Not only to you make a living busting your butt and breathing coal dust, but the Feds are trying to put you out of business.
Or, you could be a mining company or one of its shareholders.
Overall market was down 2.3% yesterday – the day after the election.
Coal stocks dived 5.5%
Ouch.
McDonald’s is reporting that global sales at restaurants open at least a year fell 1.8 percent for the month.
The last time the figure dropped was in 2003.
The figure is a key metric because it strips out the impact of newly opened and closed locations.
The fast-food chain says the figure fell 2.2 percent in both the U.S. and Europe.
In Asia, the Middle East and Africa, sales dropped 2.4 percent.
McDonald’s sales slowed recently as the company faces intensifying competition and a weak economy
Source
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Note that the company didn’t blame the U.S. drop on Michelle Obama’s war on fast food … and didn’t blame the drop in Mis East sales on a video
As Gomer Pyle would say: Suprise, suprise, suprise.
This is absolutely unbelievable …
The BLS streak — understating initial unemployment claims – ended this week.
In all the prior 26 election season weeks, the BLS’s “headline number” under-reported initial unemployment claims … and cast the jobs situation as brighter than it really was.
The election was Tuesday, right?
Well, guess what.
Here’s what the BLS report this morning … read it carefully.
English translation: Some how, the BLS was miraculously able to eliminate the reporting bias that had been consistently evident in the run up to the election.
Frankly, I’d expected them to wait a few weeks to create some distance from the election … then “modify” their reporting.
Nope.
Tell me again how the BLS is just a group of apolitical bureaucrats cranking out consistently reported facts.
The good news is that I can finally stop tracking and reporting the streak.
Quick, somebody call Jack Welch…
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Punch line: The planned (and anticipated) increases in capital gains tax rates will motivate stockholders to sell stocks and pay capital gains taxes at the current 15% rate. As a result government tax revenues should soar between now and the end of the year … and the market may dive.
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Yesterday was day #1 of a highly likely – and predictable stock sell off.
Why a sell-off?
Well, some folks (i.e. me) expect a sharp market drop.
They’ll be selling — if they haven’t already – to lock in gains.
Why?
Because, it’s unlikely that President Obama will suddenly do a turnabout and become business-friendly.
So, despite perpetual quantitative easing, stocks are likely to be pressured.
Even if Obama does become pro-business, there’s the impact of the forthcoming capital gains tax bomb(s).
For openers, ObamaCare’s initial $1 trillion cost projections (which have already doubled) … were funded (on paper, that is) roughly half by cuts to Medicare and half by tax increases.
One of the tax increases is a 3.8% tax on investment income … essentially slapping payroll taxes on so-called “unearned income”.
“Unearned income” is defined as:
So, at a minimum, capital gains tax rates will go from 15% to 18.8%.
In addition, Obama is on record pushing for a 5 point increase in the base capital gains tax rate to 20%.
Bottom line: the capital gains tax rate is likely to go from 15% to 23.8%.
One implication of increasing marginal tax rates is that investors have an incentive to sell appreciated stocks, bonds, and other assets before the end of the year … and pay the 15% rate instead of the jacked-up 23.8% rate.
As a result, tax revenues increase … when the capital gains taxes are incurred.
That is exactly what happened following the enactment of the Tax Reform Act of 1986, which increased the top capital gains tax rate from 20 percent to 28 percent.
Capital gains realizations almost doubled in 1986 and then fell back in 1987 as investors rushed to take advantage of the soon-to-expire 20 percent rate.
Similar behavior is likely this year unless investors believe that the threatened tax increases are merely head fakes.
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Practical implications
Note: I don’t provide investment advice, but I’m willing to share some research I’ve done …
Question: I like my stocks and want to keep holding them … what to do?
You can sell them, pay the 15% rate on capital gains and buy the same stock back … resetting the cost basis at the buy-back price.
Question: Isn’t that a “wash sale”?
Nope.
Wash sale rules only apply to stocks sold at a loss.
When you sell stocks at a loss, you have to wait 30 days to buy them (or comparable stocks) back.
But, if you sell at a gain, you can rebuy immediately … it’s not a wash sale.
Question: I’m only re-investing 85% of the proceeds since I have to pay 15% capital gains taxes, right?
Remember, you only pay capital gains taxes on, well, the capital gains … not all the proceeds.
Question: But, with the laws of compound interest, I lose a lot by reducing my principle even a little, right ?
Based on my back-of-the-envelop calculations, a stock has to go up at least 70% to offset the benefits of taking advantage of the lower capital gains tax rates.
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In summary
I’m expecting a stock sell-off in Q4 – partly from investors locking in gains and partly from folks arbitraging the capital gains tax rates – current and anticipated.
The most likely result: lower stock prices … but higher government tax revenues.
We’ll see ….
Pew asked that question …
Predictably:
What’s your word?
Punch line: General Mills’ Monster Cereals create a buzz for fans with limited availability.
Die hard fans of Boo Berry, Count Chocula and Franken Berry will go to great lengths to purchase the 1970’s classics, and resellers have capitalized on this, selling the boxes for 3X the price on ebay.
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Excerpted from the WSJ’s, “Boo Berry is Big at Halloween with Kids, Hoarders and Resellers”
October is the coolest month for Roger Barr. For a few happy weeks, grocery stores stock the object of his desire: Boo Berry.
That is the berry-flavored cereal that turns milk bluish, delighting generations of American kids—and some adults, too.
The problem is that you can’t eat as much Boo Berry as you might like.
Not long after Halloween, Boo Berry disappears from stores like an apparition.
The same affliction haunts lovers of Count Chocula and Franken Berry, the other two cereals General Mills produces for the Halloween season.
At first, the three surviving cereals were year-round familiars.
But the cereal maker cut distribution to the period from September to around Halloween in 2010.
General Mills wanted to focus on the pre-Halloween weeks to best capture the holiday excitement and enthusiasm for the products.
he company doesn’t release sales figures and won’t say whether the cereals were selling poorly the rest of the year.
One of the most amazing things about the monster cereals is the passion of the people.
Carol Shelley Thomas, a 45-year-old medical-billing specialist, for the past several years has bought 14 boxes of Franken Berry in October, enough to last until the following Halloween when more of the neon-pink cereal again appears in stores.
A quest for Count Chocula will lead Ron Macedo, a 41-year-old Toronto food distributor, across the border this month to Buffalo, N.Y., in order to buy at least 10 boxes of Chocula for himself and at least 20 boxes of Boo and Franken Berry for friends—to take back to Canada, where General Mills doesn’t market the stuff.
Many fans would love the cereals to be less elusive, but General Mills has no plans to make the three cereals available year-round.
But those who run out can turn to people like Josh Rhodes, who on eBay charges $7 per box from buyers. Last year, he says, he sold about 300 boxes and expects to sell about 350 this year. “Sure, I get some funny looks at the register,” says the 35-year-old Orchard Park, N.Y., resident, who buys about 40 boxes at a time for about $2 each. “It’s worth it,” he says.
“People are willing to pay an arm and a leg for this stuff.”
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