News Commentary

FPO offers an objective perspective on what we view as the primary financial news topic of the week.

Week of 29 Jan:  Fear not, fans of the iconic Twinkie.  Private equity firms Apollo Global Management LLC (APO) and C. Dean Metropoulos & Co have set a baseline offer of $410 million to buy Hostess snack cake brands Twinkie and Dolly Madison.

Week of 22 Jan:  It looks like the maket is still doing well.  The S&P has returned to the 1500 mark.  This is a good trend for a market to succeed in times of fiscal uncertainty and in the aftermath of recent U.S. tax changes.  Also, despite the slide in the price of Apple stock, it is still the singly most talked about stock.  Yahoo Finance has a whole section dedicated to all things Apple.

Week of 15 Jan:  The hot topic this week covers our country’s thirst for debt production, that is, our exponentially expanding pile of issuing debt to finance our operations.   This article at Yahoo Finance is absolutely correct in its analysis of what is being done to the U.S. money supply.  The best thing you can do to protect your self is stay away from what is being messed with.  This can be done by having a very small position in cash and cash equivalents.  Center your portfolio around stocks, short-term corporate bonds, real estate, and business ownership.  Mixing in some commodities is OK too.

Week of 8 Jan:  The Fear and Greed index available at http://money.cnn.com/data/fear-and-greed/ is an excellent resource for determining market sentiment.  Market sentiment is currently in the “Extreme Greed” mode.  Always remember, there are two viewpoints on any asset.  If someone is feverishly buying, someone else is selling just as fast.

Week of 1 Jan:  Check out the FPO 2013 tax alert.  The recent legislation has determined threshold limits of $400,000 and $450.000, along with $425,000 for “head of household”.  Seems resolved, right?  Not quite.  What has yet to be determined is what income piece of the 1040 this applies to.

Week of 25 Dec:  The Tax situation looks like is has worked itself out just in time for the New Year’s holiday.  While not complete, the compromise does extend the Bush-era tax cuts for those earning under $400,000 ($450,000 for MFJ).   The Social Security tax reduction to 4.2% was not renewed for this 2013.  This will raise the annual Social Security collected on a $50,000 salary by $1,000 for the next year.  This is money that would have been important to the families that got to keep it, as well as the economy in which the funds got spent.  However, the ever growing bill for Social Security liabilities does need to be realized at some point.

Week of 18 Dec:  The “Christmas” rally of 2012 has garnered a great deal of attention.  First of all, all but the “shorts” agree it is good to end on a win.  The reason, even those who aren’t in the stock market win.  When stocks go up the whole country prospers.  Its capitalism at its finest.  This surprise is joined with another, the early stages of our two political parties coming to an agreement on the fiscal cliff.  It is good to see that higher taxes and reduced spending are both on the table.  An interesting fact on taxes and the whole 47% that don’t pay any federal income tax…back 110 years ago the income tax of the day only applies to the top 1%.  Its only been in post WWII times that the notion of the majority paying a tax has come to be.

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