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.

Gary Shilling Continues to See Deflation on the Horizon

I recall many appearances Gary made on Larry Kudlow. He was often talked over by his cheerleading host Kudlow. As your link points out, he was right on many issues the crowd got wrong. My favorite was to short China when many permabulls considered that laughable. So now, as we consider the next move, he has earned credibility. I often say, pay attention to the ones who got it right when the cheerleaders refused to acknowledge problems. As for Kudlow the the CNBC cheerleaders, I rarely watch them any more. They cheerlead when they should be cautious, and they fearmonger when they should be looking for a bullish trade. CNBC is more likely to provide misleading commentary than anything we can use. Gary has a track record also, and has earned respect.

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.