Tag Archives: tax reform

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. The extreme overbought condition of the US stock market did not correct since the last update and so I will continue to hold a modest amount of cash. Prediction is very difficult, especially about the future… Niels Bohr Every time I see that quote I think to myself, “but that...

The likelihood that either party will ever drain the fetid swamp of corruption that is our tax code is zero, because it’s far too profitable for politicos to operate their auction for tax favors. To understand the U.S. tax code and the endless charade of tax reform, we have to start with four distasteful realities: 1. Ours is not a representational democracy, it’s a political auction in which wealth casts the votes that...

The good news is that the economy just printed its second consecutive quarter of 3% growth, a feat not accomplished since Q2 and Q3 2014. The bad news is that the growth spurt in 2014 was better, quantitatively and qualitatively. Those two quarters produced gains of 4.6% and 5.2% (annualized) in GDP, much better than the most recent 3.1% and 3% prints of Q2 and Q3 2017. And it took a hurricane to get the most recent...

The risk budget this month shifts slightly as we add cash to the portfolio. For the moderate risk investor the allocation to bonds is unchanged at 50%, risk assets are reduced to 45% and cash is raised to 5%. The changes this month are modest and may prove temporary but I felt a move to reduce risk was prudent given signs of exuberance – rational, irrational or otherwise. Moderate Allocation - Click to enlarge   No...

When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky. Which is fine I suppose since we own the devils (although not much in the way of the US variety) but I can’t help but wonder what happens when the spell breaks. Goldilocks may be in the...

Summary: Busy week of economic data and central bank meetings, and reaction to Spanish developments and Japan and Czech elections. Focus below is on the Bank of Canada and ECB meetings and tax reform in the US. The biggest challenge to tax reform is unlikely on the committee level but on the floor votes, especially in the Senate, in a similar way the stymied health care reform. US and German 2-year rates are...

The incoming economic data hasn’t changed its tone all that much in the last several years. The US economy is growing but more slowly than it once did and we hope it does again. It is frustrating for economic bulls and bears, never fully satisfying either. Probably more important is the frustration of the average American, a dissatisfaction with the status quo that permeates the national debate. The housing bubble...