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GaltMachine

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  • The Fed is likely to stick with ZIRP through 2018, says David Rosenberg, in his chart-filled outlook for 2013. He's guardedly bullish on stocks, not because earnings or the economy are set to power forward, but because real interest rates are set to remain negative for so long. [View news story]
    bbro,

    I also have been following him since 2008 which depending upon how you look at it has been both a massive success and a failure if you followed his advice all along.

    He advocated gold/silver for a long time, corporate debt, high-yield, commodities, treasuries and some other interesting stuff all of which have performed massively well since the meltdown.

    However he was clearly wrong on the S&P from 2009-2010 (late) before becoming constructive on what he calls SIRP (Safety and Income at a Reasonable Price) which was a positive call on the defensive sectors with high dividend yields. Overall for about a 1 1/2 years he has been pretty positive on select US equities.

    For me the bond call has been a miraculous payoff especially considering that it was very contrarian all along the way from a 4% plus 10 yr to the current level. No one with the exception of Rosie, Hussman, Shilling, and a few others made this type of bold call.

    Everybody was expecting rates to rise so if you believe that you would have missed this run.

    Now however the domestic bond run on price appreciation is dead . If we get strong growth then the short will be the winning trade of this next cycle.

    I have always enjoyed our conversations.

    Good luck. Merry Christmas.
    Dec 22, 2012. 12:06 PM | Likes Like |Link to Comment
  • Fiscal Cliff Notes: Plan B Edition [View article]
    dancing,

    Now if that happens that would be a pretty noticeable impact upon disposable income. Perhaps the fact that it won't be renewed is why it is not being discussed.

    According to this WSJ chart of the fiscal cliff that amounts to $127 billion dollars:
    http://bit.ly/UQYJH6

    Although it needs to expire it still will be a shock. I wonder if people realize that their future SS benefits have been reduced as a result of their not paying into the system.

    Thanks.
    Dec 22, 2012. 11:56 AM | 1 Like Like |Link to Comment
  • The Fed is likely to stick with ZIRP through 2018, says David Rosenberg, in his chart-filled outlook for 2013. He's guardedly bullish on stocks, not because earnings or the economy are set to power forward, but because real interest rates are set to remain negative for so long. [View news story]
    bbro,

    Info is info regardless of source. You should click the link. It's interesting.
    Dec 21, 2012. 05:19 PM | 1 Like Like |Link to Comment
  • Panic gripping the municipal bond sector might be a buying opportunity. Amid worries of the future of the tax exemption, $2.8B fled the sector last week - the sort of numbers not seen since 2 years ago when tobacco bonds were downgraded. "Shocking," says RBS' Chris Mauro, expecting cooler heads to prevail in the new year. [View news story]
    Smells like a buying opportunity!

    Taxes go up, munis look even better. Now that's weird.

    Fear of rising rates? Something else?

    No one will take away that tax deduction.
    Dec 21, 2012. 12:23 PM | Likes Like |Link to Comment
  • Fiscal Cliff Notes: Plan B Edition [View article]
    Jeff,

    "Avoiding the immediate impact from ending unemployment insurance and the payroll tax cuts."

    In all the discussions I have seen to this point this is one area where I have no idea as to its status in the negotiations. Everything has been focused on the tax rates but this to me is a huge deal. Bigger than the tax increases on the "rich".

    Do you happen to know if they are going to be renewed? Is there anyone with a definitive answer on this? Was it in Plan B?

    One other item for you list is the Estate Tax which is scheduled to rise massively as well if no plan is enacted.

    Thanks.
    Dec 21, 2012. 10:58 AM | 1 Like Like |Link to Comment
  • General Motors (GM) announces it will spend $5.5B to buy back 200M shares from the U.S. Treasury. GM +6.6% premarket. [View news story]
    IDK,

    "Just sayin....if you're gonna take the morally superior road on autos, you should do the same in all areas of your life, not just the ones you find convenient"

    This was a story about GM so was my comment. You should learn to focus.

    It's true what they say about psychological projection. You are arguing with yourself.
    Dec 20, 2012. 04:07 PM | Likes Like |Link to Comment
  • General Motors (GM) announces it will spend $5.5B to buy back 200M shares from the U.S. Treasury. GM +6.6% premarket. [View news story]
    chop,

    Interesting. I am truly amazed at the level of sheer ignorance being displayed about the way the GM bailout was carried out.

    It is either purposeful and politically motivated or just based upon a lack of study either way it's a bad sign for the future of our economy.

    Our economy works on debt - debt is a promise enforced by the power of law and centuries of experience - bonds are debt. People give companies money on the expectation that laws will be upheld and enforced to protect everyone's interests which is how the interest rate on the debt is calculated and the resultant yield develops once the instrument trades.

    I am not sure people truly understand how massive the bond market is and how it completely dwarfs the equity markets. You start screwing around with bondholder's rights and you are going to put the future of economic growth at risk.

    When a government can STEAL money from GM bondholders (little old ladies and men, state/federal/private pension funds, insurance companies, average non-union joes, etc.) to give to a politically connected group like the UAW it makes you wonder what country we actually live in?

    FYI, devil there is no way to put a "risk premium" on having your money stolen by the government so take some time and really examine the issue to understand how disgustingly corrupt the GM bailout process was. However as a likely Obama voter, I can only assume you really don't care because the end justifies the means.

    I don't roll that way.

    The GM debacle is the kind of thing that happens in banana republics like Venezuela where they just decide to nationalize industries and screw the owners.

    Government Motors did go through bankruptcy in case you missed it, it just happened to be a banana republic style reorganization that made a laughingstock of our laws.

    Buy your POS Government Motors vehicle, but I for one hope they fail.

    Pro-Ford, pro-Honda, pro-Toyota, pro-BMW, pro-Mercedes, etc all of which are also American car companies and didn't have the benefit of being cronies who got paid off to support the President.

    Rant over. Feel better. Thank you.

    Have a nice day!
    Dec 20, 2012. 01:38 PM | 1 Like Like |Link to Comment
  • General Motors (GM) announces it will spend $5.5B to buy back 200M shares from the U.S. Treasury. GM +6.6% premarket. [View news story]
    Devil,

    "so the final tally should be a loss of significantly less than $13.15 billion."

    My god, you actually think this is a tiny amount of government welfare. The idea that we would transfer wealth by force from on taxpayer to another would have been considered political death in any other era of our history. Destroying bondholders' right and trampling over centuries of creditor's rights in order to pay off a union would have been unfathomable just a few short years ago.

    Yet apparently to you and to many beneficiaries of corporate largesse it's no big deal.

    I will never buy a GM car again.

    You may enjoy making money this way but it turns my stomach so good luck with your investment.
    Dec 19, 2012. 12:39 PM | Likes Like |Link to Comment
  • General Motors (GM) announces it will spend $5.5B to buy back 200M shares from the U.S. Treasury. GM +6.6% premarket. [View news story]
    Devil,

    "will have lost $10 billion or less on it's investment"

    How do you know that? Where's your proof?

    How many times have airlines gone bankrupt in this country? Do we still have airlines?

    It's thinking like that that has given us the crappy economy we now have. This is not a free market economy and if you are politically connected you get payoffs from the man in charge transferring money from my pocket to the pocket of the unions.

    Sorry but there is nothing fair, reasonable, or honorable in being the beneficiary of corporate welfare.
    Dec 19, 2012. 12:07 PM | 1 Like Like |Link to Comment
  • General Motors (GM) announces it will spend $5.5B to buy back 200M shares from the U.S. Treasury. GM +6.6% premarket. [View news story]
    I can only imagine how much inside trading & leaking took place on this deal.

    Election over, curious timing, no?
    Dec 19, 2012. 08:50 AM | 3 Likes Like |Link to Comment
  • More on the BAML fund manager survey: The tailwind of low equity exposure is over, with hedge funds taking their long stock bets to the highest level since August 2006. More: Just 12% of fund managers are overweight cash, the lowest level in 9 months. A net 11% see improving corporate profits next year, a 22 point swing from October, when 11% saw declines ahead. (PR[View news story]
    They act like a bunch of yoyos. And they are supposed to be the pros.
    Dec 18, 2012. 01:00 PM | 2 Likes Like |Link to Comment
  • Long-term Treasury yields accelerate their move to the upside in the days following the Fed's open-ended promise to spend $45B/month keeping a lid on them. The 10-year yield is 20 basis points higher in December to 1.80%. TLT -0.7% today and now lower YTD. [View news story]
    And the reason for the purchases was to lower rates!

    Interesting perhaps the market is front-running the dumb buyer.
    Dec 18, 2012. 12:12 PM | 2 Likes Like |Link to Comment
  • The Selling In PIMCO's High Income Fund Continues [View article]
    Tack,

    Which of these do you like?

    Don't most of them use significant leverage?

    Any opinion on MUB & NUV?

    I am very interested.

    Thanks
    Dec 17, 2012. 03:04 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Time For Clarity On Key Market Issues? [View article]
    "When you read the entire article, you understand that the story is mixed. The "young firms" are actually optimistic. A loyal reader also pointed me to this story, suggesting that the survey results might reflect partisanship more than business plans."

    A partisan explanation to explain a partisan event doesn't do much to explain this event.

    Sometimes the simple answer is the right answer. Small business believes that their taxes will rise and their costs will go up because of Obamacare so naturally they became less optimistic after the President won reelection since both of these events will now occur post January.

    It is hard to be more optimistic from an economic viewpoint unless you believe that higher taxes and costs are a net benefit as a business owner.

    Whether this pessimism translates to meaningful economic behavior is not clear to me so I don't know if this is just a blip or something more meaningful but apparently even Ben Bernanke seemed concerned by it.
    Dec 17, 2012. 01:50 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Time For Clarity On Key Market Issues? [View article]
    Jeff,

    "The US economy does not depend upon government stimulus for growth."

    The argument that has been made by James Montier and Mauldin and others is that fiscal deficits by definition find their way into corporate profits and therefore absent offsetting growth profits in aggregate will fall.

    Here is the article from James Montier if you are interested:

    http://bit.ly/RA4v3w

    Not sure if you follow Modern Monetary Realism (MMR) but I think Cullen Roche, http://www.pragcap.com, has the best explanation of how our monetary system works and the implications of changes in fiscal policy.
    Dec 17, 2012. 12:53 PM | Likes Like |Link to Comment
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