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Chart Of The Day: Spot The "Avoid The Dividend Tax Hike" Scramble

Tyler Durden's picture




 

No commentary necessary, although we will add one word: "unsustainable." We will also add that apparently not one economist could factor the simplest human behavioral response: "hey, lets pay ourselves dividends today to avoid the dividend tax hike tomorrow" into their models, which is why reality smashed the "estimate" by about 6 standard deviations. Ah, economists.

Source: St. Louis Fed

 

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Thu, 01/31/2013 - 10:13 | 3202141 GetZeeGold
GetZeeGold's picture

 

 

Who could have seen it coming really?

Thu, 01/31/2013 - 10:15 | 3202156 Dr. Richard Head
Dr. Richard Head's picture

Mmmmmm.....I love the smell of "unintended" consequences.  Just like how Obamacare is now being shown to not cover a significant section of the "poor".  Rules for thee (all your serfs) and not for me (corporate subsidized swindlers).

Thu, 01/31/2013 - 13:09 | 3202882 Chuck Walla
Chuck Walla's picture

No unintended consequences in Obamacare. Kill the poor, weak, elderly. How else is this monster sustainable before total control is achieved?

 

FORWARD SOVIET!

Thu, 01/31/2013 - 13:15 | 3202910 economics9698
economics9698's picture

rolmao

Thu, 01/31/2013 - 11:22 | 3202398 wombats
wombats's picture

Bullish!

Thu, 01/31/2013 - 11:41 | 3202471 Clayton Bigsby
Clayton Bigsby's picture

Krugman must be shocked...

Thu, 01/31/2013 - 10:13 | 3202143 SheepDog-One
SheepDog-One's picture

Eclownomists

Thu, 01/31/2013 - 10:15 | 3202157 LeisureSmith
LeisureSmith's picture

OT, but can anyone tell me what happened here just after 10a. http://quotes.wsj.com/index/UK/UKX

Software glitch, fat finger etc.?

Thu, 01/31/2013 - 10:18 | 3202166 mayhem_korner
mayhem_korner's picture

 

 

I'd love to help but I don't speak 'bot.

Thu, 01/31/2013 - 10:52 | 3202304 CPL
CPL's picture

HFT stuffing.

 

Means the British market is just as crooked as the US.  Also means all your 'money' is now nothing but risk tied up in a controlled market.  Good luck, but if you are in a postion to take a profit, do so and stay out of it completely.

Thu, 01/31/2013 - 11:05 | 3202338 Theosebes Goodfellow
Theosebes Goodfellow's picture

Hmmm..., glitch in the matrix. Which color pill did you say you swallowed?

Thu, 01/31/2013 - 12:16 | 3202653 LeisureSmith
LeisureSmith's picture

I don't recall.

Hey, i should be in politics!

Thu, 01/31/2013 - 11:26 | 3202407 wombats
wombats's picture

"Money for nothin and the chicks for free!"

Thu, 01/31/2013 - 10:15 | 3202161 mayhem_korner
mayhem_korner's picture

 

 

Well, if you plug the Q4 dividend into the dividend-growth model for stock valuation...voila!  Tom Lee lowballed the Dow at 20K.  /s

Thu, 01/31/2013 - 10:16 | 3202162 SheepDog-One
SheepDog-One's picture

Uh oh, what's wrong with equities futures? What are they saying $85 billion/month new raw fuel is Just. Not. Enough.? 

Well I'm sure all the Eclownomists got it all figured out already.

Thu, 01/31/2013 - 10:19 | 3202170 W74
W74's picture

I would like to see Dividends taxed at half the rate of Cap Gains.  This would incentivise boards and shareholders as well as execs to actually pay out dividends....which used to be the whole fucking point behind investing in companies in the first place.

Couple the above with a transaction tax of any amount and you'd see beaucoup amounts of market stability.  Why?  Day traders would go away and so would the Algos and HFTs.  The people in the market for dividends who like to sit and wait and invest in companies that are perceived to be doing well will prosper best.  The speculators will still be in the game, but at least they'll be taxed and if you tax this stupidity beyond what is sensible amounts of risk it'll go away.

But don't anybody hold their breath.

Thu, 01/31/2013 - 10:26 | 3202195 LawsofPhysics
LawsofPhysics's picture

What?!?!  Are you suggesting that markets were actually supposed to be a mechanism for true price discovery in order to spur new innovation and value-added companies and not an easy mechanism for skimming/stealing the wealth of the productive few by paper-pushing fucknuts?

Isn't fascism great?  Bad ideas and bad companies are simply no longer being allowed to die.  Shit, they are taking over.

Thu, 01/31/2013 - 10:28 | 3202214 youngman
youngman's picture

You will NEVER donate enough money to politicans to get that passed...

Thu, 01/31/2013 - 10:42 | 3202258 SheepDog-One
SheepDog-One's picture

Thats right...the ONLY important thing now is 'special people' and making sure no matter what they survive and receive all the profits.

Thu, 01/31/2013 - 10:42 | 3202254 CheapBastard
CheapBastard's picture

true, i stopped investing in most companies last year when the CEOs were handing themselves giant bonuses and yet not paying out div.....why should i invest with the selfish greedy ?

Thu, 01/31/2013 - 12:16 | 3202627 derek_vineyard
derek_vineyard's picture

dividends used to be ordinary income.  why not make the interest on coporate debt and treasuries to be taxed at the capital gains rate.....that will add fuel and an investor subsidy to the Fed.  keep the market high and keep rates low.......its like a coiled spring......compressing tighter and tighter......how far can it compress??????  i have have no idea, a spring has never been coiled that tight.   i'm assuming the fed thinks the coil is fail-safe....or just doesn't care if it goes boom.

Thu, 01/31/2013 - 10:22 | 3202177 andyupnorth
andyupnorth's picture

What are the unintended consequences?

Fewer companies offering dividends? Or dividend pay-outs decreasing?

People getting out of dividend-paying stocks and into something else?

Stock market going lower due to high-volume exiting?

Thu, 01/31/2013 - 10:23 | 3202182 orangedrinkandchips
orangedrinkandchips's picture

THOSE BASTARDS HAD TO BORROW MONEY TO PAY THEMSEVLES TO BOOT!!!!

 

Not 'free-cash-flow'...not cash on hand....no fucking way....DEBT, DEBT AND MORE DEBT...TO PAY MYSELF!!!! Not personal debt, but shareholder debt!

 

That is unsustainable!

Thu, 01/31/2013 - 10:28 | 3202204 LawsofPhysics
LawsofPhysics's picture

Don't worry, when the default on the loans, the taxpayer will bail them out (by force) and these corporate heads will keep their private islands, security teams, and all their stolen physical assets.  Oh wait...

Thu, 01/31/2013 - 10:27 | 3202210 orangedrinkandchips
orangedrinkandchips's picture

I cannot disagree....ignorance is truly blissful.....i swear!

Thu, 01/31/2013 - 10:35 | 3202206 Cognitive Dissonance
Cognitive Dissonance's picture

Who.Could.Have.Seen.It.Coming

<Most certainly not the supreme eCONomist priests of the false fiat cult.>

Thu, 01/31/2013 - 11:49 | 3202503 rqb1
rqb1's picture

Not the Queen

Thu, 01/31/2013 - 10:33 | 3202217 CheapBastard
CheapBastard's picture

Economics is a science, right? Well, being what it may, I do notice your graph resembles luxury yacht sales for 2012.

Thu, 01/31/2013 - 10:43 | 3202262 Stuck on Zero
Stuck on Zero's picture

Economics is actually a Social Science.  But more and more it's looking like a "Socialist Science."

 

Thu, 01/31/2013 - 14:23 | 3203176 Lord Of Finance
Lord Of Finance's picture

. . . its been turned into a mad science. The social order is being destroyed, so they have also turned uncreative destruction into a science.

Thu, 01/31/2013 - 10:40 | 3202256 Shevva
Shevva's picture

I saw this episode, Homer didn't make the jump. He hit his head all the way down.

Thu, 01/31/2013 - 10:52 | 3202305 Donlast
Donlast's picture

Never understand why they can never see that the impact of increasing taxes is asymmetric compared with cutting spending. 

Make cuts and it is pretty straightforward what are the implications.  There may be some "unintended consequences" but not often and usually quickly obvious.  

But raising taxes is an entirely different ball game.  One has absolutely no idea what the eventual consequences may be.

So for CBO to actually make ten year forecasts of the payback in revenue from hiking taxes on the "rich" is a fit exercise for someone in a lunatic asylum who has a slender grasp of reality, but a CBO economist....?

Thu, 01/31/2013 - 12:34 | 3202727 donsluck
donsluck's picture

I disagree with your "absolutely no idea" thesis. There are rich and powerful people who have teams analyzing and front running all political changes. They will profit. Unfortunatly, for the economy at large, a stable and slow-moving political environment is best because most businesses do not have the spare resources to devote to political analysis.

Thu, 01/31/2013 - 11:12 | 3202364 Sudden Debt
Sudden Debt's picture

What AMAZES ME bigtime is that there are so many DIVIDEND STOCK THAT GIVE DIV'S LARGER THAN THEIR EPS!!!

AND THAN YOU READ THE BLOGS AND IT'S FULL OF OLD FARTS THAT SAY: OH!!! I'LL ADD THAT STOCK TO MY 401K!!

Sure... divs of 16% are totally normal...

NYMT, NLY, AGNC, CIM, RSO, MFA....

I did recommend these above to my boss :) which I hate :)

 

Thu, 01/31/2013 - 11:20 | 3202388 Umh
Umh's picture

Between the tax laws concerning reits and the leverage they use it can be very confusing. Guessing when an interest rate change is going to occur is a large part of buying most reits.

Thu, 01/31/2013 - 11:14 | 3202370 100pcDredge
100pcDredge's picture

I give up.. where is it?

Thu, 01/31/2013 - 11:15 | 3202373 Michelle
Michelle's picture

Let's see, the cycle repeats, big capital gain distributions and a recession follows shortly thereafter.

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