FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
PETER SCHIFF: There's Another Fiscal Cliff That Won't Be So Easy To Avoid (Advisor Perspectives)
"It cannot, or should not, be denied that Washington's latest fig leaf will have a major impact on the markets. The New Year's "relief rally" is understandable given the clear implications that the government will simply print its way out of trouble for as long as it can. …Markets are now driven by stimulus, not fundamentals, and the stimulus is firmly at the wheel.
In the meantime, President Obama and Congressional leaders will take credit for a tax cut that is in reality a huge tax increase in disguise. Government spending is the real source of taxpayers' pain and it is only a matter of time before the bill comes due in the form of inflation. See our Newsletter for fresh analysis as to why inflation may already be higher than you think. Because the deficits will grow even larger, more purchasing power will be lost in this manner than would have been lost had all the Bush tax cuts been allowed to expire. In addition, though entitlements cuts were taken off the table, the real value of benefits could be slashed, as cost of living adjustments fail to keep up with skyrocketing consumer prices. That's a Fiscal Cliff that will not be so easy to avoid."
A new report from Bloomberg says most of Wall Street got their 2012 market predictions wrong. Among them, John Paulson's call that the euro would fall apart, Morgan Stanley's prediction that the S&P 500 would lose 7 percent, and Goldman Sachs' bullish call on Chinese equities.
GARTMAN: The Gold Bug Thesis Is In Tatters (Business Insider)
After yesterday's FOMC minutes revealed that several members of the Fed wanted to end QE3 by 2013, Dennis Gartman, publisher of The Gartman Letter wrote that gold bugs were seeing their thesis in tatters.
"Commodity prices are falling and in some instances are falling quite sharply. Clearly that is the case with gold, for the minutes of the FOMC’s last meeting have shaken the hopes of the most violent “Gold Bugs” malevolently, and have shaken our gold position rather materially. We are, however, rather nicely insulated from the real damage being done to the simplistic gold bugs who have owned and who still own gold predicated upon their thesis that the Fed has lost control of the money supply. That thesis is now in tatters... or at least has been very badly torn in the past twenty four hours... following the single sentence from the Fed’s minutes noted at length above.
…The game has changed for gold if we are to believe the minutes of the FOMC meeting, and at the moment we’ve no choice but to believe them. The only hope for the gold/US$ bulls is that the newly constituted FOMC shall be more dovish than was the FOMC as constituted last year. That case can be made, but only at the margin. We shall accept the FOMC of ’13 as more dovish than was that of ’12, but only marginally so; not materially so."
The Scariest Jobs Chart Ever (Calculated Risk)
The jobs report this morning showed that the U.S. economy added 155,000 jobs and the unemployment rate ticked higher to 7.8 percent. Bill McBride at Calculated Risk wrote "This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis."
Recent disciplinary actions against brokers have shown that even tiny infractions and false reimbursement requests can cost them their jobs and bar them from the industry. Two such cases involve Hartford Life Distributors LLC. and Bank of America Merrill Lynch.
"There are a number of growing hints that the post-2008 environment of “risk on/risk off” with very strong cross-asset-class correlations is reversing. If this were true, it should be really good for specific investors who can concentrate on their asset class and not worry so much about extraneous forces. I had already touched on this a number of times during 2012, not least because smart investors should try to anticipate these trends reversing before the masses. But now, the evidence is accumulating.
It is at its most apparent in the foreign exchange market, with the dramatic decline of the Yen since mid- November, which is clearly a function of the incoming LDP leader Abe planning for a more activist set of policies. Many sell-side commentators are still focused on the two-year US-Japan interest rate differential in following the Yen, which worked so well since 2008, but – at least for now – has clearly broken down. I would remind people that over a longer period – in fact, since the early days of floating – there is very little statistical evidence that US-Japanese interest rate differentials are that crucial for USD/JPY."
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