Foreign Oil Dependency by U.S. President

The Energy Department was established during the Carter Administration to reduce foreign oil dependency.
The Energy Department's annual budget is over $28 billion!
Are the taxpayers getting their money's worth?
Gee, despite this abysmal track record, I'm confident that the government will do a better job reducing health care costs, aren't you?

From Paul Kedrosky.

Cartoon of The Day: The Hypocrisy Runneth Over...

Cartoonist: Gary Varvel.

Greece? Just The Tip of The Sovereign Debt Crisis Iceberg?

According to economist Nouriel Roubini, the sovereign debt crisis will get worse and bond vigilantes could move on to even bigger economies like the United States and Japan when they are done sweeping through vulnerable European nations.

"The recent problems faced by Greece are only the tip of a sovereign-debt iceberg in many advanced economies,” Roubini told readers of his RGE Monitor website. "Bond-market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.” “Eventually they may take aim at other countries – even Japan and the United States -- where fiscal policy is on an unsustainable path," he wrote.

Roubini said he fears failure to learn the lessons of the credit crisis will simply mean a bigger, more dangerous crisis is just around the corner. "There is a lot of talk about better regulation and supervision of the financial system but the financial industry is back to business as usual -- rebuilding leverage, engaging in prop trading and other risky behaviour, compensating bankers and traders with indecent bonuses -- and is lobbying against better regulation and supervision,” he said.

Roubini also says he believes that those who claim it is impossible to see an asset bubble coming are misguided. Bubbles are easy to see coming and have had similar characteristics since Tulip mania hit the Netherlands in the 17th century, he said.

"An asset bubble -- often in real estate or in stock markets or in a new industry -- leads to financial euphoria, excessive risk taking, an accumulation of excessive debt and leverage,” Roubini wrote. “So the signposts of this phase -- asset boom and bubble, followed by the eventual bust and crash - are highly predictable if one looks at the economic and financial indicators that show the build-up of such excesses."

Junk Bonds Jump Back To 2007 Levels

High-yield debt approaches par for the first time since before the crisis.

The riskiest class of corporate bond has inched close to par for the first time since 2007. The high-yield bond market now trades at 99.48 cents on the dollar, according to a Bank of America-Merrill Lynch Index, its highest price since the financial crisis hit in 2008. Hitting par (100.00 cents on the dollar), or face value, is a reflection that investors think they have little to fear.

The last time the market traded at par was June 11, 2007. When credit markets collapsed after the fall of Lehman Brothers, the typical high-yield bond bottomed out at 54 cents on the dollar in December 2008.

"The (high-yield) market is definitely indicating that the economy is on a solid footing," says Martin Fridson, head of Fridson Investment Advisors in New York. "You can't rule out entirely a slide back into recession, but the likelihood of that has diminished significantly."

High-yield bonds have rewarded investors with a +49% return in the past 12 months and +6.8% so far this year. Fridson says the market's surprisingly quick rebound since the financial crisis is a testament to the Federal Reserve's efforts to revive credit – keeping benchmark lending rates near zero while mopping up mortgage bonds and other securities considered toxic. "You got two years of returns in one year," he says.

 Bank of America's high-yield index currently pays an 8.1% yield. Over the last 20 years, the yield has dropped below 8% for a total of 28 months, Citigroup's strategists say, and has never sunk below 7%.

Pimco Convertible Bond Fund - Still Going Strong...

Chart courtesy of www.StockCharts.com

Convertible bond funds are one of our favorite low-risk, high-reward investments when the economy is emerging from recession.

And Pimco Convertible Fund (PFCAX) is our favorite convertible bond fund.

For active investors, I've found that selling the fund when it closes below its 13-week moving average (the blue line on the chart) at the end of the week (Friday close) and buying it when it closes above its 13-week moving average at the end of any week has kept us out of harm's way and has provided above-average returns with below-average risk relative to buying-and-holding the S&P 500.

This way we only have to check on the status of the fund over the weekend and don't have to monitor it every day of the week.

In 2009, PFCAX soared+44.73% and is up +10.0% in 2010 (thru 04/23/10).

PFCAX has remained above it's 13-week moving average on a weekly closing basis since Friday, May 22, 2009, capturing the lion's share of the move off of the March 2009 low.

FULL DISCLOSURE: We currently hold this fund in many of our managed accounts.

And, of course, past performance is no guarantee of future results.

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday April 23rd the S&P 500 closed @ 1217, and that was...
  
 +11.8% ABOVE its 12-Month moving average which stood @ 1086.
 +11.7% ABOVE its 40-Week moving average which stood @ 1083.
   +4.8% ABOVE its 10-Week moving average which stood @ 1147.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

The Cost of The Median Single-Family Home in Ounces of Gold

This chart represents the median single-family home price divided by the price of one ounce of gold. 

This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. 

For example, it currently takes 153 ounces of gold to buy the median single-family home. This is considerably less that the 601 ounces it took back in 2001. 

When priced in gold, the median single-family home is down -75% from its 2001 peak and remains well within the confines of its 5-year accelerated downtrend. 

"Gold is forever. It is beautiful, useful, and never wears out. Small wonder that gold has been prized over all else, in all ages, as a store of value that will survive the travails of life and the ravages of time."  - James Blakely

Chart & commentary courtesy of www.ChartofTheDay.com

How To Evaluate Adult Day Care Centers

• Visit each center twice - once at an appointed time and once unannounced. And bring your loved one with you at least once.
  
  
• Talk with older adults who are at the center, and their family members, if possible, and pay close attention to their mood and the atmosphere in general.
  
  
• Carefully interview the director of the center and ask if a trial enrollment period can be arranged.
  
  
• Ask if the center is licensed and by whom, if the center is inspected by state and/or local officials and if the inspection records are available for review.
  
  
• Ask if backup care, transportation and meals or snacks are offered.
  
  
• Find out what type of personnel are employed at the center, e.g., physical therapists, social workers, activities directors, home health aides, registered nurses, etc.
  
  
• Ask if staff members are required to be licensed and/or certified.
  
  
• Ask what the staff-to-participant ratio is.
  
  
• Find out what documents (medical and other) are required for enrollment.
  
  
• What medical services, if any, can the center access?
  

Source: LifeCare Fast Facts. For more information, visit www.lifecare.com.

Historically Bullish Indicator Flashes A Buy Signal

A rare stock market BUY signal that was generated a couple of weeks ago by a trend-following indicator with an exceptional long-term record.

Prior to the recent buy signal, there had been only 12 since 1967.

And 2 of those 12 prior BUY signals occurred in the last 12 months alone. In other words, between 1967 and March 2009, this indicator gave just 10 BUY signals -- an average of just 1 every 4.3 years.

Since March 2009, though, they have averaged 1 every 4 months or so.

The indicator in question comes from Ned Davis Research, the quantitative research firm. It generates a buy signal whenever the percentage of common stocks trading above their 50-day moving averages rises above 90%.

Mr. Davis refers to such events as a "Breadth Thrust."

The recent BUY signal, according to this indicator, occurred on April 5. The other BUY signals over the last year occurred on May 4 and September 16 of last year.

How has the stock market performed following past BUY signals?

Quite well, according to Mr. Davis's calculations...

Bottom Line: 

If history is any guide, the current climate is a low-risk, high-reward environment.

Top Mobility Issues For Older Americans...

• 3,129 – Number of people per 10,000 between 50 and 64 who have trouble stooping, bending, or kneeling.
  
  
• 1,491 - Number of people per 10,000 between 50 and 64 who have trouble sitting two hours.
  
  
• 1,186 - Number of people per 10,000 between 50 and 64 who have trouble reaching over their head.
  
  
• 2,491 - Number of people per 10,000 between 50 and 64 who have trouble standing two hours.
  
  
• 2,010 - Number of people per 10,000 between 50 and 64 who have trouble pushing or pulling large object.
  

Source: RAND Corporation and National Institute on Aging

Another Month, Another Huge Deficit for Our Children & Grandchildren to Inherit

With total revenues of $153 billion and spending of nearly $219 billion, the Federal government spent +43% more than it took in this month for its record 18th straight monthly deficit.

Believe it or not, this month's $65 billion shortfall was the 4th lowest over the last 12 months.

The Wall Street Journal reported in April that when all is said and done, the total cost of the TARP Bailout was likely to reach $89 billion.

When the Federal government runs $65 billion in the red during its normal course of business, $89 billion to avert the collapse of the entire financial system doesn't seem so bad.

Chart and commentary courtesy of Bespoke Investment Group
http://www.bespokepremium.com/

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday April 16th the S&P 500 closed @ 1192, and that was...
  
   +9.8% ABOVE its 12-Month moving average which stood @ 1086.
 +10.1% ABOVE its 40-Week moving average which stood @ 1083.
   +3.9% ABOVE its 10-Week moving average which stood @ 1147.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Chart of the Day: Charteristics of Post-Massive Bear Market Rallies

Chart & Analysis Courtesy of ChartOfTheDay.com

Today's chart illustrates rallies that followed massive bear markets.

For today's chart, a "massive" bear market is defined as a decline of greater than -50%.

Since the Dow's inception in 1896, there have been only three bear markets whereby the Dow declined more than -50% (early 1930s, late 1930s until early 1940s, and during the very recent financial crisis).

Today's chart also adds the rally that followed the dot-com bust during which the Nasdaq declined -78%.

One point of interest is that the current Dow rally has followed a path that is fairly similar to that of the Nasdaq rally that began in late 2002.

It is also worth noting that each rally lasted from about 300 to 370 trading days and then moved into a trading range/choppy phase that lasted for a year or more.

In the end, the current post-massive bear market rally is by no means atypical.

The U.S. Government Will Spend $31,406 Per Household in 2010

Taxpayers filing their 1040s are likely wondering just where all their hard-earned tax dollars are going, anyway.

Washington will spend $31,406 per household in 2010 — the highest level in American history (adjusted for inflation).

It will collect $18,276 per household in taxes.

The remaining $13,130 represents this year's staggering budget deficit per household, which, along with all prior government debt, will be dumped in the laps of our children.

Government spending has increased by $5,000 per household since 2008, and nearly $10,000 per household over the past decade.

Yet there is no free lunch: If spending is not reined in, then eventually taxes must also rise by $10,000 per household.

The Tax Burden of the Top 1% of Taxpayers Now Exceeds That Paid by The Bottom 95%

Who's not paying their fair share?

5 Client Questions Advisors Need To Answer

A recent report by LIMRA found that advisors don’t always address critical risks that could affect their clients’ retirement. Less than half of retirees surveyed said their advisors advised them on when to retire, planning expenses and income during retirement, how assets should be withdrawn and planning minimum distributions.

“While most advisors are very conscientious about managing their clients’ assets in retirement, many may not address some of the key issues that could jeopardize their clients’ long-term financial well-being,” Marie Rice, corporate vice president and director of LIMRA Retirement Research, said in a press release.

Researchers identified 5 questions advisors and clients should answer while planning for retirement:

1. When should I retire? According to LIMRA, people typically make this decision five years before retirement. The report recommends pre-retirees plan for health care costs and current financial obligations, as well as building a back-up plan to protect against the affects of an unforeseen layoff or illness.

2. How do I plan for my expenses and income? You’re probably already working with clients on identifying the expenses they’ll face in retirement, but it’s important to plan for possible unplanned expenses, as well.

3. Which funds should I draw from first? While most people understand the importance of diversifying their portfolio, tax implications and long-term strategies can confuse people trying to convert those savings into income, according to the report.

4. What required minimum distributions do I need to perform and when? It’s important to know which investments have minimum distribution requirements and when clients need to start taking them, in order to avoid penalties and minimize the tax burden.

5. What risks should I plan for when I retire? Among the risks identified by researchers that advisors can help clients plan for are longevity, illness, inflation and market volatility.

LTCI Stats: Older Buyers See Value In Long-Term Care Insurance (LTCI) Plans

37.2% - Percentage of LTCI buyers who were over 55 when they purchased a policy.

66.1% - Percentage of LTCI buyers who chose plans that would pay benefits for at least five years.

$149 – Most popular benefit level for new buyers, up 8% from last year.

6.4% - Percentage of new claims that were initiated by individuals age 59 or younger.

49% - Percentage of benefit dollars from new group policy claimants were for home care; 30% were for nursing home care.

64.5% - Percentage of individual LTCI buyers who purchased a 5% annual inflation growth option with their policy.

83.6% - Percentage of new buyers who chose an option that would allow them to increase benefit levels periodically in future years.

Source: AALTCI

John Stossel: Why Insurance Makes Healthcare Far More Expensive

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday April 9th the S&P 500 closed @ 1194, and that was...
  
 +10.0% ABOVE its 12-Month moving average which stood @ 1068.
 +11.0% ABOVE its 40-Week moving average which stood @ 1069.
   +5.3% ABOVE its 10-Week moving average which stood @ 1122.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Who's Not Paying Their Fair Share?...

...the 47% of taxpayers that are paying NO federal income taxes or the 53% that are paying federal income taxes?

That's right. About 47% will pay no federal income taxes at all for 2009 (see chart above, data here).

Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe NO federal income tax for 2009, as long as there are two children younger than 17.

Nearly half of the country is completely exempted from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10% of earners -- households making an average of $366,400 in 2006 -- paid about 73% of the income taxes collected by the federal government.

The bottom 40%, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50% of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Taxes Set To Soar & Punish Productive Americans

The new Medicare tax on investment income and an increase in capital gains and dividend taxes means investors will soon face much higher costs.

Productive Americans beware: Desperate to raise money to fund its profligate lifestyle, Congress is in confiscatory taxation mode.

By 2013, investment taxes for wealthy Americans will rise to roughly 24% from the current level of 15%. The tax applies to roughly 1 million individuals who earn over $200,000 and 4 million couples who rake in more than $250,000.

While this group makes up just 2% of the population, it's a far bigger driver of market activity than the other 98%.

In addition, the higher rates aren't tied to inflation, meaning middle-class Americans will eventually price into the group.

The psychological impact may be profound in the market. With the U.S. economy still reeling in the aftermath of the worst recession since the 1930s, investors have more reason to show caution in the near term.

"You'll probably see more of a sideways pattern in the stock market over the next few years, but it's a little muddy as to how the higher taxes might factor in," said Linda Duessel, equity market strategist at Federated Investors.

With some of the 2003 tax cuts expiring at the end of this year, wealthy Americans will likely see a boost in long-term capital gains taxes to 20% from 15%.

Starting in 2013, they'll also pay additional Medicare taxes - an extra 0.9% of their wage income and an extra 3.8% on investment income.

For many investors, the rally over the last 12 months only served to cut or erase the losses they racked up in 2008's bloodletting.

Having only just recovered some or all of their holdings, investors may see the threat of higher taxes as a catalyst to bail, said Ken Grant, partner at Waterstone Private Wealth Management.

"If you're thinking of selling and you know you're going to see a tax of 20% in 2011 and 15% in 2010, you're going to sell ahead of the higher rate that's coming," Grant said.

Corporate Cost of Health Care: Announced Charges as of 3/31/10

Since Congress passed the health care reform bill on March 21st, numerous companies have announced that they will take charges to earnings.

The reason for the charges stems from one aspect of the legislation that eliminates deductions for tax-free subsidies companies receive from the government for providing prescription-drug benefits to retirees.  

Due to the material and quantifiable impact that the bill will have on their business and financial results, the companies are required by law to disclose it.  By not doing so, they would open themselves up to lawsuits in the future.

In the midst of these announcements some members of Congress are claiming that the companies are being irresponsible by announcing these charges, and late last week Congressman Henry Waxman called the CEOs of each of these companies to appear at a Congressional hearing on April 21st.

Regardless of whose side you take in the debate (companies vs Congress), it is apparent that Congressman Waxman is probably going to need a bigger room!  As shown in the table above, since the passage of the bill less than two weeks ago, at least 14 companies have announced charges totalling at least $1.6 billion (Verizon has announced that the bill will impact earnings but has yet to determine an exact amount).

In Washington a number like $1.6 billion may sound like a drop in the ocean, but in the real world it adds up.

Chart and Analysis courtesy of (c) Bespoke Investment Group

http://www.bespokepremium.com/

Chart Of The Day: Nonfarm Payroll Show Largest Increase in 3 Years

 Chart & Analysis Courtesy of ChartOfTheDay.com 

On Friday April 2nd, the Labor Department reported that nonfarm payrolls (jobs) increased by 162,000 in March -- the largest increase in three years.

Today's chart puts that decline into perspective by comparing job losses following the beginning of the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-1999 (dashed blue line).

As today's chart illustrates, the current job market has suffered losses that are more than triple as much as what occurs at the lows of the average recession/job loss cycle.

It is also worth noting that previous job market declines did not tend to end abruptly but rather flattened out before moving back into an expansionary phase.

Today's relatively positive jobs report provides an early indication that the current job market is moving from a phase of stabilization to that of expansion.

Unfunded Liabilities Exceed 100% of the Next 10 Years Worth of U.S. GDP

According to the most recent Social Security and Medicare trustees report, the unfunded liabilities of these New Deal and Great Society programs exceed $100 trillion dollars.

Add the unfunded Medicaid mandates imposed on the states along with the pension liabilities of millions of federal, state, and local government employees and the total becomes almost impossible to comprehend.

Try this on for size...

If you confiscated 100% of the Gross Domestic Product (GDP) of the U.S. for 10 years you couldn't cover all these liabilities!!!

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday April 2nd the S&P 500 closed @ 1178, and that was...
  
 +10.3% ABOVE its 12-Month moving average which stood @ 1068.
 +10.2% ABOVE its 40-Week moving average which stood @ 1069.
   +5.0% ABOVE its 10-Week moving average which stood @ 1122.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Social Security Outlays to Exceed Revenue in 2010

Social Security's chief actuary reports that the social safety net will run a deficit for 2010.

That's 9 years earlier than expected!  The 2010 shortfall is expected to be -$29 billion.

Peter Orszag, now director of the Office of Management and Budget, predicted as director of the Congressional Budget Office in August 2008 that no one need worry about Social Security.

We were told: "CBO projects that outlays will first exceed revenues in 2019 and that the Social Security trust funds will be exhausted in 2049."

Doesn't exactly inspire confidence in the estimating prowess of the CBO or the OMB , does it?

Apple iPad - PC Magazine's Video & Online Review

Apple iPad Review with Video and Photos - Full Review - Reviews by PC Magazine

Quote of The Day: Courtesy of John Galt & Ayn Rand

"It only stands to reason that where there's sacrifice, there's someone collecting the sacrificial offerings. Where there's service, there is someone being served."

"The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master."

- John Galt, Atlas Shrugged