Wednesday, February 5, 2014

IRS data for 2009 (most recent year available) are displayed above and show that the top 1% of US taxpayers (about 819,000 filers) paid 37% of all federal income taxes collected, the top 50% paid almost all taxes collected (98%) and the bottom half (about 41 million filers) paid only 2%. — (Carpe Diem)

IRS data for 2009 (most recent year available) are displayed above and show that the top 1% of US taxpayers (about 819,000 filers) paid 37% of all federal income taxes collected, the top 50% paid almost all taxes collected (98%) and the bottom half (about 41 million filers) paid only 2%. — (Carpe Diem)

Friday, December 27, 2013 Monday, December 23, 2013
The French parliament has approved the Socialist government’s 2014 budget which includes massive spending cuts and tax hikes in an attempt to control the county’s high public deficit. 
The budget passed Thursday in the lower house after support from Socialist, Green and other left-of-center parties. The main opposition centre-right UMP party and the far-right National Front voted against it, AFP reported. 
The second budget of President Francois Hollande’s government had been rejected by the Senate. 
The budget now needs the approval of the Constitutional Council — France’s top court — before the end of the year. (via PressTV - French parliament approves 2014 austerity budget)

The French parliament has approved the Socialist government’s 2014 budget which includes massive spending cuts and tax hikes in an attempt to control the county’s high public deficit.

The budget passed Thursday in the lower house after support from Socialist, Green and other left-of-center parties. The main opposition centre-right UMP party and the far-right National Front voted against it, AFP reported.

The second budget of President Francois Hollande’s government had been rejected by the Senate.

The budget now needs the approval of the Constitutional Council — France’s top court — before the end of the year. (via PressTV - French parliament approves 2014 austerity budget)

Friday, March 8, 2013

Weekly Bull/Bear Recap: Mar. 4-8, 2013

This objective report concisely summarizes important macro events over the past week.  It is not geared to push an agenda.  Impartiality is necessary to avoid costly psychological traps, which all investors are prone to, such as confirmation, conservatism, and endowment biases. 

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Bull

+ The U.S. economy clearly remains on the recovery track:

image

+ Further signs surface that the global economy is stabilizing.  In Europe, region-wide retail sales surprised to the upside in January, climbing 1.2% versus analysts’ forecasts of a 0.3% rise.  This result cancelled out a 0.8% decline in December. Furthermore in China, exports are beginning to increase signaling increased demand from its trading partners.  Meanwhile in Japan, the Nikkei equity index is up roughly 40% over the past 3.5 months.  A weaker Yen is proving the difference as exporters become more competitive in global markets.  

Bear

-  A clear divergence between Germany and the rest of the periphery countries in Europe (see chart below) highlights the risk of the euro chipping away at European unity (French unemployment just hit its highest level since 1999; youth unemployment is at a record high).  The downturn in the region has intensified.  An increasing number of investors believe a strong Euro, due to other central banks easing to high heaven, is an impetus (Eurozone exports plunged at the fastest rate in almost 4 years during Q4).    

image

Meanwhile, Fitch downgrades Italy’s credit rating due to a strong showing from Beppe Grillo’s 5-Star Movement, increasing political risk to the Eurozone. “The inconclusive results of the Italian parliamentary elections on February 24-25 make it unlikely that a stable new government can be formed in the next few weeks,” Fitch said.  While Germany may be showing strength, is it sustainable?: check out both January new factory orders and car sales.  Meanwhile, Brussel’s prescription for record unemployment in Spain?: raise taxes (brilliant!)

- China institues its harshest property measures yet, leading to a 9.2% plunge in the Shanghai Property Index.  Uncontrolled advances in real estate prices are a symptom of short-sighted rampant monetary easing by major central banks worldwide.  China’s getting irritated by Japan’s Shinzo’s Abenomics.  Currency wars and beggar-thy-neighbor policies greatly increase the prospect for armed conflict.

- Preliminary negative signs of the increase in payroll taxes are slowly sprouting behind the incessant news of new all-time highs for the DJIA. The International Council of Shopping Centers reported that in February US chain store sales rose 1.7%, below the organization’s guidance of 2 to 2.5%.  Meanwhile, the Beige Book released this week also noted slowing retail sales through late February. Deteriorating sales trends will lead to an excess of inventories (keep an eye on the inventories to sales ratio) and ultimately slowing production.  On the job front, the Challenger job-cut report indicates that layoff announcements for February rose to a level seen only twice over the past 16 months.  Moreover, Friday’s news of a falling unemployment rate is likely transitory; the sequester will result in increased unemployment.  Another warning shot comes from Gallup’s Consumer Confidence survey, which has notably deteriorated since the sequester began.

-  The president of the Dallas Fed states the obvious to those who see the forest for the trees. Monetary policy is clearly not a panacea for economic growth. Despite unprecedented amounts of monetary stimulus, lack of credit demand (an idiosyncrasy of a balance-sheet recession) makes transmission of monetary policy to the general economy very difficult. The only credit demand we’re seeing is that related to student loan debt.  

Monday, July 9, 2012
Thursday, October 13, 2011 Tuesday, September 20, 2011
(Click on pic for the source)
Based on this information, I can’t see a reason to agree with Republicans on “no tax increases”.  It looks to be a central theme for the 2012 elections.  
It’s time to stop thinking about our individual interests (lower taxes are good!) and think about our country (we need to each pay our share for living in this great country).    

(Click on pic for the source)

Based on this information, I can’t see a reason to agree with Republicans on “no tax increases”.  It looks to be a central theme for the 2012 elections.  

It’s time to stop thinking about our individual interests (lower taxes are good!) and think about our country (we need to each pay our share for living in this great country).    

Sunday, September 18, 2011

Political Dynamic In Better Focus

I speculated about what the political climate could look like with regards to further stimulus and tax increases here.  It looks like this dynamic may be beginning to occur when I see an article like this.  I’ll continue to monitor.  

Friday, March 4, 2011
As populism continues its rise, the horizon for the wealthy becomes more clouded.  Tax hikes may be in store for them.  You think this encourages them to spend their extra cash?  “Ricardian Equivalence” my friends

As populism continues its rise, the horizon for the wealthy becomes more clouded.  Tax hikes may be in store for them.  You think this encourages them to spend their extra cash?  “Ricardian Equivalence” my friends

Thursday, March 3, 2011 Tuesday, December 21, 2010
herblondness:

By Felix Salmon
Stephen Culp has another striking chart today.
This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:
Federal taxes are the lowest in 60 years, which gives you a pretty  good idea of why America’s long-term debt ratios are a big problem. If  the taxes reverted to somewhere near their historical mean, the problem  would be solved at a stroke.
Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
Employment taxes, by contrast—the regressive bit of the fiscal  structure—are bearing a large and increasing share of the brunt. Any  time that somebody starts complaining about how the poor don’t pay  income tax, point them to this chart. Income taxes are just one part of  the pie, and everybody with a job pays employment taxes.
There aren’t any wealth taxes, but the closest thing we’ve  got—estate and gift taxes—have shrunk to zero, after contributing a  non-negligible amount to the public fisc in earlier decades.
If you were structuring a tax code from scratch, it would look  nothing like this. But the problem is that tax hikes seem to be  politically impossible no matter which party is in power. And since any  revamp of the tax code would involve tax hikes somewhere, I fear we’re fiscally doomed.

herblondness:

By Felix Salmon

Stephen Culp has another striking chart today.

This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:

  • Federal taxes are the lowest in 60 years, which gives you a pretty good idea of why America’s long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke.
  • Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
  • Employment taxes, by contrast—the regressive bit of the fiscal structure—are bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor don’t pay income tax, point them to this chart. Income taxes are just one part of the pie, and everybody with a job pays employment taxes.
  • There aren’t any wealth taxes, but the closest thing we’ve got—estate and gift taxes—have shrunk to zero, after contributing a non-negligible amount to the public fisc in earlier decades.

If you were structuring a tax code from scratch, it would look nothing like this. But the problem is that tax hikes seem to be politically impossible no matter which party is in power. And since any revamp of the tax code would involve tax hikes somewhere, I fear we’re fiscally doomed.

Wednesday, December 1, 2010

Today’s Economic Indicators and Observations

+Improving economic results show that the recovery is on firmer footing.

ADP Employment report for November shows a gain of 93K, 23K above expectations, while October was revised higher to 82K from 43K.  The breadth of the gain was improved from the prior months. 

Strong UK PMI and German Retail Sales

Strong China PMI = the economy continues to cruise.

Mortgage Application for purchase inch up 1.1% after that large 14.4% increase and marks a new post-stimulus high. 

ISM Manufacturing gauge comes in at a healthy 56.6 in November from 56.9; Employment sub-index points to additional employment gains in the sector; Supply chains are working as delivery times slowed, however, backlogs continue to contract. 

-Some coals in the stocking as well though:

Challenger Job-Cut report shows a rise in the announced layoffs and is up the highest level since March/April.  While it isn’t cause for alarm just yet, it’s worth keeping an eye on as retailers begin shedding their “holiday workforce”.

The Productivity and Costs report points to employers continuing to squeeze work out of its existing workforce as productivity jumped 2.3% for the 3rd quarter, while labor costs continued to decline, though slightly, down 0.1%.  Overall this helps corporate profits, but at the expense of hiring and inflation (which is what the Fed is desperately attempting to foster).

Strong China PMI may mean more tightening as price gauges are near 2008 highs… with a possible property bubble, the probability of a hard-landing is increasing

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Overall the contradicting economic indicators continue, which is representative of a muddle through economy that is growing, but not at a strong enough pace to bring down the massive labor slack. 

Is the Santa Claus Rally about to begin?  Perhaps, however, I stand by my cautiousness as the name of the game is forecasting what may come in the future, not what’s going on now.  The market has priced this economic improvement already and many headwinds will be getting stronger.

   Housing prices continue to double-dip thus eventually affecting consumption

   Unemployment benefits expiring, affecting consumption as well..will they be extended?

   China applying the breaks via price controls and increasing interest rates

   Eurozone Sovereign debt issues just won’t go away

   State & Local government reigning in spending (see Cisco’s recent earnings report)

   Bush-tax cuts not getting extended…the stakes were raised today by Mitch McConnell

Tuesday, November 30, 2010 Thursday, November 11, 2010