July 2011

The Debt Ceiling: No Time to Panic

by Michael Moore July 25, 2011
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What if a debt deal doesn’t get done in time? While markets may appear to be priced for a “last minute” deal, it is important to consider the implications of a debt default and government shutdown. According to Jefferies Fixed Income Strategist, David Zervos, there have bee 17 government shutdowns since 1976:

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How To keep From Losing Money When Interest Rates Rise

by Jim Rhodes July 21, 2011
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Every investor knows its coming, but we’re just not sure when. The Federal Reserve has kept interest rates low for several years in order to help the economy get on track. The economy is slowly expanding and will probably continue on this slow growth path for several years. At some point, interest rates will have to rise, perhaps as much as 3% or 4% over a couple of years.

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Philadelphia Federal Reserve Business Outlook Positive in July

by Glenn Busch July 21, 2011
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Anything above zero is expansionary for this diffusion index.The positive print is a welcome break from the previous two negative prints by the Philadelphia Federal Reserve Business Outlook Survey. However, the key component is always New Orders. The demand for manufactured goods, as measured by the current new orders index, improved from last month but suggests flat demand:

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More Fun with Apple: The Dow Jones Industrial Index with Apple Instead of Cisco

by Glenn Busch July 21, 2011
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Yesterday we had Zerohedge and their chart of Apple’s cash holdings versus cash taxes paid. Today we have courtesy of Bespoke Investment Group where the Dow Jones industrial Average would be if it had Apple in its index rather than Cisco (CSCO).

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Apple’s Cash and Taxes

by Glenn Busch July 20, 2011
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Apple again beat its earnings estimates. Not a surprise as they always sandbag their guidance and then beat it but they did beat by a large margin this time. Tyler Durden at Zerohedge had a little fun with Apple after their earnings announcement. Mr. Durden created a chart highlighting the total cash holdings of Apple, which is now more than the total market capitalization of Goldman Sachs (GS), and the total amount of taxes paid out by Apple.

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June Housing Starts Up

by Glenn Busch July 19, 2011
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Increased starts and permits are good for immediate construction jobs and a boost to the economy but the benefits will be short-lived if these new homes just become more supply. The major factor weighing the housing market down is excess supply and not enough demand. The new household formation rate needs to be higher than housing starts and so far it is.

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The Debt Ceiling Debate: Should We Be Afraid?

by Glenn Busch July 19, 2011
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In brief, there are at least four reasons not to fear a U.S. default. First, the debt limit America breached in May and must raise by Aug. 2 is an artificial barrier created by Congress mostly so that its parties can scold each other every so often about having to expand it. They have done so dozens of times since 1940 (and many more times through extending deadlines and stretching definitions).

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Warren Buffett on the Debt Ceiling and the Political Posturing Associated With It

by Glenn Busch July 18, 2011
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Warren Buffett talks with Kristin Welker of NBC after his meeting with President Obama. The primary purpose of the meeting was for Bill Gates and Warren Buffett to discuss their giving pledge with the president. However, when you have the Oracle of Omaha in your office you’re going to discuss finances and the debt ceiling.

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Are You Contributing Enough to Your 401(k) Plan?

by Glenn Busch July 18, 2011
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According to the article, the majority of companies set the automatic contribution rate at 3% compared to the 5-10% rate people usually choose on their own. The auto-enrollment has greatly increased 401(k) participation but workers are missing out on a great retirement saving opportunity if they do not increase their automatic contributions above the standard 3%.

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Industrial Production and Capacity Utilization Remain Flat

by Glenn Busch July 15, 2011
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The last economic report out today that I’ll cover is the Industrial Production and Capacity Utilization report from the Federal reserve. The report measures the monthly changes in U.S. manufacturing output. It is a good gauge on the overall health of the U.S. economy and increases or decreases in production reflect changes in the demand for goods and services.

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