We believe stocks are making a final rally to a major top, a top for the centuries, and a Grand Supercycle degree Bear Market will start upon this rally’s completion. There is a Jaws of Death pattern in stocks that has been forming for two decades. It is very close to completion, needing one more rally, a strong rally, that takes prices to the top of the pattern’s upper boundary. Then, after reaching that height, a Bear Market for the ages will begin, something that will be greater than the Bear Market of 2007 to 2009, and greater than the Great Depression of the 1930’s. Below we show this Jaws of Death stock market pattern.

……read much more HERE

Before I get to my analysis of the key markets, today I want to digress a bit and discuss what I call the “idiocy of raising taxes.”

Especially taxes on dividends. It offers a great example of how raising taxes can backfire, and how Washington’s bureaucrats don’t have a clue about what they’re doing.

Consider the various economic gurus who say raising taxes on dividends and capital gains won’t impact investor behavior or the economy. That’s pure hogwash.

To see why, just consider the companies that are busy cashing out their investments ahead of a tax hike January 1 …

Costco (COST), the giant wholesaler, announced Wednesday that it will pay a special dividend of $7 a share — or $3 billion in total cash — before the end of the year. As a result, Costco shareholders will only pay the current 15% tax on dividends, rather than the 39.6% rate scheduled to kick in next year.

That represents a tax savings of $738 million for Costco shareholders, 24.6% less taxes they have to pay on the $3 billion payout.

Or put another way, it’s $738 million the U.S. Treasury will NOT get.

Costco isn’t the only company cashing out before year-end. According to the Wall Street Journal, as of last Wednesday, 173 companies had announced special dividends, compared to only 72 in the same period a year ago.

n the Russell 3000 Stock Index, from just September to mid-November, 59 companies declared one-time special dividends, four times last year’s pace.

Howard Silverblatt of S&P Dow Jones Indices stated, “I find no precedent like this at all going all the way back to the 1950s.”

Wal-Mart (WMT) did the same thing last week, moving up its expected $1.34 billion dividend payout next year to this year. That’s another $319 million the Treasury won’t get.

And mind you, the figures above don’t even include the 3.8% ObamaCare surcharge that households making more than $250,000 next year will save by getting their dividends this year.

You can bet that many more companies will be doing the same in the days and weeks ahead, accelerating next year’s dividend payouts to this year.

And it’s all money the U.S. Treasury will NOT get as a result.

Moreover, the long-term consequences of a higher dividend tax starting in January will be that fewer and fewer companies will pay dividends at all, while others will reduce their payouts.

Which again, all translates into less money for the U.S. Treasury, precisely the opposite of what it wants.

Consider history. According to the Wall Street Journal, dividend payouts rose only modestly in the 1980s and 1990s when they were taxed as ordinary income.

But when the Bush tax cut chopped the rate to 15% on January 1, 2003, dividends reported on tax returns nearly doubled to $196 billion in 2003 from $103 billion in 2002.

By 2006, reported dividend income hit $337 billion — more than three times the pre-tax-cut level.

In other words, when tax rates were cut, the Treasury received more tax income. If they are raised, the Treasury will get LESS tax receipts.

You don’t need to be a rocket scientist to figure it out. Raising taxes, in any form in my opinion, is pure idiocy.

It also applies to capital gains.

When the capital gains rate last rose, to 28% from 20% as part of the 1986 tax reform, investors also cashed in before the higher rate took effect.

Tax revenue from capital gains in 1986 soared to $52.9 billion, then plunged to $33.7 billion in 1987 and stayed largely flat for nearly a decade. It boomed again after Bill Clinton and Newt Gingrich agreed to return the rate to 20% in 1997.

Again, it’s a simple formula: When government raises taxes on dividends and capital gains, it lowers the after-tax return on stocks.

That in turn reduces the wealth in the private economy. And not just among the rich. It will affect almost everyone.

It’s also why I remain largely bearish most markets in the short- to intermediate-term.

The Dow is hovering below important resistance at the 13,400 level, and looking like it’s about to break down. Ditto for the S&P 500.

Gold is starting to weaken again, unable to take out resistance at the $1,755 to $1,760 level. A break of the $1,700 level should lead to new lows.

Oil is having trouble at the $90 level. Look for it to top out soon and head back down.

Silver is going to hit a stiff wall of resistance at the $34 to $35 level and a plunge down to $26 — and lower — is still in the cards.

Bottom line: Don’t be surprised when you see Washington’s tax receipts plummet next year and the deficit widen and the national debt get worse. The idiots in Washington, again, just simply do not have a clue what they are doing.

ALL of this virtually guarantees that 2013 will be the wildest ride any of us has ever seen.

That’s why it’s so important you join us today for our urgent online conference, America’s Date with Destiny: 11 Shocking Forecasts for 2013!

About 15 minutes before 2 p.m. Eastern today, click this link to check your browser’s compatibility and connection.

If you have trouble accessing the link above, please copy and paste this link into your Internet browser. The link may span two lines, so be sure to copy the entire URL with no spaces into your browser: http://www.gliq.com/cgi-bin/click?weiss_martin+2013-TWE-countdown+++g446+5384161

Then, simply make sure your computer speakers are turned up. America’s Date with Destiny: 11 Shocking Forecasts for 2013 will begin promptly at 2 p.m. Eastern Time (11 a.m. Pacific; 7 p.m. GMT).

I look forward to seeing you there!

Stay safe, and best wishes,

Larry

Uncommon Wisdom

Produced by McIver Wealth Management Consulting Group

Mark Jasayko, CFA,MBA, Portfolio Manager with McIver Wealth Management of Richardson GMP in Vancouver.

www.McIverWealth.com

$2 trillion Pimco money managers Bill Gross and Mohamed El-Erian, the co-CEOs, are warning investors to prepare for the coming lean years of slow, low growth and austerity. Specifically no recovery until 2022. 

Warren Buffett and Jack Bogle first mentioned a “new normal” with slow, low growth back in 2002. It fell on deaf ears. Since the 2008 meltdown the same warnings are coming from gurus like Grantham, Gross, El-Erian and others. Ignore their warnings at your peril.

Here is a summary of 10 points picked up from meetings with El-Erian and Gross: 

1. America fell in love with a Goldilocks economy

As early as 2005 Pimco warned that investors, voters and politicians had fallen in love with “a Goldilocks economy, the notion that markets were in a long period of growth and stability, neither too hot nor too cold.” El-Erian “never believed the bull” about wise “world’s central bankers and the seemingly endless growth of emerging markets.”

2. Economists predicting 3% to 4% growth are misleading America

Pimco was “quick to see, post-2008, the passing of an era,” says Foroohar. The unthinkable was happening: “The U.S. flirting with default, unlimited central-bank money dumps were suddenly happening.” Worse, today “while most experts (including those within the Obama administration) were plotting how to move from recession back to the trend growth rate of 3% or 4%,” Pimco concluded that a low 2% growth will probably be the New Normal “not for a couple of years but for decades.”

3. Warning: Too many investors, banks, politicians still in denial

Many investors are still disappointed with their nest eggs, in denial, ignoring Pimco’s message, trapped in wishful thinking, hoping for a return of the short-term bull-bear cycles common in recent decades, unwilling to face the harsh reality of the New Normal with slow growth everywhere: consumer spending, jobs, government revenues, corporate earnings, stocks, bonds, commodities, even America’s role in the world.

….read 4 to 10 HERE

The Problem in any Post Bubble Contraction.

SIGNS OF THE TIMES

“Indian Industrial Production Unexpectedly Fell in September” – Bloomberg, November 12

“Economic output in the Eurozone fell 0.1 percent in the third quarter, following a 0.2 percent drop in the second quarter.”– Reuters, November 15

“China’s vehicle sales fell for the sixth straight month in October.” – Bloomberg, November 14

“Investment Falls Off a Cliff”– Wall Street Journal, November 18

This story included that U.S. companies were cutting spending plans because of “fiscal and economic uncertainty”.

Then there are two gems that really mark growing uncertainty:

“Krugman: Bring Back the 91% Tax Rate” – The New York Times, November 18

“Treasury Secretary Geithner: Lift Debt Limit to Infinity”– CNS News, November 19

*   *   *   *   *

PERSPECTIVE

Harvesting headlines is usually interesting and sometimes riveting. The first ones indicate a slowing global economy – despite unprecedented stimulation, corporate bailouts and “fixing” of any number of countries.

The problem in any post-bubble contraction is that in the mania debt was eagerly expanded to an amount that can’t be serviced even by a strong economy. The debt burden seems to be the main reason that post-bubble recessions are severe and recoveries are weak.

The last two headlines suggest that the establishment is discovering that massive intervention is not prompting a strong business expansion. The proposed remedies of higher tax rates and unconstrained issuance of treasury debt indicate that confiscation of wealth and earnings is changing from a hidden to an open agenda.

Intellectually pathetic and fiscally tragic.

COMMODITIES

The fall decline took base metal prices (GYX) from a nice high of 406 on September 14th to 359 on November 9th. Our November 8th piece was looking for a “natural” rebound. There is overhead resistance at the 380 level.

Agricultural prices (GKX) have been in a stair-step decline since all of the excitement peaked in July. The RSI reached the highest levels since the cyclical top at 570 in early 2011. Last week’s low at 463 extended the downtrend, but a rebound into January seems likely.

Crude oil slipped to a modest oversold condition and can trade in a narrow range into January.

*   *   *   *   *

AMPERSAND

Squirrels

Through the winter months it’s worthwhile to keep a bird feeder. One kind that is almost problem-free is one set up for husked peanuts, which only attracts the birds that like what the Southerners call “goober peas”. With a multi-grain feed, visitors scatter the seeds that they don’t like and that is messy.

My office has a lot of window and the feeder hangs from a cord attached to the house and to a tall post at the fence with the climbing hydrangea. The problem this season has been a new and persistent squirrel in the neighborhood. And the weather has yet to get cold.

A couple of plastic pie plates were drilled and the cord passed through such that they provide a barrier – that rotates. On the first few attempts the squirrel suffered a sudden instruction in the forces of gravity. Then with determination and practice was able to get to the feeder.

So, I switched the critical plate such that the rim faced the other way, but he was still able to get over it.

It needed something with a greater diameter, which the old camping equipment did not have.Fortunately, the record collection has some of the old twelve-inch 78s. This looked good as they already have the right-sized hole for the cord and now one is mounted. It is a recording of an indifferent Tchaikovsky, so it won’t be missed and it may be effective in its new role.

It will be interesting to see how it works.

Link to November 23rd ‘Bob and Phil Show’ on TalkDigitalNetwork.com:

http://talkdigitalnetwork.com/2012/11/us-markets-close-early-no-sign-of-santa/

INSTITUTIONAL ADVISORS

WEDNESDAY, NOVEMBER 28, 2012

BOB HOYE

PUBLISHED BY INSTITUTIONAL ADVISORS

The following is part of Pivotal Events that was

published for our subscribers November 22, 2012.

BOB HOYE,   INSTITUTIONAL ADVISORS

E-MAIL  bhoye.institutionaladvisors@telus.net

WEBSITE:   www.institutionaladvisors.com