basehitz

Who's Smarter: Bond Guys or Stock Guys?

When unclear, I keep the bets small and wait. Early March was pretty obvious and I was very aggressive. Now I am skeptical overall but hold some long positions. The flood of earnings should give the market direction. Until then, I wait on heavy bets and trade the noise with small bets to keep it interesting.

It's a Winter Warming Spell - But More Snow Ahead for Markets

The thoughtful analysis is compelling.

Another issue on which I am focused is tax policy. There is a steady stream of major US corporations heading overseas (Switzerland is a favorite) in anticipation of coming tax policies.

A March 11 AP article "Corporate oil booms in low-tax Switzerland" states:
"Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration." Already RIG, WFT, NE, FWLT and others are moved or in process.

Another March 11 TSDC article states:
"The tax-law change, which has not yet been introduced for a vote to Congress, hopes to collect an extra $210 billion in corporate taxes.
"For U.S. companies like IBM, Hewlett-Packard, Microsoft, Intel, Cisco, Qualcomm and Juniper, which operate foreign subsidiaries, this could mean bigger tax bills."
""Under a worst-case-scenario," Gelblum wrote, Cisco and Qualcomm would see a 22% tax rate grow to 35%. This would reduce 2010 earnings by 17%."

The unintended consequences of aggressive tax policy may actually reduce tax revenues rather than, as some have explicitly stated, accept a less competitive world position for these large multinationals.

So far, it is unclear Washington is hearing it. Yesterday I heard a compromise from Washington about moderating corporate tax rate but the strings attached may make it a non-starter. I don't have details yet. These guys better be careful they don't run off the very companies we need for our future.