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The World's Most Important Chart According To Jan Hatzius (Business Insider)
Goldman Sachs' Jan Hatzius recently wrote that the U.S. will see growth above 3 percent following 2013. At the center of his call was a chart titled "Private Sector Surplus Offsets Government Deficit" which showed that government deficits are the mirror image of private sector savings and that the key to projecting growth is to think about which sectors are increasing and decreasing their savings.
Hatzius told Business Insider's Joe Weisenthal that growth should start picking up in 2013 because, "if the business sector is basically trying to reduce its financial surplus at a more rapid pace than the government is trying to reduce its deficit then you’re getting a net positive impulse to spending which then translates into stronger, higher, more income, and ultimately feeds back into spending."
In his latest Breakfast with Dave report, Gluskin Sheff's David Rosenberg is seeing two themes, one 'emerging', and one 'ongoing'.
"The emerging theme is the out-of-favor gold mining stocks. Cheap, cheap, cheap. The group is down 8% year-to-date even as the price of gold has rallied 10 percent… they even pay a dividend in these income-crazed times. The second theme is income-equity."
President Obama has said that letting the Bush tax cuts expire would simply bring top tax rates up to the level they were at during the Clinton years. But this is incorrect because the Medicare contribution tax is slated to come in to effect on January 1. This is a 3.8 percent tax on interest, dividends, capital gains, and passive business income for those with incomes over $200,000, or $250,000 for couples.
"The biggest issue, however, is the additional penalty the tax will impose on the savings that finance investment and fuel long-run economic growth."
Richard Bernstein's 13 Investment Themes for 2013 (Richard Bernstein Advisors)
Every December Richard Bernstein Advisors (RBA) publishes a list of investment themes for the coming year. For 2013, they have 13 investment themes this includes A) being bullish on U.S. equities which Bernstein says are "in the midst of a major bull market that could ultimately rival 1982's bull market". B) "Hedge funds continue to experience outflows to traditional asset allocation funds."
PIMCO's Mohamed El-Erian writes that the media is too focused on if the fiscal cliff will be avoided and what a deal would contain. He says it is equally important to note how the negotiations are carried out. El-Erian writes that politicians are in a "multi-round game" in which confidence building becomes important and both sides have to have "a common vision of the ultimate destination". In the absence of this American innovation and entrepreneurship will be overshadowed by dysfunction in Congress.
America Faces Another Cliff That's $1.5 Trillion High (Financial Times)
The fiscal cliff has garnered a lot of attention. But Gillian Tett writes that the December 31 expiration date for the Transaction Account Guarantee (TAG) program has left the U.S. with a potential $1.5 trillion cliff. Outflows prompted by the expiration could total half that and could send interest rates plunging.
A documentary uploaded by Financial Industry Regulatory Authority (FINRA) aimed at educating people on investment fraud included a segment on Steve Sampler of Cetera Advisor Networks. Sampler became the victim of a scam when he invested in T-Bar Resources LLC's. Reading his story is important for investors because its a reminder than those with a finance background all too often fall for investment scams themselves and that you need to fight the instinct to trust people.
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