Secretary of State John Kerry who served in Vietnam fined $50 for not shoveling snow at his Boston residence

Story here:

Boston city officials issued a ticket to Kerry’s home for neglecting to shovel his sidewalk on Thursday, according to Citizens Connect, a website run by the city of Boston where residents can upload complaints.

John Kerry, who served in Vietnam, has also been rumored in the past to avoid stopping at four way stop signs in his Jeep, and to avoid paying taxes on his yacht domicile.

One law for me, another for thee. 

Hm: Obama makes it to Arabia within 4 days of the king's death, but couldn't pull off DC to Paris for Charlie Hebdo

King Abdullah died on the 23rd, on which he was immediately buried, and Obama scurried from India to Saudi Arabia by yesterday, the 27th, to pay his respects.

The Charlie Hebdo massacre in Paris was on a Wednesday, the 7th, and the infamous parade of idiots which Obama did not attend and to which he did not send a representative occurred on Sunday the 11th.

The flight time for the former is less than 5 hours, and for the latter about 7.5 hours.

Funny how security can be so hastily arranged, from so far away, when the trip really matters.

Obama is still a rookie after 6 years in office: drops proposed tax on 529 plans after massive blowback

CNBC reported the story here.

Evidently the White House realized the idea was a non-starter when someone explained that the 529 plans would stop being funded, meaning there would be insufficient revenue to fund alternatives, as reported here:

'On "Power Lunch," [Joe] Hurley [of savingforcollege.com] said this tax will deter people from using 529 plans. "Taxing 529 plans won't pay for any other initiative because people will no longer be using 529 plans," he said. "You can't raise revenue when you don't have any contributions going into these plans."'

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Well DUH!

Analyst says oil price plummet primarily driven by OPEC abandoning swing producer role

Dirk Leach, who also credits the rising dollar but not to the extent others have, here:

"Now that OPEC has abdicated their role as swing producer, the only mechanism to stabilize oil prices is the market itself based on supply and demand. As we are now seeing, the supply side of that balance has a lot of inertia. Despite some analysts' view that shale production can be turned on and off rather quickly, the time it takes to decrease production is measured in months or quarters while the crude oil price response is essentially immediate. Going forward, we appear to have a crude oil market pricing system with a very fast response time and a very slow feedback mechanism (supply adjustments). Generally, this type of system is not very stable and results in frequent large swings in market pricing. Going forward, it might be a more bumpy oil market than we have been used to."

Obama wants to tax 529 plans, 53% of which are owned by those making less than $100k

So reports The Wall Street Journal here about Obama's latest attack on the middle class:

"The average account balance [of 529 plans this June] was $20,671. ... The Investment Company Institute, trade group for the mutual-fund industry, says that in 2013 households saving for college through 529 plans, Coverdell ESAs, or mutual funds held outside these accounts tended to be headed by people younger than 45. And 49% of these heads of household had fewer than four years of college. A majority of these households, 53%, earned less than $100,000."

The dollar has surged 2.26% since Wednesday to trade at 95 this morning

The dollar hasn't traded at 95 since late 2003.

Much more of this dollar strength is due to the continued improving fiscal condition of the United States since 2012 than people realize. 

Tax revenues are way up under the made-permanent Bush tax cuts and the made-permanent Alternative Minimum Tax fix, both of which heralded in 2013. Federal receipts are up a whopping combined 36% in 2013 and 2014 over 2012.

And continued Republican control of the purse in Congress has meant almost zero expansion of federal spending. Federal outlays are up a paltry combined less than 1% in 2013 and 2014 over 2012.

The federal government is up a net $845.5 billion in the last two years. That's huge.

The dollar is not simply a fiction which competes with other fictions in the global marketplace, but a symbol of the determination of the American people to play by the rules and pay their bills. It is not a coincidence that this determination lately expressed politically paved the way for falling commodity prices generally, and oil in particular. It is uncertainty which breeds fear-trades.

Speaker John Boehner doesn't get the credit he deserves for achieving under the Democrat President Barack Obama what Republicans before him could only dream about.

And if you want to know what's wrong with Republicans, that's it.

Strange fact of the day: Both General Lee and MLK Jr. were born in January

Born January 19th

Born January 15th

Likely primary voters prefer Mitt Romney to Rubio and Bush in latest Zogby poll

Bank Failure Friday: The Second of 2015

Highland Community Bank, Chicago, Illinois, failed tonight, costing the FDIC $5.8 million.

This is bank failure number two in 2015.

S&P 500 market capitalization/GDP ratios the years before plus-20% crashes

http://www.advisorperspectives.com/dshort/commentaries/CAPE-at-Market-Peaks.php

1955: 104*
1956: 101
1957:   84

1960: 107
1961: 123
1962: 103

1965: 120
1966:   96

1967: 109
1968: 107
1969:   88
1970:   84

1972:   89
1973:   66
1974:   43

1979:   40
1980:   45
1981:   37
1982:   41


1986:   52
1987:   49

1999: 148
2000: 126
2001: 107
2002:   79

2006: 101
2007: 100
2008:   62
2009:   77

*The ratio is the S&P 500 level at the end of the calendar year divided by 4Q final GDP in trillions of dollars. The average peak ratio in the series is 99. The average trough ratio is 71. The average spread between peak and trough ratios in the series is 27%. The ratio through 3Q2014 is 112, 13% above the average peak in the series.

The chart from Doug Short gives the Shiller p/e ratios on the record dates. The average peak of these is 22.6, the average trough is 14.2, and the average spread between them in the series is 35%. The Shiller p/e ratio at the end of 3Q2014 was 25.16, 11% above the average peak in the series. 

Oh the horror: Did you know the personal savings rate INCLUDES IRA and 401(k) contributions?

The annual average of the rate is shown.

Then how come the personal saving rate has been in steady decline since 1974 when IRAs were first passed into law? And how come saving didn't improve after 1978 when 401(k) plans were first created? Or after 1997 when Roth IRAs were legislated? The current monthly reading of personal saving is a measly 4.4%.

A rich country saves, a poor one spends.

"Notice that NIPA’s [National Income and Product Accounts] treatment of IRAs and 401(k) plan contributions, for example, is perfectly consistent: Because these defined contributions are not part of personal outlays (and, therefore, must be included in the difference between personal income and personal outlays), they are correctly included in national saving computations."

-- Massimo Guidolin and Elizabeth A. La Jeunesse, "The Decline in the U.S. Personal Saving Rate: Is It Real and Is It a Puzzle?" in Federal Reserve Bank of St. Louis REVIEW, November/December 2007, p. 499, footnote 13 (here)

Hey Obama! Tell me how we get to yes . . .

. . . for life!

Jobless claims so far in 2015 are running 6.25% below the same period in 2014

First time claims for unemployment have averaged 450,000 per week in the first three weeks of January 2015 compared to 480,000 per week in the first three weeks of 2014, not seasonally adjusted.

The claims spike last week was equalized by a spike to the downside this week.

Expect the opposite: Obama says "The shadow of crisis has passed"

If you like your insurance you can keep your insurance.

Iraq is secure.

If you like your doctor you can keep your doctor.

Al-Qaeda is on the run.

Everyone will save $2500 under my health reform plan.

I'm as angry as you are about the IRS scandal.

We've fixed healthcare.gov.

Looming global financial catastrophe: Anglo-Saxon pioneers of QE have yet to pay its price

William White, former chief economist to the Bank for International Settlements, quoted here:

Those who argue that the US and the UK are growing faster than Europe because they carried out QE early are confusing "correlation with causality". The Anglo-Saxon pioneers have yet to pay the price. "It ain't over until the fat lady sings. There are serious side-effects building up and we don't know what will happen when they try to reverse what they have done."

Obama's $500 tax relief is so George W. Bush 2.0

Obama is to announce tonight not even inflation-adjusted George W. Bush-type tax relief to middle class families, as reported here, but just another gimmick:

"Among the highlights of President Obama’s State of the Union address plans to pull the American family out of economic plight is a $500 tax credit for two-earner families."

George W. Bush bookended his administration with similar gimmicks.

OK, the first one wasn't exactly a gimmick. The first was part of the then-temporary tax reduction passed by the Congress. You know the one. The check in the mail was a result of the implementation of the tax rate schedule which existed for the rest of Bush's presidency but was set to expire by the time of Obama. Obama finally agreed to make that schedule permanent, something George W. Bush wasn't able to make happen but Speaker John Boehner was. (Why is that? And how come no one except maybe two people on the planet recognize and applaud that? I am one of them. A Forbes columnist, Ralph Benko, is the other. But I digress.)

Flashback to the San Francisco Chronicle in June 2001, here, just six months after Bush assumed office after the narrowest presidential election victory in living memory:

Bush signed the $1.35 trillion tax cut -- which includes soon-to-be-mailed rebate checks of up to $600 -- amid the kind of presidential pomp he usually disdains: a formal ceremony in the East Room, with a Marine band playing "Hail to the Chief." ... In Congress yesterday, a few Republicans talked about making the current bill permanent. One of its odd features is that it expires on Dec. 31, 2010, a sunset provision put in because of congressional rules governing spending more than a decade into the future.

Bush's second and real gimmick came at the end of his presidency in 2008, just before all hell broke loose in the economy with massive bank failures, massive bankruptcies, massive foreclosures, massive job losses, and massive stock market declines. It was a minor echo of Herbert Hoover trying to stop the Great Depression, double, triple, and quadruple-downed on by his successor FDR but to no avail.

Market Watch had the story here in February 2008, detailing the very liberal character of the Republican stimulus plan, which at the time met with no criticism from candidate Obama (why? because it was Obama's brand of liberalism also):

President Bush signed a $168 billion economic stimulus package on Wednesday that will extend rebates to U.S. taxpayers, give tax breaks to businesses and make more-expensive mortgages available through the government and government-sponsored mortgage-finance companies. ... Bush said the U.S. economy has clearly slowed but that the package is "a booster shot for our economy." Approved by lawmakers last week, the package provides a tax rebate of up to $1,200 per working couple, plus $300 per child. ... Taxpayers will not have to apply for the rebate; it would come automatically based on their 2007 tax return. ... Democratic presidential candidate Barack Obama wove the stimulus package into a speech in Janesville, Wisc., on Wednesday, touting a plan he offered a few weeks ago. He proposed sending each working family a $500 tax cut and each senior a $250 supplement to their Social Security check. "Neither George Bush nor Hillary Clinton had that kind of immediate, broad-based relief in their original stimulus proposals, but I'm glad that the stimulus package that was recently passed by Congress does," Obama said.

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These crumbs from the Master's table aren't going to help Americans do anything except survive as dependents, maybe for a week. What Americans need is jobs, decent jobs, and the decent wages which go with them, and liberals know nothing about how to provide them with those.

Paris to sue Fox News for insults: "Free speech for me but not for thee"

Charlie Hebdo gets to insult every religion and every follower of same, but don't you dare insult Paris!

Story here.

The lagging indicator MACD told you to sell the S&P 500 in January 2008, and buy it in August 2009

Three months after the 2007 top, and five months after the 2009 bottom. That's how lagging indicators work: better on the front end and poorer on the back end.

But hey! Close counts in grenades and horseshoes.

Germany repatriated 120 metric tons of gold to the Fatherland in 2014

From the story here:

"The Bundesbank successfully continued and further stepped up its transfers of gold," the central bank said in a statement. "In 2014, 120 tonnes of gold were transferred to Frankfurt from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York. Germany's gold reserves are the second-biggest in the world after those of the United States and totalled 3,384.2 tonnes this month, according to the latest data compiled by the World Gold Council. ... Under the Bundesbank's new gold storage plan in 2013, it decided to bring back 674 tonnes from abroad by 2020 and store half of its gold in its own vaults. ... Since the transfers began in 2013, the Bundesbank said it has relocated a total of 157 tonnes of gold to Frankfurt -- 67 tonnes from Paris and 90 tonnes from New York.

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If I'm doing the math right, that means that in 2013 New York coughed up just 5 metric tons of Germany's gold to Germany, and Paris 32 metric tons.

If the plan is to repatriate 674 metric tons by 2020, the 157 repatriated so far means there are just 517 to go, or about 86.1 metric tons per year through 2020, to put half of Germany's gold back in Germany.

The story line not included above includes the narrative that it was unsafe to let Germany store its own gold in its homeland during the Cold War. But there were already 1,018.1 metric tons stored in Germany all those years, not quite a third of its holdings. Seems like a pretty big target to me.

An interesting assessment of the risks, wouldn't you say? Or was something else at work here? Versailles, and all that.

Bob Brinker's advice to stay fully invested in stocks in 2008 beats Jim Cramer's to sell

Bob Brinker famously said on his radio show Moneytalk during the 2008-2009 market meltdown that "no one could have predicted this".

As a market timer, he's taken a lot of heat for this statement, including from me, but it is time to reassess his 2003 call to return to a fully-invested position in the stock market and to stick to it in 2008 despite the meltdown.

How has that worked out? 

"Fully invested" means different things to different people. This is because it is a question of asset allocation. Asset allocation strategies are by definition highly individualized to meet objectives while minimizing risk, and they depend on many factors including income and age, which change over time and thus necessitate adjustments to the strategy periodically. So to be clear, a person who allocates 50% of all resources to stocks at any given time is fully invested when that is so. But that means that a person who has much more tolerance for risk and normally invests 90% of all resources in stocks by definition has a greater percentage of all his resources in stocks, yet both individuals are "fully invested".

OK, so let's take the hypothetical person born in 1949 who just retired at the age of 65 in November 2014. That person has had theoretically 43 years of continuous investing life, let's say beginning from November 1971 after landing that first job out of college in the spring of that year.

Now whatever this person had allocated to stocks over the course of those 43 years, using the S&P 500 as a proxy for the part allocated to stocks, he or she has averaged a nominal return of 10.68% annually with dividends fully reinvested through November 2014, including the crash periods of 2000 and 2008.

But back in March 2003 this person was turning 54 years old and was worried about the future after the stock market crash he had just experienced. And let's say he had ridden his investments all the way down in that crash by being fully invested through the 2000 debacle. From 1971 to that point in 2003 his average annual performance had been 10.94%.

Had he heard Bob Brinker's advice to be fully invested going forward and stayed the course he had been on, how did remaining in the market as before repay him as part of the overall average performance of 10.68% which he ended up achieving annually on average through November 2014?

The answer might surprise you: The average annual performance of the S&P 500 from March 2003 through November 2014 has been 10.01%. The market crash of 2008-2009 might certainly have unnerved this investor, who was then turning 60, to the point of utter capitulation, for it reduced his performance from 1971 through March 2009 to 9.11% per year on average.

It's clear, however, that cutting and running after the fact in 2008-2009 was not the answer. That was Jim Cramer's answer in October 2008, on morning television no less, but it wasn't Bob Brinker's.

Simply staying the course was like putting back on a point and a half for every year of the 43 year investing life of our hypothetical investor in a matter of just five years.

Kudos to Bob Brinker. Raspberries to Cramer.