Archive for August, 2010

Weekly Recap & Outlook – 08.13.10

Friday, August 13th, 2010

Tower Private Advisors

Prior Posts


  • Market action calls for defense
  • Yields and alternatives to bonds
  • Economics still soggy
  • Plenty to spook markets next week (more…)

Bill Poole, former St. Louis Fed Governor

Wednesday, August 11th, 2010

He was interviewed on Bloomberg radio this morning.  Here are a couple of bits I picked up while sort of listening:

Monetary policy can not fix what is wrong with the economy.

The problem, intead, is regulatory uncertainty.

The result, he said, is that, as a consequence, businesses are afraid to do anything . . . like hire.

He proposed that put a moratorium on new regulations for three years, because “businesses can’t play the game when they don’t know the rules.  It’s like not knowing whether you’re playing poker or bridge.”

When asked by the reporter if the economy is in a liquidity trap, where, at a certain point, lower rates don’t do anything.

His response was, “we’re not in a liquidity trap; we’re in a regulatory trap.”


Taxes – II: Soaking the Rich

Wednesday, August 11th, 2010

So here’s Congress’ idea of soaking the rich, and why it won’t make any difference.

Presently the discussion in Congress on the Bush tax cuts (BTC) seems to be favoring extending them for all but the uber-rich.  There is a study out from The Joint Committee on Taxation that shows the results of that.  A story on Bloomberg highlighted some features of the wealth re-distribution that would result when the BTC expire.

The report breaks down the uber-rich into three categories:

1.  Those with incomes between $200,000 – 500,000

These folks would pay about $2 billion more in 2011 taxes.

2.  Those with incomes betweeen $500,000 and $1 million

These folks would payabout $6 billion more in 2011 taxes

3. Those with incomes above $1 million

This group really gets soaked, paying an additional $30 billion more.  According to Bloomberg, that’s about $95,238 each.

Add it all up, and it’s a tax increase of $38 billion, which is . . .

  • about one week’s worth of the July budget deficit.
  • about 37 days worth of the interest on the Federal debt

8/12 update

This is from a Strategas note of this morning:  analysis being done on the higher-income components of the Bush tax cuts, which says lifting the top two income tax rates will lead to just a -0.2 pct of GDP drag since the provisions will only raise $40bn in tax revenue.


Completely fascinating for data junkies

Wednesday, August 11th, 2010

Click on the attachment below for an interactive look at this Table of Periodic Visualization Elements.  Then, hover over each for a detailed look at each.


Google – a glimmer of hope?

Tuesday, August 10th, 2010

Google (GOOG) is a stock we’ve liked for a while.  It’s part of a theme that our Williams Inference service highlightedseveral quarters ago:  cloud computing.  That’s the idea that more and more of our computing applications will be housed, not on your desktop’s hard drive, but on the internet, the so-called Cloud.

But since late 2007, when it hit its peak of $747, it has struggled, falling as low as $247.30 in the depths of the financial crisis.  It has since recovered 50% of that loss, but its peers have far-outperformed it.

There may be a glimmer of hope for the stock in that Fortune magazine is just now recognizing the company’s situation, featuring it on the cover of its most-recent issue, shown below.

As I’ve mentioned here before, by the time a company or an issue moves from deep in a publication to the front cover or page, it’s often a sign that the worst is over. 

One piece that’s missing to complete this picture of pessimism is gloom amongst the analysts.  There are 37 who follow the stock, with 86% of them rating it a “buy,” while five say “hold” it.  That’s considerably above the average for all U.S. stocks.  The analysts’ price targets have come down, however.  At the end of 2009, the average price target was $662, while the stock was at $619.  Now, with the stock at $503, the average price target is $625.