What the market gives the market takes.
That's pretty much the story overnight as Asian shares returned most of Tuesday's gains. The culprit of choice was once again that thick black stuff the climate change crowd loves to hate but a bunch of people of nearly all ages hope will stage some sort of rally soon.
Without energy there's no demand for a real recovery and without a real recovery there's no demand at this point for energy. So it become like a lot of things in the world today a stalemate. Earlier the Shanghai Composite index was down neatly 1.4% while the Hang Seng in Hong Khong, the ASX 200 and the Nikkei 225 suffered similar fates.
For Japan the market entered bear market land, now down over 20% since it topped out last June. For the Hang Seng it was the lowest level since 2012. It's like one of those déjà vu all over again things. Market after market down double digits from their recent highs. In the case of Australia's ASX 200 it's down nearly 20% from its high last spring.
Crude fell to a new13-year low. Gold eked out a small positive gain as investors continue to wait for more positive news than that of the past few weeks. Hope springs eternal.
Tuesday, January 19, 2016
WHAT'S YOUR NECTAR?
One man's nectar is another man's poison.
That appears to be the case with commodities as noted in a report from Macquarie Bank, the big Australian financial services firm. In a word, it's hard to get a little help from one's friends when one doesn't have any friends.
Commodities have no friends at the moment.
From energy to softs to base and precious metals, prices have been hammered almost unilaterally across the board, weighed down by a combination of a strengthening US dollar, increased supply, tepid demand and, as a consequence, mounting disinflationary pressures.
The paragraph below, from Macquarie Bank's commodity analyst team, is reflective of the broader investor mood when it comes to commodity markets - they hate them.
The world simply hates commodities at the moment. Prices keep on falling, producers are in a battle for survival and, more worryingly, demand isn’t reacting that positively as of yet. They are providing a catalyst for currency volatility, causing headaches for many emerging market governments and leading to wider concerns around systemic financial risk. This is particularly true as deflationary pressure intensifies which in turn drives business caution and amplifies the fundamental problems pervading commodity markets. We remain in the wrong type of global economy for commodity prices to perform well.
According to Macquarie, there is only one thing that can break the current cycle of ever-lower commodity prices. Unfortunately for those hoping that 2016 will herald a year of accelerating global growth, they believe supply, not demand, holds the key for a move higher in prices.
According to the bank, the crude oil market, in the midst of a severe supply glut at present, holds the key to not only stabilising prices for the energy sector, but the broader commodity complex as a whole.
In recent times oil has been leading everything lower. Moreover, the lagged deflationary pressure will push industry cost structures (and pain points) for other commodities even lower. However, we expect global crude oil markets to return to seasonally normal supply-demand balances by 3Q16, while 2017 will be the first year in five that results in an annualised inventory draw. We expect the resulting oil price recovery will at least go some way to breaking or even reversing the current global deflationary down cycle.
Macquarie suggest that the slumping crude oil price has kept more marginal producers of other commodities in production, lowering their running costs and, as a consequence, keeping markets awash with supply that would normally be displaced in the past.
However, given their expectation that the crude market will return to normal supply-demand by the September quarter this year, this will help to support crude prices, placing additional cost pressure on marginal commodity producers.
Based on this assessment, the bank has compiled a list of commodities that they expect will outperform over the next two years, along with those likely to benefit from short-term seasonality factors along with those to avoid. More:
We don't know what your definition is of blood in the streets and we're not saying this is necessarily one. But if it isn't it's got to be pretty darn close.
businessinsider.com/macquarie-everyone-hates-commodities-2016-1?
That appears to be the case with commodities as noted in a report from Macquarie Bank, the big Australian financial services firm. In a word, it's hard to get a little help from one's friends when one doesn't have any friends.
Commodities have no friends at the moment.
From energy to softs to base and precious metals, prices have been hammered almost unilaterally across the board, weighed down by a combination of a strengthening US dollar, increased supply, tepid demand and, as a consequence, mounting disinflationary pressures.
The paragraph below, from Macquarie Bank's commodity analyst team, is reflective of the broader investor mood when it comes to commodity markets - they hate them.
The world simply hates commodities at the moment. Prices keep on falling, producers are in a battle for survival and, more worryingly, demand isn’t reacting that positively as of yet. They are providing a catalyst for currency volatility, causing headaches for many emerging market governments and leading to wider concerns around systemic financial risk. This is particularly true as deflationary pressure intensifies which in turn drives business caution and amplifies the fundamental problems pervading commodity markets. We remain in the wrong type of global economy for commodity prices to perform well.
According to Macquarie, there is only one thing that can break the current cycle of ever-lower commodity prices. Unfortunately for those hoping that 2016 will herald a year of accelerating global growth, they believe supply, not demand, holds the key for a move higher in prices.
According to the bank, the crude oil market, in the midst of a severe supply glut at present, holds the key to not only stabilising prices for the energy sector, but the broader commodity complex as a whole.
In recent times oil has been leading everything lower. Moreover, the lagged deflationary pressure will push industry cost structures (and pain points) for other commodities even lower. However, we expect global crude oil markets to return to seasonally normal supply-demand balances by 3Q16, while 2017 will be the first year in five that results in an annualised inventory draw. We expect the resulting oil price recovery will at least go some way to breaking or even reversing the current global deflationary down cycle.
Macquarie suggest that the slumping crude oil price has kept more marginal producers of other commodities in production, lowering their running costs and, as a consequence, keeping markets awash with supply that would normally be displaced in the past.
However, given their expectation that the crude market will return to normal supply-demand by the September quarter this year, this will help to support crude prices, placing additional cost pressure on marginal commodity producers.
Based on this assessment, the bank has compiled a list of commodities that they expect will outperform over the next two years, along with those likely to benefit from short-term seasonality factors along with those to avoid. More:
We don't know what your definition is of blood in the streets and we're not saying this is necessarily one. But if it isn't it's got to be pretty darn close.
businessinsider.com/macquarie-everyone-hates-commodities-2016-1?
OVERNIGHT
The news is out and it's right in line with expectations. We're talking China's GDP numbers, at 6.8% annualized for December.
That should be your first clue, when something as complicated and arcane as the world's second largest economy hits the economic nail on the head. But we will let that slide for now. Reuters reported it this way:
Growth in fourth-quarter gross domestic product (GDP) eased as expected to 6.8 percent from a year earlier, down from 6.9 percent in the third quarter and the weakest pace of expansion since the first quarter of 2009. Full-year growth of 6.9 percent, enviable by Western standards, was China's poorest showing in quarter of a century.
Other data on Tuesday suggested the world's second-largest economy lost more steam in December, dashing hopes that a year-long flurry of government stimulus would finally kick in.
It's this other data you want to pay attention to because there's nothing dashing in these numbers. Rather it's an attempt to release the air slowly to cover up just how bad it is and prevent a stampede of panic in the markets. The answer to the how bad is it is simple: Even the Chinese don't know.
Economists as you'd expect are out in force commenting on the data. Here are some reactions from a WSJ article.
China’s economic growth is unlikely to rebound anytime soon. While the headline numbers match expectations, the detailed figures, such as industrial production, are a bit weaker than expected. Overall, today’s data confirmed the fact that Chinese economic growth is on a downward trend. China’s gross domestic product will likely slow to about 6.6% this year and 6.3% in 2017. The industrial sector is really struggling now. I think the government should further cut taxes to help boost the manufacturing sector. – Zhang Fan, RHB Research
We forecast that China’s growth will slow to 6.4% in 2016, and hit the trough of 6.0% in 2017. A gradual rebound in growth could start in 2018, together with an upward property market cycle and political business cycle. It is still possible that China could achieve an average 6.5% growth during its 13th five year plan (2016-20) provided that the government takes decisive measures to tackle the highly indebted corporate and local government sectors in the coming two years. –Li-Gang Liu and Louis Lam, ANZ Research
The upshot is that while the official GDP figures shouldn’t be taken at face value, growth does appear to have been broadly stable last quarter and the December data, although mixed, don’t suggest that China is now entering a deeper economic crisis. On the contrary, with the tailwinds from recent policy stimulus still gathering we actually expect the data to gradually turn more upbeat over the next few months. – Julian Evans-Pritchard, Capital Economics
Meanwhile, back at the ranch the Nikkei traded up for the first time in four sessions; Australian shares edged higher 0.9%; the Kospi stretched slightly higher 0.6% and The Shanghai Composite Index was up nearly 3%. Gold fell 0.2%, closing at $1,088.80 and Brent crude hit a new 12-year low, most likely owing to Iran's sanctions being mothballed, at $27.70 a barrel.
.
That should be your first clue, when something as complicated and arcane as the world's second largest economy hits the economic nail on the head. But we will let that slide for now. Reuters reported it this way:
Growth in fourth-quarter gross domestic product (GDP) eased as expected to 6.8 percent from a year earlier, down from 6.9 percent in the third quarter and the weakest pace of expansion since the first quarter of 2009. Full-year growth of 6.9 percent, enviable by Western standards, was China's poorest showing in quarter of a century.
Other data on Tuesday suggested the world's second-largest economy lost more steam in December, dashing hopes that a year-long flurry of government stimulus would finally kick in.
It's this other data you want to pay attention to because there's nothing dashing in these numbers. Rather it's an attempt to release the air slowly to cover up just how bad it is and prevent a stampede of panic in the markets. The answer to the how bad is it is simple: Even the Chinese don't know.
Economists as you'd expect are out in force commenting on the data. Here are some reactions from a WSJ article.
China’s economic growth is unlikely to rebound anytime soon. While the headline numbers match expectations, the detailed figures, such as industrial production, are a bit weaker than expected. Overall, today’s data confirmed the fact that Chinese economic growth is on a downward trend. China’s gross domestic product will likely slow to about 6.6% this year and 6.3% in 2017. The industrial sector is really struggling now. I think the government should further cut taxes to help boost the manufacturing sector. – Zhang Fan, RHB Research
We forecast that China’s growth will slow to 6.4% in 2016, and hit the trough of 6.0% in 2017. A gradual rebound in growth could start in 2018, together with an upward property market cycle and political business cycle. It is still possible that China could achieve an average 6.5% growth during its 13th five year plan (2016-20) provided that the government takes decisive measures to tackle the highly indebted corporate and local government sectors in the coming two years. –Li-Gang Liu and Louis Lam, ANZ Research
The upshot is that while the official GDP figures shouldn’t be taken at face value, growth does appear to have been broadly stable last quarter and the December data, although mixed, don’t suggest that China is now entering a deeper economic crisis. On the contrary, with the tailwinds from recent policy stimulus still gathering we actually expect the data to gradually turn more upbeat over the next few months. – Julian Evans-Pritchard, Capital Economics
Meanwhile, back at the ranch the Nikkei traded up for the first time in four sessions; Australian shares edged higher 0.9%; the Kospi stretched slightly higher 0.6% and The Shanghai Composite Index was up nearly 3%. Gold fell 0.2%, closing at $1,088.80 and Brent crude hit a new 12-year low, most likely owing to Iran's sanctions being mothballed, at $27.70 a barrel.
.
Monday, January 18, 2016
SWIMMING UPSTREAM
No doubt today the media--at least the financial media--is awash in stories about the oil sanctions against Iran being lifted over this past weekend.
The fear is a further fall in oil prices from what has already been a bigger slaughter than many so-called experts thought. Iranian oil is expected to reach as much as 500,000 barrels a day, something this already over-supplied market clearly doesn't need if prices are not to fall further.
But it just might be time for one for one of those, "Not so fast!" insertions. A story three days ago in the UK Daily Telegraph suggested a ray of hope. Saudi Arabia is already suffering mightily from these cheap prices and they're not alone as the strong dollar has led to further pain beyond just cheap prices.
The first signs of a thaw are emerging for the
battered oil market after Russia signalled a sharp fall in exports this
year, a move that may offset the long-feared surge of supply from Iran.
The oil-pipeline monopoly
Transneft said Russian companies are likely to cut crude shipments by
6.4pc over the course of 2016, based on applications submitted so far by
Lukoil, Rosneft, Gazprom and other producers.
This amounts to a drop of 460,000 barrels a day (b/d), enough to
eliminate a third of the excess supply flooding the world and
potentially mark the bottom of the market. Russia is the world’s biggest
producer of oil, and has been exporting 7.3m b/d over recent months.
The big question as the article points out would such a move be market-driven or purely politics.
When you're dealing with the Russians it's anyone's guess. Just last month OPEC put out a statement that it alone was too small to act alone, a plea many believe aimed at Russia,the world's largest producer of oil, that brokering a deal might be possible.
Remember, the Saudis are unable to protect themselves. That's why the U.S. for years has been their essential big brother, but recent events have strained those relations. When you're looking around for survival at some point you'll take what's available. Either Russia or China, take your pick, are big enough to protect them.
There's is another factor here in our view that many don't want to own in this election year. U.S. foreign policy has been pathetic for years and this administration has matched it colleagues at the Fed with its own ZIRP policy. Yet one of the leading candidates for the White House has been an intimate part of that policy. It might date us, but there's an old saying: "Go Figure!"
Meanwhile, we think there will be some big surprises this year that in the end will bode well for those brave enough to test their upstream swimming skills.
telegraph.co.uk/finance/economics/12100609/Glimmers-of-hope-for-oil-as-Russia-poised-to-slash-output
Sunday, January 17, 2016
MONDAY, MONDAY
Monday, Monday feels so good. But sometimes it's just a blur.
Well, we'll soon find out.
Monday might be a holiday in the U.S., but it won't be for China and a host of economic data expected next week. On Monday evening Chinese industrial production, GDP numbers and retail sales along with earnings reports kick off another week in what has been a rocky start to the new year few will care to remember.
Whether the selloff storm of the last few weeks continues will most likely have much to do those numbers. For now, however, some are suggesting there a hint of capitulation in the air with all the recent carnage.
Despite what anyone says, the selloff has been impressive, Just look at Friday's list of New York Stock Exchange 52 week lows, 944, only the fourth time since 2009 that number exceeded 900. It also saw for the seventh straight day more that 500 NYSE stocks hit yearly lows, something not seen since late 2008.
So what if anything is there to like about all this. For one you might say it represents a kind of detox, a reverse flushing of all the Fed's over-intervention. There an old medical saying: The solution to pollution is dilution. There is little you can tell about the extent of the damage until you've flushed all the detritus out.
Stock buybacks, M&A activity and related shenanigans have little to do with fair market value and real earnings. As one market commentator put it over the weekend: "I actually am encouraged to see the market drop so we can just get to fair value and take it from there, then it is really determined by the path of the economy, and profits and revenues."
This seemed to be a reference to all the air the Fed has pumped into these markets with their gunslinger approach to money printing couched in careful Fed speak. This week U.S. core inflation numbers hit the markets and, as already noted, 'tis the earnings season with some big boys also on tap to report.
OVERNIGHT
More of the same is one way to describe early action in China as stocks sold off Monday.
Here's the way the WSJ described the action.
Here's the way the WSJ described the action.
Shares in most of Asia traded lower Monday, with Australia and Japan flirting with bear market territory as anxieties grew about China weakness and fresh lows in oil.
The S&P/ ASX 200 was down 0.8% at 4853.30, down 19% from its April peak. The Nikkei Stock Average was last off 1.6% at 16,887.75, down 18% from their June peak. Benchmarks enter a bear market when they fall 20% or more from a recent high.
The Shanghai Composite Index was trading near flat after opening down 0.4% at 2891.17. It fell into bear-market territory Friday. The Hang Seng Index, which has stayed in a bear market since August, was 1.2%. South Korea’s Kospi fell 0.3%.
A global rout deepened in Asia amid concerns about China’s slowing economy and falling commodity prices. Weak U.S. retail sales data released Friday also raised concerns about the strength of the U.S. economy.
“A lot of focus is on [China’s central bank] and their ability to stabilize markets,” said Drew Forman, co-head of trading at Macro Risk Advisors. “I wouldn’t say people are coming into buy this market” yet.
We've written a lot about stabilization or the perception of it. That's what investors are looking for, at least the perception of stabilization. And they're not getting it in two areas that count right now, oil and China, two areas that snuck up on them because of their shortsighted fascination with government rhetoric.
In some ways it's one of those be careful what you wish for sagas when one does not stop to think it through, oil producing counties to handle budget gaps need to sell off assets and they appear to be doing that around the globe., putting further pressure on markets.
Commodity based currencies are taking the hit, particularly the Canadian loonie. We noted before the inflation Canadians now face at the super market. Betting against the yuan seems to be the latest trade de jour with some estimates it will by year end fall to 7 to the dollar.
In some ways it's one of those be careful what you wish for sagas when one does not stop to think it through, oil producing counties to handle budget gaps need to sell off assets and they appear to be doing that around the globe., putting further pressure on markets.
Commodity based currencies are taking the hit, particularly the Canadian loonie. We noted before the inflation Canadians now face at the super market. Betting against the yuan seems to be the latest trade de jour with some estimates it will by year end fall to 7 to the dollar.
BREAD BEANS AND BANKING
You've most likely never heard of the 3B virus. But as they say there's first time for everything.
Some banking officials last week expressed surprise that the market has downed their stock prices of late. The selloff comes in the face of a reasonably good earnings period.
Some on the financial press are calling this a disconnect since many Wall Street bankers are expecting the U.S. economy to grow this year around 2.5%, the same as several economists are predicting. Now keep in mind many of these are the same executives who couldn't see any bloat in their industry right up to and even past part way through the last banking crisis.
When discussing the old notion that people see whatever they want to see, it is never more apropos then when discussing bureaucrats, Wall Street bankers and economists. A recession means the end or at least fewer interest rate hikes by the Fed and a flattening of the yield curve. Wall Street bankers make their bread and beans off the yield curve.
Investors are scouring bank holdings, big and small, for signs of exposure to the fracking business. But that's hardly all of the story. Banks--especially the bigger boys--are repeat offenders, recidivists of the first order. They get a lot of help from their friends at the Fed and it has little to do with what's good for you and me or the economy. Those subjects are mere smoke screens.
The WSJ over the weekend quotes a big banking official, "It's starting to spread," referring to more and more energy loans going south, affecting "anybody who was in the game as the oil boom started."
To know who was in the game one just has to recall what Voltaire noted about bankers, all bankers.
"If you see a banker jump out of a window, it's a good idea to follow because there is probably a profit in it." If one banker sees another raking in money on loans--think subprime here--you know what he or she's going to do.
The WSJ piece goes on to say: "Banks have remained relatively lenient with cash-strapped energy companies rather than set tougher lending constraints that could make their survival harder." Wonder if you and I could get the same deal? This is not about whether the economy is doing better. It's about what bankers want your perception of the economy to be. And that's doing better.
People get upset and concerned about the Ebola virus spreading. But there's another virus--probably not as old as Ebola but just as sinister--that's nearly as bad for your financial health. It's called the 3B virus--bread, beans and banking.
Friday, January 15, 2016
ASSUMPTIONS RULE
We don't know how low oil can go and for how long it will stay whenever it gets there, but we do like it when we see quotes like this one.
“As the world continues to face the truth—we are living in an oil market where supply will continue to be greater than demand for the remainder of 2016—prices renew their downward trend,” said Daniel Holder, commodity analyst at Schneider Electric.
Investment sentiment has weakened as international sanctions against Tehran’s nuclear program could be lifted as soon as this weekend, which is likely to lead to a gush of Iranian oil exports.
“Assuming sanctions are lifted, we have Iranian supplies coming back by around 0.5 [million barrels a day], although the increase will not be straight away,” said Matt Parry, senior oil analyst at the International Energy Agency, told MarketWatch in a recent email interview.
Investment confidence is down they tell us and consumer confidence is up from what we read.
It's assumed that the Saudis can't suddenly cut production because they use the revenue to prop up the welfare state without which the whole charade will come tumbling down. It's assumed Iranian oil will soon find its way to the market once nuclear sanctions from the west are rolled back and that the transition will be a smooth one. It's assumed that the Fed and other central bankers around the globe know what they're doing and they will lead rather than trail the curve. It's assumed that the U.S.dollar will remain strong throughout 2016. It's assumed Hilary will be the next president of the country.
It's been assumed for a long time that China's GDP numbers were accurate. It was assumed that ZIRP would bring the common guy back into the market. It was assumed that consumers would spend their savings from lower gasoline prices in the stores rather than driving more miles. The assumptions are like politician speeches: They go on and on. Economics is the dismal science of assumptions, nothing more. Be careful relying on their data to invest your money.
We don't know Warren Buffett, the Omaha Hypocrite, but he just, according to recent data, increased his holdings in Phillips66 by some 900,000 shares at a price in the low 70s. We know refiners are expected to continue to do well in this low-price energy environment. We don't know Mr. Buffett's reasoning and we don't care to guess. Either the old guy knows what he's doing or he doesn't. That's up to you and his history to decide.
What we do know is we're seeing more and more articles about oil prices rebounding. What we also know is that if and when a rebound occurs, the first one or two rebounds will be the low-hanging fruit, the easy money, so entry points matter or, as Mr. Buffett has preached for years, margins of safety.
The more energy prices falter, the closer we're getting to decent margins of safety, value traps notwithstanding. A 2016 outlook is a short-term outlook in our view. And that's pretty typical of the Homo sapien species.
Be careful of assumptions.
“As the world continues to face the truth—we are living in an oil market where supply will continue to be greater than demand for the remainder of 2016—prices renew their downward trend,” said Daniel Holder, commodity analyst at Schneider Electric.
Investment sentiment has weakened as international sanctions against Tehran’s nuclear program could be lifted as soon as this weekend, which is likely to lead to a gush of Iranian oil exports.
“Assuming sanctions are lifted, we have Iranian supplies coming back by around 0.5 [million barrels a day], although the increase will not be straight away,” said Matt Parry, senior oil analyst at the International Energy Agency, told MarketWatch in a recent email interview.
Investment confidence is down they tell us and consumer confidence is up from what we read.
It's assumed that the Saudis can't suddenly cut production because they use the revenue to prop up the welfare state without which the whole charade will come tumbling down. It's assumed Iranian oil will soon find its way to the market once nuclear sanctions from the west are rolled back and that the transition will be a smooth one. It's assumed that the Fed and other central bankers around the globe know what they're doing and they will lead rather than trail the curve. It's assumed that the U.S.dollar will remain strong throughout 2016. It's assumed Hilary will be the next president of the country.
It's been assumed for a long time that China's GDP numbers were accurate. It was assumed that ZIRP would bring the common guy back into the market. It was assumed that consumers would spend their savings from lower gasoline prices in the stores rather than driving more miles. The assumptions are like politician speeches: They go on and on. Economics is the dismal science of assumptions, nothing more. Be careful relying on their data to invest your money.
We don't know Warren Buffett, the Omaha Hypocrite, but he just, according to recent data, increased his holdings in Phillips66 by some 900,000 shares at a price in the low 70s. We know refiners are expected to continue to do well in this low-price energy environment. We don't know Mr. Buffett's reasoning and we don't care to guess. Either the old guy knows what he's doing or he doesn't. That's up to you and his history to decide.
What we do know is we're seeing more and more articles about oil prices rebounding. What we also know is that if and when a rebound occurs, the first one or two rebounds will be the low-hanging fruit, the easy money, so entry points matter or, as Mr. Buffett has preached for years, margins of safety.
The more energy prices falter, the closer we're getting to decent margins of safety, value traps notwithstanding. A 2016 outlook is a short-term outlook in our view. And that's pretty typical of the Homo sapien species.
Be careful of assumptions.
GE NEWS: THE IRONIC, THE HYPOCRITICAL
What are Illinois, Kentucky and Connecticut? No, this isn't Jeopardy.
But the answer is the three worse pension funded states for retirement in the nation. That's funded as in prepared. From an opinion piece in the WSJ.
Hard to believe, but Connecticut was once a low-tax haven in the Northeast. Its business climate has grown so hostile in recent years, however, that General Electric on Wednesday announced that it will move its headquarters to Boston. When Taxachusetts becomes a reprieve, Governor Dan Malloy ought to know Connecticut has a problem.
But the answer is the three worse pension funded states for retirement in the nation. That's funded as in prepared. From an opinion piece in the WSJ.
Hard to believe, but Connecticut was once a low-tax haven in the Northeast. Its business climate has grown so hostile in recent years, however, that General Electric on Wednesday announced that it will move its headquarters to Boston. When Taxachusetts becomes a reprieve, Governor Dan Malloy ought to know Connecticut has a problem.
GE CEO Jeff Immelt began entertaining re-location offers last summer after Connecticut’s legislature grabbed an additional $1.3 billion in tax hikes, the fifth increase since 2011. A company statement noted that the “Connecticut economy continues to struggle as other states offer more opportunities and a better environment for business growth.”
The state’s $40.3 billion two-year budget boosted the top marginal tax rate on individuals earning more than $500,000 to 6.99% from 6.7% and 6.5% in 2010. Mr. Malloy also extended for the second time a 20% corporate surtax that his Republican predecessor Jodi Rellhad imposed in 2009. To add liability to injury, he required corporations to report their “unitary” business income from affiliates around the world and limited deductions for carried-forward losses.
The tax hikes have failed to cure Connecticut’s chronic budget woes, which are symptoms of a bloated government payroll and paltry economic growth. Since 2010 the Constitution State has recorded zero real GDP growth, the lowest in the nation save Louisiana (-0.7%) and Maine (-0.6%). Connecticut is one of only four states (Illinois, Vermont, West Virginia) whose populations have declined since 2012.
What's ironic about this story is GE CEO Jeffery Immelt is a good friend and a big supporter of the President, the same President who protested and did his best to block Pfizer's tax-saving inversion move to Europe. Now we have Immelt and GE leaving Connectitax for the same reason.
Hypocrisy is only hypocrisy when I say it is. Some call it setting up shop.
Thursday, January 14, 2016
WEANING OFF WELFARE
As nearly everyone knows weaning isn't always easy. Weaning off of drug can be quite trying and that's what welfare is--a drug as additive as any drug can be.
Saudi Arabia has a huge weaning problem. To keep its subjects happy Saudi oil pays the freight. The price of that freight fluctuates with the price of oil. Given today's energy mess, Saudi rulers look to be in big trouble, the kind that could erupt and get out of control quicker than one can spell welfare as in farewell to the current government and the House of Saudi.
It's impossible to separate oil, Saudi Arabia and the petrodollar. They are as intertwined as the Three Musketeers. For more on the subject: zerohedge.com/news/2016-01-13/ron-paul-warns-watch-petrodollar.
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