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Posts Tagged ‘Taxulationism’

2013/01/16: Technicals and Taxulationism (an update)

January 16, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

A fresh set of Technical Projections and Select Comments are already available via the link in the right hand column, current through Tuesday’s US Close. And those are now very relevant to the near term price activity in equities that are standing still for the most part and other asset classes that have had some reasonably strong swings.

More on that below. Yet the becalmed nature of the equities trade is fairly ironic in light of the degree to which equities are sometimes an indication for economic expectations. And in turn, those drive psychologies of other asset classes. Yet, right now the sometimes sharp swings in other asset classes are in sharp contrast to the equities lack of activity.

And it’s not like the tail is ‘wagging the dog’, as the dog is catatonic. Equities sitting still cannot likely last that much longer. Yet right now the standoff between positive QE, corporate earnings and upbeat chatter of ‘multiple expansion’ on renewed confidence are countered by all the global economic growth downgrades (Germany, World Bank, IMF previous, etal.), weak data (Europe in particular), and US Taxulationism1.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

And that gets us right into the update on how pernicious that just might be. Yes, we know, and have been duly respectful of how those sorts of things only have an impact across time. Which is exactly why we have been so circumspect on the potential for equities develop weakness early this year; and have been very pointed about not getting too bearish in early-mid January.

However, the final piece is now in place. Taxulationism is the term Jack Bouroudjian and I coined some time ago regarding how far the US has moved away from the free market principles, and especially the insights on optimal taxation levels developed by Dr. Arthur Laffer (as in the ‘Laffer Curve’.)  

Taxation is back with a vengeance, even on the middle class (more on that shortly.) Aggressive regulation that was held in abeyance into the US election is back with a vengeance. And the protectionism which is the ‘ism’ on the back end of Taxulationism is now here as well, completing the circle. How? Exchange rate changes have reached the point where they are predatory.

But FIRST… Taxation…

Click on illustration to watch CNBC video

Click on illustration to watch CNBC video

As CNBC’s Eamon Javers points out in the video (click on the graphic to watch), after all the rhetoric about raising taxes on “millionaires and billionaires” to protect the middle class… the middle class takes the hit.

 

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2013/01/14: Calendar, OECD CLI, another great resource, Europe

January 14, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

The Weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective will be added sometime soon. Yet, in addition to the calendar are two other resources which we feel you might find useful.

The first is this month’s Organization for Economic Cooperation and Development (OECD) Composite Leading Indicators (CLI), which they insist shows economic growth stabilizing in most economies. We can’t really disagree that was the case looking back to the upbeat factors we have already cited for late last year.

As noted previous, on the fundamental side there are reasons why the January statistical releases are going to be fairly upbeat in the US, and that will drive positive sentiment elsewhere. In fact, we still see the US influence as critical, with the news in Europe and some other areas not being nearly as strong. The US remains the key, and the headwinds there are going to intensify. We are going to have a full Taxulationismupdate very soon on that.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

But there is also another update from a source and a region that is highly influential. That is the latest edition of the Reserve Bank of Australia Chart Pack. That is the very simple name for a very robust set of economic indicators. Given the importance of the Asian and Australian economy, this is a great additional research resource.

While titled The Australian Economy and Financial Markets, it is actually a terrific, very current (updated through December 27th) global economic and finance graphical representation overview. And what it does have on Australia is an incredibly good sector and finance breakdown of many industries and finance functions for that important Asian natural resource economy.

And while the online version is very easy to navigate, it allows for the download of the full (34 page) PDF version as well. After all there are some lunatics (present writer proudly included) who want to be able to compare some fairly diverse factors in hard copy. It can be printed in a four-to-a-page easy review format, such as the example below comparing world share price trends…

Click on the graph to access the RBA Chart Pack home page

Click the graph to access RBA Chart Pack

It is no surprise that research generated by the RBA also includes extensive indications for Asia. And versus the passing view of China typical of so much European and US research, this means India and the Greater Asia economic sphere as well… including emerging markets.

Beyond that this is going to be another very big week, with an interesting twist on the confidence now helping the European markets…

 

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2013/01/08: Cal-Perspective and US December strength to continue?

January 8, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

The Weekly Report & Event Calendar is available through the link in the right hand column. This is a revised calendar with updated government bond auction details, so we suggest a read even if you saw yesterday’s edition. This week’s Summary Perspective is also now available there as well.

Yet there is also a continuing anomaly in the fundamental influences: relatively positive indications in quite a bit of the US economic data versus the additional headwinds which are so obviously going to impact the economy and markets into 2013. And one clear expression of that is in the important NFIB (National Federation of Independent Business) Small Business Confidence Survey that is very weak again this month after a disastrous November reading. The improvement to 88.00 from 87.50 masks some of the truly troubling aspects of this poll.

Still very negative after November plunge. Click to view Dunkelberg interview

Still very negative after November plunge. Click to view Dunkelberg interview

And we likely do not need to inform our readers that the Capital Spending indication is wholly inconsistent with the abysmal readings in the balance of the survey. Click on the table to see the CNBC video where Steve Leisman notes how minor this month’s improvement is compared to a November that was worse than 9/11 and almost as bad as the Lehman Brothers collapse response.

Dunkelberg was happy to share the small business owners’ primary reasons for such downbeat sentiment on the US economy and lack of any interest in hiring or expansion (in order of importance): Taxes, Weak Sales, Regulations. In other words, albeit with no mention of ‘protectionism’ this is a clear reflection of the continued drags from Taxulationism1.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

Yet there is even more reason to suspect the December economic indications are an anomaly on the way into weaker tendencies from a very well-informed source…

 

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2013/01/03: Quick Post: Fresh Tech available & ironic ‘creeping’ tax view

January 3, 2013 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

A fresh set of Technical Projections and Select Comments are already available via the link in the right hand column. They incorporate the sharp swings from the top of the year response to the US Fiscal Cliff avoidance effort. While that was characterized as a tax hike on ‘the rich’, it is important to note this was only insofar as the income tax rate is concerned.

And that is not the true sum of the real impact

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2012/12/11: Cal-Perspective and overall weakness in spite of some good data

December 11, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

The weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective is also now available. Yet there is also an interesting anomaly in the fundamental influences. And it is not just the strongish US economic data versus the trepidation over the potential plunge off the Fiscal Cliff… as that dilemma looks closer to being solved timely enough (end of year or top of January) to avoid its worst effects.

There is also the negative outlook for Europe. Today’s German and Euro-zone (essentially the same) ZEW Sentiment (i.e. the forward view) was stronger than expected. Yet, that flies in the face of other indications out of Europe that are still incredibly weak… like the recent Italian and Spanish Industrial Production numbers that came in below already weak estimates. And anyone who thinks Germany is going to return to being a bastion of strength in Europe should take a look at Monday morning’s admittedly mixed Organization for Economic Cooperation and Development (OECD) Composite Leading Indicators (CLI).

The only real growth is in the US and (interestingly enough in light of recent official forecasts) the UK, with growth or even economic basing elsewhere problematic at best. Even more important is the degree to which Germany remains on a distinctly downward path into the early part of next year. The general tone of the OECD regarding the actual condition of CLI on individual countries is also typically charitable. How does France sliding further below 100 and remaining on a clear downward path indicate “weak growth”? And even though it is still marginally above 100, the same goes for Japan; especially in light of it just recently going back into recession.

And it appears that our continued concerns over US Taxulationism1 are finally beginning to bite. It is no longer just our theoretical assessment that these influences from a Nanny State run amok are a problem.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

There is now real-world confirmation from actual surveys of the impact this is going to have into the early part of next year. And that comes from none other than one of our favorite US employment-related resources

 

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2012/12/04: Cal-Perspective and US Age of Austerity finally here?

December 4, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

The weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective is also now available. Yet there is also an interesting anomaly in the fundamental influences. And it is not just the strongish US economic data versus the trepidation over the potential plunge off the Fiscal Cliff… there is also the negative outlook into next year.

The misguided perception in some quarters that the US election would settle enough ‘uncertainty’ to encourage an economic revival on the back of clearer parameters has now been completely dispelled. As noted in our post early last week, nothing could have been further from the truth, as the public pronouncements by highly partisan US political class leave little hope that there is common ground for constructive compromise. And with Mr. Obama’s reelection, we suspect he feels within his rights to push his agenda at the same time Conservatives find it as distasteful and counterproductive as ever.

It’s good old Nanny State Taxulationism1 finally run amok, as the President and his cohorts distract the opposition with outrageous proposals to waylay them from unwinding what’s already the law of the land.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

And while framing this as a US Age of Austerity might seem a bit harsh, it is something we have warned of since back in 2010 (well, a ‘Frugality’ mania in the first instance.) To revisit those major themes from a previous post, regardless of whether the Fiscal Cliff is addressed, the degree to which 2013 is going to be a tough year has not escaped the watchful eye of the best of the observers…

 

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2012/11/27: Quick Post: Weekly Calendar and Weak Macro View

November 27, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

The weekly Report & Event Calendar is available through the link in the right hand column. The Summary Perspective will available soon. Yet there is also an interesting anomaly in the fundamental influences. And it is not just the strongish US economic data versus the trepidation over the potential plunge off the Fiscal Cliff… there is also the negative outlook into next year.

Some would like to believe that the US election settled enough ‘uncertainty’ to encourage an economic revival on the back of clearer parameters. In fact, nothing could be further from the truth, as the pending legislation enactment (Obamacare in particular along with tax increases) and regulation acceleration (EPA takes on anything exuding carbon) in the US is going to be daunting for business. Wait until Obamacare foments the major cancellation of group healthcare plans at myriad small and mid-sized employers.

It’s good old Nanny State Taxulationism1 finally run amok, as the President and his cohorts distract the opposition with even more outrageous proposals to distract them from unwinding what’s already the law of the land. The questionable nomination of UN Ambassador Susan Rice for Secretary of State after her misguided or purposely misleading statements on the Benghazi tragedy comes to mind.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy   

And the degree to which 2013 is going to be a tough year has not escaped the watchful eye of the better macro-economic observers…

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2012/11/23: Weekend Thought: There is NO Bond Bubble… more so Cash

November 23, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

It has been the bane of the ‘Bond Vigilantes’ (adamant bond bears) that all of the fiscal crises and incipient signs of economic growth have not led to a major capitulation of the primary government bond markets. Another short term round of that is apparent today. Equities are spurred higher in this week’s recovery from the midmonth break, yet govvies are holding steady… just as they did yesterday in the face of the higher equities. And due to better than expected German economic numbers, today’s rally would seem more than just technical. Likely even more frustrating for the bond bears.

While we will get back to more current market discussion below, the current intermarket asset class performance must be taken in a twofold broader context. The first is that the immediate threat to the equities is less from a still troubled Europe, and more so on the question of whether the US Fiscal Cliff issues can be resolved timely. The far broader and more meaningful aspect for the sometimes seemingly mindless resilience of the govvies is the question of whether there actually is a Bond Bubble? Our assessment for some time has been that as long as equities appear risky due to government policy interference and instability, equities are indeed at risk due to the potential for significant global economic weakening.

This is our classical Taxulationism1 fear. While many assert that the US election clarifying the path forward is constructive, we are not at all sure. What it guarantees is that the ‘Obama program’ will mostly proceed according plan. Possibly business will indeed be able to plan around the higher taxes and aggressive regulatory enforcement. On the other hand, the Obama health care reform and other measures might just lead to layoffs, closures, and at the very least many individuals facing the higher expense of shifting to personal health care plans from company-sponsored ‘group’ policies. Also to say the least, not good for consumer discretionary spending.

1Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All rights reserved unless explicitly waived

 Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

If that is going to weigh on the US economy, the one developed economy showing some growth now is going to weaken once again into next year. And that is a good reason why people still feel more comfortable in bonds than equities. All of the capital flow data on fund investment tends to back that up as well. And yet, there isn’t really any ‘Bond Bubble’ as such. If anything, there is a ‘Cash Bubble’. That was brought home to roost in a Financial Times video report on Monday.

While the title of the piece is Marooned in a bond ‘safety bubble’ and the opening discussion focuses on bond vs. equities flows, the point which eminently come to the fore is there no historic basis for this. As the graph below illustrates…
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2012/11/01: Wait for it… heeeere it comes: US General Election Delay?

November 1, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

Yes, indeed, we know. This is something that a few folks have noted before, only to see it immediately refuted by the powers-that-be. But when you think about it…

…does either side have any interest in going forward if it is possible that any major portion of the Northeast remains dysfunctional on Tuesday in the wake of Super Storm Sandy? The Democrats surely wouldn’t want one of their bastions of electoral strength to be left without full and fair representation.

And what about the Republicans? Well, there are areas where they are very strong and the election is critical in Appalachia and elsewhere. Even if the powers-that-be on each side of the political divide allow that it might all average out, isn’t this a dangerous precedent for the standpoint electoral enthusiasm? In an America already suffering from an unhealthy level of voter apathy (at least up until 2010), is a “Don’t worry if you didn’t get to vote; it’ll all average out” a quality ethic for either party?

And there is one more very good reason. Almost all informed observers allow this is more of a battle for the very soul of the United States than the election of any particular individual. While Mr. Obama and Mitt Romney are the standard bearers at the top of each ticket, the stakes are more so the basic philosophy of government that may well dominate the US for a generation.

Is it going to continue to become increasingly statist along the lines of the Obama approach (with a major assist from his predecessor’s abandonment of some cherished Republican precepts)? Or is it going to go back to the more self-sufficient ‘classic’ American tendencies that Mitt Romney and Paul Ryan assert (rightfully or not) they will be able to put back in place?

And there is an important accelerant on all that partisan perspective that neither side has been very vocal about throughout the entire process, precisely because it is the most important prize. The truth that nobody dare speak too loudly is that

 

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2012/10/18: Weekly Perspective into Equities signaled changing dynamic

October 18, 2012 Leave a comment

© 2012 ROHR International, Inc. All International rights reserved.

The weekly Report & Event Summary Perspective is available through the link in the right hand column. The Technical Projections and Select Comments from last week are also available and still relevant… with the notable exception of the critical equities decision explored in the General Market Observations and EXTENDED TREND IMPLICATIONS below.

This is one of those weeks that saw equities benefit from the combined influence of the now well-established central-bank support along with somewhat better data. As it typically takes a couple of quarters for the central-bank actions to impact the various economies, it leads one to wonder whether the central bank actions were really all that necessary. However, in this case we must allow that the anticipation of worse things to come is enough of a psychological drag to justify at least some of the central-bank largesse. What is most interesting is not that the central bank and supra-national actions have created a ‘risk on’ psychology, but more so how little is being done about the underlying problems which caused the central banks to feel their massive involvement was necessary in the first place.

And those are apparent both in Europe and the US…  

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