Would you bet against the U.S?

Ask the oracle of Omaha, On Monday, May 6th, in an interview on CNBC,
Buffett predicted stocks will go “far higher” in the long run. He
laughed recalling such milestones as DOW 100 and DOW 1000. “You’ll see
numbers a lot higher than this in your lifetime.” he said.

How do we choose?

Who do we connect with? and Why?

The question is no longer should we buy a smartphone. It’s which one. This change has driven innovation and enhanced content and the user experience. We can research, shop and purchase with the touch of a button. You can bank, deposit checks, transfer money and even make stock purchases right in your own hand. The world has become a smaller place. Distance no longer separates us from loved ones. We can Skype or Facetime with those we cannot see so easily, a grandparent, cousin, aunt or uncle, a student at school, those studying abroad and of course our loved ones stationed around the world serving our military.

There are many to choose from with an equal amount of new features that add to the allure. Many of these features drive users to upgrade more frequently. Consumers look for a better experience. Faster connections, video calling, GPS and bigger screens continue to drive innovation. The online experience has been woven into our daily lives.

What drives you?

According to a Reuters article from Tuesday, “A slowdown in China, combined with a deteriorating outlook for the eurozone economy and government belt tightening in the United States could prompt investors to flee riskier investments and seek safety in the dollar and yen.”, reported from Reuters FX summit.

Is this what investors have been saying as of late? The S&P 500 is only 1% off recent highs.

Gold is suffering its worst monthly decline since late 2011. Gold has acted as a safe haven in the past. Is this a sign of risk on? Or risk off? Or is the sell off in Gold reflecting a slowing global economy with a lower appetite for the precious metal.

According to Mary Ann Bartels, a Merrill Lynch Wealth Management, CIO, Portfolio Strategies,”..we are recommending to our clients on any market pullback that they should be adding to equities.” When asked about Gold as an investment, she said, “right now we’re recommending that investors hold off on purchases and our analysts do see risks down into the 1200 range, but when we look at it in terms of a portfolio context we still view gold as a diversifying asset and on these pullbacks, if our clients have not purchased gold we do recommend they buy on the pullback.”

Are the signs of slowing growth giving investors an opportunity to get into the market? Or out?

As mentioned in an article by CNBC, “What Japan is doing is actually
quite dangerous because they are doing it after 25 years of just
simply accumulating deficits and not getting the economy going”.
according to George Soros. “….the fall could be like an avalanche.”

With the U.S. and Japan attempting to stimulate growth, where does
this leave investors?

Problems in Europe and North Korea seem to have been put on the back
burner for now. The Dow continues to press into new higher territory.

According to a key indicator for the Bank of Japan, manufacturers have
been pessimistic in the most recent quarter yet momentum has been
gaining for the optimists.

One Japanese manufacturer has analysts and investors thinking differently.

Shares of Toyota Motor broke into higher ground as did the EWJ, which
is an exchange traded fund whose performance is expected to correspond
to that of the Japanese market. Toyota is the top holding of the EWJ.
Investors have been rewarded as each continues to gain ground.

Will this be a windfall for investors and the Japanese?

Or will this attempted economic boost be short lived and disappoint?

Or were they?

No one needed to vote to increase taxes or cut spending. For the record, no one needs to take blame back to their constitutents. It was the other guys fault.

Is this really the way this country was meant to be governed?

The American people are a resilient group. We continue to spend. Whether we have the money or not.

According to Federalreserve.gov, “In January, consumer credit increased at a seasonally adjusted rate of 7 percent. Revolving credit was little changed, while nonrevolving credit increased 10 percent.”

Credit card issuers Mastercard and Visa trade at or near all time highs. So does American Express…

On Wednesday, the Institute for Supply Management(ISM) released its most recent report. The ISM service index fell to 54.4 in March from 56 in February. Economists had been expecting 55.8. This was the lowest report in months yet an indication over 50 still reflects expansion. Albeit, at a slower pace than desired. The ADP employment report indicated an additional 158,000 jobs were created in March. Expectations were for 205,000.

The DOW has been trading at record levels. Take a look at that index and everything seems alright. An uptick in the housing sector and and the job environment and things appear to have improved.

Or have they?

Are you better off today?

The market doesn’t bail companies out by way of supports.

Innovation will lead the way and the buggy whip company will be
replaced by an auto maker, for example. Companies need to be able to
stand the test of time. Innovate or risk being replaced by an
innovative newcomer.

This is the greatest country in the world.

It is a country so great that two college kids can build a company in
their garage and rise to incredible heights of success.

But are all things really created equal?

Take a look at our government. Years after our own financial crisis,
the Fed continues to prime the pump, adding more quantitative easing
each month. An extension was made adding another six months ending in
May of 2014. Many economists doubt the ability of future government QE
and its ability to further benefit the economy. Will this add jobs?
Will it lower the unemployment rate?

ON March 8th, famed economist Nouriel Roubini told CNBC, “Tax
increases on wealthy Americans and reduced government spending will
have a severe impact on economic growth in the United States, wiping
out the positive effects of a revival in the housing market and
cheaper energy.”

By expanding the feds balance sheet we may have removed some of the
shock to the system. That may or may not have helped us. While things
definitely could have been worse initially, where would we be today?

Which do you prefer?

Would you have pulled off the band-aid quickly or slow and gently?

Or so they say.

Taxing the depositors could prove to have greater implications on future negotiations for bailouts in an already fragile European environment.

Initially, Asian markets retreated as did our own. But both have since regained some of that lost ground. The Nikkei posted a 2.03% gain only a day later.

U.S markets could be the best place to invest but after a significant early year advance this could be the excuse the strategists and technicians have been looking for as they call for a pullback.

Meredith Whitney said “This is the most bullish I have been in my career.” “You have to be bullish on U.S. equities here because you have so much offshore money coming into the U.S. looking for someplace safe and sound,”

Alan Greenspan, an American economist and former Chairman of the Federal Reserve was recently quoted saying “Irrational Exuberance’ Last phrase I would use right now”.

So, where do we go from here?

Do we follow the Meredith Whitney’s and Alan Greenspan’s of the world?

The technicians and strategists?

European concerns and market headlines?

Regardless of your time frame, goals and investment ideals, a sound strategy and a plan to work from would be a good start.

When Patient Protection and the Affordable Care Act or Obamacare was passed, signed and was defended by the Supreme Court, the government reform of the healthcare industry began.

Some aspects of ObamaCare were instantly enacted and 100 million Americans have already benefited from the new health care law.

According the Congressional Budget Office (CBO), the number of Americans receiving subsidized coverage will increase from 2014-2018 and then subsequently decline.

Assuming Obama’s projections don’t take into account the potential exodus of employer covered plans which seem more than likely because many small business owners will need to measure the costs of the coverage vs. the cost of paying the penalties.

Will businesses cover part-time employees?

Will businesses refuse coverage to full-time employees?

These are questions that will only be answered over time.

This country was built through capitalism. The free markets find their way. If costs get too high for let’s say, energy, alternatives compete in order to normalize pricing. This is why we have monopoly controls in place.

Bottom line, almost anything the government controls ends in crisis. Pick your favorite one: Amtrak, postal services, and my favorite home ownership.

Are we just setting ourselves up for disaster?

If you are a avid watcher of all things political, the last few years have been an exercise in futility. This sequestration episode is no different…

Has anything happened over the past month, past year or even the past 5 years that gives the average American any hope that things will get better for they get way worse.

Were you aware the next crisis is a government shutdown on March 27 unless Congress can agree on a funding measure.

Both President Obama and House Speaker Boehner agreed not to let that happen, but can anybody in Washington D.C. be kept to their word?

If you are keeping score at home, Democrats and Republicans swore up and down they would never let sequestration happen. Obama said during the last presidential debate, “It will not happen”…

We are living in a post sequestration world, and it is time for all of us to be ever more skeptical of any promise made by a politician.

How have we gotten this far off of track?

What is the message the government is sending to the American people?

We preach to our kids to get their work done early and not wait until the last minute to finish their assignments. Yet our elected leaders can’t accomplish anything before the 11th hour.

What does the message say to the rest of the world?

It would look to the rest of the world like we are a banana republic, if the rest of the world wasn’t worse off. I mean we could be Greece or Italy. So it could be worse.

Is that what we are shooting for these days?

It is 2013, our debt is soaring, with no slowdown in sight.

You know what really burns me up is that this is sequestration is not even a cut, it is a limit in growth.

In a macro level we are failing as a government, not necessarily as a country. Our country is made up of the best and brightest, but we are losing our edge and our government is not helping the matter.

Are we going to go over the falls before it is too late?

“There’s a building in the Cayman Islands that supposedly houses 12,000 U.S. corporations, which means it is either the largest building in the world or the biggest tax ripoff in the world, and I think we know which one it is.”

Sen. Max Baucus,(D-MT), Chair of the Senate Finance Committee, 2008

“Offshore evasion costs Americans tens of billions of dollars every year. And that contributes to our nation’s $345 billion annual tax gap, the difference between the taxes legally owed and the taxes timely paid. We owe it to hardworking, honest taxpayers to make sure that their tax burden is not increased because sophisticated tax cheats moved dollars offshore.”

Barack Obama Reelection Ad, July 2012

“He had millions in a Swiss bank account,” the ad says, and in “tax havens like Bermuda… and the Cayman Islands. Mitt Romney’s not the solution.”

January, 10 2013

President Barack Obama nominated his chief of staff, Jack Lew, as the next Treasury secretary, praising him as a expert on the pressing national issues of U.S. government spending cuts and deficit reduction.

February 8, 2013

NBC News breaks the story that Jack Lew, President Barack Obama’s Treasury Secretary nominee, previously held up to $100,000 in investments in an offshore hedge fund located in the Cayman Islands, according to financial disclosure forms.

February 13, 2013

Dana Mibank writes in the Washington Post, “This awkward fact pattern forced a role reversal Wednesday on Capitol Hill, as Obama’s nominee, Jack Lew, came before the Senate Finance Committee for his confirmation hearing. Republicans expressed outrage about his compensation and his investment — in other words, giving him the Mitt Romney treatment. And Chairman Max Baucus (D-Mont.), an outspoken foe of offshore tax havens, helped Lew defend himself.”

In response to questions about his Cayman Island investors… Jack Lew said this to Sen Max Baucus yesterday…

In and of itself, investing in an offshore investment vehicle does not preclude Jack Lew from being an excellent Treasury secretary. All it serves to do is highlight how incredibly hypocritical every aspect of our political culture has become…