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Sorry, But The Republican Arguments Against A “Millionaire’s Tax” Are Just Preposterous

Courtesy of Henry Blodget of The Business Insider

The Republicans have had 12 hours to digest the news that President Obama plans to propose a "Millionaire’s tax" on annual incomes over $1 million.

I’ll say anything to suck up to rich people.

Image: AP Photo/Carolyn Kaster

As expected, they’re freaking out.

And if they had a good argument as to why such a tax was a terrible idea, we’d be happy to say so. But so far anyway, they don’t.

Obviously, no one likes higher taxes. And it’s no surprise that the potential target of higher taxes will squawk in protest as soon as the idea is proposed. But if the country is to begin to find a way out of its massive debt-and-deficit problem, it’s important to separate the self-interested squawking from actual logic.

The Republic arguments against Obama’s millionaire’s tax boil down to the following:

  • Raising taxes on millionaires will kill their ambition and discourage them from working
  • Raising taxes on millionaires will punish successful people for being successful
  • Raising taxes is always a terrible idea--the problem is spending
  • Taxes are a form of theft: The government has no right to take our money away
  • Raising taxes in a weak economy will further weaken the economy

Of these reasons, only the last one is valid. Raising taxes in a weak economy might, in fact, further weaken the economy (or the private sector, anyway). This weakening effect will certainly be less than it would if one raised taxes on the middle class, but it still could weaken the economy. And that’s why it’s important to consider the tax carefully and phase it in over time.

Just admit it: He’s right on this one.

The rest of the Republican counter-arguments are just silly, self-serving, or obstructionist. Let’s take them one by one, ending with the one that seems most persuasive to reasonable people.

"Taxes are a form of theft."  This is just ridiculous. It’s like arguing that paper money is illegal. We live in a Democratic society, with well-defined laws and processes. In this society, people have agreed that the government has a right to collect…
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Obama To Propose $1.5 Trillion In Tax Increases Tomorrow





Market Snapshot: US Friday Afternoon Hope Dashed

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

FX markets opened first and gapped down 100pips in EURUSD only to retrace back to fill the gap and then drop all the way back down again – all within the first hour. European credit markets (early CDS runs) are trading very marginally wide of their European closing levels from Friday and that is where US equity futures have pulled back to – 11/12am ET Friday levels – extinguishing the late-day hopium-inspired melt-up. We noted Friday that the late-day jump higher in stocks was not supported by any other asset class and sure enough, ES has retraced it all.

 

ES is down 17pts from Friday’s close – testing the lows from Friday’s early trading.

 

The EUR is starting to crack lower once again as we post – back below 1.3675 – under Thursday’s lows as DXY pushes above Thursday’s highs.

Chart: Bloomberg

CONTEXT – adjusted for the fact that TSYs have yet to open – indicates ES should be more like 1185 currently (about 10pts lower) – driven by the shifts in carry pairs (mostly AUDJPY and EURJPY), gold’s relative strength (within a hair of $1830), and WTI’s continued slide (back under Friday’s lows around $87). Silver is holding up near Wednesday’s highs while Copper is below last week’s lows now (and notably back to August 9th lows for the DEC futures contract and down 8.5% from its September 1st highs!).

TSY futures are well bid with the Long bond up over a point, 10Y +16 ticks (around a 6bps compression in yields), and 5Y +5 ticks.

SovX is being quoted unchanged and SUBFIN 3-4bps wider (with SENFIN unch so far). The short-end of the XOver credit curve is underperforming +9bps at 670/677. Asia Pac sovereigns are around 3bps wider.

As we post, risk assets are starting to leg gently down.





US vs Germany: A Comparison In Political Regimes

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While the trope of US “short-termism” has been significantly discussed in recent months, in an attempt to explain why the capital markets no longer align with the 7-11 year duration of the business cycle, but with the duration of the elected term of the US president or of various congressional and senatorial critters, and in many cases, with the lock up period at various prominent hedge funds (nowadays as short as 1 month), little has been said about the comparison between the “political imperatives” that define Europe’s economic growth dynamo: Germany. And as last week demonstrated, when it comes to the US attempting to impose its “imperatives” on Europe (read Germany) in the form of the one and only “solution” available to the US (namely print, print, print) any such venture ends in mockery, ridicule and general disparagement of TurboTax experts. So just what is it about Europe that makes the two regimes so incompatible? Well, for one thing the fact that unlike the US, Germany has already suffered through a period of hyperinflation, seen the disastrous impact of central planning in the form of a totalitarian regime and it subsequent dissolution with the fall of the Berlin Wall, and experienced an economic “miracle” or the period between 1948 and 1955, in which Germany denied central planning and unleashed a golden age predicated by free and fair capital markets, and the abolition of all rules and regulations established by the occupying powers. But that is not all: aside from the purely empirical perspective that Americans so acutely lack, Germany also has a vastly different political system which explains why the prerogatives behind the German ruling party are so vastly different than those for the US, and why Europe will almost certainly never embark upon a path comparable to that of the US. The Privateer‘s Bill Buckler does the perfect comparison of the “political imperatives” that shape, define and most importantly, distinguish the US from Germany, and which we believe should receive far greater attention in the mainstream media than they currently do.

From Bill Buckler’s Privateer:

The most telling comparison between the “management” of the debt crises in Europe AND the US is the comparison between the political systems of both nations. In the US, a


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The "Real" Mega-Bears: Weekend Update

Courtesy of Doug Short.

It’s time again for the weekend update of our “Real” Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.

The chart below is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the “real” all-time high for the S&P 500 occurred in March 2000.


 

Click to View
Click for a larger image

 

Here is the nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.

 

Click to View
Click for a larger image

 

See also my alternate version, which charts the comparison from the 2007 nominal all-time high in the S&P 500. This series also includes the Nasdaq from the 2000 Tech Bubble peak.

Click to View
Click for a larger image

 

 

 

 





Here Is What Else To Expect From Obama Tomorrow Besides The “Buffett Plan”

Courtesy of ZeroHedge. View original post here.

Tomorrow at 10:30 am Obama will present the balance of the details from his latest tax hike proposal, which obviously has no chance in hell of passing, but which will provide for substantial theater and hopefully deflect from the fact that Europe is closing an hour later. Courtesy of Reuters, here are some of the tax measures Obama has either already proposed, or may be looking at, to raise more tax revenue to help reduce the deficit, according to analysts, and what he will likely focus on tomorrow.

RECOMMENDATIONS MADE

* The president wants a new tax on the rich, known as the "Buffett tax." Details were sketchy, but uber-investor Warren Buffett, chairman of Berkshire Hathaway, in mid-August made his own tax proposal. If Obama’s recommendation resembles the Buffett plan, then it would look like this:

--Hold income taxes steady for more than 99 percent of U.S. taxpayers. Raise rates, to an undetermined level, for individuals with income exceeding $1 million. Raise taxes for the super-rich making more than $10 million per year.

The "Buffett tax" could be a 5.4 percent surtax on joint returns above $1 million and individual returns above $500,000. If it is, it could bring in as new government revenue about $480 billion over 10 years, said analysts at MF Global.

* Under a $447-billion jobs plan unveiled on Sept. 8, Obama asked for a cap on itemized tax deductions and some exemptions at 28 percent for individuals earning more than $200,000 a year and families earning more than $250,000.

POSSIBLE FURTHER RECOMMENDATIONS

* The president may call for reining in the mortgage interest deduction. This could include denying it for second mortgages on vacation homes and yachts; lowering a $1 million cap on eligible first mortgages to perhaps $500,000; converting the deduction to a limited tax credit; or killing it, said analysts who stressed any changes would be phased in slowly.

* Another possibility is limiting the employer-provided healthcare income exclusion for higher-income tax brackets. It cost about $117.3 billion this year.

* In his jobs plan, Obama said he wants to close a loophole that lets private equity and hedge fund managers pay the 15-percent capital gains rate, instead of the 35-percent income rate, on much of their income known as "carried interest."

* On the corporate tax front, Obama may…
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Kabuki Theater Economy

Courtesy of ZeroHedge. View original post here.

Submitted by ilene.

Kabuki Theater Economy

(Taken from this week’s Stock World Weekly)

The stock market was driven by three major influences this week: the ongoing European “Black Debt” saga, the Dollar, and rumors galore. The rumor that lifted the markets out of their initial funk on Monday was that China would be buying Italian debt. 

Discussing the double-edge sword of Chinese investments, Chinese Briefing reported, “Debt-ridden European countries are longing for China’s purchase of their public debt despite fears that the country has motivations of a ‘reverse colonization’ of Europe. Nowadays the message ‘the Chinese are coming’ can often help governments trapped in financial crisis press public refinancing needs and shore up creditworthiness.

“As for China, it is reported that the country – whose US$3.2 trillion in foreign exchange reserves still have a heavy reliance on the U.S. dollar – is seeking more diversification and is increasing its holdings of the Euro.” (Concerns Grow over China’s Presence in Europe) The notion that white knight China was riding to the rescue of Italy fizzled out on Tuesday, when it turned out the rumor was based upon preliminary discussions that were unlikely to pan out. 

On Wednesday, U.S. Treasury Secretary Tim Geithner asserted, “There is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.” (Yet the Greek government one-year bonds are yielding over 110%.) Geithner pointed out that German Chancellor Angela Merkel has publicly stated “We are not going to have a Lehman Brothers,” referring to Lehman’s notorious implosion that exacerbated the financial crisis of 2008. (Geithner: Europe will not be a ‘Lehman Brothers’)

After a three-way conference between Chancellor Merkel, French President Nicholas Sarkozy and Greek Prime Minister George Papandreou on Thursday, Mrs. Merkel’s spokesman proclaimed: “German Chancellor Angela Merkel and French President Nicolas Sarkozy are convinced that Greece’s future is within the euro zone.” (Merkel, Sarkozy: Greece Belongs in Currency Bloc) Also on Thursday, the Governing Council of the European Central Bank (ECB) announced its decision, “in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year. These operations will be
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EURUSD Opens 100 Pips Lower On Latest Round Of Greek Default Fears

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Same Sunday, Different Day. As the FX market opens, the accrued rumors from this weekend, once again focusing squarely on Greece have come to a fore. The immediate result: a EURUSD which is down 100 pips from the Friday close. Gold and ES opens in 2 hours, Asia in 4, the European bailout rumor mill shortly thereater, the central bank global liquidity pumpathon just after that, and so on. We have seen this all play out before and frankly it is getting boring.





DSK Says Greece Is Done

Courtesy of ZeroHedge. View original post here.

Funny how all it takes for people to tell the truth is to no longer be part of the status quo. Yesterday, former UK PM and gold trader extraordinaire Gordon Brown said the 2011 financial crisis is worse than that of 2008, and now we have the man who until 5 months ago was head (it just never gets old) of the IMF, saying that Greece is finished.

From Bloomberg:

  • STRAUSS-KAHN SAYS GREECE CAN’T PAY BACK ITS DEBTS
  • STRAUSS-KAHN SAYS EVERYONE MUST ACCEPT LOSSES ON GREECE

And in other news…

  • STRAUSS-KAHN SAYS HE WON’T RUN FOR PRESIDENT OF FRANCE

Which probably means he will run for Prime Minister of Italy. After all, most politicians only talk about putting their youth to work. Only Italian PM’s actually do it.





Twist and Shout?

Courtesy of John Mauldin, Thought From the Frontline

What in the wide, wild world of monetary policy is the Fed doing, giving essentially unlimited funds to European banks? What are they seeing that we do not? And is this a precursor to even more monetary easing at this next week’s extraordinary FOMC meeting, expanded to a two-day session by Bernanke? Can we say “Operation Twist?” Or maybe “Twist and Shout?” Not many charts this week, but some things to think about.

But first, I have had readers ask me about my endorsement of Lifeline Skin Care and whether I was still pleased. Quickly, let me say that I am more than pleased. I have not mentioned it recently, as the company had to deal with supply issues (partially, from too many orders, which is a good thing) but those have been handled. I read a lot of positive letters from people who use the cream with excellent results. I can clearly see a difference in my own skin. If you use it correctly you will get results

But a very interesting endorsement came by way of my cynical daughter Tiffani, who was in Europe recently for 6 weeks. She did not take her Lifeline with her but used another (very) high-end product. She came back and was complaining about how her skin looked. After switching back to Lifeline for two weeks, she notes that she can already see a difference, and the “feel” is improving. Many of the re-orders are coming from men (which is not surprising, as the bulk of initial orders came from my readers), almost the reverse of industry standards.

Basically, Lifeline uses patented stem-cell technology in its cream, and it promotes a visible rejuvenation of the skin in about 3-6 weeks (depending on the individual’s skin, how often you use it, etc.) I encourage readers who are (ahem) of a certain age, or simply want to keep their skin looking younger, to click on the link to see a new, very short video; and if you like, you can order at the website. I and a number of friends are enthusiastic users. If you are interested in your appearance, you might want to consider becoming a Lifeline user. And you can use the code…
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Zero Hedge

Capital Controlling Like A Boss: Nigeria, Belarus Halt All FX Trading As Central Bank Urges "Don't Panic"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Just because Russia has managed to stabilize its currency for the time being as crude tries to find a floor, that certainly does not mean the soaring dollar tantrum-cum-crude crash episode is anywhere near over, nor that stability has returned to the rest of the oil-exporting countries. Case in point, crude-exporting powerhouse Nigeria, where things are going from worse to #REF!

As Bloomberg reported yesterday, the temporary Russian FX-trading halt appears to have inspired all other nations with plunging currencies (the Nigeria Naira just hit a new rec...



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Phil's Favorites

Competitive Theories: "Deflation Warning" vs. "Inflation is Nearly Everywhere"

Courtesy of Mish.

Theory #1: Break-Even Rates Provide "Deflation Warning"

Bloomberg is sounding a Deflation Warning as 2-Year Break-Even Rates Go Negative.

Break-even rates are the difference between treasuries and the same-duration Treasury Inflation-Protected Securities (TIPS). The break-even rate turned negative yesterday for the first time since 2009.

In theory, break-even rates reflect investors’ expectations for inflation over the life of the securities.

When break-even rates are negative, it's an indication investors expect price deflation for the duration, in this case for two years.

From Bloomberg ...
The drop in the break-even rate followed a Labor Depart...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Sabrient

Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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