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US politics: Where are the liberals? - Fullermoney
This is an interesting and topical column by David Brooks for the NYT and IHT. Here is the opening:
Why aren't there more liberals in America?
It's not because liberalism lacks cultural power. Many polls suggest that a majority of college professors and national journalists vote Democratic. The movie, TV, music and publishing industries are dominated by liberals.
It's not because recent events have disproved the liberal worldview. On the contrary, we're still recovering from a financial crisis caused, in large measure, by Wall Street excess. Corporate profits are zooming while worker salaries are flat.
It's not because liberalism's opponents are going from strength to strength. The Republican Party is unpopular and sometimes embarrassing.
Given the circumstances, this should be a golden age of liberalism. Yet the percentage of Americans who call themselves liberals is either flat or in decline. There are now two conservatives in this country for every liberal. Over the past 40 years, liberalism has been astonishingly incapable at expanding its market share.
The most important explanation is what you might call the Instrument Problem. Americans may agree with liberal diagnoses, but they don't trust the instrument the Democrats use to solve problems. They don't trust the federal government.
A few decades ago they did, but now they don't. Roughly 10 percent of Americans trust government to do the right thing most of the time, according to an October New York Times, CBS News poll.
My view - In many countries governments are seen as the problem rather than the solution, although in democracies this can change around election time. Mitt Romney certainly sounded presidential following his comfortable victory in yesterday's New Hampshire primary, and again on CNBC's US Squawk Box this morning. Governor Romney, who I assume will be the Republican candidate and President Obama will offer contrasting visions for the country. It should be an interesting campaign.
Tim Price: A revolutionary road - My thanks to the author for his sombre, if ever-interesting letter published by PFP Wealth Management. It is posted in the Subscriber's Area but here is part of the opening:
Sam Mendes' 2008 film 'Revolutionary Road' is edited to maximise heartbreak among viewers. Its opening scene shows bright young things Frank (Leonardo DiCaprio) and April (Kate Winslet) falling for each other at a New York party. Without missing a beat it then cuts to April displaying a mediocre performance in a mediocre amateur drama, which Frank is only too willing to point out. By this stage they are already married, with children and a brooding mutual resentment. Whatever happened, we are urged by this brutal jump cut to ask, to love's young dream? The disenchantment foisted upon us by the slow death of honest, free market capitalism, and of any form of political integrity, has, by contrast, taken its time coming. But that disintegration and its accompanying, lingering sense of existential despair are just as sure. There has been profound change in the markets over the last decade alone, and none of it good.
Crisis historians can take their pick deciding precisely when the rot set in. Our suggestion would be President Nixon's 1971 abandonment of the dollar to an unbacked, purely fiat status. That, in turn, allowed all other currencies to start out on the road to hell together. Other candidates include the 'Greenspan put' variously displayed after the 1987 Crash, during the 1998 bail-out of Long Term Capital Management, before the year 2000's 'Millennium Bug' (sic), and after the dotcom bust (ahead of, and igniting, the US property boom that proved both pièce de résistance and coup de grâce). But whatever the proximate cause of the death of free market capitalism, by the time that Lehman Brothers failed (six months after the emergency bail-out of Bear Stearns) the patient had already entered a climactic decline, and now suffers fitfully under life support.
My view - Personally, I am less interested in writing about what has gone wrong with the monetary and political system during my lifetime. It is not good for my blood pressure; it bores the family and it would be delusional of me to think that I can influence, let alone change these global events.
Instead, I am much more interested in finding a financial path through what can sometimes feel like a minefield. Usually, it is better than that, in which case the risk may be overconfidence rather than a paucity of opportunities.
Email of the day - On a gold report:
"I thought you may be interested in this article. I sent the note below to my family and a few friends. It depressed me when I first read it. It was easy to feel down in mid-December but it was probably a good contrary indicator. I have attached a PDF of the article in case you want to use it.
"The markets have a much better feel about them for now so I am hopeful that 2012 will be a better year.
"Thanks again for all of your help including your 45 minute effort last Friday. I's a funny thing but I get excited when I see a long audio as your thoughts are always very useful - the more the better."
My comment - Thanks for the feedback and an interesting article by Stephen Watt of The Australian Financial Review, a good paper which I always enjoyed during my many seminar and other speaking tours of Australia in the 1980s and 1990s.
This chart-illustrated item continues in the Subscriber's Area where the article is also posted.
Chart of the day: Global Leader - The Philippines (weekly & daily) surged to a new all-time high this week. Watch for a pause and consolidation near the 4500 region as it is temporarily overextended, followed by further strength towards the psychological 5000 level.
Additional commentary by Eoin Treacy
Email of the day on Primark and Associated British Foods:
Firstly let me wish you a very happy and prosperous new year to you and your families.
Have only just got around to reading last night's email so I am sure I won't be first with this, but Primark as mentioned in Eoin's first item, is not privately held, but owned by Associated British Foods - now ABF is 55% owned by the Weston family, so it's some way there,, but I am glad to say that Mrs D owns a fair chunk in her ISA and has done well compared to the FTSE over the years although interestingly not that well compared to the sector although I can't on a first look ascertain what proportion of that index is made up by ABF
My comment Thank you for pointing this out and let me apologise for inadvertently misleading subscribers. Yes, Primark is a subsidiary of Associated British Foods. The FTSE-350 Food Producers and Processors Index is dominated by Unilever at 75%. Associated British Foods occupies 12.38% with Tate & Lyle at 9.06%. The Index has been consolidating mostly above the 2007 peak since 2010 and has held a progression of higher reaction lows for 18 months. A sustained move below 5250 would be required to begin to question medium-term scope for additional higher to lateral ranging.
This section continues in the Subscriber's Area.
Food and drink exports up 12% - This article by Suzanne Lynch for The Irish Times may be of interest to subscribers. Here is a section:
The record rise in exports was driven by high commodity prices on world markets. Agricultural commodity prices reached record levels in 2011, with the FAO food price index recording growth of 26 per cent during the first 11 months of the year.
However, while the increase was driven primarily by value, growth in the volume of product sold was also a factor, with volume accounting for 25 per cent of the rise in food and drink exports.
The dairy and meat sectors were the strongest performing categories, both representing about €2.6 billion or 30 per cent of total food and drink exports. Prepared foods accounted for €1.5 billion, or 17 per cent of sales, with seafood accounting for €440 million or 4.5 per cent.
The meat and dairy sectors account for almost two-thirds of total food and drink exports, and indications that breeding herds are expanding, combined with the lifting of milk quotas from 2015, will underpin export growth into the future said chief executive Aidan Cotter.
My view The Irish stock market index was dominated by the financial sector prior to the crash. If memory serves me correctly, the weighting of financials was in excess of 70% in 2006. Today that figure is less than 5% and Bank of Ireland looks likely to be the only one of the major banks to avoid nationalisation. Building materials (27.02%), Food (19.02%) and Airlines (12.9%) now dominate the Index.
This section continues in the Subscriber's Area.
The Key 100 Cities in China for reaching households with a pre-tax income over Rmb 100,000 (US$15,000) pa and over Rmb 140,000 (US$22,000) pa Thanks to a subscriber for this interesting report from GlobalDemographics which may be of interest to subscribers. The full report is posted in the Subscriber's Area but here is a section:
It is projected that the average pre-tax Urban household income will grow from Rmb 77,374 pa in 2011 to reach Rmb 133,909 pa in 2021. This is 5.6% per annum for that time period.
Rural Incomes are projected to grow at 5.6% per annum and are much lower in absolute value than that of urban households.
In the next decade to 2021, the number of households with an income over Rmb 140,000 will go from 27 million to reach 96 million. That is an additional 69 million affluent households.
The Rmb 100,001 to Rmb 140,000 segment grows by 15 million households over the next 5 years. That is a 51% increase. It shows virtually no growth after then.
The obvious conclusion from this is to focus on the 100,000 plus segment for the next 5 years and then move to the Rmb 140,000 plus segment after 2016.
My view These are ambitious targets but appear to be more or less in line with other major patterns of industrialisation. The evolution of the consumer sector in China as well as across Asia, the Middle East, Africa and Latin America is a secular theme. The global population went from being mostly rural to mostly urban in the last few years. Companies offering to meet the basic requirements of people new to the sensation of discretionary income continue to outperform. This is likely to remain a compelling bull theme for the forseeable future. (Also see Comment of the Day on December 9th for a list of related Autonomies).
Email of the day on fund closures:
I am concerned about the number of funds that go out of business and whether I am invested in a candidate for such action and what is the financial penalty should that happen. I am in the Atlantis China Fund, along with other Fullermoney subscribers and my tracking source reports that it has a little over 3.1 million units; sedol - whatever that is? This would result in a value of $20 million U.S., which seems to me to be getting a little near the mark. I live outside the U.K. and would appreciate your response. Best wishes for a happy and prosperous New Year.
My comment Thank you for this email which I'm sure will be of interest to other subscribers. SEDOL stands for Stock Exchange Daily Official List and is a seven digit identification code for securities; most often used for funds. To the best of my knowledge it has nothing to do with a fund's liquidity.
This has been a difficult few years for the funds industry but I am not aware of large numbers of mutual funds going out of business. Hedge funds are perhaps a different story.
This section continues in the Subscriber's Area.
Speaking engagements in the USA I was invited to speak to the members of the Technical Analysis Society Singapore and the Australian Technical Analysts Association on my tour with The Chart Seminar last year. In fact, it was a subscriber, who is also an ATAA member, who suggested the tour in the first place.
I will be in southern California for approximately 10 days before driving up to San Francisco for The Chart Seminar. I will also be in New York for a few days before the New York Seminar. If you are a member of a local MTA chapter in those areas and/or a member of the TSAASF or AAPTA and interested in having me come speak to your association I still have space on my itinerary and would be happy to make time.
The Chart Seminar 2012 Following a sell-out tour to Singapore and Australia last year, The Chart Seminar will be held in San Francisco, New York and London this year. Please be aware that the early booking rate for non- subscribers at the US seminars expires on January 31st.
We are currently taking bookings for our San Francisco and New York dates in April as well as London seminars in May and November. Anyone interested in securing a place at any of our events should contact Sarah Barnes at sbarnes@fullermoney.com.
The date and venues for my seminars so far in 2012 are:
San Francisco - April 16th &17th 2012 Nikko Hotel
New York - April 23rd & 24th 2012 at The Manhattan Club at 800 7th Avenue
London - May 25th & 25th 2012 at the Radisson Edwardian Hampshire
London - November 22nd & 23rd 2012 at the Radisson Edwardian Hampshire
The full rate is £950 + VAT. (Please note US delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires on January 30th for the US seminars. Paid-up Fullermoney subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
