Get Ready for Major Spin Over Taxes in the Coming Months

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“One of the most pernicious falsehoods you’ll hear during the next seven months of political campaigning is there’s a necessary tradeoff between fairness and economic growth. By this view, if we raise taxes on the wealthy the economy can’t grow as fast.

Wrong. Taxes were far higher on top incomes in the three decades after World War II than they’ve been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it’s grown since tax rates on the top were slashed in 1981.

This wasn’t a post-war aberration. Bill Clinton raised taxes on the wealthy in the 1990s, and the economy produced faster job growth and higher wages than it did after George W. Bush slashed taxes on the rich in his first term.

If you need more evidence, consider modern Germany, where taxes on the wealthy are much higher than they are here and the distribution of income is far more equal. But Germany’s average annual growth has been faster than that in the United States.

You see, higher taxes on the wealthy can finance more investments in infrastructure, education, and health care – which are vital for growth and the economic prospects of the middle class.

Higher taxes on the wealthy also allow for lower taxes on the middle – potentially restoring enough middle-class purchasing power to keep the economy growing. As we’ve seen in recent years, when disposable income is concentrated at the top, the middle class doesn’t have enough money to boost the economy.

Finally, concentrated wealth can lead to speculative bubbles as the rich in the same limited class of assets – whether gold, dotcoms, or real estate. And when these bubbles pop the entire economy suffers.

What we should have learned over the last half century is that growth doesn’t trickle down from the top. It percolates upward from working people who are adequately educated, healthy, sufficiently rewarded, and who feel they have a fair chance to make it in America.

Fairness isn’t incompatible with growth. It’s necessary for it. “

Citi comes in @ $0.95 in EPS

CNBC reports a beat on profits, but a miss on revs ???

FSLR & TXN change up

“It’s really hard to argue with Paul Krugman’s latest column, which argues that Europe is committing economic suicide.

You probably know what the argument is: The peripheral economies, especially Spain, are in complete ruins, and yet they’re being asked to make things worse by undergoing austerity, as directed by Germany and the ECB.

Not only is the economy worsening, it’s not even helping to achieve the objective of improving the debt situation. Yields are surging again, and as Greece showed us, austerity doesn’t even improve debt dynamics.

So basically it’s suicide, because the outcome of the current path is so obviously economic disaster and everyone knows it.

Click here to read the whole column >“

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Full article

“Deja vu it ain’t.

The U.S. looks unlikely to suffer the same sort of swoon this year as the one in 2011: Household, bank and company balance sheets are stronger, and the shocks hitting the economy so far are weaker, with gasoline prices even showing signs of slipping after an early-year rise.

Consumer-loan delinquencies fell across the board in the fourth quarter, the first time that’s happened in eight years, according to the American Bankers Association in Washington. Banks have reduced leverage, with financial-institution debt as share of the economy at its lowest level in a decade. And corporations are flush with cash: The ratio of liquid assets to short-term liabilities is the highest since 1954, based on datacompiled by the Federal Reserve.

“It feels eerily similar to last year, but fundamentally it’s quite different,” said Joseph LaVorgna, chief U.S. economist for Deutsche Bank Securities in New York. He sees the economy growing 3 percent in the fourth quarter from a year earlier, compared with 1.6 percent in 2011.

That’s good news for the stock market and for companies such as Discover Financial Services. (DFS) Net income for the three months ended Feb. 29 rose 36 percent to a record $631 million, or $1.18 a share, the Riverwoods, Illinois-based credit-card issuer said March 22.

“Consumers are continuing to gradually grow their spending,” Chairman and Chief Executive Officer David Nelms said in an interview. “They’ve finished a lot of the deleveraging that they’re going to do on credit cards and auto loans.”

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“The euro region’s trade surplus narrowed more than economists estimated in February as increased demand for imported goods outpaced exports.

The surplus shrank to a seasonally adjusted 3.7 billion euros ($4.8 billion) from a revised 5.3 billion euros in January, the European Union’s statistics office in Luxembourg said today. Economists had forecast a drop to 5 billion euros, the median of eight projections in a Bloomberg News survey showed. Imports increased 3.5 percent in the month, while exports were up 2.4 percent….”

Full report

“Infosys Ltd. (INFO), which sits on the largest cash pile among India’s computer-services providers, is prepared to spend as much as $500 million on a single acquisition in a European market.

Infosys may make another attempt to acquire a company of that size after it walked away from a plan to buy U.K.-based Axon Group Plc for 407 million pounds ($644 million) in 2008, Chandrashekar Kakal, the company’s global head of business IT services, said in a telephone interview.

“We do have cash, but we are looking for a company which adds to our capability and becomes complementary to our growth rather than becoming a laggard,” he said.

Infosys’s war chest of about $4 billion is more than twice the size that of Tata Consultancy Services Ltd. (TCS) Indian software companies, after a decade of growth fuelled by the outsourcing of jobs from the U.S., are turning to acquisitions to expand into Europe, now the second-largest source of theirrevenues. Making purchases in Europe may help Bangalore-based Infosys achieve a target of getting 40 percent of its sales from the region, up from about 22 percent….”

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WRI is down $0.36 @ $102.49

Brent is down $1.30 @ $119.91

“For the first time in seven months, traders are testing the Swiss National Bank’s determination to limit the franc’s strength against the euro as Europe’s resurgent debt crisis drives up demand for safer assets.

The franc breached the central bank’s cap of 1.20 to the euro on April 5 and April 9, and options show investors are predicting even more appreciation. It jumped 1.1 percent versus nine peers in a basket of currencies in March, the biggest gain since July, and is up 1.8 percent from a nine-month low on Jan. 11, according to data compiled by Bloomberg.

Demand for Swiss assets is so strong that investors accepted negative yields at an auction of six-month government bills last week as Spain’s borrowing costs rose toward levels that prompted bailouts for Greece, Ireland and Portugal. The franc is climbing against its peers even after the Swiss central bank repeated a commitment to prevent increases that threaten to bring about deflation and hurt exports.

“As long as there is risk aversion tied to rising euro- region stress, investors will want to buy francs,” Peter Frank, a London-based currency strategist at Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest lender, said in an interview on April 10. “The Swiss franc is an extremely liquid currency, it is tradable throughout all time zones and the economy is very resilient.”

The franc will weaken to at least 1.23 per euro over the next three months as the central bank steps up efforts to counteract its strength, he said…”

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“India’s inflation slowed less than estimated in March as food and fuel prices rose, limiting room for cuts in interest rates to bolster a weakening economy.

The benchmark wholesale-price index advanced 6.89 percent from a year earlier, the commerce ministry said in a statement in New Delhi today, compared with a 6.95 percent climb in February and the median 6.65 percent estimate in a Bloomberg News survey of 33 economists.

The Reserve Bank of India, which reviews policy tomorrow, has signaled readiness to lower borrowing costs for the first time since 2009 to boost domestic demand as Europe’s debt crisis and a slowdown in China dim the global outlook. It has also flagged the risk of a revival in price pressures because of the rupee’s slide, costlier oil and the fiscal gap.

“Inflation worryingly could be sticky, and the recent comments by the RBI suggest it is growing more and more concerned by downside risks,” said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd. in Singapore. The central bank will move “gradually” and cut no more than 25 basis points at any one meeting and 100 basis points in total in the year through March, he said…”

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Spanish bonds fall

“Spain’s bonds led a slump among the euro-region’s higher-yielding government securities after a minister called on the European Central Bank to buy its debt and stem the financial-market turmoil.

Ten-year Spanish yields jumped to a four-month high before the nation sells 12- and 18-month bills tomorrow and notes due in October 2014 and January 2022 on April 19. The cost of insuring Spain’s securities against default advanced to a record, while Italian bonds slid and Portuguese 10-year rates rose for an 11th consecutive day. German bund futures climbed to a record as investors sought the safest assets.

“Clearly investors are again getting worried that Spain may not be able to overcome its problems without external help,” said Elwin de Groot, a market economist at Rabobank Nederland in Utrecht. “One thing that could stop this is ECB intervention but they are not extremely keen on taking that role at this point in time. Sentiment is starting to crumble.”

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The Euro is trading 0.0037 @ 1.3003

“European officials travel to Washington this week seeking a bigger global war chest to combat the debt crisis as Spain’s government battles to quell renewed market turmoil over its finances.

Three weeks after European leaders unveiled emergency euro- area funding exceeding the symbolic $1 trillion mark, concerns about Spain’s position have ratcheted the nation’s borrowing costs to the highest levels this year. Crisis-fighting resources will dominate talks at the International Monetary Fund’s spring meeting in Washington from April 20-22. ..”

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Asia

Europe

Futures

Currencies

Commodities

LIBOR, EURIBOR, 10 year yields for Italy, Spain, France, and Germany

SYDNEY (MarketWatch) — Asian shares fell Monday after last week’s surge in Spanish borrowing costs brought concerns about Europe’s fiscal situation back to the fore, overshadowing a loosening of China’s currency controls.

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Indeud

Reuters) – Temasek Holdings added a sizeable China bank stake to its financial institutions portfolio, scooping up a 5.3 percent chunk of ICBC’s Hong Kong-listed shares from seller Goldman Sachs.

Temasek was burned by its financial industry exposure in 2008, hit by stakes in large European and U.S. banks that plunged in the crisis. But the state investor has kept nearly 40 percent of its investment portfolio in banks it feels are strong and are capturing emerging market growth.

Temasek agreed to buy $2.3 billion worth of H-shares in the Industrial and Commercial Bank of China, the world’s largest bank by market value. The purchase amounts to a 1.3 percent stake in ICBC, a Temasek spokesman said.

The Singapore state investor already owns stakes in China Construction Bank and Bank of China .

The deal for ICBC brings Temasek deeper into China’s banking industry, which has grown from insolvency six years ago to a sector that holds four of the world’s top ten banks by market value.

China’s banking industry, however, has also come under fire lately, as people and politicians have cried out that the sector’s massive profits are coming at the expense of citizens. Low deposit rates, coupled with steady customer fees are at the heart of the protests.

The total value of Goldman’s block sale was $2.5 billion, continuing with its plan to reduce its stake in ICBC, which it bought into prior to ICBC’s 2006 IPO. After the sale, Goldman will have roughly $3 billion of ICBC shares remaining.

Goldman sold the Hong Kong traded shares of ICBC at HK$5.05 each, or a 3.1 percent discount to Friday’s closing price. The other, roughly $200 million worth of shares were sold to other institutional investors, according to a source.

Temasek’s financial services portfolio includes stakes in Singapore’s DBS Group, Indian lender ICICI Bank and Standard Chartered .

Hong Kong shares of ICBC, which has a market value of $240 billion, were down 1.3 percent in early trading on Monday.

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Exclusive: Threats range from governments trying to control citizens to the rise of Facebook and Apple-style ‘walled gardens’.

Dan Norcini is my friend, one of the more savvy people I know in the markets. He has made his living as an off-exchange trader for many years. The concerns he has about the viability of the markets is genuine, and of great importance.