U.S. Investing
Budget Office Cuts Estimate Of Nation’s 2013 Deficit By 24%
Tuesday, May 14, 2013 16:33

The nonpartisan Congressional Budget Office has slashed its projections of the current-year fiscal deficit because of bigger-than-expected tax receipts and payments from Fannie Mae and Freddie Mac.

 

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According to The New York Times, in a periodic update to its projections, CBO on Tuesday estimated that the deficit for the current fiscal year, which ends on Sept. 30, would be about $642 billion, or 4% of economic output. Just three months ago, it projected that the current-year deficit would be $845 billion, or about 5.3% of economic output.

 

 

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The SEC "Likes" Facebook; Agency Says Public Companies Can Make Disclosures Via Social Media, As Long As They First Disclose Which Social Sites They Will Use
Tuesday, April 02, 2013 17:00

For anyone thinking this whole social media thing wouldn’t last, the Securities and Exchange Commission today issued some surprising news: public companies can disclose material information on social media sites as long as they first publicly declare which social sites they will use.

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The SEC released the results of an investigation of the CEO of Netflix, declining to file any charges against him for disclosing material nonpublic information about Netflix on his personal Facebook page last year. The agency basically says that because social media is so new, Netflix CEO Reed Hastings did not have enough guidance to punish him. But it set the record straight on how it wants public entities to use social media to disclose material information.

 

The embrace of social media by the SEC in the publc dislcosure process represents a major event in communications, a major policy change. The government is recognizing and legitimizing the new communication medium.

 

For financial advisors the change has no immediate impact, although you may want to start following your favorite companies and mutual funds if they "favorite" a particular social medium, like Faceboook or Twitter, for making public discloures about company news. 

 

Longer term, my guess is RIAs might be able to satisfy the annual brochure disclosure requirement using social media.

 

In concluding its report on the investigation, the SEC said:

"There has been a rapid proliferation of social media channels for corporate communication since the issuance of the Commission’s 2008 Guidance. An increasing number of public companies are using social media to communicate with their shareholders and the investing public. We appreciate the value and prevalence of social media channels in contemporary market communications, and the Commission supports companies seeking new ways to communicate and engage with shareholders and the market. This Report is not aimed at inhibiting corporate communication through evolving social media channels. To the contrary, we seek to remind issuers that disclosures to persons enumerated in Regulation FD, even if made through evolving social media channels, must still be analyzed for compliance with Regulation FD. Moreover, we emphasize that the Commission’s 2008 Guidance, though largely focused on the use of web sites, is equally applicable to current and evolving social media channels of corporate communication. The 2008 Guidance explained that issuers must take steps sufficient to alert investors and the market to the channels it will use for the dissemination of material, nonpublic information. We believe that adherence to this guidance will help, with minimal burden, to assure compliance with Regulation FD and the fair and efficient operation of the market."
 

 

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Q1 2013’s Great Performance Inspires Warnings From Financial Press; Where Are The Bulls?
Monday, April 01, 2013 15:51

Perusing the consumer press after last Thursday’s close of 1Q2013, skepticism about the prospects for the market abounded.

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To be sure, it was a record-smashing quarter. “Stocks closed out the first quarter on a high note with the S&P 500 piercing through levels last seen in 2007 to end at a record high near 1,570 and the Dow logging its strongest quarter in 15 years,” CNBC reported, in the only story I could find that did not advise caution and simply reported the quarterly numbers without prognostication.


All of the other sites I read that reported on the outstanding quarterly results carried warnings of a looming correction. For example, MarketWatch’s subheadline on its coverage: “After a month of teasing investors, the S&P 500 closed at a new record high on Thursday. Time to take the money and run?”
 

The LA Times, in its coverage, similarly asked “how long might the rally last? Some market experts caution the rally may slow in the next three months, and stocks could fall 5% to 10%, they say.”
 

Even Reuters, which is relied on for reporting hard news straight, was skeptical with its headline, “Wall Street Week Ahead: Pullback possible after S&P's milestone.”
 

None of the major news outlets I found pointed out the possibility that this rally might actually be the beginning of a new secular bull market. Maybe it’s a bullish sign that sentiment is so negative in the consumer press, but none of the major new outlets suggested that the market could be on the verge of a new bull leg.

 

(Shameless plug: Economist Fritz Meyer recently made the case that stock investors could experience the benefits of earnings-multiple expansion propelling a new secular bull market, which Advisor Products explored in a story for advisor clients in newsletters and websites. Fritz Meyer’s next webinar is coming up next week and you can register for it now. )

 

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Illinois Is Accused Of Securities Fraud By The U.S. Government
Monday, March 11, 2013 20:45

For the second time in history, federal regulators have accused an American state of securities fraud, alleging that Illinois misled investors about the condition of its public pension system from 2005 to 2009.

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In announcing a settlement with the state on Monday, the Securities and Exchange Commission accused Illinois of claiming that it had been properly funding public workers’ retirement plans when it had not, says The New York Times.

 

 

 

 

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February Car Sales Strong Despite Payroll Tax Increase And Sequester
Monday, March 04, 2013 09:15

Tags: economy

February car sales were slightly weaker than January, but they were stronger than last year by 7%. Chrysler, Ford, Toyota, and General Motors saw their sales rise, while Honda and Nissan saw declines.

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February's sales weren't just more numerous than last year; they were more valuable as well, says Christan Science Monitor.

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