To Pause or not to Pause

How bored am I waiting for the next Fed Statement?

This bored:

To Pause or not to
Pause, that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous commodity prices,
Or to take arms against a sea of rising yield troubles,
And by opposing inflationary trends, end them?
To halt: to stop
tightening; No more; and by a tightening to say we end
The heart-ache and the thousand natural shocks of incremental rate increases
That Treasuries are heir to, ’tis a consummation
Devoutly to be wish’d by equity traders. To halt, to cease;
perchance to dream of the end of the rate cycle: ay, there’s the rub;
For in that sleep of death what dreams may come of runaway inflation
and gold priced over $700 an ounce.
When we have shuffled
off this mortal coil *(and into the private sector),
This must give us pause: there’s the respect of bond ghouls,
That makes calamity of markets domestic and foreign;
For who would bear the whips and scorns of said ghouls verging on madness
The oppressor’s short selling, the proud man’s margin calls,
The pangs of despised Sarbox, the law’s delay,
The insolence of regulators and the spurn of taxes
That patient value investors merit of the unworthy day trader takes,
When he himself might his quietus FOMC make
With a bare bodkin? Who
would fade the bull and buy the bear?
To grunt and sweat under a trader’s life,
But that the dread of something after Spitzer,
The undiscover’d buy side from whose bourn
No broker returns, puzzles the will
And makes us rather bear those deficit ills we have
Than fly to slowing economic growth that we know not of?
Thus conscience does make cowards of us all in the wake of worsening inflation
expectations;
And thus the native hue of resolution at FOMC meeting
Is sicklied o’er with the pale cast of the steeper yield curve and greater TIPS
spread,,
And enterprises of great pith and Crude Oil
With this regard their
currents turn awry from the weaker dollar,
And lose the name of action. – Softer rates you now say!
The fair Ophelia! Nymph, in thy orisons and increased demand for
inflation-protected securities,
Be all my sins remember’d.

To be, or not to be (from Hamlet 3/1)

With my deepest apologies to William Shakespeare 

Category: Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation

Stephen Moore Gets Slick With the Data

Early this morning, I caught a few minutes of Stephen Moore’s Supply Side arguments on CNBC re Tax Cuts.

Rather than discuss what some have called Economic’s biggest mistake, and what the Chairman of President Bush Council of Economic Advisors Greg Mankiw described in the third edition of his book Principles of Economics textbook as the work of
"charlatans and cranks," I thought I would simply debunk his Capital Gains Tax Cut argument as increasing treasury receipts:

Moore is arguing that since tax reciepts went up after the Capital Gains Taxes were cut in 2003, it should therefore get all the credit. I would respond simply by going to the charts, and pointing out that THE ABSENCE OF CAPITAL GAINS FROM 2000-20003 is the primary reason.

This first chart shows the pre-tax cut period of October 2000 to March 2003; Gee, anyone want to hazard a guess for why Capital Gains Taxes paid were so low after the Nasdaq dropped 78%?

How about NO CAPITAL GAINS = NO CAPITAL GAINS TAXES!

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 Nasdaq 2000-03

200003_nazz

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The second chart shows what happened after the War began in March ’03. Note that the Nasdaq selloff was very similar in depth to the initial 1929 crash.

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Nasdaq 2003-06

2003_06_nazz

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Gee, when markets rally, people pay more Capital Gains! Go figure . . .

(And this is before we even mention increased Housing sales due to half century low interest rates and the potential capital gains taxes there) 

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