Well, it’s March 1st and the dreaded sequestration “cuts” are slated to begin, except as I understand it those spending cuts will not actually “bite” until March 27th. If that’s correct, our legislators have until then to arrive at a deal. Then, using their “magic erasers,” they can erase everything back to March 1st and sequestration will be pinned to the great media hype wall just like the “fiscal cliff” and Y2K. As we...
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Jack Lew, the former Chief of Staff in the Obama Administration, is the country’s 76th Treasury Secretary. The U.S. Senate approved him with a vote of 71-26 yesterday and included support from 20 Republicans. Jack Lew now has the tough job of a finding solution to the “fiscal cliff” set to begin tomorrow. Jack Lew, 57, will replace Timothy Geithner and will have to hit the ground running. The $85 billion automatic spending cut...
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Steven Romick, CFA, managing partner of First Pacific Advisors LLC, has released his investor letter for the fourth quarter of 2012. The letter comments on the fund’s 2012 performance, and looks ahead to investment opportunities in 2013. The major point of the piece, however, is that investors are currently taking on more risk than they are willing to admit, and this might lead to serious problems in the future. The problem, according to Romick,...
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EARNINGS MISSES HIDING BEHIND THE FISCAL CLIFF The US corporate governance system is based on the principle of operational freedom for the management and oversight by the non-executive directors (NED). This free hand given to the managers, including the Chief Executive Officers, is a strong reason for the shareholders to hold them majorly responsible for poor performance. However, in case of earnings misses, any action which can be taken through the board’s oversight mechanism...
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To say that there is far from a shortage of pundits weighing in on the fiscal cliff/debt ceiling, would be an understatement. It is interesting to hear from someone who beat the S&P 500 over the past 15 years. Recently, Ron Muhlenkamp wrote an op-ed on the topic: To welcome in the New Year, Congress and the Obama administration have addressed one side of the deficit problem: government revenues (taxes). For most Americans, they’ve gone...
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In spite of the Fiscal Cliff fears and now the many fears expressed in the upcoming US Debt negotiations, it appears that not only is there not a slowdown in home construction, but an acceleration. The Housing Starts report continues to confirm that a home building recovery is gaining momentum. See the chart below. What this means to equities is that this long underperforming sector of our economy may finally be adding its clout...
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Stocks setup for fall It is ironic that stocks are at five years highs going into what is probably going to be the biggest disappointment of an earning`s season since the 2008 financial crisis. We got a hint of 4th quarter results during the disaster which was the 3rd quarter earning`s season where most companies missed on the revenue side, and those that beat EPS guidance, did so barely, and most of that was created through...
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Yesterday on CNBC during the coverage of the monthly employment report, Rick Santelli pointed out that there is some absurdity in calling the Republicans “lunatics,” when they are the only responsible voice in Washington right now trying to call attention to the out of control government spending in the overall context of an unsustainable federal deficit, while the Democrats are running the country into the ground with even additional spending programs that the government...
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Jeffrey Gundlach, DoubleLine Capital CEO, does not believe there is a bond bubble, but thinks that double digit returns going forward are unlikely. Gundlach was on CNBC yesterday, and also discussed his views on the country’s biggest company (by market cap). Gundlach who is considered a bond guru, has been bearish on Apple for a while. He stated “I deeply believe Apple is headed to $425 a share.” He discussed the fiscal cliff and other economic and investing...
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North Carolina’s business community gathered to discuss the market outlook for 2013. Mark Yusko, head of Morgan Creek Capital Management, a $7 billion alternative investment advisor for pension funds, was the keynote speaker in the conference. His thesis was centered around three big risks, euro crisis, US fiscal cliff and China. Yusko explained that while stocks stayed flat after rising considerably in first quarter of 2012, the gold and bond market appreciated more in the later...
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President Barack Obama continued his shake up of the cabinet today with the announcement that current Secretary of the Treasury, Timothy Geithner, would be leaving the position toward the end of January. The news was originally reported by Bloomberg earlier today. The Secretary of the Treasury holds the second most important position in the cabinet, and is fifth in line to succeed to the Presidency. Geithners tenure in the position has been filled with...
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