“Please allow me to introduce myself
I'm a man of wealth and taste
I've been around for a long, long year
Stole many a man’s soul and faith”
...Sympathy for the Congress?
SHOCK TO THE ECONOMY - SEQUESTRATION (Financial Times)
“The $1.2 trillion in automatic spending cuts that Barack Obama once
promised to avert are looking increasingly likely to occur because of
entrenched politics in Washington, threatening a shock to confidence in the US
economy...
…"I think the sequester is going to happen," said Paul Ryan,
the influential Republican congressman on NBC's "Meet the Press".
While he and other Republicans are expressing regret that defence (sic) will
take the brunt of the hit, a fact that the Obama administration has warned
threatens national security, he and other Republicans say the reduction in
spending is paramount....
…"While I would prefer to see the specific spending cuts configured
differently...I'm not convinced that we'll be able to agree with the president
and the Democrats in the Senate on how those shifts should occur," Pat
Toomey, the Republican senator from Pennsylvania, told the FT.” Full story at...
http://www.cnbc.com/id/100410660
SEQUESTRATION IMPACTS
Expect a pull-back if sequestration occurs. CNBC and the fear-mongers will work to
convince investors that it will be a disaster for the economy so the shorts can
make their money. The $1.2-trillion cut
is over 10-years, so the effect in any one year is around $120-billion. That is also about the amount of money taken
out of the economy by ending the 2% payroll tax deduction and that was part of
the agreement to avoid the Fiscal Cliff (just check your paycheck). If the sequestration cuts by the Government
were translated to cuts in spending by taxpayers, it would be about $1,200 per
taxpayer or $100 per month. So if each
taxpayer cut their spending by $100 a month what would it mean? While this is not insignificant, I don’t see
that the effects on the economy will be worth all the handwringing and whining
we’ll hear in the media. I am not an
economist so take that as an uninformed opinion from a non-believer. Economists are not so sanguine.
Goldman Sachs estimates sequestration may cut GDP growth by 1%. Some estimates place the impacts of the payroll
tax reinstatement as high as 1%. So
together, the reductions in GDP growth could push the economy close to
recession, if not in recession; the US GDP is estimated to have averaged around 2%
growth in 2012. (Final numbers aren't in yet.) Here’s some background
information from ZeroHedge:
http://www.zerohedge.com/news/2013-01-16/here-comes-sequester-and-another-1-cut-2013-gdp
MARKET RECAP
Tuesday, the
S&P 500 was Up 0.5% to 1508 (rounded).
VIX was down about 2% to 13.31.
NTSM
The NTSM analysis
remained HOLD Tuesday.
MY INVESTED
POSITION
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks. 
