COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

George Chamberlin's Money in the Morning

Ben Bernanke once again rained on Wall Street's parade. The markets were moving along nicely yesterday with the Dow Industrials up 80 points despite the lack of progress in Washington regarding the "F.C." Even the official Fed announcement detailing the new strategy on interest rates had little impact. It was only when Bernanke held his press conference and joined the chorus about the dangers of not addressing the fiscal mess that investors decided to start selling and push stocks slightly lower, snapping a five-session winning streak for the Dow.

******

There is no lack of opinion about the Fed's change in interest rate policy. For most of this year the Fed has repeatedly said short-term interest rates would stay near zero until sometime in 2015. Well, that changed yesterday. The new policy -- claimed to be an effort to make the Fed more transparent -- suggests rates will stay low until the unemployment rate, currently at 7.7 percent, falls below 6.5 percent. Some say that may not happen until well after 2015. Others say the policy could rattle the financial markets as the jobless rate nears 6.5 percent. Most analysts I follow think it is a mistake to pull the Fed curtain back and expose all the actions of the monetary panel.

******

There is lots of economic news this morning and it all is linked to Superstorm Sandy. Initial claims for jobless benefits fell by 29,000 in the past week to 343,000, the second lowest number of weekly applications in 2012. The number had jumped above 451,000 in the wake of the big storm but has steadily declined in recent weeks. Retail sales rose 0.3 percent in November thanks to a big jump in car sales. In October, sales had declined sharply as fewer vehicles were sold, again the result of Sandy. And, the producer price index, which measures prices at the wholesale level, fell sharply last month as gasoline prices declined. Overall, energy prices fell 4.6 percent in November, the biggest monthly drop since March 2009.

******

Toys R Us is joining the list of retailers planning to stay open for extended hours during the weekend before Christmas. The company announced today it will stay open for 88 consecutive hours, from 6 a.m. on Friday, Dec. 21, to 10 p.m. on Christmas Eve. It is likely just about every large retailer will be announcing extended hours for the weekend.

******

America's CEOs are buying into the fiscal cliff panic and are scaling back their expectations for 2013. The Business Roundtable reports 35 percent of CEOs say regulatory costs were of highest concerns for the next six months, followed by labor and health care costs. "CEOs anticipate continued slow overall economic growth for the next six months and have slightly lower expectations for sales and capital expenditures," said Jim McNerney, chairman of the Business Roundtable.

******

It was an interesting meeting yesterday at the USD Burnham-Moores Center for Real Estate's annual conference. To be sure, the mood was much more optimistic than in recent years but concerns still linger about the "F.C.", inventory shortages and tight credit. An interesting report this morning from Trulia debunks the theory we are becoming a "Renter Nation." The report finds 93 percent of Millenials (18 to 34-year-olds) say they plan to purchase a home some day.

******

There was a great headline to a story at Yahoo Finance this morning. It said: "Buffett, Soros join list of billionaires calling for tax hikes they won't pay." Buffett has become the poster boy for raising estate taxes and the article points out the Oracle of Omaha has repeatedly said he will die penniless, giving all of his money to charity before he dies. That, of course, is a good thing as the charities will benefit significantly. But, it also means there will be no taxes paid on his estimated $46 billion net worth. Also, Buffett gets paid a salary of $100,000 -- well below the threshold of those considered wealthy -- so he won't be paying higher income taxes. Almost all of Buffett's wealth is locked up in shares of Berkshire Hathaway, his investment company. At his most recent annual shareholders meeting he told the audience to "follow my tax dodging example."

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

User Response
0 UserComments

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

Subscribe Today!