2013 Memes

“With the hoax of the Mayan ‘End of the World’ fantasy and the week of extreme materialistic consumerism behind us, we can now return our focus to the events of the day and what might come to pass as we enter 2013. Certainly, there are several issues at the forefront right now, but many of the biggest issues are being buried. As we transition from 2012 to 2013, let’s take a look at what are likely to be the main themes of 2013.

1) The Fiscal Cliff Follies Show

Let’s get something straight right from the beginning; the whole idea of a fiscal cliff is a joke. It is a two-bit made-for-TV movie straight out of Hollywood. This country went over the real fiscal cliff decades ago when we blew our strategic advantages after World War II on ‘great society’ largesse. We capitulated totally in favor of greed and put into motion a sequence of events that sealed our doom before this writer was even born. For all intents and purposes the real cliff was breached when the US was taken off the gold standard because of excessive and continuous imbalances with regards to trade and the current account. The debt cycle began….”

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“Ratings agency Standard & Poor’s has cut its ratings on debt for ConAgra Foods Inc. (NYSE: CAG) from BBB to BBB- following the company’s announcement that it would finance its $6.8 billion acquisition of Ralcorp Holdings Inc. (NYSE: RAH) primarily with debt. S&P’s outlook for ConAgra is listed as “stable.” ”

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“In a display of confidence about its fourth calendar quarter sales, Ford Motor Co. (NYSE: F) yesterday announced that its Ford Focus nameplate is the best-selling car in the world, with more than 737,000 new vehicle registrations through September. The company’s Ford Fiesta nameplate is on track to be the fifth best-selling car globally, with more than 520,000 sales and the venerable Ford F-150 pickup truck is number four, with more than 576,000 sales.”

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Remember Texas is one of the best recovery & growth stories since 2008…

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[youtube://http://www.youtube.com/watch?v=ty8onuh_5DM 450 300]

[youtube://http://www.youtube.com/watch?v=zbn3wr_MQu4 450 300]

The world’s most active twitter city is….

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“Even if President Barack Obama and Congressional leaders somehow manage to patch together a last minute deal to avoid going over the “fiscal cliff” on New Year’s Day, Washington’s budget drama is likely to drag on for much of 2013, meaning continued high economic, tax and investment uncertainty.  “Fiscal policy will be (weighing) on investors’ minds the way housing was four years ago,’’ predicts Joseph Davis, chief economist for the Vanguard Group.

If Congress does nothing at all,  more than $500 billion in tax hikes and $100 billion in defense and domestic budget cuts automatically kick in for 2013, sucking enough cash out of the economy to send the U.S. back into a recession, most economists believe. What’s more likely, says budget expert Stan Collender, is that a falling stock market will pressure the pols to reach a “fig leaf” deal in January that postpones most of the pain, but makes little progress on resolving fundamental disagreements or cutting the long term budget deficit.  In February, Congress will face another deadline, when the debt ceiling needs to be raised.  And at the end of March, a six-month budget resolution funding fiscal 2013 federal operations will run out, raising the possibility of a  government shutdown. After that, any deadlines set in the January fig-leaf will kick in. And come October, there will be a new fiscal year budget for the pols to fight over.

Here are eight steps ordinary investors can take to protect their sanity and their finances while this all plays out…”

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In Play ,

On the Wires 

“The Democrats made several key concessions yesterday in the Fiscal Cliff negotiations.

As a result, the two sides are absurdly close together. If we don’t get a deal at this point, the entire country will be justified in being outraged.

Here’s the Democrats’ latest offer, as reported by Lori Montgomery and Paul Kane of the Washington Post:

* The Democrats agreed to raise the income threshold for tax increases to $450,000 a year (couples) from the prior $250,000. The Republicans are insisting on $550,000 threshold. This is a massive tax cut for almost the entire country relative to the rates that will otherwise take effect on January 1. (So agree on $500,000 already and call it a day.)

* However, to the Republicans’ chagrin, the Democrats insist on raise capital gains and dividend taxes to 20% on households over $250,000 and reducing some of the allowable deductions. Importantly, this, too, is a massive tax cut relative to the scheduled changes, which would boost dividend taxes to 40% on incomes over $250,000.

* The Democrats conceded on the estate tax: They’ll keep the threshold for taxable estates at $5 million, with a 35% rate over that level. This, again, is a massive tax cut over current law, in which the threshold will drop to $1 million with a much higher rate.

* The Democrats’ offer would permanently protect middle-class households from the Alternative Minimum Tax. No details on how this would work.

* On the spending side, the Democrats’ offer would delay the “sequester” (automatic spending cuts) until 2015. This would cost an estimated $200 billion. But it would avoid the cuts to the military budget that the Republicans are so desperate to avoid.

* The Democrats would also extend unemployment benefits for a year, extend farm subsidies for a year, and avoid a 27% cut in Medicare payments to doctors. The Republicans say they want offsets to these spending cuts.”

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“(Reuters) – U.S. media giant The Tribune Co, owner of the Los Angeles Times and the Chicago Tribune, said late on Sunday it will emerge from bankruptcy on December 31, ending four years ofChapter 11 reorganization.

Chicago-based Tribune said it will emerge from the Chapter 11 process with a portfolio of profitable assets that will include eight major daily newspapers and 23 TV stations. The company will also have a new board of directors.

“Tribune will emerge as a dynamic multi-media company with a great mix of profitable assets, powerful brands in major markets, sufficient liquidity for operations and investments and significantly less debt,” Eddy Hartenstein, Tribune’s chief executive officer, said in an email to employees. “In short, Tribune is far stronger than it was when we began the Chapter 11 process.”

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“Treasuries held a three-day gain as Democrat and Republican lawmakers have just hours left to agree on a budget deal that both sides say is necessary to prevent a blow to the nation’s economy.

U.S. government securities gave up their first-place rank among world bonds in 2012 as signs of improvement in the global economy cut demand for the safety of Treasuries. Benchmark notes rose last week as lawmakers failed to reach agreement to avoid the so-called fiscal cliff of more than $600 billion in spending cuts and tax increases set to start tomorrow. Allowing those changes to take effect would cause a recession in the first half of 2013, according to theCongressional Budget Office.

“We’ve had a pretty significant move in Treasuries in the past few days,” said Owen Callan, an analyst at Danske Bank A/S (DANSKE) in Dublin. “The market got quite complacent and assumed a deal would be done a lot earlier. It does appear that the two parties are still some way apart but I still think they will come up with some kind of deal or stopgap. Both sides recognize the danger of not coming to an agreement.”

The 10-year yield was little changed at 1.70 percent at 7:37 a.m. in New York, according to Bloomberg Bond Trader prices. The 1.625 percent note due in November 2022 was at 99 11/32. Ten-year yields declined six basis points last week….”

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Can you say $45? Currently WTI is down $0.62 at $90.18

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“Dec. 31 (Bloomberg) — Carlyle Group LP and investors including Swiss bank Pictet & Cie agreed to buy investment- banking firm Duff & Phelps Corp. (DUF) for $665.5 million.

The buyers, also including Stone Point Capital LLC and Geneva-based Edmond de Rothschild Group, will pay $15.55 a share, 19 percent more than Duff & Phelps’s closing price on Dec. 28. The transaction is expected to be completed in the first half, the companies said in a statement yesterday…”

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“Gold advanced, poised for a 12th annual gain, as U.S. lawmakers struggled to reach a budget deal before automatic tax increases and spending cuts start to take effect from tomorrow, boosting demand for a haven.

Gold for immediate delivery advanced as much as 0.3 percent to $1,660.60 an ounce and was at $1,660.10 at 9:35 a.m. in Singapore. Prices have gained 6.2 percent this year as central banks from Europe to the U.S. to China pledged additional stimulus to spur economic growth.

Senate Majority Leader Harry Reid rejected the latest Republican offer to resolve the crisis as Minority Leader Mitch McConnell reached out to Vice President Joe Biden to try to break the impasse. Congress is working to avert more than $600 billion in tax rises and spending cuts, known as the fiscal cliff, and a failure risks a recession, the Congressional Budget Office has warned. The Senate will resume its session today.

“There’s a murky cloud over the outlook in the short term that’s purely being driven by the U.S. fiscal deadlock,” said Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne. “Once that’s resolved, there’s better clarity in the market, gold has more upside than downside risk.”

Gold, down 6.3 percent since September and set for the biggest quarterly drop since 2004, may climb to $2,000 next year, the median of 49 estimates in a Bloomberg survey published on Dec. 18 showed. Morgan Stanley said Dec. 6 that bullion will be among next year’s best-performing commodities. Prices may peak in 2013 as the U.S. recovers, Goldman Sachs Group Inc. predicts…”

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“The dollar gained for a second day against the euro as the deadline for U.S. lawmakers to reach a deal to avoid tax increases for almost all workers approached, spurring demand for the relative safety of the greenback.

The U.S. currency rose toward the strongest since August 2010 versus the yen after talks between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell stalled yesterday because of disputes over income-tax rates and other issues. The euro fell against all except two of its 16 major peers as German Chancellor Angela Merkel said the region’s debt crisis was “far from over.” The yen weakened on speculation the Bank of Japan will boost stimulus at its January meeting to spur growth.

“We could go right to the wire, that looks like the most likely scenario,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “If trading conditions become more risk averse, it could actually support the dollar in the near term if an agreement isn’t reached today.”

The dollar strengthened 0.2 percent to $1.3191 per euro at 7:44 a.m. New York time after gaining 0.2 percent on Dec. 28. The U.S. currency appreciated 0.2 percent to 86.17 yen after rising to 86.64 yen on Dec. 28, the strongest since Aug. 3, 2010. The yen was little changed at 113.66 per euro….”

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“India, the world’s third-largest coal user, cut imports of the fuel by 13 percent to 11.6 million metric tons in November, shipping data show.

Adani Enterprises Ltd. (ADE), Bhatia International Ltd., Tata Power Co. (TPWR) and Steel Authority of India Ltd. were among buyers who received 9.25 million metric tons of steam coal and 2.33 million tons of the coking variety, according to Interocean Group, a New Delhi-based ship broker that provided the information. October shipments were 13.3 million tons…”

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“German Chancellor Angela Merkel said the economic environment will be more difficult in 2013 than this year, and that Europe’s sovereign debt crisis is “far from over,” though progress has been made.

“The reforms that we’ve agreed on are starting to take effect,” Merkel, who faces federal elections in September, said in a New Year’s television speech to the nation, sent today in advance by e-mail. “Nevertheless, we still need a lot of patience. The crisis is far from over.”

Financial-market tensions have abated after the European Central Bank unveiled its Outright Monetary Transactions bond- buying plan on Sept. 6, pledging to spend as much money as needed to restore confidence in bond markets. The program provides support to debt-strapped nations as long as they sign up to economic reforms.

The European Stability Mechanism, which is helping the Spanish government recapitalize the country’s banks, was established Sept. 27 after Germany ratified the agreement. About 200 of the 17-nation euro area’s biggest lenders will come under direct ECB oversight when the single supervisor becomes operational, targeted for March 2014.

In the meantime, the 500 billion-euro ($661 billion) ESM could aid banks directly using its own procedures and asking ECB supervisors to step in. The fund could act as a resolution mechanism as well as providing capital to ailing banks, as long as certain conditions are met, ECB Executive Board member Joerg Asmussen said Dec. 18 in Frankfurt….”

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“Most European stocks fell amid concern U.S. lawmakers won’t reach a budget deal in time to prevent automatic tax increases and spending cuts from coming into effect tomorrow. U.S. index futures signaled a lower opening for equities and Asian shares were little changed.

Iberdrola SA (IBE), Spain’s largest utility, slid 1.5 percent after Bolivia nationalized four of its business units. Bankia SA (BKIA) rallied 5 percent, rebounding from its record low…”

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