Why Spending a Thousand Bucks Can Make You Feel Like a Million – Bloomberg 11-26-13

Salient to Investors:

New marketing research shows how we shop has as much to do with our mental state as with our material needs. People spend because they are sad or are feeling guilty or insecure.

Martin Lindstrom says there is a direct correlation between lack of self-esteem and the brands you buy – the less self-esteem, the more brands bought.

JoAndrea Hoegg at University of British Columbia and the Journal of Consumer Psychology said shoppers who find their usual size too small don’t buy the offending clothes, but buy other items without sizes that make them feel attractive.

Paco Underhill at Envirosell advises never to shop tired or hungry.

Scott Rick at University of Michigan studies have long shown that sadness can make you looser with the purse strings but that is not all bad, because going to the mall boosts the moods of sad shoppers by giving them a feeling of control.

Read the full article at http://www.bloomberg.com/news/2013-11-26/why-spending-a-thousand-bucks-can-make-you-feel-like-a-million.html

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Fareed Zakaria GPS – CNN 05-05-13

Salient to Investors:

Fareed Zakaria said:

  • A recent Pew survey found that only 51 percent of Americans think it’s essential to act on immigration reform this year, versus 70 percent who demand a deficit reduction deal this year, despite the wealth of data that shows that immigration reform will lead to deficit reduction.
  • The economy looks good driven by the private sector.
  • People genuinely don’t care where you’re from in America because there’s a sense in which everyone comes from somewhere.

Richard Haas at the Council on Foreign Relations said the US has to:

  • Fix long-term entitlements are the cancer hole hanging over the American body politic.
  • Fix infrastructure: it takes very little money to do it through public-private partnerships. Pass immigration reform; that is the driver of innovation and jobs.
  • Resist the temptation to get pulled into the Middle East.

Joe Klein at Time said our smartest young people should be making things instead of making deals, and American need to understand that investing in our people is investing in our future.

Anne-Marie Slaughter at New America Foundation said the US needs to build an infrastructure of care that guarantees that people can both earn an income and care for their loved ones: with better schools, better health, affordable daycare, paid family leave, flexible arrangements – essentially we leave no one behind.

The Center for American Progress said immigration reform is a very simple way to increase tax revenues, expand GDP and create jobs all at the same time. Legalizing undocumented workers brings them into the formal economy where they have to pay income taxes, Social Security and health care taxes etc and gives them access to many more jobs and at higher wages. The gains to the economy would be:

  • Scenario 1. All of America’s 11 million, undocumented immigrants are immediately granted citizenship then over the next 10 years GDP would expand by an additional $1.4 trillion, 203,000 additional jobs would be generated on average every year, and tax revenues would increase by an additional $184 billion.
  • Scenario 2. Undocumented immigrants are granted legal status and it takes 5 years to become citizens, then GDP gains an additional $1.1 trillion over the 10-year period, jobs and tax revenues increase as well.
  • Scenario 3. Undocumented immigrants are only granted legal status and not citizenship during the ten years, then GDP expands by an additional $832 billion, 121,000 extra jobs on average are added every year, and tax revenues grow by an additional $109 billion.

Douglas Holtz-Eakin said immigration reform could raise the pace of economic growth by nearly one percent in the near-term and increase GDP per capita by $1,500.

Rana Foroohar at Time magazine said:

  • If you strip the public sector out, US growth is 3.1 percent and mostly down to the American consumers, who have done a good job of balancing their budgets, getting out of credit card debt, and are now able to dip a little more into savings.
  • Political gridlock is going to make it hard to come up with the kinds of spending that would actually be useful, like infrastructure and education. The US is the prettiest house on an ugly block.
  • After the German election, there will be an increasing realization that Germany has as much to lose if not more than any other European country if there is a fracture in the Euro zone – a lot of their trading partners are in the Euro zone.
  • American manufacturing is back though the jobs have not returned in mass yet because of the big, complex supply chains in places like India and China. Many CEOs are complaining about how risky these supply chains are now. Companies have lost billions in recent years in reputation, and coupled with rising energy prices, it has become more cost-effective to bring production closer to home, helped by the need for quick, customized products.

Gillian Tett at The Financial Times said:

  • Consumers have managed to adjust to the new normal, with credit card debt down to a 10-yr low.
  • Ireland, Greece, Italy and Portugal are absolutely fed up at being told by the Germans and the IMF that they need more austerity. An entire generation is essentially being thrown into the garbage can and the problem is they are not spending, not stimulating the economy.
  • Bangladesh’s fire, social media, demonstrates how quickly consumers can turn on a dime and cause serious brand damage very quickly. American wages are becoming more competitive on global standard, while the cost of moving things around the world is high, so we could see more localization.

Salman Rushdie said many immigrants to England came from very poor agrarian communities, not from the urban middle class, and were much more traumatized in Western industrial urbanized culture; while immigrants to the US are more middle class and therefore more easily adjustable to urban life in America.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1305/05/fzgps.01.html

New Critical Warning as 2013 shocker looms – MarketWatch 03-25-13

Salient to Investors:

Paul Farrell writes:

We are at a market top and an economic turning point.

Bernanke’s non-stop cheap-and-easy-money printing presses are loved by Wall Street banks but are bad for the rest of America. His reappointment – certain to become Obama’s greatest domestic blunder – so shocked Nassim Taleb that he went into isolation. Taleb says Bernanke doesn’t even know that he doesn’t understand how things work.

Bernanke has repeated the same ideological mistakes as Greenspan and made the economy worse, created a new bubble, making the next crash ever bigger. Fed chairman believe their own press and believe they alone have the answers. 

We will get a “black swan” before year-end, the big shocker expected by Gary Shilling who says investors are paying little attention to weak and declining global economies and concentrating on the flood of money being created by central banks. Shilling’s 11 sectors to avoid: commodities, developed-country stocks. home builders, your own home, big-ticket consumer-discretionary equities, consumer lender stocks, selected bank stocks, junk securities, developing-country bonds, developing-country stocks and old-tech capital-equipment producers.

Read the full article at http://www.marketwatch.com/story/new-critical-warning-as-2013-shocker-looms-2013-03-23

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U.S. Stocks Fall on Fed Minutes Amid Corporate Earnings – Bloomberg 02-21-13

Salient to Investors:

Tim Hartzell at Sequent Asset Mgmt said the Fed’s comments took a little excess out of the stock market as equities had gotten ahead of themselves in the belief there’s always going to be $85 billion come into the market from the Fed.

72 percent of the 427 S&P 500 so far reporting beat profit estimates, 65 percent beat sales estimates.

Neil Massa at John Hancock Asset Mgmt said investors are taking profits and waiting for the next catalyst – a healthy sell off and not a downtrend.

Russ Koesterich at BlackRock said volatility will likely increase with the March 1 deadline for automatic budget cuts, so investors with above benchmark US equities should reduce exposure, and be cautious of consumer stocks.

Read the full article at http://www.bloomberg.com/news/2013-02-21/u-s-stock-index-futures-fall-before-housing-jobs-data.html

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20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead – Seeking Alpha 02-20-13

Salient to Investors:

Michael T. Snyder writes:

The US economy is slowing down – freight volumes and expenditures are way down, consumer confidence is down sharply, major retail chains are closing hundreds of stores, the sequester threatens to bring austerity. gas prices are rising rapidly, corporate insiders are dumping massive amounts of stock, and high-profile corporate bankruptcies are in the news almost every day.

Most Americans have learned nothing from 2008, racking up staggering amounts of debt, and Wall Street is more reckless than ever. Society has concluded that 2008 was just a temporary malfunction rather than a sign our entire system was fundamentally flawed.

So, what will the rest of 2013 bring? Hopefully the economy will remain stable for as long as possible, but right now things do not look particularly promising.

Signs we are headed for big trouble in the months ahead include:

  • Freight shipment volumes are at their lowest level in 2 years, and freight expenditures have gone negative for the first time since the last recession.
  • Gasoline has risen by more than 50 cents over the past 2 months.
  • Reader’s Digest and Atlantic City’s newest casino, Revel, filed for bankruptcy.
  • A  Michigan  review board says there is no satisfactory plan to solve Detroit’s financial emergency, and many believe that bankruptcy is imminent.
  • Town Sports Intl is struggling because consumers simply do not have as much disposable income:
  • The Conference Board reports consumer confidence at its lowest level in more than a year.
  • iPhone sales are slower than projected, and global cell phone sales in 2012 declined for the first time since the end of the last recession.
  • Sears, J.C. Penney, Best Buy, and RadioShack may close hundreds of stores by the end of 2013.
  • Wal-Mart leaked that February sales were a total disaster.
  • If sequestration goes into effect on March 1, the Pentagon says 800,000 civilian employees face mandatory furloughs, and the CBO says GDP growth will drop by at least 0.6%, reducing job growth by 750,000 jobs.
  • Gallup says 65% of Americans believe that 2013 will be a year of economic difficulty; 50% believe the best days of America are behind.
  • GDP contracted at an annual rate of 0.1% during Q4, 2012, the first contraction in more than three years.
  • Art Cashin says every time GDP growth has fallen this low for an entire year, recession has followed.
  • The global economy is starting slowing.
  • Corporate insiders are dumping enormous amounts of stock.
  • Some of the biggest names on Wall Street warn of economic collapse, including Seth Klarman who says a collapse of the US financial system could happen at any time.

    Klarman said the Fed’s relentless interventions and manipulations have left few purchase targets for his hedge fund.

 

Read the full article at http://seekingalpha.com/article/1208831-20-signs-the-u-s-economy-is-heading-for-big-trouble-in-the-months-ahead?source=email_macro_view&ifp=0

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U.S. Stocks Fall as Economic Concern Offsets Heinz Deal – Bloomberg 02-14-13

Salient to Investors:

Tim Courtney at Exencial Wealth Advisors said all these deals are good news for the markets because they show that capital is being put to good use for investors.

The difference between the price of put options protecting against a 10 percent slide in the S&P 500 and calls betting on a 10 percent gain – the skew – fell to the lowest since November 2010.

Berkshire Hathaway’s bid for Heinz increases Warren Buffett’s bets on consumer products.

Read the full article at http://www.bloomberg.com/news/2013-02-14/u-s-stock-futures-drop-as-euro-area-recession-deepens.html

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