Monthly Archives: September 2014

40% of U.S. on Benefits; More Receive Benefits Than Full-Time-Employed

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“Let’s take the 2012 welfare total of 109,631,000 and add the 6 million Obamacare Medicaid expansion and the 17 million who get Obamacare subsidies and you have a minimum of 126 million receiving some sort of means-tested welfare vs. 118.5 million who ‘usually’ work full time.  The 2013 US Population Estimate is 316 million.  Using 316 million as a rough estimate of the 2014 population (it would likely be higher) and 126 million on welfare (that number is also higher, perhaps way higher), about 40% of the country is on some form of means-tested welfare, up from 35.4% at the end of 2012.  Over 50% gets welfare or some other form of non-means-tested assistance.”

http://globaleconomicanalysis.blogspot.com/2014/08/40-of-country-on-welfare-obamacare.html

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A Guide to Stock Splits

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“There is an ongoing debate over whether stock splits are a plus for investors. Warren Buffett is one detractor. The class A shares of his holding company, Berkshire Hathaway, have never split and currently trade at a lofty $204,500.  That’s because the Oracle of Omaha prefers investors who see themselves as business owners who plan to stick around for a long time, not simply traders. A split would attract ‘people who buy for non-value reasons’ and ‘are likely to sell for non-value reasons,’ Buffett wrote in his 1983 letter to shareholders.  However, some studies have found that companies that split their shares tend to outperform their peers.”

http://www.investingdaily.com/19366/a-guide-to-stock-splits/

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Australia Stock Market Set to Shrink on Foreign Takeovers, Rocket Higher

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“Australia’s stock market is shrinking for the first time in eight years. For Credit Suisse Group AG, that’s a signal to buy.  Buybacks, acquisitions and delistings will outweigh equity issuance by as much as A$2 billion ($1.9 billion) this year, the first time that has happened since 2006, according to data compiled by Credit Suisse.  The shrinking A$1.5 trillion stock market is struggling to accommodate Australia’s A$1.6 trillion in pension savings, which are forecast to almost double by the end of this decade.  Credit Suisse says the falling share count will boost the benchmark index to 6,000 points by year end as demand outweighs supply. That’s about 8.2 percent higher than yesterday’s close.”

http://www.bloomberg.com/news/2014-07-22/australia-stock-market-set-to-shrink-on-foreign-takeovers.html

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Norway’s $810B Sovereign Wealth Fund Shuns Stocks on Reversal Bet

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“Norway’s sovereign wealth fund, the world’s largest, warned that stock-market gains may reverse as Europe’s biggest equity investor said it won’t use new inflows to buy more shares.  ‘Our share in the stock market has been stable or falling even though markets are rising, and that means in practice that we’re not using inflows to buy stocks,’ Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, said at a press conference today in Oslo. The fund is preparing for a ‘correction’ in stock prices, he said.  The warning follows a surge in stock values that added 7.6 percent to the fund’s equity portfolio last quarter.”

http://www.bloomberg.com/news/2013-10-25/norway-wealth-fund-gains-5-as-recovery-boosts-global-stocks.html

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John Hussman: Yes, This Is An Equity Bubble

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“Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000. The median price/revenue ratio of S&P 500 components is already far above the 2000 level, and the average across S&P 500 components is nearly the same as in 2000.”

http://www.hussmanfunds.com/wmc/wmc140728.htm

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Several Swiss banks pull out of US tax settlement programme

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“At least 10 Swiss banks have withdrawn from a U.S. programme aimed at settling a tax dispute between them and the United States, Swiss newspaper NZZ am Sonntag said on Sunday, quoting unnamed sources.  Around 100 Swiss banks came forward at the end of last year to work with U.S. authorities in a programme brokered by the Swiss government to help the banks make amends for aiding tax evasion.  ‘At least 10 banks that had decided at the end of 2013 to pay a fine have withdrawn their decision,’ NZZ am Sonntag said, quoting unnamed lawyers and auditors. It did not name the banks concerned.  The newspaper said the banks were convinced they had not systematically broken U.S. law.”

http://uk.reuters.com/article/2014/08/31/uk-swiss-banks-tax-idUKKBN0GV0A520140831

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School districts drop federal lunch program after kids won’t eat

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“The Campbell County district is opting out of the federal school lunch program, forfeiting hundreds of thousands of dollars in federal funding.  The reason: Kids didn’t like their healthful lunches.  The 2,800-student district joins a small but growing number of school districts across the country – mostly wealthy districts who can afford to forfeit the money – who have dropped out of the federal program in the wake of stricter nutritional standards.  Schools said students don’t like the unsalted potatoes, low-fat cheese or the mandatory fruits and vegetables. They throw food away or decide not to eat at all.  If kids don’t buy lunch, the district loses money and has to dig into its general fund.”

http://www.cincinnati.com/story/news/education/2014/08/09/district-drops-federal-lunch-program/13847169/

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Home Ownership for Young Americans Is Falling. So What?

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portallogo3

“The government owns Fannie Mae and Freddie Mac. It subsidizes mortgage rates: low. They should use the home they bought as a starter home as an investment property. This is sensible investing. But this is not what most people do.  Young people who live in areas in which they cannot afford to buy a home are making a mistake, to this extent: they could have begun to develop equity by purchasing the first home with a 30-year mortgage. That is a tremendous opportunity missed. But they were going to miss it anyway. They were not going to use the property as an investment property. They were going to get on the treadmill of social status, buying ever larger houses in ever nicer neighborhoods.”

http://www.garynorth.com/public/12755.cfm

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Citic Securities: Interest in Chinese REITs High

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“Interest in Chinese REITs is high following Citic Securities Co.’s listing of the country’s first exchange-traded REIT last month, according to the general manager of a Citic Securities subsidiary.  Citic Securities Co. listed the REIT, called the Citic Qihang Specific Asset Management Plan, on May 21 after raising $835 million at the end of April from a handful of institutional investors. The REIT is underpinned by two office buildings originally owned by Citic Securities in Beijing and Shenzhen.  Citic Securities is now preparing to launch dozens of other REITS on behalf of state-owned investment companies, industrial companies, financial institutions and property developers.”

http://blogs.wsj.com/moneybeat/2014/06/03/citic-securities-interest-in-chinese-reits-high/

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China’s falling real-estate prices trigger protests, clashes

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“The sharp drop in China’s housing prices has led to an outburst of anger among property owners, leading to violent clashes in some cases, according to local media reports Tuesday.  In one case, scores of property owners surrounded a Shanghai sales office of Greentown China Holdings Ltd. to protest the developer’s 25% cut to prices within a five-day period, according to a report on the NetEase news portal site 163.com.  Protesters held banners with slogans such as ‘You cheated us!’ and ‘300,000 yuan [$48,750] worth of assets evaporate within five days — years of work in vain!’ according to photographs of the demonstration posted on the site.”

http://www.marketwatch.com/story/chinas-falling-real-estate-prices-trigger-protests-clashes-2014-08-26

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