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Yale's $40.7 billion endowment (as of June 30, 2023) Source: Yale.edu
Apr 27
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Growth of solo businesses

By General

The Number of US Businesses without paid employees, in millions

 

Is the growth in the number of solo businesses a good sign for the economy?

The number of U.S. businesses without paid employees—mostly self-employed individuals with unincorporated businesses—rose 1.1% to 22.74 million in 2012, the latest data available, according to a new report by Census this week. “Non-employer” businesses have increased nearly 7% since dipping to 21.35 million in 2008, the first full year of the 2007-2009 recession.

The new Census data jibe with reports from the Labor Department that suggest self-employment took a hit during the recession but has since come back slightly.

Overall, the readings could be a sign that some Americans are feeling more confident about their ability to launch businesses as the economy gradually recovers from the recession. But it could also point to the persistent difficulty many face in landing full-time jobs.

(Source: Wall Street Journal)

Apr 27
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Pump Prices Help to Drive Inflation Outlook

By Inflation Watch

Pump Prices Help To Drive Inflation Outlook

 

While we watch many indicators that might point to a future rise in inflation, the above chart depicts how consumers correlate near term inflation expectations with prices paid at the pump.

According to Friday’s consumer sentiment survey put out by Thomson-Reuters and the University of Michigan, consumers think inflation will be 3.2% a year from now, little changed from expectation readings so far this year. (Consumers almost always think inflation is running higher than the government’s official measures. The consumer price index, for instance, shows prices are up just 1.5% in the past year.)

Changes in gasoline prices tend to color how consumers view inflation. That’s not a surprise since gas prices are very visible and drivers tend to fill up frequently. Prices at the pump have been rising lately. Add in the price jump for some grocery items—most notably beef and pork—and it would not be surprising if inflation expectations edge up in coming months.

(Source: Wall Street Journal)

 

Apr 21
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EWM Number of the Day: 4/21/2014

By Uncategorized

$100 million

Square’s approximate loss recorded in 2013, which was broader than its loss in 2012, according to people familiar with the matter. With losses widening and cash shrinking, representatives of the mobile-payments startup have discussed a possible sale to several deeper-pocketed rivals.

(Source: Wall Street Journal)

Apr 20
Love0

U.S. Equity Markets: Bull or Bear?

By General

We believe that it is hard to determine precisely whether you are at the end of a Bull run or at the beginning of a Bear cycle. However, one can look at a panoply of macro factors that might help in making a decision one way or the other. It is also possible that the two scenarious balance out and put you in a Neutral Zone. 

Factors that favor a continuing of the current Bull Market:

  • Continuing of current accomodative global monetary policy
  • U.S labor market continues to improve
  • U.S. auto sector continues to grow
  • U.S. housing affordability still attractive in most markets
  • Muted inflation
  • U.S. Current Account and Federal Budget deficits continue to shrink
  • Renaissance in U.S. energy production and manufacturing
  • U.S. corporations sitting on over $2 Trillion in cash
  • M&A and IPO activity picking up
  • Equity market valuations are reasonable particularly on a relative basis to bonds
  • Europe starting to grow its economy
  • China growth stabilizing alongwith other emerging markets like India and Brazil

Factors that Bears are making in support of a coming Bear Market:

  • Slow job improvement compared to past economic recoveries
  • Political and regulatory uncertainty continues hindering global capital investment and employment growth
  • End of QE in the U.S. prompting discussion of how equities might crash in a rapidly rising interest rate environment
  • High corporate profit margins might not be sustainable
  • Momentum investors have driven the valuations for many internet oriented and biotech stocks to very steep levels that might not be sustainable
  • U.S. IPOs might be showing signs of excessive speculation
  • U.S. equity markets have not had a 10% plus correction in over 30 months vs. a historical average of 18 months
  • 2nd quarters are usually the worst on both a price change and frequency of decline basis since WWII for the S&P 500

We are in a neutral zone with a bias towards Equities and Risk Managed asset classes on a relative and absolute return basis.

Apr 16
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$2.1 Trillion in Untaxed Profits held Abroad by U.S. Corporations

By General

More than $2 trillion in foreign profits were held by U.S. corporations abroad in 2013, says Reuters.

U.S. corporations do not pay income tax on their overseas profits (something known as income tax deferral) unless they bring those profits back into the United States.

  • Between 2008 and 2013, the amount of profits held overseas by American corporations almost doubled.
  • General Electric alone had $110 billion overseas, followed by Microsoft (at $76.4 billion), Pfizer (at $69 billion) and Merck (at $57.1 billion).

This corporate tax issue has been at the center of congressional debate on tax reform. Some lawmakers have advocated getting rid of offshore deferral, and others have pushed for a “tax holiday” that would allow these corporations to bring foreign profits back into the United States at a low tax rate. Democratic Senator Max Baucus, former finance committee chairman, had made a number of tax reform proposals before leaving to become ambassador to China. Senator Ron Wyden has taken over Baucus’ post.

Analysts do not anticipate any real reform action until after the mid-term elections in November, but Americans can expect to see a push for a tax code overhaul in 2015.

Source: Kevin Drawbaugh and Patrick Temple-West, “Untaxed U.S. Corporate Profits Held Overseas Top $2.1 Trillion: Study,” Reuters, April 8, 2014.