Friday, January 22, 2010

Senate Race

2010 IS OFF TO A SOLID start, as the major equity indices are up. By the numbers, for the two weeks ended Friday, January 15, 2010, the Dow Jones Industrial Average closed at 10,609, up 181 points, or 1.7%. The Standard & Poor’s 500 closed at 1136, up 21 points, or 1.85%, and the NASDAQ closed at 2288, up 19 points, or 0.8%.

Earnings season has started. Analysts expect earnings of the S&P 500, ex-financial stocks, to increase 8% during this reporting season, up for the first time in nine quarters. December unemployment held steady at 10%. Ford auto sales were up 33% in December, while both government run operations continue to bleed.

Retailers reported their best December in two years, though Marks & Spencer of England suggested that the heavy winter weather took a toll on sales. Novartis has decided to drop $39.3 billion for the 75% of Alcon it doesn’t already own. Cadbury appears ready to acquiesce to Kraft’s increased offer of $19.5 billion.

The Coakley-Brown showdown in Taxachussetss appears to be a referendum on fifteen months of federal foolishness, starting with the $800 billion feeding frenzy in the fall of 2008. A Brown win would end an eighty year Kennedy monarchy.

The World Cup of Texting took place in New York City this last weekend. Yours truly didn’t qualify. The Administration is proposing a ten year fee on financial institutions that is projected to raise $90 billion during that time frame. Bankers are in a quandary. On the one hand, they are hammered for not lending by Washington. On the other, they are getting no clear direction from OCC and FDIC auditors, who are in serious defensive mode.

Google is considering leaving China, after what appear to be attempts to censor the flow of information through the Google network. On the economic front, the Fed’s Beige Book reported improved economic performance in ten of the twelve Fed regions in December, and business inventories grew for the second straight month after no gains since August 2008. Consumers continued to cut spending, trimming consumer credit by $17.5 billion in November, the largest decrease since 1980.

On the tax front, Congress is in complete disarray, with no consensus on either cap-and-trade or nationalized health care. Our distinguished and seasoned leaders have been so caught up with political shenanigans that they have allowed a variety of tax laws to expire, leaving a vacuum, instead of allowing for sound planning. Regarding estate taxes, a group of Congressmen is pushing for a $5 million exemption and a 35% maximum rate.

Expect the mileage deduction to remain at 50 cents for 2010, and for the domestic production deduction to increase to 9%. Still to be addressed are AMT provisions, charitable gifting from IRA’s, R&D credits, and credits for college tuition and teachers’ supplies, to name a few. The limits on HSA deductible payins increases to $6150 and $3050 for married and single taxpayers in 2010. The adoption credit goes to $12,170 in 2010, and 401k contribution limits remain at $16,500.

The Iditarod starts this year on March 7 in Willow, Alaska. The race covers 1150 miles of some of the most beautiful terrain on earth, and can last from ten to seventeen days. 2010 should see 75 teams attempt to be the first to Nome, on the Bering Sea. You can learn more at To plan your outing to watch the Iditarod, check out, and, among others.

Quotes of the week:

“Of the four wars in my lifetime, none came about because the U.S. was too strong.”

“I have wondered at times what the Ten Commandments would have looked like if Moses had run them through Congress.”
                                                                                   Ronald Reagan