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Two Economic Developments Every Investor Needs to Be Aware Of

Phoenix Capital Research's picture




 

 

Last week I outlined the reason why we are very likely going over the fiscal cliff: there are little if any political incentives for the GOP or Dems to fix the problem; the best option politically is to let us go over the cliff and then offer targeted tax breaks in late 2013 early 2014 as part of their 2014 Congressional campaigns.

 

With that in mind, corporations are now rushing out special dividends to shareholders in an effort to beat the coming tax hikes on dividends.

 

Between Nov. 1 and Dec. 5, 349 companies moved up their dividends or paid special dividends, according to Silverblatt. That is higher than the 314 irregular dividends paid last year in all of November and December. Silverblatt expects the pace of early dividends to pick up if Washington keeps dawdling.

 

Many companies go beyond moving up ordinary payments. They are declaring special, one-time dividends to take advantage of the lower tax rate while it lasts.

 

http://www.lasvegassun.com/news/2012/dec/10/us-wall-street-week-ahead/

 

This is a serious red flag for the US economy’s future: all of the capital being paid out to shareholders will not be going into corporate expansions or hiring. This, when taken along with the recent rush of capital into savings accounts ($150 billion was shifted into savings accounts following Obama’s re-election), indicates that big money is either going into hibernation or being paid out to shareholders.

 

In simple terms: none of these funds will be used to grow the US economy or create jobs. Which means the US economy will be taking an even sharper nose-dive than expected in 2013.

 

On the other side of the pond, the EU as a whole is in recession. However, recent data coming from Germany indicates things are going to be getting significantly worse.

 

Month over month, German industrial production fell 2.6% in October. It fell 1.3% the month before. This contraction has resulted in the Bundesbank lowering its 2013 GDP growth projection to just 0.4%.

 

The entire EU bailout process has been based on the notion that Germany will write the check to fund various bailouts/ interventions. If Germany enters a recession then politically it will be much harder for German politicians to push for additional aid to the rest of the EU.

 

Remember, Chancellor Angela Merkel is up for re-election next year. So she will be turning her attention increasingly towards her campaign. And running on the idea of more bailouts when the German economy is contracting is political suicide.

 

Thus, we have something of a capital freeze occurring in the US at the very same time that the primary pillar of EU stability (Germany) will very likely begin to pull back from providing additional aid (case in point, Greece is still waiting on receiving proposed aid from six months ago).

 

All of these items point towards what will be a particularly ugly 2013.

 

On that note, we’ve published a report showing investors how to prepare for the break-up of the EU. It’s called What Europe’s Collapse Means For You and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.

 

This report is 100% FREE. You can pick up a copy today at:

http://gainspainscapital.com/eu-report/

 

Best Regards,

 

Graham Summers

 

PS. We also offer a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a copy of this report at:

 

http://gainspainscapital.com/gpc-inflation/

 

 

 

 

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Mon, 12/10/2012 - 23:42 | 3050889 pupton
pupton's picture

Dammit, I'm disappointed right now. Dollarcollapse.com has this crap linked to it's page as if it were an reasonably intelligent piece of information. Low water mark for dollarcollapse.com

Mon, 12/10/2012 - 14:14 | 3049097 Bullwinkle Moose
Bullwinkle Moose's picture

Pure unadulterated flatulance. It stinks all the way here.

Mon, 12/10/2012 - 12:36 | 3048773 Rustysilver
Rustysilver's picture

What's the criteria for declaring oneself an expert and publishing reports that are 100%. I can point to many people on ZH that

can produce more coherent thoughts.

Mon, 12/10/2012 - 12:45 | 3048805 DavosSherman
DavosSherman's picture

My take is that about 8 months or so ago, something changed.  Some good.  Some like this, or i-Worst-lene.

Mon, 12/10/2012 - 12:10 | 3048703 Bullwinkle Moose
Bullwinkle Moose's picture

Just a question: Has any of this clown's predictions ever come true?

Mon, 12/10/2012 - 12:11 | 3048705 DavosSherman
DavosSherman's picture

If I recall he said there'd be no QE3, he's right, they named it Qenfinity and beyond, Buzz Lightyear eat your fucking heart out.

Mon, 12/10/2012 - 11:57 | 3048647 pupton
pupton's picture

I'm just checking in to see if anyone is still paying attention to this douche.  Good to see the hatred is still alive. 

Mon, 12/10/2012 - 12:10 | 3048692 DavosSherman
DavosSherman's picture

Yah wanna feel love, visit http://www.zerohedge.com/contributed/2012-12-07/hidden-dangers-gold

A score of 1.0 and 5 votes here so far, ilene has him slaughtered with a whopping all time ZH record of a 1.6 average at 70 votes.

Graham is a Little League whiffer.

Mon, 12/10/2012 - 12:01 | 3048657 Jack Sheet
Jack Sheet's picture

Well, we managed to get rid of Leo Kolifuckis and Rubber Scrota - eventually.

Mon, 12/10/2012 - 11:39 | 3048579 HoaX
HoaX's picture

Geman exports in October 2012 are actually up 10.6% compared to 2011.

https://www.destatis.de/EN/PressServices/Press/pr/2012/12/PE12_432_51.html

Data is a funny thing if used subjectively.

Mon, 12/10/2012 - 11:23 | 3048529 rsnoble
rsnoble's picture

"grow the economy"

That seems to be the entire problem.  Nothing can last forever in a society based on the idiotic idea of sustained growth.  If it were based on survival maybe things would be better.  Of course since it's not I guess the alternative is certain death.

Mon, 12/10/2012 - 11:35 | 3048572 DavosSherman
DavosSherman's picture

"That seems to be the entire problem. "

+1

A monetary money system predicated on expoential growth to cover the money (debt) loaned into existance today means only that more money must be loaned into existance tomorrow.

The wall: Finite resources & 7 billion people.

Mon, 12/10/2012 - 11:17 | 3048511 SilverMoneyBags
SilverMoneyBags's picture

No more cans to kick.

Mon, 12/10/2012 - 12:32 | 3048765 Liquid Courage
Liquid Courage's picture

Maybe they're counting on that Mayan thing: kick the can all the way to the Apocalypse.

Mon, 12/10/2012 - 10:53 | 3048440 digitlman
digitlman's picture

More shit from this asshole.

 

 

Mon, 12/10/2012 - 11:57 | 3048650 Jack Sheet
Jack Sheet's picture

To be more exact, dogshit.

Mon, 12/10/2012 - 12:06 | 3048685 DavosSherman
DavosSherman's picture

Least the comments are insightful.

Like going to a shit lecture where at break you learn more.

Mon, 12/10/2012 - 11:05 | 3048478 DavosSherman
DavosSherman's picture

Have you read ilenes latest? 1.6 @ 70 votes.

Mon, 12/10/2012 - 10:40 | 3048414 andrewp111
andrewp111's picture

The EU isn't going to break up. They will begin the process of breakup and descend into civil war, look over the abyss, and be consolidated under a single totalitarian EU government. Roman Empire II is about to be born.

Mon, 12/10/2012 - 11:25 | 3048530 Enslavethechild...
EnslavethechildrenforBen's picture

Done.

Do NOT follow this link or you will be banned from the site!