April 27, 2012
Comment on Model Portfolio activity
was no activity again this week. We haven’t made a trade since the last week of
February and doubt that we will in the near future without a 10% correction or
some major news that turns us bullish.
The S&P 500 and DJIA regained
highs seen in February as economic numbers were muted but Apple and many other
major companies exceeded earnings/revenue expectations.
Hoover lives on:
GDP growth is the first
quarter was a respectable 2.2%. It would have been much better but:
government consumption expenditures and gross investment decreased 5.6 percent
quarter, compared with a decrease of 6.9 percent in the fourth.
defense decreased 8.1 percent, compared with a decrease of 12.1 percent.
decreased 0.6 percent, in contrast to an increase of 4.5 percent.
and local government consumption expenditures and gross investment decreased
1.2 percent, compared with a decrease of 2.2 percent.
Britain has slipped into
recession as decreased government spending and lower taxes fail to stimulate
the economy. Duh!!
Unemployment in Spain has
risen to 24.4% in the first quarter of this year. It's an increase on 22.9% in
the last three months of 2011.
(Reuters) - German Chancellor Angela Merkel has ruled out any
renegotiation of the fiscal pact on budget discipline agreed by 25 European
Union governments and rejected criticism that the bloc was not focusing on
April 20, 2012
Comment on Model Portfolio activity
did nothing this week. Below is Sheila Bair’s (former Chairperson of
the FDIC: bio http://en.wikipedia.org/wiki/Sheila_Bair
) tongue in cheek with many grains of salt solution to the economic crisis.
Fix income inequality with
$10 million loans for everyone!
Bair, Published: April 13
Are you concerned about
growing income inequality in America? Are you resentful of all that wealth
concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal
that involves just a small adjustment in the Federal Reserve’s easy monetary
policy. Best of all, it will mean that none of us have to work for a living
For several years now, the Fed
has been making money available to the financial sector at near-zero interest
rates. Big banks and hedge funds, among others, have taken this cheap money and
invested it in securities with high yields. This type of profit-making, called
the “carry trade,” has been enormously profitable for them. So why not let everyone
Under my plan, each American
household could borrow $10 million from the Fed at zero interest. The more
conservative among us can take that money and buy 10-year Treasury bonds. At
the current 2 percent annual interest rate, we can pocket a nice $200,000 a
year to live on. The more adventuresome can buy 10-year Greek debt at 21
percent, for an annual income of $2.1 million. Or if Greece is a little too
risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a
year. (No sense in getting greedy.)
Think of what we can do with
all that money. We can pay off our underwater mortgages and replenish our
retirement accounts without spending one day schlepping into the office. With a
few quick keystrokes, we’ll be golden for the next 10 years.
Of course, we will have to
persuade Congress to pass a law authorizing all this Fed lending, but that
shouldn’t be hard. Congress is really good at spending money, so long as
lawmakers don’t have to come up with a way to pay for it. Just look at the way
the Democrats agreed to extend the Bush tax cuts
if the Republicans agreed to cut Social Security taxes and extend unemployment
benefits. Who says bipartisanship is dead?
And while that deal blew
bigger holes in the deficit, my proposal won’t cost taxpayers anything because
the Fed is just going to print the money. All we need is about $1,200 trillion,
or $10 million for 120 million households. We will all cross our hearts and
promise to pay the money back in full after 10 years so the Fed won’t lose any
dough. It can hold our Portuguese debt as collateral just to make sure.
Because we will be making
money in basically the same way as hedge fund managers, we should have to pay
only 15 percent in taxes, just like they do. And since we will be earning money
through investments, not work, we won’t have to pay Social Security taxes or
Medicare premiums. That means no more money will go into these programs, but so
what? No one will need them anymore, with all the cash we’ll be raking in
thanks to our cheap loans from the Fed.
Come to think of it, by
getting rid of work, we can eliminate a lot of government programs. For
instance, who needs unemployment benefits and job retraining when everyone has
joined the investor class? And forget the trade deficit. Heck, we want those
foreign workers to keep providing us with goods and services.
We can stop worrying about
education, too. Who needs to understand the value of pi or the history of
civilization when all you have to do to make a living is order up a few trades?
Let the kids stay home with us. They can play video games while we pop bonbons
and watch the soaps and talk shows. The liberals will love this plan because it
reduces income inequality; the conservatives will love it because it promotes
I’m really excited! This is
the best American financial innovation since liar loans and pick-a-payment
mortgages. I can’t wait to get my super PAC started to help candidates who
support this important cause. I think I will call my proposal the “Get Rid of
Employment and Education Directive.”
Some may worry about inflation
and long-term stability under my proposal. I say they lack faith in our
country. So what if it cost 50 billion marks to mail a letter when the German
central bank tried printing money to pay idle workers in 1923?
That couldn’t happen here.
This is America. Why should hedge funds and big financial institutions get all
Look out 1 percent, here we
April 13, 2012
Comment on Model Portfolio activity
are a process and we are of the opinion that the process has begun. The sell
off early in the week was a reaction to the disappointing Employment Report of
last Friday. FED talk led to rallies on Wednesday and a big bump on Thursday.
Friday the 13th was a wash with China growth numbers a bit less that the
whisper number and European financial problems again on traders’ minds.
Austerity in the UK and Spain and Italy and Portugal is not going to solve any
U.S. economy is slowly recovering, autos are selling but auto stocks lag, and
traders are enamored of concept stocks where P/E doesn’t matter. We remain on
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