May 23, 2011, 12:20 pm EDT
One of the most exciting events in the middle of every month for monetary policy followers is the release of the Federal Reserve Board minutes from the previous month’s meeting.
The minutes of the central bank’s rate-setting committee last week provided insights on how and when Bernanke & Co. plan to end quantitative easing and tighten monetary policy. The minutes said that a few participants “thought that economic conditions might warrant action … later this year.”
But that group was shown to be in the minority, because most participants were said to be concerned that “an early exit could unnecessarily damp the ongoing economic recovery.” Read
May 18, 2011, 1:02 pm EDT
Master limited partnerships have been shellacked over most of the past week in tandem with the decline in crude oil prices, though they are well off their lows.
A key problem has been news that the White House and Congressional leaders are thinking about changing the way certain partnerships, including MLPs, are taxed, as part of an effort to raise more revenue for the government . I don’t think this is likely to make much progress, and that the decline was likely to be seen as a good entry point for investors seeking high yields.
I have been a big advocate of owning these for the past two years as they provide an ideal mix of high and rising dividend yields, strong balance sheets and rising stock prices. And now the case for MLPs is as strong as ever. Read
May 18, 2011, 12:05 am EDT
There’s a lot of fuss about the U.S. debt ceiling this week, including fears that the Treasury could “default” on its debt. Is the government going to go the route of so many hard-luck Americans during this downturn and just stop paying the bills?
As economist Ed Yardini wrote this week, the U.S. Treasury can still auction new securities to raise funds. And according to Yardini’s math, net interest expenses by the Federal government were $213 billion through the last 12 months that ended in April, while Treasury revenue totaled ten times that. Specifically, the last 12 months saw $2.27 trillion in revenues for the Treasury – including nearly $290 billion in April alone due to tax season. Read
May 11, 2011, 4:00 am EDT
This week, Chinese officials are in Washington, D.C., this week for their annual Strategic and Economic Dialogue meeting, and topping the list of discussion points between the world’s largest economic powers is the issue of China’s currency.
The United States has been pressuring China on the value of the yuan for some time now. And while Beijing has its own game plan when it comes to its currency, new trade data out yesterday may put more pressure on China to send the yuan higher.
Dramatic Surge in China’s Trade Surplus
China’s trade surplus swelled dramatically in April as a result of slower import growth and exports that kept powering ahead. The surplus widened to a whopping $11.4 billion in April, compared to a meager $139 million in March. This was a big surprise, as the average analyst expectation was for the trade surplus to come in around just $1 billion. Read
May 10, 2011, 12:31 pm EDT
You may have noticed that a few of the nice, quiet, unassuming energy master limited partnerships — energy stocks with high dividend yields — blew up in the middle of last week. Here’s why.
It seems that certain people in government have decided that rather than cutting back on spending to balance the budget it might be a better idea to tax successful companies more. Hard to believe, I realize, that government officials could be so naive. But here’s what I found out.
According to Reuters, the Obama administration is considering a plan to force more businesses to pay corporate income tax as part of an overhaul package that could be unveiled as early as this month. Under the proposal, entities with more than $50 million in gross receipts would pay the corporate income tax, instead of the individual income tax they now pay. Partnerships like law firms, hedge funds and MLPs would likely be the most affected. Read