This No-Brainer Could Yield 40% Returns

The one investment opportunity I regard as an absolute no-brainer also happens to be potentially among the most lucrative. How lucrative? Gains of up to 40% over the next 12 months are possible. More on that below. But before I divulge some further details, let me mention that this particular asset class has yielded well in excess of 20% in five of the last six years. You might think that such a terrific opportunity would have been discovered by now. In fact, the opposite is true. This particular investment has either been shunned or ignored by the crowd, mainly because it disdains the popular wisdom that Fed stimulus already in the pipeline is certain to produce serious inflation somewhere down the road.

Have you guessed what investable asset I’m talking about? The answer is long-term Treasury bonds – the longer-term, the better (explained below) — and the reason they have performed so well is not hard to fathom if you simply jettison the mistaken notion that inflation is inevitable.  I owe a debt of thanks for this insight to my good friend Doug Behnfield, a Boulder, Colorado-based financial

advisor and fellow deflationist whose forte is building robust portfolios for high-net-worth individuals.  I have featured Doug’s thoughts here many times over the years, mainly because he is, hands-down, the smartest investor I know.  He is also one of the smartest guys I know, and his life outside the office reflects the same sort of Zen balance that he brings to portfolio management.  Doug is a consummate do-it-yourselfer, an avid hobbyist and a perfectionist — as adept at landscaping a garden as restoring old Citroens or taking the helm of a sail-powered yacht.

Beating the Geniuses

Like all highly successful investors, Doug has the courage of his convictions and the fortitude to stick with winners even when they go against him for a spell. This was the case in 2013, when T-Bond prices plunged 15%.  Even then,  Doug and his clients – unlike those of such erstwhile financial geniuses as George Soros and Paul Tudor Jones  — still made money, since Doug had wisely hedged his clients’ portfolios with some big winners, including a perfectly timed short against gold.

Like your editor, Doug thinks recession lies just ahead and that deflation will continue to rule the U.S. and global economies. If so, a stock market currently priced for perfection is primed to fall. That would necessarily cause portfolio managers to unwind their stock-heavy bets with a major shift into fixed-income assets such as T-Bonds.  Thereafter, if long-term bond prices were to return to their 2012 highs within the next 12 months, Doug estimates that capital gains would be on the order of 40%. He notes that the further out the maturity date, the more leverage one will reap from a fall in yields.

The Herd’s Major Fallacy

One reason the vast majority of investors are on the wrong side of this bet is that with the Federal funds rate already at zero, they’ve incorrectly assumed yields can only go up. As Doug points out, however, those yields – an “irrelevant data point” — are being artificially suppressed, whereas T-Bonds yields will ultimately be driven by market forces. “The factors affecting bond market are completely different from the factors affecting fed funds-rate decisions by the Fed,” he notes.  Thus, were recession to return, yields could only go lower, and bond prices higher, no matter what the Fed does with administered rates.  As for the economy, you can judge for yourself whether we’re headed into a recession or worse. For what it’s worth, I regard the 4% GDP growth just reported as a brazen lie – one that can be confirmed by simply asking friends who own businesses how they’re doing. My friends – a group that includes Realtors, restaurateurs, a wine importer, a clothier, health insurance agents, tradesmen and croupiers, among others  – say they’re working harder than ever just to stay afloat. Meanwhile, the case for economic recovery, such as it is, lies in housing and auto sales, the two sectors besides the stock market that have benefited most from easy credit.

Can the illusion of recovery be sustained indefinitely?  If you think the answer is yes, then by all means bet the farm on higher interest rates. This is what the mindless herd effectively did last week on the announcement of supposedly booming GDP growth in Q2.  But be aware that Doug’s against-the-consensus government-bond portfolio is already up 16% this year. He is mainly in Treasury “strips,” securities that are discounted from par and have maturity dates out to 2044. For high-bracket taxpayers, he especially likes zero-coupon, non-callable debt with durations as long as 40 years. An example of this would be certain California school bonds.  Doug is confident that long-term yields will test their 2012 lows, implying a fall to 2.46% for the 30-year (currently around 3.30%) ; and to 1.46% for the ten-year (currently around 2.49%).  As for closed-end munis, which high-bracket investors should favor, a retracement to 2012 yields over the next 12 months would produce a capital of about 28%. If interest rates were to fall more slowly, corresponding capital gains would be lower but still substantial.

My Low-Risk Strategy

At Rick’s Picks, I’ve been advising equity-based strategies such as purchasing bull calendar spreads on such vehicles as TLT, an Exchange Traded Fund (ETF) proxy for Treasury Bonds with durations of at least 20 years.  My strategies are intended to make the bet nearly riskless by “rolling” the spreads forward from one week to the next using weekly expirations.  Last week’s selloff in bonds, prompted by the absurd GDP datum, offered the kind of fat pitch we’ve been waiting for, since the calendar spreads got knocked down to fire-sale levels. If you’d like to know more about them, and gain access to my real-time trading strategies, analysis and daily, actionable “touts,” click here for a free two-week trial subscription.  Head to the chat room first, since that’s where the action is, 24/7. The room draws veterans traders from around the world, and you will find them an unusually helpful and polite bunch. Quite a few of them have mastered the Hidden Pivot Method that is my coldly mechanical basis for forecasts and trading.

  • Andy Gutterman August 10, 2014, 3:27 pm

    Gary,

    Watch the 3 month T-bill rate to determine is rates are going up. The FED always follows the market.

    http://www.booktrakker.com/Economy/MarketRate.jpg

    T-Bill rate started declining in February, 2007, FED funds followed in August.

    What is fascinating is how many people believe the opposite. I’m willing to bet that 95% of the population, investors included, believe the FED sets interest rates, ahead of the market.

    It has never been so, and it never will be so.

    Although we are getting what looks like good economic data it hides what is quite obviously the rot that is inside the figures. Especially when you factor in the declining spending from the boomers, which is only going to accelerate.

    A slow motion train wreck.

    Andy

  • gary leibowitz August 7, 2014, 6:33 pm

    Well it looks like the yield on the 10 year is at an inflection point. It also looks to be attaining a bottom if I read this correctly. The geopolitical crisis, specifically Russia, seems to be keeping yields low. Why Russia is going thru the torturous flexing of muscle it doesn’t have is beyond me. Even if they manage to take full control of Ukraine it will result in a net zero gain. China seems to be the real worry as there are definite signs of slowing to levels not seen for a long time.

    Interesting that this is all happening while the domestic picture is the brightest its been in 6 years.

    My bet is that we are about to see the lows in both the stock market and yields within a week. I am still expecting a surge to all-time highs in the stock market and bond yields to follow. We are going to have another correction soon based on over-extended earnings expectations and possible geopolitical concerns coming to a head.

  • Steve aw August 7, 2014, 7:46 am

    I had some quiet time tonight while walking my dog and a thought occurred to me… If we are in a real bad deflationary situation, who will buy these bonds from us. They may have gone up a lot on paper, but can I find a buyer. The second thought I had is if these are government bonds, what sort of risk am I taking regarding a government default or a big haircut. A bail in situation perhaps? My dog could’t answer either one of these questions either.

  • L fry August 7, 2014, 7:02 am

    Hi folks,

    Has anyone read “The Death of Money “by James Rickards ? So much history + facts! Brings truth to the the adage ” the more you know, the more you realize you don’t know “.TVA, tennesee valley authority laid off 2000 today. Rickards, in above mentioned book gives possibility of inflation or deflation. currency wars, which we are now in with Russia +Iran.He also covers the derivatives debaucle, which caused the 2008 near collapse.The book is really good. This Ebola mess, could this be one of the ” plaques” as quoted in Scripture for the ” end times “? Really scary ! a woman in Kroger yesterday told me ” we’re screwed “. what’s ya alls opinion ? 10:4

    • John Jay August 7, 2014, 3:31 pm

      L fry,
      My opinion on the bond market?
      The Fed will always provide a rock solid floor not just for US Treasury paper, but for all manner of bad Housing Paper etc.
      On the upside for bonds?
      The sky is the limit, ZIRP could easily become NIRP’ because there are no markets, only interventions.

      On Ebola?
      Worldwide death total of 932 so far?
      Puhlease!
      Chicago all by itself has had 247 homicides thus far in 2014.
      I would need a more comprehensive breakdown on Ebola progress to be concerned.
      For example here is a lovely breakdown for Chicago murder and mayhem available to you:
      http://heyjackass.com/

  • Redwilldanaher August 6, 2014, 7:07 pm

    http://www.zerohedge.com/news/2014-08-06/mystery-behind-strong-auto-sales-soaring-car-leases

    The smoke and mirrors behind the “booming” auto “sales”…

    Can’t wait to read the now-retired El Garo’s counter to this. This is how it is done Garo. Go back and read Richebacher from last week along with Rick’s commentary. It’s all gamed and hollow at the core. It’s worse than ever, Richebacher would’ve been blown away by 2014’s levels of deception and propaganda. Have the courage to face the truth, admitting that you’ve been in denial is the first step to recovery…

    • Jason S August 6, 2014, 7:41 pm

      Red,

      In three years when those leased cars need to be resold as used cars is about the time that the hundreds of thousands of Central American teens crossing the boarder will be of driving age. Sounds like a great opportunity for reselling those gently used vehicles, maybe with the help of some government incentives. Big brother has plans within plans.

      • Squire Danaher August 6, 2014, 8:07 pm

        I don’t see why we all go to so much effort. We could simplify things and become prosperous in no time. Very simple, let’s just break a bunch of windows and then repair them. The current gdp calculations will love it!

      • gary leibowitz August 8, 2014, 12:38 am

        Does anyone actually look at the data and compare it to the trend in the market? Factory orders, PMI services and non-services, and consumer credit is taking flight recently. Where is the “fake” gravity defying stock market if the hundreds of economic reports point to a justification. I wonder how many more years it would take for anyone here to actually conclude that the reports do paint a full picture of all segments of the economy.

        If you want to place blame, put it squarely on the consumer that refuses to give up a lifestyle they are used to, and one where it has always been above real means. Now that credit is accelerating I find it hard to see the 10 year note fall much further. in fact my number one bet is that rates rise in the next 2 months rather fast. Only a short term bet.

        I have been saying the same thing, as Rick points out, but haven’t yet gotten thru. The market tries to stay unemotional. It’s all comes down to earnings and growth patterns.

        Take a peek at the reports these last few months and maybe you will understand why it seems unlikely we are at a final bull peak. (how many words was that?)

      • Jason S August 8, 2014, 6:39 pm

        Red and I were commenting strictly on auto sales and auto leasing, Gary, not the overall economy. Go bloviate elsewhere.

      • gary leibowitz August 9, 2014, 3:30 am

        Red likes to show how everything is faked, not just car sales. I guess the people that invested in car companies are lamenting over his revelation. He seems to trump all the experts that place their bets in that segment of the economy. Zerohedge is so outrageously biased and wrong had you listened to them all these years you would be in a constant state of shock on all the misinformation the public has been getting. The duration of this misinformation is truly historic. I guess there is no accountability when it comes to making such disastrous claims. Why anyone would bother to use them is beyond me. I guess fanatics ignore their misses, which has been HUGE. As long as they stay on theme. Your theme that is. Track record? They have none. ZERO is a good name for their website. Entice an audience that want to hear it, no matter how wrong they have been.

        BTW, the lows seem to have been hit, and it stayed above 1900 as I expected. Watch the bond yields. I am amazed that domestic indicators haven’t pushed this much higher. I suspect once external factors go away rates will rise fast.

        &&&&&&&

        Exactly which aspects of ZeroHedge’s ‘outrageously biased’ story on car leases would you like to challenge? Which parts of it constituted ‘misinformation’? It is not rocket science to see that booming car sales are attributable solely and entirely to rent-to-own leases that allow people to ‘buy’ more car than they can afford — w-a-ay more car if the number of Escalades sitting in slum-neighborhood driveways is any indication.

        While you’re pondering my question, why don’t you provide just one egregious example of actual misinformation or bias at ZeroHedge? You remind me of one of those Rush Limbaugh-haters who have never actually listened to his show. RA

      • Redwilldanaher August 9, 2014, 3:52 am

        You’re a clueless, lazy propagandist.

      • gary leibowitz August 9, 2014, 6:28 am

        No Red, I am a realist. Wake up and see a market that tripled in 6 years. Not exactly a text book idea of a crash around the corner. My analysis is consistent with what happened and is happening. Why am I always called out for being “in touch” with the market. Let me correct that, not just the market, but earnings as well. I have expressed a long time ago that this human suffering has created a perfect storm for corporations to make big profits. Does anyone remember me saying this? How has that been wrong?
        I am wrong on the notion that credit expansion should have already been stronger and that yields should once again retrace some of the long standing losses. Perhaps I do have it wrong but managed to profit from the mistake. I know you have been absolutely wrong in assuming the 6 years were faked. No more faked than having the FED announce they are tightening, and seeing stocks react negatively. Cause and affect. I never justify or place emotional baggage on my investments. I’ll leave it to this bunch. I just want to be on the right side of the bet. Isn’t that what you are here for?

        &&&&&&

        …ad nauseum. RA

      • gary leibowitz August 9, 2014, 8:40 pm

        Rick, the facts and interpretations of those facts are way different between ZEROHEDGE and other articles. Zerohedge has consistently been outrageously wrong on it’s conclusions over the many years. Lets take the auto figures. Total auto sales is actually down while leasing is surging. net affect is no real gain in total auto sales. Leasing to consumers is taking off simply because it costs less and has no down payment. In this environment consumers are looking for the cheapest way to keep their lifestyle. that is in every category. The conclusions that after 3 years their inventory surge will be a major problem doesn’t show up in any other article on the subject. Where do they get these facts from? Please reference some statistics or research paper that comes to this same conclusion. Do you think that analysts tracking autos for a living can’t realize this same problem? Zerohedge once again scoops everyone with their vast amount of foresight and knowledge, yet they have called for hyperinflation, crash after crash, no growth, etc… If you can’t see their misguided assumptions from 2009 on than it doesn’t pay for me to list them. easily done by googling. See for yourself how off they have been. Like FOX news they love to present a decidedly one sided view for the already initiated viewer.

      • mario Cavolo August 10, 2014, 4:07 am

        I’m surely the consistently annoying one when I jump in encouraging balanced views….

        Zerohedge posts some great stuff and some biased, limited, generalized, distorted crap…they tow the media line on China and clueless on that subject… Following them on China is hazardous to you…

        Gary, if leasing sales have risen higher and higher as the primary way to get behind the wheel in the US, (I didn’t know that was happening compared to yen years earlier), it surely is reasonable to forecast a high load of 3-4 year old inventory layer on as another form of over capacity, like China’s high inventory of apts perhaps! If its not one asset its another that some body tries to push along into a bubble,to make money.

        The latest in China auto sales: yes credit circus clowns, line up! Pay the sales tax and 1st year insurance only down, 2 years payment on the vehicle cost.

        So on a typical $20k Focus-Buick Excelle -Kia K3 its about $2500 down, $800/mo for 2 years. A shockingly generous credit offer for China…

        Cheers gang, Mario

  • Andy Gutterman August 6, 2014, 2:59 pm

    Yet another eye-opener from Ben Hunt:

    http://www.salientpartners.com/epsilontheory/notes/Fear_and_Loathing_on_the_Marketing_Trail.html

    The animal spirits of greed and fear have been crushed, not so much by zero interest rates or any other specific policy, but more by the non-stop game-playing of our political and economic leaders as they seek to maintain a political status quo within a deleveraging and fragmented world of overwhelming public debt. In macroeconomics we talk all the time about “the crowding-out effect”, where public sector borrowing sops up available private capital and diverts it from more productive uses in the overall economy. What we are experiencing today is a Narrative crowding-out effect, where public stories and words in the service of political goals dominate market expectations and prevent private narratives in the service of greed and fear from taking root in the hearts of investors. When every real-world event is interpreted for us by Voices of Authority within seconds, when Bernanke’s farewell speech is all about social control through communication policy … well, that’s a world designed to tell you what to think, which among thinking people inevitably becomes a world where you are hesitant to act. That’s a world where public insincerity reigns and private authenticity is painted as either quaint or dangerous. That’s a world of “macroprudential policy”, to use our current Fed Chair’s favorite phrase, and you better believe there’s no room at that inn for good old-fashioned greed and fear.

  • Farmer August 6, 2014, 12:35 pm

    This has me interested. But as a person who has little direct experience with bonds I have to ask the dumb question. How best to play this via a pension plan? Are you guys thinking ETF’s for example and what of zero coupons and strips? Anybody?

    • VegasBob August 8, 2014, 7:57 am

      Farmer, I’m primarily a bond investor, though I’ve held a few stocks in my lifetime.

      It’s not easy to learn how to invest in bonds – US Treasury debt is highly liquid, but most other bonds have varying degrees of liquidity and some bonds, including a lot of junk issues, are not very liquid at all. If you don’t know what you are doing, the bond dealers will clean your clock on the buy/sell spreads.

      What I would do is start to educate yourself. ETFs are easier than individual bonds because they trade like stocks, and some brokers offer certain ETFs commission-free. Somewhere online there is a list of bond ETFs. I’d find it and start researching the various offerings. For US govt bonds, there are bullish ETFs and bearish ETFs and some of them offer triple leverage. But triple leverage also means triple the risk.

      I would monitor my ETF holdings daily, especially if I had leveraged holdings. Wide swings against my position could result in huge losses in just a few days.

      If you have a broker or brokerage firm, someone there can answer any questions you have.

      Personally, I hold lots of assorted Build America Bonds (taxable municipal bonds) and some taxable municipal zero coupon bonds in my retirement accounts, but I wouldn’t recommend those unless you are an experienced bond investor.

      You will have to do your own due diligence…

  • VegasBob August 6, 2014, 7:46 am

    There seems to be no liquidity in the junk bond market, as it is increasingly difficult to get bids. Fortunately, I only have one $10K block left to liquidate.

    My guess is that Rick is absolutely right about 2 things – (1) the 4% 2nd quarter GDP print was a brazen lie and (2) the economy is already back in recession.

    I’d venture to say that the falsified GDP print and the warmongering in Ukraine are both designed to try to protect incumbent Democrats from the voters’ wrath in November.

    &&&&&&

    Forgot to mention this, but long-term TBonds are effectively a short against junk. RA

  • Janet August 6, 2014, 4:05 am

    This guess will be 100% wrong. As the disclaimer says, this is for information purposes only. …shown for education purposes only…..i’m sure you won’t re-visit this article when yields have gone much, much higher.

    &&&&&&

    Thanks for your insightful, fact-filled post, “Janet”. May I show you the door?
    RA

    • Jason S August 6, 2014, 6:31 pm

      Janet, how many people have blown themselves up betting Japan’s interest rates must rise over the last 18 years? Yes, it is inevitable but doesn’t mean it is immediate or even close at hand.

      We are pulling many of the same levers and we control the world’s reserve currency. This gives us a lot of bargaining power to keep rates low or lower for far longer than many people think.

      I don’t know where rates are going but I do know that the markets have fallen when the Fed takes them higher. I also know that the political environment right now directs the economy (rather than economic fundamentals) and that the politicians have recently shown no patience or stomach for a declining market. So I think Rick’s educated guess is stronger than yours.

    • Andy Gutterman August 7, 2014, 5:23 am

      Janet,

      I doubt rates will go much higher for at least another 10 years. Just look at the interest rate cycle over hundreds of years. When they go down like they have they stay down for much longer than anyone expects. No different this time around.

      We won’t see higher rates until all the dead debt is wrung out of the economy. That takes many, many years.

      Andy

  • Squire Danaher August 5, 2014, 3:29 am

    Things are better than ever……..if you don’t think too much on it…

    http://www.prisonplanet.com/defining-away-economic-failure.html

    • Chuck August 5, 2014, 7:45 pm

      where do you put money????!!!

      cash?

      EVERYTHING is going down!

    • gary leibowitz August 9, 2014, 6:15 am

      Instead of reading articles that echo your opinions, why not verify it with every day economic reports that give as clear a picture of all segments of the economy as one can get. GDP, factory orders, ISM, credit expansion, discretionary spending, retail sales, consumer and corporate confidence. It is the road map that the street uses to try and get one step ahead of the earnings reports.

      I find it amusing that in the 6th year of the recovery, a good number of important segments of the economy is showing readings not seen since the pre-crash days. Yet the arguments here are as if they mattered not. It’s not where you are that matters, it’s where you’re going. I can always find charts and reasons to support a view that all is lost. Heck the debt levels placed against charts are down right scary. If you don’t find the correlation between market reaction, profits, and these data points, you have to expand your search. The simple fact that most of the arguments on when or why we crash has been wrong. You have to adapt or change the formula or you will forever be wrong basing something on a failed premise. There are obviously inter-connecting influences that counter or reinforce certain positions.

      Would love a debate on this subject. How to find that magic formula that explains why companies have thrived thru this human suffering, and what are the tell tale signs that it is about to change.

      • BDTR August 13, 2014, 4:43 am

        Companies don’t thrive ‘thru’ this human suffering, Gary, they thrive ON it. Because of it. There’s no other way for a decent multinational to go but ‘thru’ means of co-option, corruption, egregious human exploitation, deception and abject immorality.

        Suffering being the pain of deprivation and poverty in a debt based social/fascist economy requiring virtual debt-slave sub-subsistence wages and/or homelessness. That, and murder as policy.

        Hence, bankster financed state dependency in the phased destruction of the American middle class.
        Control. As in controlled demolition. As in it will come apart when they’re damn good and ready to get neo-medieval with their militarized police state
        on our sleepy little asses.

        You’ll see the change, Gary. Smoke rises. Keep looking up.

        Cheers

        &&&&&&

        A good time for me to mention that bank profits, currently at record highs, are no longer being driven by trading desks, which evidently have run out of clever new ways to beat each other, but by consumer loans, including a preponderance of low-interest teasers that will turn lethal if and when interest rates rise. This will already have made a Second Great Financial Crash all but inevitable. RA

  • Frank August 4, 2014, 7:50 pm

    Rick, your conclusion that the bond prices will rise as the stock market falls makes sense. Did bonds rise during other market declines such as’73/’74? Also wouldn’t it be more profitable to invest in a market decline ETF such as SDS rather than TLT or maybe some of each?

    &&&&&

    Bond prices tend to rise when the economy and the stock market go in the dumper, although this was not true during the 1970s inflation. Interestingly, the converse has proven wildly untrue lately, since we’ve seen stocks, bonds AND gold rising simultaneously in recent months. This reflects the irresistible power of the global financial-asset bubble. RA

    • Jason S August 5, 2014, 3:03 am

      Rick, you touch on a point that I have made for a while now. The wisdom is that in a crisis correlations go to one, but everyone looks at that as being true only on the decline. I suspect that it is true on the way up as well; at least until the inflection point is achieved and then everything declines in unison. So I would venture to say that if we continue to have correlations increasing toward one on many different asset classes then crisis is upon us.

  • mary August 4, 2014, 1:19 pm

    Rick, for those 401k accounts, do you have an opinion of ubt v. zroz? or is it better to use tlt?

    &&&&&&

    No opinion, Mary. Seems like six of one, half dozen of the other….
    RA

  • Andy Gutterman August 4, 2014, 1:55 am
    • gary leibowitz August 4, 2014, 6:39 pm

      Yes this is a long trend down. Interestingly though is the current situation. The upper trend line could take the 30 year back towards 4 percent before it reverts back down. I am still anticipating the next move will be higher.

      Yes bond prices have had a better track record than stocks over the very long term. Betting the right direction can pay off big. I just wonder what the risk/reward is at these levels. It can’t go down forever. There is a symmetry in the yield curve going back over 50 years. It is where it was in the late 50’s and early 60’s. Looks like the spike caused by new credit vehicles coming on board is taking its toll. Interesting to see if we break below the lows.

      If anyone is interested Warren Buffett now has the largest cash hoard ever — 50 billion. This suggests very strongly we will have a bear trend soon. Timing is never his best attribute. He has been premature in his assessment, but hardly ever wrong in future direction. This suggests to me we should have a minimum 15 percent drop soon, starting anywhere between now and 2 months. I personally still expect one more rally to new highs, but can quickly change my mind if we break below 1900 on SPX.

      &&&&&&

      One more rally to new highs would be the bull trap we permabears dream about. Wouldn’t everybody in the world be bullish at that point — with nary a short left to be covered? Almost too obvious a trap to work — which implies it’d be a bear trap, on its way to DOW 18000. I’d feel completely comfortabler shorting a new high only if it’s accompanied by a Time magazine cover story about the bull market. RA

      • gary leibowitz August 4, 2014, 9:50 pm

        Well we should at least hit 1956 on the SPX. The other reason for new highs should be because of all the current call that we are already in one. The length of this run has made everyone nervous. I wouldn’t call this a frenzied move since the public has been left out.

        The latest call for covering the “inversion” tax loophole will be an interesting one. Democrats should easily be on board, but I suspect Republicans will find excused not to vote for it. This would prevent US corporations from buying foreign company and placing their headquarters overseas avoiding taxes here. I am surprised Wall Street hasn’t swooned on this effort. I suspect they think it will never happen.

        &&&&&&

        By all means, let the U.S. continue to make its multinationals pay the highest corporate tax rate in the world. Who do those companies think they are, anyway, trying to avoid this? RA

      • gary leibowitz August 5, 2014, 2:00 am

        Rick, the big boys never pay close to the tax rate on the books. “Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, the Government Accountability Office said. Even when foreign, state and local taxes were taken into account, the companies paid only 16.9% of their worldwide income in taxes in 2010. U.S. corporate tax collection totaled 2.6% of GDP in 2011, according to the Organization for Economic Cooperation and Development. That was the eleventh lowest in a ranking of 27 wealthy nations. ”

        Lets not cry for the most profitable companies in the world with productivity levels so high no one thought it could be maintained for years, yet it has. I wish individuals had these breaks. Maybe I should hire myself a lobbyist.

      • Squire Danaher August 5, 2014, 3:19 am

        If you believe, as you do, that the central government has done well by us, then why would you want them to be deprived of tax revenues?

        Here I’ve been thinking that it was good that we overpay taxes to them because people like you, that know what’s best for us, staff government and intuitively know more efficient ways to allocate capital.

        Where did I lose your trail?

      • Larry D August 5, 2014, 6:46 pm

        Here I thought that you WERE a lobbyist.

        We need many, many more unprofitable companies. Then you’ll sleep better.

      • gary leibowitz August 6, 2014, 2:49 am

        A little perplexed. So the argument for corporate breaks is? I guess the huge profits on the backs of consumers these last 6 years hasn’t convinced you there is a huge problem here? Live and learn. Live and learn.

        Lynching those blacks in NYC during conscription didn’t help, but I guess this will? Support your CEO’s. Blame this mess on the people themselves. Unions, lazy poor, immigrants. We live in the bizarro world.

      • mario Cavolo August 6, 2014, 5:53 am

        Avoid is one thing Rick, they’ve gotten away with far too much, playing the political and accounting chess game that keeps favoring the rich again and again. Its annoying and obviously bad for the country.

  • Allan Corrado August 4, 2014, 1:29 am

    T-Bond prices have been trending higher with the stock market since the beginning of the year. If the market were to finally hit the wall, that would have to change for T-Bond prices to continue rising.

    &&&&&&

    And so it shall, Allan. Are you related to my friend and former newspaper colleague Frank? RA