Archive for ND&S Updates
Three Yards and a Cloud of Dust
December 10, 2012
12.10.12
The markets moved somewhat higher last week, with the Dow Jones Industrials advancing by 1.0%, but the S&P was flat and the Nasdaq declined by 1.1%. The latter were held back by AAPL, which fell 8.9% last week. It has developed both fundamental and technical challenges.
The US economy is still in a slow-growth mode. November nonfarm payrolls increased more than expected, but added only 146,000 jobs [down from last month’s 171,000 originally reported increase {now revised down to 138,000}]. The civilian unemployment rate declined to 7.7% from 7.9%, but this was driven by a decline in the size of the workforce [the “participation rate” was lower].
Moreover, consumer sentiment has turned markedly lower, falling to 74.5 from last month’s 82.7. This decline is variously attributed to the “fiscal cliff” histrionics, ongoing European difficulties [Greece lost its CCC credit rating] or election results implications [ObamaCare rules release, 2013 tax increases details or …].
In the midst of this lackluster environment, it is important to watch the Fed. It continues to print money, and it is never wise for investors to “fight the fed”.
“You can’t change the past, but you can ruin the present by worrying about the future”
Cliff Walk
December 3, 2012
12.03.12
All we hear about these days is the fiscal cliff, which we’re heading for come January 2013. We read about Obama’s “offer” of $1.6 trillion in tax increases and choke, or we learn that the Republicans want the Democrats to start “acting like adults” and we cringe. One reason for concern is the estimate that going over the fiscal cliff will reduce economic activity by 1 ½ percent. This on top of an already sluggish economy.
But what would happen if Congress fails to act in time? One prediction is that the 2013 democrats would push through a tax cut for all but the $250,000+ income group. Additionally, the spending cuts outlined in the fiscal cliff will not hit all at once, mitigating their impact in the early months.
If it makes you feel any better about taxes, the 2010 tax rates are lower than any year in the 1980s.
Also if you look around the world we find that U.S. taxes as a percent of GDP are near the bottom. Keep in mind the ingenuity of Americans to find ways to reduce their taxes through deductions and loopholes. Next year is the 100 year anniversary of the federal income tax system. We can also celebrate 100 years of finding ways to keep our taxes down.
Let the battle begin!!
“Those who are too smart to engage in politics are punished by being governed by those who are dumber.”
– Plato
Broken Hearts
December 17, 2012
12.17.12
In light of the horrific events at Sandy Hook Elementary School in Newtown, CT, we are not posting any market commentary this week.
Our hearts are broken, and our thoughts and prayers go out to all the victims of last week’s tragic event. The tragedy in Newtown is yet another reminder that each day is a gift.
Peace.