The most important upcoming day is not Election Day November 2nd, but rather, the day after, November 3rd. Why? That is the day the Federal Reserve is expected to announce QE2 (Quantitative Easing #2 – more money for the system.) However, there is currently an internal civil war occurring at the Fed since some believe that QE2 will do more harm than good. Those in opposition argue the banks will simply hold onto the money and not loan it out, choosing to build up their cash reserves as the foreclosure fiasco continues to develop. (This foreclosure fiasco will be worse than the Lehman affair.) The stock market has built QE2 into its expectations. What happens if it doesn’t take place?
November 2nd? Just a sideshow for November 3rd.
Till next time,
Bill
P.S. – In Europe, anarchy can be defined by angry participants taking to the streets. In the United States, anarchy can be defined by not paying your mortgage because it’s a “broken chain of title.” More on this next time.
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, October 14, 2010
Tuesday, October 12, 2010
Foreclosure Fiasco
One year ago, I started talking about Greece (Grease). Most people thought I meant the low fat vs. high fat controversy. That’s an understandable mistake; however, I was referring to the one punctuated with high-fat bloating of governmental budgets and unsustainable indebtedness. It was obvious to me that a crisis was lurking right around the corner, and that crisis quickly unfolded.
Now, an even higher event has raised its ugly head: foreclosures. For years, various institutions created mortgages and held the deeds of trust in their vaults. However, the promissory notes were sold-off in a systematic method known as securitization, a process in which a single promissory note was sliced and diced, resulting in multiple owners. As a result, it’s almost impossible to know the identity of the actual owner. That is where the problem arises. To legally foreclose, both the deed of trust and the promissory note must be in hand by the foreclosing party. This is not a question of whether owners should be foreclosed; it’s a question of the legal right to do so. Bank of America has suspended foreclosures in all fifty states. Forty attorney generals have recommended (here come the lawsuits) a total moratorium on foreclosures. The White House has taken a position that it is only a paper snafu, a reminder of when Ben Bernanke said that subprime mortgages were contained.
This problem will bring any housing recovery to a dead halt. It will create such a firestorm that even I can’t imagine, and it will make us all long for the days of Greece.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Now, an even higher event has raised its ugly head: foreclosures. For years, various institutions created mortgages and held the deeds of trust in their vaults. However, the promissory notes were sold-off in a systematic method known as securitization, a process in which a single promissory note was sliced and diced, resulting in multiple owners. As a result, it’s almost impossible to know the identity of the actual owner. That is where the problem arises. To legally foreclose, both the deed of trust and the promissory note must be in hand by the foreclosing party. This is not a question of whether owners should be foreclosed; it’s a question of the legal right to do so. Bank of America has suspended foreclosures in all fifty states. Forty attorney generals have recommended (here come the lawsuits) a total moratorium on foreclosures. The White House has taken a position that it is only a paper snafu, a reminder of when Ben Bernanke said that subprime mortgages were contained.
This problem will bring any housing recovery to a dead halt. It will create such a firestorm that even I can’t imagine, and it will make us all long for the days of Greece.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, October 7, 2010
It's Been a While
The month of September represented a period of time to truly sit back and become awestruck. Not because of the so-called good things that happened, which were implied by the rising stock market, but rather because of all the bad things that were suggested by a rising bond market and the dramatic decline in interest rates. The free-fall of the ten-year treasury to levels not seen since the Dow Jones was in 6,000 territory tells the story of increasing unemployment, rising foreclosures, escalating bankruptcies, significantly more food stamp participants, and a currency war that is just beginning to heat up.
If the Dow is right, and the level of 11,000 is accurate, then all the prior economic problems are simply an illusion that will drift away like a dream. However, if the bond market is right, then that dream suddenly becomes an unbearable nightmare, making 1929, 1987, 1999, and 2008 seem downright mild. Unemployment, foreclosures, bankruptcies, and food stamps are no dream, and the currency war will become a veritable nightmare.
Preservation, protection, and a keen-eye are the watchwords.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
If the Dow is right, and the level of 11,000 is accurate, then all the prior economic problems are simply an illusion that will drift away like a dream. However, if the bond market is right, then that dream suddenly becomes an unbearable nightmare, making 1929, 1987, 1999, and 2008 seem downright mild. Unemployment, foreclosures, bankruptcies, and food stamps are no dream, and the currency war will become a veritable nightmare.
Preservation, protection, and a keen-eye are the watchwords.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, September 3, 2010
The Service Sector
Today, the monthly jobs report came out. My guess is that less bad is considered not bad. However, the key component of today’s report was something overlooked by everyone. To me, the announcement that the ISM service industry declined dramatically is the most significant news of the day. Why? Simply put, the United States thrives on service, not manufacturing. In fact, companies are not creating new manufacturing sites, nobody is rushing to build plants in the United States, and businesses are manufacturing overseas. No matter how much the President strong-arms, that trend seems likely to continue.
On this Labor Day, as we celebrate the American workforce, we must keep perspective. As the stock market traders take a weekend vacation, seasonality reigns supreme, and hope fills the air, just remember, on Tuesday, it’s back to reality.
Have a wonderful weekend.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
On this Labor Day, as we celebrate the American workforce, we must keep perspective. As the stock market traders take a weekend vacation, seasonality reigns supreme, and hope fills the air, just remember, on Tuesday, it’s back to reality.
Have a wonderful weekend.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Wednesday, August 25, 2010
It's Lonely at the Top
In December of 1989 the Japanese Nikkei (stock market) hit an all-time high of 40,000; a level many believed was just a stopping-off point for much greater things to come. Unfortunately, for those who bought with that expectation, they were sadly disappointed. The same could be said for the NASDAQ, which closed at an all-time high of 5,048 in March of 2000. In October of 2007, the Dow Jones Industrial Average closed at a record of 14,164. So, have we seen the Dow hit its all time peak?
A case can be made that the Nikkei, the NASDAQ, the Dow, housing, the Beanie Baby, and the tulip bulb, will never reach the heights they once attained. In fact, we may be entering an era where 5-digit Dow Averages are a thing of the past. Could we even conceive of a 3-digit Dow?
Anything is possible when deflation rules the roost.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
A case can be made that the Nikkei, the NASDAQ, the Dow, housing, the Beanie Baby, and the tulip bulb, will never reach the heights they once attained. In fact, we may be entering an era where 5-digit Dow Averages are a thing of the past. Could we even conceive of a 3-digit Dow?
Anything is possible when deflation rules the roost.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Monday, August 16, 2010
Getting on Board
Sometimes, it gets a little too comfortable when others start agreeing with you. That’s the position I now find myself in since I've been saying that economics always wins out in the end. Each day that passes another nail has been driven into the coffin of not only the domestic economy, but the global economy as well. House prices are plummeting again, unemployment is accelerating, Israel and Iran appear to be headed for a showdown, and Nero fiddles (vacation in Martha’s Vineyard) as Rome burns.
Goldman Sachs has just released their trading desk analysis which says in part: “In conclusion, as discussed in recent client meetings, while the timing is difficult, we remain concerned for the larger topping structure that is still being formed on the S& P 500 Index which will eventually lead to another meaningful decline.”
Richard Russell, Dennis Slothower, Peter Eliades, Robert Prechter, and Arch Crawford, are all calling for an historic stock market top that will not be seen again for many years, and a downside that will at least rival 1930 to 1932, and maybe worse.
Suddenly, that simple little boat I've been rowing alone has started to get very crowded.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Goldman Sachs has just released their trading desk analysis which says in part: “In conclusion, as discussed in recent client meetings, while the timing is difficult, we remain concerned for the larger topping structure that is still being formed on the S& P 500 Index which will eventually lead to another meaningful decline.”
Richard Russell, Dennis Slothower, Peter Eliades, Robert Prechter, and Arch Crawford, are all calling for an historic stock market top that will not be seen again for many years, and a downside that will at least rival 1930 to 1932, and maybe worse.
Suddenly, that simple little boat I've been rowing alone has started to get very crowded.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, August 10, 2010
Deflation - Ben Bernanke: "Unusually Uncertain" Bill Tatro: "Very Certain"
Ben Bernanke recently called the economy “unusually uncertain.” KKR cancelled their $500 million IPO, saying market conditions were not favorable. Tim Geithner said raising taxes on the wealthy is justified for the economy. Each of these three items could be discussed for hours, and probably will be. However, collectively, they are indicators which point to an economic environment that has not been seen for many years. It’s called classic deflation, characterized by soaring unemployment, excessive bankruptcies, high taxes, and most important, complete lack of confidence in the system. It is this last item which could be the worst. When people give up on the system, strange things happen. The unemployed stop looking for work and drop out. The employers give up because they’re taxed to death. The consumer stops consuming for lack of money, and those that do have money to spend expect prices to be lower in the future, and likewise stop consuming.
And the stock market you ask? Well, after the dust finally settles, many will ask: “Why didn’t I see it coming?”
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
And the stock market you ask? Well, after the dust finally settles, many will ask: “Why didn’t I see it coming?”
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, August 6, 2010
Jobs, Jobs, Jobs??? (Why Rats are Leaving a Sinking Ship)
The nonfarm payrolls dropped by 131,000 in July. However, the greater untold story is the June jobs number was revised downward from a loss of 125,000 jobs, to a loss of 221,000 jobs. Like it or not, there is no way to spin this into good news. As we have been continually telling you, the worst could be ahead, not behind. Each day, new data comes forth to reconfirm our position. Since the mainstream media will not give you the necessary information to formulate your own (informed) opinion, we will take up the slack.
The Federal Reserve’s jobs strategy, inspired by the Whitehouse, or vice-versa, has obviously failed and most people, including the Fed officials, recognize it. Thus, the Fed must take some action next week which more than likely is to announce quantitative easing # 2. Specifically, buying more treasuries and possibly buying more mortgage backed securities. Should they do that, it is possible the same action could occur as happened last time. “In March 2009, the Fed surprised investors by announcing it would purchase treasuries and more mortgage related debt that it had already stated. That precipitated 10-year yields plunging 47 basis points, the biggest single-day drop since the 1987 stock market crash.” – (CBS Marketwatch)
INTEREST RATES GO DOWN, AND BOND PRICES GO UP!!!
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
The Federal Reserve’s jobs strategy, inspired by the Whitehouse, or vice-versa, has obviously failed and most people, including the Fed officials, recognize it. Thus, the Fed must take some action next week which more than likely is to announce quantitative easing # 2. Specifically, buying more treasuries and possibly buying more mortgage backed securities. Should they do that, it is possible the same action could occur as happened last time. “In March 2009, the Fed surprised investors by announcing it would purchase treasuries and more mortgage related debt that it had already stated. That precipitated 10-year yields plunging 47 basis points, the biggest single-day drop since the 1987 stock market crash.” – (CBS Marketwatch)
INTEREST RATES GO DOWN, AND BOND PRICES GO UP!!!
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, July 20, 2010
"Facts are Stubborn Things" - John Adams
It seems this economy takes one-step forward with a new government program, and two-steps back with the expiration of the same program. Case in point, housing. For several months, the government granted an $8,000 credit for home buyers as an incentive. Contrary to expectations, this housing program cannibalized future purchases, much the same way as cash-for-clunkers. Now, in the most recent announcements, we see homebuilder’s attitudes approaching historic lows and homebuyers nowhere to be seen.
Housing and jobs are the linchpins which are necessary to create a strong economy. As both of them continue to erode, the strength of our economy will continue to be drained. This makes a dramatically lower stock market no surprise.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Housing and jobs are the linchpins which are necessary to create a strong economy. As both of them continue to erode, the strength of our economy will continue to be drained. This makes a dramatically lower stock market no surprise.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, June 22, 2010
On the Bubble
When all is said and done, barrels of oil spilled in the Gulf of Mexico could possibly be in the billions, not millions. Watching the oil continuing to gush would lead even the most unsophisticated observer to the conclusion that trouble continues to brew.
Listening to Standard & Poor’s officials discuss ratings of European countries, including the UK, would lead even the most unsophisticated observer to the conclusion that trouble continues to brew. (Did I just repeat myself?) The UK has just announced an emergency budget, Spain needs additional measures to met fiscal targets, France has announced high deficits, and Greece continues to melt like the Wicked Witch of the West.
However, keep in mind, that while the aforementioned events are headline news, little notice is being taken of the increasing expansion in spreads between investment-grade bonds and junk-bonds. In April, the height of the bear market rally and when complacency was at its greatest, the difference between yields of investment-grade bonds and junk-bonds was the lowest in many years. In other words, there was no reward for taking risk, and the market bubble in junk-bonds had reached historic proportions. Like all bubbles, such as dot-com, housing, oil, and tulip bulbs, few recognize the environment they’re in until it’s too late. (Although, I might add that very quietly, a few smart money types are in fact leaving the bond risk-trade and re-entering the safe haven of U.S. Treasuries.) Unfortunately, the general public, just like in all other bubble situations, will recognize their mistake after the fact. Once again, too late.
Alas, if only on careful examination, even the most unsophisticated observer will be left with the conclusion that trouble continues to brew.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Listening to Standard & Poor’s officials discuss ratings of European countries, including the UK, would lead even the most unsophisticated observer to the conclusion that trouble continues to brew. (Did I just repeat myself?) The UK has just announced an emergency budget, Spain needs additional measures to met fiscal targets, France has announced high deficits, and Greece continues to melt like the Wicked Witch of the West.
However, keep in mind, that while the aforementioned events are headline news, little notice is being taken of the increasing expansion in spreads between investment-grade bonds and junk-bonds. In April, the height of the bear market rally and when complacency was at its greatest, the difference between yields of investment-grade bonds and junk-bonds was the lowest in many years. In other words, there was no reward for taking risk, and the market bubble in junk-bonds had reached historic proportions. Like all bubbles, such as dot-com, housing, oil, and tulip bulbs, few recognize the environment they’re in until it’s too late. (Although, I might add that very quietly, a few smart money types are in fact leaving the bond risk-trade and re-entering the safe haven of U.S. Treasuries.) Unfortunately, the general public, just like in all other bubble situations, will recognize their mistake after the fact. Once again, too late.
Alas, if only on careful examination, even the most unsophisticated observer will be left with the conclusion that trouble continues to brew.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, June 4, 2010
Vice-President Joe Biden Touts the Success of the Stimulus Program!
The U.S. economy added 431,000 jobs in May. However, don’t forget to subtract the 411,000 census workers, 31,000 temporary health-services employees, and 215,000 jobs due to the birth-death adjustment. That equals a negative 226,000 jobs. In addition, the unemployment rate declined from 9.9% to 9.7% because 322,000 people dropped out of the labor pool. Finally, those unemployed longer than 27-weeks hit a new record of 46%.
Hey Joe, how’s that for success!
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Hey Joe, how’s that for success!
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, June 1, 2010
Famous Last Words
“Attempting to manage risk in an environment where everything that could go wrong does go wrong seems like a fruitless endeavor.”
- Brad Balter (Balter Capital Management, LLC, a Boston firm that invests in hedge funds for clients.)
Remember, in our current economic environment, the only defense might be taking a contra position to the stock market. When everything that could go wrong does go wrong, short positions, government bonds, and cash may not be a fruitless endeavor.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
- Brad Balter (Balter Capital Management, LLC, a Boston firm that invests in hedge funds for clients.)
Remember, in our current economic environment, the only defense might be taking a contra position to the stock market. When everything that could go wrong does go wrong, short positions, government bonds, and cash may not be a fruitless endeavor.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Monday, May 24, 2010
“Bank bill legislation promises the most significant overhaul in regulation of U.S. banks since the Depression”
CBS Marketwatch (5-21-10)
“Sound and fury signifying nothing”
Bill Tatro (5-21-10)
On the surface, it would appear both the House and Senate are jumping on populist opinion and attempting to overhaul Wall Street. However, most individuals in the financial community recognize that the first step toward cleaning-up Wall Street is to reinstate the Glass-Steagall Act. Established in 1933, Glass-Steagall essentially separated commercial banking and investment banking when Congress recognized that banks being involved in day-to-day trading with investors and depositors money was the surest way for both chaos and failure.
Unfortunately in 1999, Bill Clinton, with prodding from former Treasury Secretary Robert Rubin and current Director of the White House’s National Economic Council Larry Summers, signed into legislation the repeal of Glass-Steagall. Since that time, we have experienced the dot-com crash, the housing collapse, the credit fiasco, and now the sovereign debt crisis. The genie is out of the bottle, and chaos reigns supreme. Here’s the rub. Congressmen and senators receive significant financial support from Wall Street, and as we’re learning from our relationship with China, you don’t bite the hand that feeds you. You might even say, “It’s All About Money.”
Is the current bank bill significant legislation or simply a smoke screen to make the populous feel happy? In my opinion, until we restore the Glass-Steagall Act, it will be one crisis after another.
Keep your seatbelt fastened tight.
Till next time,
Bill
CBS Marketwatch (5-21-10)
“Sound and fury signifying nothing”
Bill Tatro (5-21-10)
On the surface, it would appear both the House and Senate are jumping on populist opinion and attempting to overhaul Wall Street. However, most individuals in the financial community recognize that the first step toward cleaning-up Wall Street is to reinstate the Glass-Steagall Act. Established in 1933, Glass-Steagall essentially separated commercial banking and investment banking when Congress recognized that banks being involved in day-to-day trading with investors and depositors money was the surest way for both chaos and failure.
Unfortunately in 1999, Bill Clinton, with prodding from former Treasury Secretary Robert Rubin and current Director of the White House’s National Economic Council Larry Summers, signed into legislation the repeal of Glass-Steagall. Since that time, we have experienced the dot-com crash, the housing collapse, the credit fiasco, and now the sovereign debt crisis. The genie is out of the bottle, and chaos reigns supreme. Here’s the rub. Congressmen and senators receive significant financial support from Wall Street, and as we’re learning from our relationship with China, you don’t bite the hand that feeds you. You might even say, “It’s All About Money.”
Is the current bank bill significant legislation or simply a smoke screen to make the populous feel happy? In my opinion, until we restore the Glass-Steagall Act, it will be one crisis after another.
Keep your seatbelt fastened tight.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, May 11, 2010
Re-evaluation
It took less than twenty-four hours for the analysts (yours truly excluded), to ask the following questions: Exactly how does the nearly one-trillion dollar European bailout package work? Who is paying the money, and at what interest rate? How are they paying it back? How does that help growth for the European countries, and since when do you get out of debt by going deeper into debt? The lemming media does not see things as they are, only as they want them to be. There may be a bailout, but only at the risk of inflaming an entire continent.
Meanwhile, gathering few headlines, the Chinese stock market is down 20% from its November 2009 peak. Now in bear territory, and with spiking real estate prices and ever increasing inflation, China could be on the verge of implosion. Just another little tidbit for the market to chew on.
Have you fastened your seatbelt yet?
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Meanwhile, gathering few headlines, the Chinese stock market is down 20% from its November 2009 peak. Now in bear territory, and with spiking real estate prices and ever increasing inflation, China could be on the verge of implosion. Just another little tidbit for the market to chew on.
Have you fastened your seatbelt yet?
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, May 7, 2010
Apocalypse How?
Glitch in the system? Bad trade? A finger typed “B” instead of “M”? Or, did somebody scream “Fire!” in a crowded theater and everyone ran to the exits at the same time? How else to explain yesterday’s nearly one-thousand point intraday decline on the Dow Jones Industrial Average. Welcome to the 21st century of electronic trading.
The Wall Street of today is no different than the Wall Street of yesteryear. In the old days, after work, traders from the various brokerage firms would congregate at Harry’s Bar & Grill, located in the basement of the American Stock Exchange. They would talk about what they did for the day, but more important, they would talk about what they were going to do for the next day. They would compare notes, discuss, argue, and like lemmings, would be swayed by the person with the strongest argument. Fast forward to the present. The traders may congregate once in a while at a bar, but more importantly their computers are congregating every single day. High frequency trading, the centerpiece of Wall Street today, is the current example of what yesteryear was all about. If one proprietary trading desk is moving in a certain direction, every other computer knows it, and will adjust their positions accordingly. Yesterday, for whatever reason, one computer moved in a massive negative direction, and like lemmings, the rest of the computers followed along.
For us to believe this was a one-time event, that this is not symptomatic of what will happen in the future, might be a monumental mistake. This could happen again, again, and again. The reality is that economics usually catch-up and dictate the directions of markets. Whether its employment, foreclosures, or a Greek tragedy, economic data will eventually be reflected in the marketplace. With high frequency trading it will be reflected in the blink of an eye.
As I’ve continually been saying, get ready. The rollercoaster ride has just begun.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
The Wall Street of today is no different than the Wall Street of yesteryear. In the old days, after work, traders from the various brokerage firms would congregate at Harry’s Bar & Grill, located in the basement of the American Stock Exchange. They would talk about what they did for the day, but more important, they would talk about what they were going to do for the next day. They would compare notes, discuss, argue, and like lemmings, would be swayed by the person with the strongest argument. Fast forward to the present. The traders may congregate once in a while at a bar, but more importantly their computers are congregating every single day. High frequency trading, the centerpiece of Wall Street today, is the current example of what yesteryear was all about. If one proprietary trading desk is moving in a certain direction, every other computer knows it, and will adjust their positions accordingly. Yesterday, for whatever reason, one computer moved in a massive negative direction, and like lemmings, the rest of the computers followed along.
For us to believe this was a one-time event, that this is not symptomatic of what will happen in the future, might be a monumental mistake. This could happen again, again, and again. The reality is that economics usually catch-up and dictate the directions of markets. Whether its employment, foreclosures, or a Greek tragedy, economic data will eventually be reflected in the marketplace. With high frequency trading it will be reflected in the blink of an eye.
As I’ve continually been saying, get ready. The rollercoaster ride has just begun.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Monday, May 3, 2010
Ode to Greece
“It has been a year since the world was jolted by the September 11th incident (2001 World Trade Center terrorist attack.) The international community, especially the superpowers, has declared an all-out war against terrorism. To them, terrorism is confined merely to physical attacks on countries and their people. In fact, their economic onslaught on developing countries which have brought unrest, miseries, and the downfall of governments, is equally violent. In fact, the remedies which they prescribed destroyed these nations. The high interest rates, withdrawal of subsidies, and floating the exchange rate further worsened the economy, and resulted in instability. Those who benefited were the currency speculators. Indeed, economic terrorist do not differ from other terrorists.”
- Malaysian Prime Minister Mahathir Mohamad (2003 budget speech-September 20th 2002)
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
- Malaysian Prime Minister Mahathir Mohamad (2003 budget speech-September 20th 2002)
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, April 16, 2010
Main Street/Wall Street
“Initial jobless claims climb to 484,000”
“The number of workers receiving extended federal benefits rose 161,101 to 5.97 million”
“All told, 11.08 million people were collecting some type of unemployment benefits in the week of March 27th”
- CBS Marketwatch 4-15-10
“The heavy concentration of bullish strategies among all classes of traders pushed the Option Speculation Index to another recent high…., the only comparison in history that we have are the weeks around the peak in the Spring of 2000. The last time we were here, the tech bubble was about to pop, and result in 50% losses for the NASDAQ virtually overnight. This time around, this is not a tech isolated bubble. This is a global bubble funded by the endless money printing. When it pops, it will take down every asset class with it.”
- The Sentiment Trader 4-12-10
“Recovery picking up steam”
- Ben Bernanke 4-14-10
"U.S. homebuilders grow more optimistic in early April"
- National Association of Homebuilders 4-15-10
“Foreclosures soared to 367,056 in March, up 19% from February, 8% higher than March of 2009 and 56% higher from March 2008 according to the foreclosure data specialist RealtyTrac.”
- The Atlanta 4-14-10
“A vast majority of technical indicators such as the CBOE Volatility Index, Investors Intelligence Advisory Survey, CBOE Equity Put/Call Ratios, Daily Sentiment Index, and the thirty-day NYSE Trin, are aligned at or near extremes. We have a very long history with these indicators and their message is bearish. It is nearly the exact opposite extreme to that which occurred in the first few months of 2009.”
- Elliot Wave Financial Forecast Services 4-14-10
“Regardless of the reality…..what matters most for the direction of the stock market is to determine how everybody FEELS about it. "
- Nick Godt (CBS Marketwatch) 4-15-10
George Soros, speaking at a meeting organized by “The Economist” warned all those who are throwing their money into the equity pit that “the financial world is on the wrong track, and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.”
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
“The number of workers receiving extended federal benefits rose 161,101 to 5.97 million”
“All told, 11.08 million people were collecting some type of unemployment benefits in the week of March 27th”
- CBS Marketwatch 4-15-10
“The heavy concentration of bullish strategies among all classes of traders pushed the Option Speculation Index to another recent high…., the only comparison in history that we have are the weeks around the peak in the Spring of 2000. The last time we were here, the tech bubble was about to pop, and result in 50% losses for the NASDAQ virtually overnight. This time around, this is not a tech isolated bubble. This is a global bubble funded by the endless money printing. When it pops, it will take down every asset class with it.”
- The Sentiment Trader 4-12-10
“Recovery picking up steam”
- Ben Bernanke 4-14-10
"U.S. homebuilders grow more optimistic in early April"
- National Association of Homebuilders 4-15-10
“Foreclosures soared to 367,056 in March, up 19% from February, 8% higher than March of 2009 and 56% higher from March 2008 according to the foreclosure data specialist RealtyTrac.”
- The Atlanta 4-14-10
“A vast majority of technical indicators such as the CBOE Volatility Index, Investors Intelligence Advisory Survey, CBOE Equity Put/Call Ratios, Daily Sentiment Index, and the thirty-day NYSE Trin, are aligned at or near extremes. We have a very long history with these indicators and their message is bearish. It is nearly the exact opposite extreme to that which occurred in the first few months of 2009.”
- Elliot Wave Financial Forecast Services 4-14-10
“Regardless of the reality…..what matters most for the direction of the stock market is to determine how everybody FEELS about it. "
- Nick Godt (CBS Marketwatch) 4-15-10
George Soros, speaking at a meeting organized by “The Economist” warned all those who are throwing their money into the equity pit that “the financial world is on the wrong track, and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.”
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Monday, April 12, 2010
The Currency Peg
China comes to town this week, or, more specifically, a Chinese representative comes-a-callin’. The question on everyone’s mind: Will the Chinese wilt under the pressure of the Obama smooth talk, the letter signed by a hundred Congressmen and Senators, and Geithner’s middle-of-the-night clandestine meetings? It seems everyone wants the Chinese to allow their currency to float versus our dollar.
A little review is in order. We no longer, since 1971 (thanks, President Nixon), are on the gold standard. Thus, currencies float against each other. For example, if the U.S. dollar is rising, the euro is falling, and vice-versa. The tactic of printing money (Bernanke style) has de-valued our currency. However, it has made our goods cheaper in the world, and this benefits American corporations engaged in international trade. In addition, it also makes overseas goods more expensive. Thus, you see a German manufacturer urging their country to play the same game as the United States.
China is the only country not to go along with this. They have pegged their currency to the U.S. dollar. Thus, if our dollar goes up, so does theirs. If our dollar goes down, theirs does likewise. So essentially, there is no currency benefit for either country. Why do it? Because China knows that if currency is taken out of the equation, manufacturing will simply be judged by cost and quality. China knows that they can always win on cost, not always on quality. (You’d never know by looking at the way Wal-Mart markets Chinese goods.)
Will China float their currency? Probably not. However, they might provide some type of provision so Obama can say he’s working things out, and the Congressmen and Senators can go back to their districts, or states, and show how tough they were with the Chinese.
The reality is that China has us over a barrel, and they know it. And de-pegging from our currency? No way.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
A little review is in order. We no longer, since 1971 (thanks, President Nixon), are on the gold standard. Thus, currencies float against each other. For example, if the U.S. dollar is rising, the euro is falling, and vice-versa. The tactic of printing money (Bernanke style) has de-valued our currency. However, it has made our goods cheaper in the world, and this benefits American corporations engaged in international trade. In addition, it also makes overseas goods more expensive. Thus, you see a German manufacturer urging their country to play the same game as the United States.
China is the only country not to go along with this. They have pegged their currency to the U.S. dollar. Thus, if our dollar goes up, so does theirs. If our dollar goes down, theirs does likewise. So essentially, there is no currency benefit for either country. Why do it? Because China knows that if currency is taken out of the equation, manufacturing will simply be judged by cost and quality. China knows that they can always win on cost, not always on quality. (You’d never know by looking at the way Wal-Mart markets Chinese goods.)
Will China float their currency? Probably not. However, they might provide some type of provision so Obama can say he’s working things out, and the Congressmen and Senators can go back to their districts, or states, and show how tough they were with the Chinese.
The reality is that China has us over a barrel, and they know it. And de-pegging from our currency? No way.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, April 8, 2010
Conspicuously Quiet
For the past few weeks, I have been conspicuously quiet as world events have unfolded. Like a good sports television broadcaster who knows when to let the action do the talking, I have chosen to let events speak for themselves. And, oh, what events! From the passage of a health care bill, to the demise of the European Union, from Middle East taunts, to allied snubs, all contributing to the steady erosion of personal freedom.
One could think viewing the U.S. stock market that its business as usual, the worst is behind, and Obama Nation is masterfully leading us into the 21st century. Obama Nation is leading us into the 21st century, but the word “masterfully” is in the eye of the beholder. On the world stage, there are sometimes moments in history when earth-shattering and long-lasting events unfold. This is one such period. Economics, stock markets, and even our everyday lives adjust to the reality of events at their own pace. But make no mistake, they all adjust. In this instance, whether it’s a Greek citizen, an Israeli response, or the New York Stock Exchange, all will emerge differently from what one expects.
Quiet time is over. Let the games begin.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
One could think viewing the U.S. stock market that its business as usual, the worst is behind, and Obama Nation is masterfully leading us into the 21st century. Obama Nation is leading us into the 21st century, but the word “masterfully” is in the eye of the beholder. On the world stage, there are sometimes moments in history when earth-shattering and long-lasting events unfold. This is one such period. Economics, stock markets, and even our everyday lives adjust to the reality of events at their own pace. But make no mistake, they all adjust. In this instance, whether it’s a Greek citizen, an Israeli response, or the New York Stock Exchange, all will emerge differently from what one expects.
Quiet time is over. Let the games begin.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, February 18, 2010
One Year Later
Happy birthday to the stimulus package after one year and one day. (Don’t forget the TARP, also.) Just a few of today’s headlines that I’m sure will not make VP Biden’s report of “stimulus success.”
The Congressional Oversight Panel: “A significant wave of commercial mortgage default would trigger economic damage that could touch the lives of nearly every American.”
Realty Trac: “Year over year mortgage borrower delinquency was up about 50%.” "The forecast for the number of foreclosures in 2010 is three million homes.”
Treasury Department: “U.S. government runs a deficit for the 16th straight month.” "Three million foreclosures on the horizon, only 116,000 borrowers have mortgage modified in the past year.”
Labor Department: “11.8 million people collecting some type of unemployment, 14.8 million people officially classified as unemployed. Undetermined amount of how many people have stopped looking for work.”
The Pew Center on States: “States liability for pension, healthcare, and other retirement benefits, $3.35 trillion. Funding capability $2.35 trillion.”
Now, consider this:
Tao Te Ching - Chapter 57 (written in approximately 5th century BC)
“Run the country by doing what’s expected.
Win the war by doing the unexpected.
Control the world by doing nothing.
How do I know this?
By this.”
“The more restriction and prohibitions in the world
The poorer the people get.
The more experts a country has
the more of a mess it’s in.
The more genius the skillful are
the more monstrous their inventions.
The louder the call for law and order
the more thieves and con men multiply.”
“So a wise leader might say
I practice in action and the people look after themselves.
I love to be quiet and the people themselves find justice.
I don’t do business and the people prosper on their own.
I don’t have wants and the people themselves are un-cut wood.
(Naturally virtuous.) Today’s libertarian might say: the government
that governs best is the one that governs least.”
Next, consider this:
14th century Arab genius Ibn-Khaldun:
“In the early stages of the state, taxes are light in their incidence, but fetch a large revenue. In the later stages, the incidence of taxation increases while the aggregate revenue falls off.”
“This is because the state, as it rests on a religious basis, will exact only dues provided for by Islamic law such as the benevolence contributions, plan tax, and pool taxes whose rates are low and fixed. Now, where taxes and imposts are light, private individuals are encouraged to engage actively in business. Enterprise develops because businessmen feel it worth their while in view of the small share of their profits which they have to give up in the form of taxation, and as business prospers…the total yield of taxation grows.”
“As time passes and kings succeed each other, they impose fresh taxes on their subjects, farmers, peasants, and other subjects to taxation; sharply raised the rate of old taxes to increase their yield; and impose sales taxes…until taxation burdens the subject and deprives them of their gains. People get accustomed to this high level of taxation because the increases have come about gradually without anyone being aware of who exactly it was who raised the rates of the old taxes, or imposed the new ones.”
“But the effects on business of this rise in taxation make themselves felt. For businessmen are soon discouraged by the comparison of their profits with the burden of their taxes, and between their output and their net profits. Consequently, production falls off, and with it, the yield of taxation.”
“The rumors may, mistakenly, try to remedy this decrease in the yield of taxation by raising the rate of taxes. This process of higher tax rates and lower yields (caused by the government’s belief that higher rates result in higher returns) may go on until production begins to decline, owing to the despair of businessmen and to affect population. The main injury of this process is felt by the state, just as the main benefit of better business conditions is enjoyed by it.”
“From this you must understand that the most important factor of making for business prosperity is to lighten, as much as possible, the burden of taxation.”
As it was thousands of years ago, so it is today.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
The Congressional Oversight Panel: “A significant wave of commercial mortgage default would trigger economic damage that could touch the lives of nearly every American.”
Realty Trac: “Year over year mortgage borrower delinquency was up about 50%.” "The forecast for the number of foreclosures in 2010 is three million homes.”
Treasury Department: “U.S. government runs a deficit for the 16th straight month.” "Three million foreclosures on the horizon, only 116,000 borrowers have mortgage modified in the past year.”
Labor Department: “11.8 million people collecting some type of unemployment, 14.8 million people officially classified as unemployed. Undetermined amount of how many people have stopped looking for work.”
The Pew Center on States: “States liability for pension, healthcare, and other retirement benefits, $3.35 trillion. Funding capability $2.35 trillion.”
Now, consider this:
Tao Te Ching - Chapter 57 (written in approximately 5th century BC)
“Run the country by doing what’s expected.
Win the war by doing the unexpected.
Control the world by doing nothing.
How do I know this?
By this.”
“The more restriction and prohibitions in the world
The poorer the people get.
The more experts a country has
the more of a mess it’s in.
The more genius the skillful are
the more monstrous their inventions.
The louder the call for law and order
the more thieves and con men multiply.”
“So a wise leader might say
I practice in action and the people look after themselves.
I love to be quiet and the people themselves find justice.
I don’t do business and the people prosper on their own.
I don’t have wants and the people themselves are un-cut wood.
(Naturally virtuous.) Today’s libertarian might say: the government
that governs best is the one that governs least.”
Next, consider this:
14th century Arab genius Ibn-Khaldun:
“In the early stages of the state, taxes are light in their incidence, but fetch a large revenue. In the later stages, the incidence of taxation increases while the aggregate revenue falls off.”
“This is because the state, as it rests on a religious basis, will exact only dues provided for by Islamic law such as the benevolence contributions, plan tax, and pool taxes whose rates are low and fixed. Now, where taxes and imposts are light, private individuals are encouraged to engage actively in business. Enterprise develops because businessmen feel it worth their while in view of the small share of their profits which they have to give up in the form of taxation, and as business prospers…the total yield of taxation grows.”
“As time passes and kings succeed each other, they impose fresh taxes on their subjects, farmers, peasants, and other subjects to taxation; sharply raised the rate of old taxes to increase their yield; and impose sales taxes…until taxation burdens the subject and deprives them of their gains. People get accustomed to this high level of taxation because the increases have come about gradually without anyone being aware of who exactly it was who raised the rates of the old taxes, or imposed the new ones.”
“But the effects on business of this rise in taxation make themselves felt. For businessmen are soon discouraged by the comparison of their profits with the burden of their taxes, and between their output and their net profits. Consequently, production falls off, and with it, the yield of taxation.”
“The rumors may, mistakenly, try to remedy this decrease in the yield of taxation by raising the rate of taxes. This process of higher tax rates and lower yields (caused by the government’s belief that higher rates result in higher returns) may go on until production begins to decline, owing to the despair of businessmen and to affect population. The main injury of this process is felt by the state, just as the main benefit of better business conditions is enjoyed by it.”
“From this you must understand that the most important factor of making for business prosperity is to lighten, as much as possible, the burden of taxation.”
As it was thousands of years ago, so it is today.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, February 4, 2010
Let the Games Begin
Last month, I wrote “One Man’s Opinion,” a list of events that I thought would occur in 2010. Number two on that list is as follows: Several municipalities could declare bankruptcy, and several states, led by California and New York, may be in technical default. I believe expenses will continue to outpace tax revenues, and April 15th will be D-day. Havoc could be the word for the municipal bond market.
This morning, Bloomberg announced that the state capital of Pennsylvania (Harrisburg), is entertaining the decision to declare bankruptcy, their last resort. This would make bondholders part of the creditor group, and we all know what happened to the GM and Chrysler bondholder creditor group. Good luck. I knew this was coming, but thought later, rather than sooner.
Let the games (begin) continue.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
This morning, Bloomberg announced that the state capital of Pennsylvania (Harrisburg), is entertaining the decision to declare bankruptcy, their last resort. This would make bondholders part of the creditor group, and we all know what happened to the GM and Chrysler bondholder creditor group. Good luck. I knew this was coming, but thought later, rather than sooner.
Let the games (begin) continue.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Thursday, January 28, 2010
State of the Union (The Aftermath - A Sampling)
Fact - Senate Democrats will vote today to increase the nation’s debt limit to a record $14.3 trillion, an increase of $1.9 trillion. (So much for Obama’s fiscal responsibility.)
Fact - The total number of people claiming unemployment benefits of any kind in the week ending January 9th was 11.5 million, compared with 12 million people the previous week. (Either 500,000 people found jobs (yeah, right), or 500,000 people exhausted their unemployment benefits.)
Fact - Nancy Pelosi says “If there is a freeze on spending in 2011, why not a 10% cut in defense spending.” (She must think Al-Qaeda will surrender by then.)
Fiction - Senator Barack Obama announced that after nine years George W. Bush is no longer President, and Obama looks forward to running the country and being called “President Barack Obama.”
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Fact - The total number of people claiming unemployment benefits of any kind in the week ending January 9th was 11.5 million, compared with 12 million people the previous week. (Either 500,000 people found jobs (yeah, right), or 500,000 people exhausted their unemployment benefits.)
Fact - Nancy Pelosi says “If there is a freeze on spending in 2011, why not a 10% cut in defense spending.” (She must think Al-Qaeda will surrender by then.)
Fiction - Senator Barack Obama announced that after nine years George W. Bush is no longer President, and Obama looks forward to running the country and being called “President Barack Obama.”
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Friday, January 22, 2010
We're Off to the Races
We start 2010, the year I believe that will be studied in future textbooks as a pivotal year in American history. We’ve already witnessed an election for the ages in Massachusetts, a political attack on the “too big to fail banks,” and 650,000 new people in one week applying for emergency unemployment compensation. (Current total 5.6 million people.) If President Obama is sincere and is able to deliver on the promise of shutting down Federal Reserve assisted proprietary trading by commercial banks, it will go a long way in reducing the risk of another financial meltdown. However, the unintended consequence could be a stock market collapse, since the main support and driving force arguably has been the prop desk. I don’t mind if the banks want to take risk, just not with our taxpayer money. Let’s see if Obama can deliver, or if it’s just another in a long-line of sound bites. Regardless, the die is cast, the stock market’s direction has been foretold, and 2010 starts with a bang, not a whimper.
Till next time,
Bill
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A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Wednesday, January 6, 2010
2010 - One Man's Opinion (Part II)
6.) Public anger over political decisions such as budget increases, healthcare, and Wall Street bailouts will not subside as expected. The Tea Party becomes more influential as we approach the November elections.
7.) President Obama’s ratings drop to an historical low, and, as a consequence, his public appearances are sporadic at best. The general public comes to grips about his lack of economic comprehension as well as his misunderstanding of being a true Commander-in-Chief.
8.) International incidents against the United States could rise, as opponents sense a softness not seen before. In addition, our allies (e.g. Israel), may take overt actions into their own hands.
9.) Treasury yields will continue to move higher as the government printing presses keep printing money. That is until the stock market crashes and safety becomes the objective. At that point, fear and panic should drive treasury prices higher and yields lower.
10.) The dollar re-asserts itself as a safe haven as the events in #9 play out.
Conclusion of One Man’s Opinion (Part I and Part II): The stock market has one last gasp, then replicates the Tulip Bulb Mania of 1630, the Mississippi Company of 1700, the South Sea Company of 1700, the market crash of 1930, the Nikkei of 1989, the dot-com of 2001, and overall, could drop by as much as 80%. When you connect the dots, the conclusion is almost irrefutable. However, anything can happen, and usually does.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
7.) President Obama’s ratings drop to an historical low, and, as a consequence, his public appearances are sporadic at best. The general public comes to grips about his lack of economic comprehension as well as his misunderstanding of being a true Commander-in-Chief.
8.) International incidents against the United States could rise, as opponents sense a softness not seen before. In addition, our allies (e.g. Israel), may take overt actions into their own hands.
9.) Treasury yields will continue to move higher as the government printing presses keep printing money. That is until the stock market crashes and safety becomes the objective. At that point, fear and panic should drive treasury prices higher and yields lower.
10.) The dollar re-asserts itself as a safe haven as the events in #9 play out.
Conclusion of One Man’s Opinion (Part I and Part II): The stock market has one last gasp, then replicates the Tulip Bulb Mania of 1630, the Mississippi Company of 1700, the South Sea Company of 1700, the market crash of 1930, the Nikkei of 1989, the dot-com of 2001, and overall, could drop by as much as 80%. When you connect the dots, the conclusion is almost irrefutable. However, anything can happen, and usually does.
Till next time,
Bill
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
Tuesday, January 5, 2010
2010 - One Man's Opinion (Part I)
1.) Dramatic increase in bank failures – the FDIC is hiring over one thousand new employees. Are they getting prepared?
2.) Several municipalities could declare bankruptcy, and several states, led by California and New York, may be in technical default. I believe expenses will continue to outpace tax revenues, and April 15th will be D-day. Havoc could be the word for the municipal bond market.
3.) Leveraged commercial real estate continues its path to implosion. But the big surprise, residential housing, which started it all, will resurface as a significant problem. A tsunami of mortgage resets will occur over the next 24 months, including subprime, prime, Alt-a, and Option ARM.*
4.) Americans go further into debt (if that’s possible) as the government encourages more cash-for-clunkers type programs. Yet bankruptcies, credit card defaults, and housing foreclosures continue rising.
5.) Real unemployment continues to accelerate toward 25%. Emergency Unemployment Compensation (EUC) keeps climbing as non-government job creation is nonexistent. However, the government and mainstream media will continue to focus on first-time unemployment claims, thus massaging the numbers.
Tomorrow – Part II….it doesn’t get any better.
Till next time,
Bill
*Bloomberg
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
2.) Several municipalities could declare bankruptcy, and several states, led by California and New York, may be in technical default. I believe expenses will continue to outpace tax revenues, and April 15th will be D-day. Havoc could be the word for the municipal bond market.
3.) Leveraged commercial real estate continues its path to implosion. But the big surprise, residential housing, which started it all, will resurface as a significant problem. A tsunami of mortgage resets will occur over the next 24 months, including subprime, prime, Alt-a, and Option ARM.*
4.) Americans go further into debt (if that’s possible) as the government encourages more cash-for-clunkers type programs. Yet bankruptcies, credit card defaults, and housing foreclosures continue rising.
5.) Real unemployment continues to accelerate toward 25%. Emergency Unemployment Compensation (EUC) keeps climbing as non-government job creation is nonexistent. However, the government and mainstream media will continue to focus on first-time unemployment claims, thus massaging the numbers.
Tomorrow – Part II….it doesn’t get any better.
Till next time,
Bill
*Bloomberg
>>>>>>>>>>>>>>>>>>>>>
A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
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