raising the debt ceiling (far more contentious issues) above the US$16.4tr ceiling will weigh on markets in coming weeks. Whilst I remain positive on equity markets this year, I will look to take some profits, as markets may well react negatively to the (likely particularly heated) debate in the US on the spending/raising the debt limit issues. The Euro is rising against the US$ – currently US$1.3255, with the Yen weaker against the US$ at Yen 87.17. The A$ is materially higher against the US$ – currently just below US$1.0520. Gold is trading around US$1685, with February Brent up sharply at US$112.44.
May I just take this opportunity of wishing you a very happy, prosperous and fun New Year.
Kiron Sarkar
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| Posted: 02 Jan 2013 07:00 AM PST My morning reads:
What are you reading?
In uncertain 2012, stocks saw double-digit gains |
| Posted: 02 Jan 2013 05:30 AM PST |
| Posted: 02 Jan 2013 05:00 AM PST
Source: Buzzfeed |
| Posted: 02 Jan 2013 04:00 AM PST Its the start of the new year, and most of you have been thinking about some grandiose plan for self-improvement. Quit smoking, lose weight, clean out the basement, exercise, spend more time with family and friends, floss. May I suggest taking control of your portfolio as a worthwhile goal this year? I have been thinking about this for awhile now. Last year (heh), I read a quote I really liked from Tadas Viskanta of Abnormal Returns. He was discussing the disadvantages of complexity when creating an investment plan:
I am always mindful that brilliant, complex strategies more often than not fail. Why? A simple inability of the Humans running them to stay with them whenever there are rising fear levels (typically manifested as higher volatility and occasional drawdowns). Let me state this more simply: Any strategy that fails to recognize the psychological foibles and quirks of its users has a much higher probability of failure than one that anticipates and adjusts for that psychology. Toward that end, as you make your financial plans for the new year, I would suggest that you keep in mind these simple ideas for your portfolio:
I am curious as to your comments or thoughts on this. If there is interest, I may expand it into a full column. |
| Optimal Oil Production and the World Supply of Oil Posted: 02 Jan 2013 03:00 AM PST |
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