Salient to Investors: Nassim Taleb says there’s a simple mathematical basis for why governments continually miss their deficit targets. The problem is that the economic data forecasts the government uses are taken as a given and not looked at as mere probable likelihoods. The government tends to underestimate the damage when things get worse
READ MORE... →Salient to Investors: Some financial advisers are telling wealthy clients that the remainder of 2012 is a last-chance sale on federal tax rates before taxes rise in January. Ron Florance at Wells Fargo said pressure to reduce budget deficits will mean higher taxes sooner or later so take advantage of historically low rates and move taxable
READ MORE... →Salient to Investors: The social security system will be still be able to pay at least 70% of benefits in coming decades, even if no action is taken. John Bogle at Vanguard says Social Security should be considered as part of a bond allocation, meaning a person could allocate a greater portion of
READ MORE... →Salient to Investors: New York City’s economic inequality rivals that of a third-world country – in 2011, the median annual income for the bottom 20% was less than $9,000, the top one percent was $2.2 million. Income inequality is the highest since the Great Depression – the top 1% took 93 percent of the income earned
READ MORE... →Salient to Investors: Investors have pulled $440 billion from U.S. equity mutual funds since 2008. E.E. Geduld at Cougar Trading says crashes happen when investors become convinced they’ve lost control – the volumes we can now handle are gigantic, but the exit door hasn’t changed in size. Timothy Ghriskey at Solaris Group said
READ MORE... →Salient to Investors: Technology companies are expanding and investing in real estate, helping a nascent rebound in US office development from the lowest levels since at least 1960 as default rates on construction mortgages decline from a 2010 peak. Jon Southard at CBRE Econometric Advisors said there is a surprising amount of construction,
READ MORE... →Salient to Investors: Copper traders are the most bullish in a year versus the most bearish in four months a week ago. Hedge fund bets on a rally are near the highest in 14 months. Christin Tuxen at Danske Bank said the market has been way too pessimistic on China – China is will stabilize and avoid
READ MORE... →Salient to Investors: Charles Comiskey at Bank of Nova Scotia said the market is finding its bottom and becoming a range trade again – there’s no change in the big picture. Brian Barry at Investec said the economic backdrop is weak and sees no sustainable improvement in economic indicators. Gary Shilling at A. Gary Shilling & Co said
READ MORE... →Salient to Investors: Angus Campbell at Capital Spreads said earnings have come back a little, but that is to be expected given the overall growth environment – it’s natural to see profit taking near highs for the year. 80 of 116 S&P 500 companies have posted earnings that exceeded analyst estimates, 33 missed. Investors have pulled $440
READ MORE... →Salient to Investors: The New York Fed says investors are beginning to price in a higher risk of default on senior bonds issued by large institutions. Since the mid-1990s, banks have grown too big due primarily to non-deposit liabilities, not retail deposits. The five biggest US banks control more than half of all US banking
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