Markman: Expect a Bounceback in Limited Partnerships

May 18, 2011, 1:02 pm EST

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 

3 Budget Problems That Dwarf the Debt Ceiling

May 18, 2011, 12:05 am EST
3 Budget Problems That Dwarf the Debt Ceiling

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 

Who’s Afraid of Big, Bad Inflation? Not China

May 11, 2011, 4:00 am EST
Who’s Afraid of Big, Bad Inflation? Not China

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 

Markman: Tax Crusaders Aiming at Partnerships

May 10, 2011, 12:31 pm EST

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 

5 Myths & 5 Ugly Truths About the Fed

May 8, 2011, 8:10 pm EST
5 Myths & 5 Ugly Truths About the Fed

Misinformation about the Federal Reserve abounds these days. And that misinformation cuts both ways – for every conspiracy theorist who labels the central bank and its chairman Ben Bernanke as the root of all economic evils, there is a brainwashed Fed defender who asks for just a little more time or a little more understanding.

I don’t pretend to be impartial when it comes to the Federal Reserve – I have my list of personal gripes both with Fed policies, as with the vocal alarmists and apologists who fail to look holistically at the role of America’s central bank in the 21st century global economy. But as a trained journalist, I must admit that what disappoints me most is the lack of an honest debate about our nation’s fiscal policies and its caretakers.

So here is my humble attempt at clearing the air and starting an important conversation about our central bankers: a hard look at common myths and ugly truths about the Federal Reserve. Read 

Markman: Obama’s 7.5% Solution

May 5, 2011, 10:48 am EST

An election year is staring us in the face and the most remarkable things occur when elected officials suddenly face their career mortality. I learned a long time ago that the No. 1 job of politicians is to get re-elected, and the higher they are in the hierarchy the more levers they can pull.

In this context, consider the fact that no post-war president has been re-elected with the unemployment rate of more than 7.5%. Jimmy Carter and Bush pere both lost with 7.7% unemployment rates. (Clinton, you may remember, won in 1992 with the mantra, “It’s the economy, stupid.”)

So you can bet that President Obama and Federal Reserve chief Ben Bernanke realize that the current unemployment rate over 8.75% is not going to cut it, and have Fed analysts and the administration economic team of Goolsbee, Sperling, Geithner, Daley, Locke and Immelt on the hunt for a surprise proposal to put people back to work in a hurry. 

Almost 60% of Americans are expressing disapproval for the administration’ s handling of the economy, which puts the administration on the wrong side of history. And I don’t think the country really understands how weak GDP growth really is now, as forecasts by credible economists are coming down by the week, to as low as 1% to 2% annualized. Read 

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