I have been repeatedly asked in recent months "What Difference Does an Election Make"? I strongly believe that this significant watershed mid-term election could provide the ignition the market needs to get back to the 12,000 level. Here are a few bullet points which help to illustrate my thoughts:
· Over the last 60 plus years the market has never declined in the 2 quarters following mid-term elections, with the average market gain being over 18% - that makes Dow 12,500 possible next year.
· A generational event has taken place! Deficits and debt have outraged the public and they demand CHANGE! This deeply concerned public has roared. Washington will see new faces and new ideas. We will find our way back to fiscal responsibility. We need a new tax structure which is fair, easy & predictable. Maybe it is time for a flat tax and VAT. Spending must be brought down. The private sector is able to pick up the slack as the federal monster is shrunk.
· The American people will not tolerate economic failure: They want free enterprise, lower taxes and less government involvement. When new leaders convince the public that a new course is being set that will be the basis for a new mindset. We will return to normalcy. That brings reflation, then inflation.
· Money will start to flow to risk categories and the unemployment rate will start to fall. Many will be stunned at the speed at which the US Economy can turn on a dime. During this process expect volatility to increase in all asset categories. The hiding places people used will become dangerous spaces; the trillion dollars invested at rates under 3% will come running out.
Side effects:
-Equities will be one of the best performing asset categories for the next two or three quarters.
-Managed foreign exchange strategies have the potential to offer equity like returns with little correlation to equities.
-Managed commodity trading strategies also can provide attractive returns as we reflate.
-Water, oil, grains and hogs all look much higher next year.
I hope you will not hesitate to call me to discuss your portfolio or the strategies in which you are enrolled. While I recognize that there will be many challenges ahead, I firmly believe that there are an even greater number of opportunities as well.
Showing posts with label White House and Business. Show all posts
Showing posts with label White House and Business. Show all posts
Thursday, December 2, 2010
Wednesday, April 1, 2009
The White House vs. Business
I'm always trying to find interesting information that will allow you to make intelligent decisions. Last weekend I spent several hours reading various publications and thought I would share some interesting information coming from Business Week magazine.
As you read the comments, you can see how various aspects of the economic recovery plan are being challenged by businesses.
What the White House wants: Emissions
To cut emissions that cause global warming, the Administration proposes a "tap and trade" system. This would require companies to pay $646 billion over eight years to buy the tradable rights to emit such pollutants. Much of the money would be returned to consumers.
What business thinks:
Many companies do not oppose a price tag on carbon emissions, since it provides more certainty and boosts investments in efficiency and renewable energy. But they worry that selling all of the permits from the start can impose a huge burden on the companies involved.
What the White House wants: Healthcare
The President has provided $634 billion in the proposed budget to help pay for health care reforms over the next 10 years. Half that some will come from tax hikes and half from cuts in Medicare payments to insurers, drug companies and hospitals.
What business thinks:
On the surface, business broadly backs health care reform. But the cracks are starting to show: insurers fear competition from government-backed rivals, hospitals worry costs will be squeezed, and drugmakers face far lower prices.
What the White House wants: Foreign Tax
Multinationals currently can defer US taxes on profits earned abroad until they bring the funds back home. The Administration says that encourages companies to ship jobs overseas. It plans to raise $210 billion by limiting the tax deferral and other overseas breaks.
What business thinks:
Companies fear they will be at a competitive disadvantage if they have to pay US rates on foreign operations while their rivals pay lower local rates. Any loss of revenues overseas, they add, will result in US jobs lost, not gained.
What the White House wants: Income Tax
The President would boost the top rates for families making more than $250,000 from 33% to 36%; those earning over $370,000 would go to 39.6%. Capital gains and dividends rate would rise from 15% to 20%. Deductions for mortgage interest and charitable giving drops to 28%.
What business thinks:
Fears that tax hikes will discourage the well-off from investing are shared by a host of businesses, from homebuilders and mortgage brokers desperate for a housing rebound to mutual fund companies and other investment managers struggling to keep investors in the market.
What the White House wants: Drilling
Converting the economy to cleaner energy has emerged as one of the Administration's top goals. If it has its way, that means an end to a host of tax breaks for oil and gas producers, including tax credits aimed at spurring domestic offshore drilling.
What business thinks:
The oil industry plans to mount a fierce fight to keep its tax perks, arguing that the President's plan puts jobs and energy security at risk. Plus, making drilling more expensive in the US could encourage oil giants to shift even more investment in exploration abroad.
What the White House wants: Agriculture
The President wants to end what he considers wasteful agricultural subsidies. He is counting on saving $9.8 billion over 10 years by capping payments at $250,000 annually to farmers whose gross sales do not exceed $500,000 a year.
What business thinks:
The agricultural lobby, which spent $131 million in lobbying in 2008, is among the fiercest defenders of turf in Washington. It will argue that farmers can't stay in business, especially in a tough economy, without support for cotton,
rice, and other crops.
It seems to me that the battle lines are being drawn. I believe the recovery of this economy is going to require give-and-take on both sides. As we learn more about the details I will share some more thoughts with you.
Bill Spiropoulos
President & CEO
CoreStates Capital Advisors
As you read the comments, you can see how various aspects of the economic recovery plan are being challenged by businesses.
What the White House wants: Emissions
To cut emissions that cause global warming, the Administration proposes a "tap and trade" system. This would require companies to pay $646 billion over eight years to buy the tradable rights to emit such pollutants. Much of the money would be returned to consumers.
What business thinks:
Many companies do not oppose a price tag on carbon emissions, since it provides more certainty and boosts investments in efficiency and renewable energy. But they worry that selling all of the permits from the start can impose a huge burden on the companies involved.
What the White House wants: Healthcare
The President has provided $634 billion in the proposed budget to help pay for health care reforms over the next 10 years. Half that some will come from tax hikes and half from cuts in Medicare payments to insurers, drug companies and hospitals.
What business thinks:
On the surface, business broadly backs health care reform. But the cracks are starting to show: insurers fear competition from government-backed rivals, hospitals worry costs will be squeezed, and drugmakers face far lower prices.
What the White House wants: Foreign Tax
Multinationals currently can defer US taxes on profits earned abroad until they bring the funds back home. The Administration says that encourages companies to ship jobs overseas. It plans to raise $210 billion by limiting the tax deferral and other overseas breaks.
What business thinks:
Companies fear they will be at a competitive disadvantage if they have to pay US rates on foreign operations while their rivals pay lower local rates. Any loss of revenues overseas, they add, will result in US jobs lost, not gained.
What the White House wants: Income Tax
The President would boost the top rates for families making more than $250,000 from 33% to 36%; those earning over $370,000 would go to 39.6%. Capital gains and dividends rate would rise from 15% to 20%. Deductions for mortgage interest and charitable giving drops to 28%.
What business thinks:
Fears that tax hikes will discourage the well-off from investing are shared by a host of businesses, from homebuilders and mortgage brokers desperate for a housing rebound to mutual fund companies and other investment managers struggling to keep investors in the market.
What the White House wants: Drilling
Converting the economy to cleaner energy has emerged as one of the Administration's top goals. If it has its way, that means an end to a host of tax breaks for oil and gas producers, including tax credits aimed at spurring domestic offshore drilling.
What business thinks:
The oil industry plans to mount a fierce fight to keep its tax perks, arguing that the President's plan puts jobs and energy security at risk. Plus, making drilling more expensive in the US could encourage oil giants to shift even more investment in exploration abroad.
What the White House wants: Agriculture
The President wants to end what he considers wasteful agricultural subsidies. He is counting on saving $9.8 billion over 10 years by capping payments at $250,000 annually to farmers whose gross sales do not exceed $500,000 a year.
What business thinks:
The agricultural lobby, which spent $131 million in lobbying in 2008, is among the fiercest defenders of turf in Washington. It will argue that farmers can't stay in business, especially in a tough economy, without support for cotton,
rice, and other crops.
It seems to me that the battle lines are being drawn. I believe the recovery of this economy is going to require give-and-take on both sides. As we learn more about the details I will share some more thoughts with you.
Bill Spiropoulos
President & CEO
CoreStates Capital Advisors
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