Is There Reason for Optimism after the Fiscal Cliff? – Published in Noozhawk on Monday, December 17, 2012

For weeks, most financial pundits, including myself, have been writing about the perils of the fiscal cliff — the expiration of the Bush-era tax cuts and the implementation of significant spending cuts set to go into effect Jan. 1. The combination of tax increases and spending cuts, worth about $800 billion if implemented, is expected to drive the U.S. economy back into recession early next year. Congress and President Barack Obama continue to grapple…

Politicians May Purposefully Push Us Over The Fiscal Cliff

I think all of us have been operating under the logical assumption that politicians want to do the right thing, meaning what is best for the country and our economy.  But the more I think about it, and the more I read about the responses from both democrats and republicans, the more it seems that they may want to have us go over the fiscal cliff.  My reasoning is this:…

Fiscal Cliff Concerns Push Companies to Accelerate Dividends

Nearly 200 companies have announced either special dividends or accelerated dividends – moving dividends that would have been paid in 2013 to 2012 so far in the fourth quarter.  The threat of higher tax rates on dividends (as well as on capital gains and ordinary income) is scaring the hell out of consumers and business owners/management.   Consumer sentiment, as measured by Reuters, plunged to 74.5 in early December, the…

Rock and a Hard Place

Congress and the President are really between a rock and a hard place with the fiscal cliff.  Either they do nothing, and the tax increases and spending cuts go into effect, and the economy tanks; they vote for something that avoids those tax increases and spending cuts, but then the national debt and budget deficit continue to spin out of control; or they vote for something that lets taxes go…

Forget the Fiscal Cliff, What about the Debt Ceiling — Again? – Published in Noozhawk on Monday, November 26,2012

Despite the impending doom of the fiscal cliff (and we can’t really forget about it), there is a potentially more serious problem Congress and President Barack Obama will be forced to address by February, if not before: the debt ceiling. If the previous debates and the resulting gridlock and government shutdown that we experienced are any indication of what we can expect, wrangling over raising the debt ceiling again promises to be contentious. Over…

Dow Theory, the Fiscal Cliff, and the Limits of Unlimited: Three Reasons for Investors to be Cautious – Published in Noozhawk on Monday, September 24, 2012

The recent rally from the lows set in early June, after the 11% correction we experienced from the April highs, has provided a 16.5% return for the S&P 500.  All three major indexes—The Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite—have achieve multi-year highs.  However, there are key reasons to believe that this rally may be coming to an end shortly. Dow Theory Dow Theory is based…

The ESM (European Stability Mechanism) is a game of musical chairs

The ESM, or European Stability Mechanism, is a fund proposed by the ECB and member countries of the EU (some of which are coming along kicking and screaming, including Germany, the biggest contributor) to stabilize the financial system and economies of EU countries.  The fund has a proposed value of 700 billion euros, with each of the 17 full member countries providing their proportionate contributions, based on GDP.  For example,…

Sell Sell Sell!!!

The Fed announced today a new round of quantitative easing – QE3.  Stocks are rallying today, with the Dow up over 200 points.  This is the natural reaction to this news for the short-term, but the longer-term reality is that the Fed is borrowing this money, which will contribute even more to our national debt.  The previous two rounds of QE have contributed $2 trillion to out $12 trillion national…

EU Buckles, but it will be a tough sell for Germany

EU leaders at a summit in Brussels agreed that euro area rescue funds could be used to stabilize markets (read bail-out countries) without forcing these countries that comply with EU budget rules to adopt extra austerity measures or economic reforms.  It was also agreed that a single supervisory body for euro zone banks, housed under the European Central Bank, would be created by year’s end—much faster than previously discussed.  In essence,…