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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Berney who wrote (69524)	2/19/2001 1:51:28 AM
From: lurqer	Respond to of 99985

If my preliminary analysis is correct, the budget surplus is going to vanish in April. I was thinking about that a couple of weeks ago and decided that maybe that was why Dubya was in such a hurry with his tax cut. lurqer

To: Berney who wrote (69524)	2/19/2001 9:40:51 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 99985

Berney, I believe that the 7.5% increase is in tax receipt from payrolls, not the quarterly advances, if these numbers are correct, it seems that in January's payrolls themselves were advancing YOY at a clip of abut 3% to 5% (yes taxes increase faster than payrolls themselves <g>, as if we did not know that <VBG>). As for the surplus, it really depends if we are going to run into an actual period of economic contraction. Right now, we seems to be headed, this time, once more, for a soft landing in the economy. If consumer confidence deteriorate further, things may change. When prices are increasing rather than decreasing in the automotive sector, things cannot be so bad. I heard from a GM dealer that the decision to discontinue the "Olds" brand has created huge demand for this last generation from "old faithful". Maybe that brisk demand in that sector is masking other basic weaknesses. There surely is over capacity in that sector, and normal laws of economics would dictate price declines rather than ascent under such circumstances. Zeev

To: Berney who wrote (69524)	2/19/2001 10:52:19 AM
From: Doug	Respond to of 99985

Berney: This is the golden age of virtual reality. That and never ending extrapolation can be a deadly combo.. Make hay whilst the sun shines.!

To: Berney who wrote (69524)	2/19/2001 10:53:47 AM
From: Zack P	Respond to of 99985

<Zeev, I can only tell you that I'm on the front lines. Accountants prepare their estimates to clients based on the previous year and 1/15 was the last due date for these estimated payments. Further, clients blindly follow these "suggested" estimated payments without regard to their current situation. My preliminary analysis says that the surplus is going to evaporate. The clients did not see the capital income in 2000 that they saw in 1999, and, further, the "refund" is going to offset any estimated payments for 2001. If my preliminary analysis is correct, the budget surplus is going to vanish in April. We will see! Berney> This is quite true in my case. I made huge quarterly payments to cover my multi year gains from selling most of my long term holdings in April-May. But I sold of all of my losses at year end and now the gov owes me quite a bit.

To: Berney who wrote (69524)	2/19/2001 1:58:32 PM
From: David E. Taylor	Read Replies (1) \| Respond to of 99985

Berney: I agree with you 100%, and I've been thinking and saying the same thing since last fall. You cannot wipe out $2 or $3 trillion in market cap without cap gains tax payments taking a major hit, and all that tax loss selling Oct-Dec was not for nothing, it was to offset a chunk of the gains people had realized earlier last year from the 1999 run up. You only have to look at the US Treasury monthly tax receipts to see the balloon in tax receipts in Jan, April, June and Sept to see the major contribution from non-withholding sources, but the first month to take the hit from declining depositis will be April. In addition, the Treasury could well see record tax refunds that month for the reason you outlined (quarterly tax deposits in excess of tax liabilities), and you can bet people will be filing on time for them. I think that the projected budget surpluses are going to turn into projected budget deficits faster than the Nasdaq has declined. The problem is, while Greenspan may have been slow to realize the effect of declining stock market values on consumer spending and its feedback effect on the economy, our elected representatives in both the Administration and the Congress have their collective heads buried in the sand (or somewhere worse). Not only did they already spend part of this fiscal year's surplus in election year pork barrel spending, they're well on their way to spending the rest. Come April, when they're in the middle of debating how much of the "surplus" they can spend in a tax cut, they're going to get an extreme case of sticker shock when they realize the "surplus" isn't there to fund it. Then George W. is going to face the daunting prospect of selling a large supposed economy-stimulating tax cut at a time when the federal budget is running a deficit, GDP is flat or contracting, and unemployment is increasing. The ramifications of the contraction of the last few years stock market "bubble" seem to be growing rapidly, and the whole mess could take years to work itself out. David T.