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Barrons is out with its 2013 Outlook and not one of their forecasters expects the S&P 500 to fall in 2013. Barry Knapp of Barclays sees the S&P year-end target at 1525; Stephen Auth of Federated investors expects a year-end target of 1660; David Kostin of Goldman Sachs is looking for 1545; Putnam’s Jeffrey Knight expects 1490, JP Morgan’s Thomas Lee projects a year-end target of 1580; Bank of America’s Savita Subramanian expects 1600, Citi’s Tobias Levkovich projects a year-end target of 1650.
Mark Dow Explains Why The Gold Trade Is Going Bust (behavioural Macro)
A rule of thumb for investors was that quantitative easing would cause inflation and caused them to seek out gold. But in a new piece Mark Dow explains that sentiment around monetary policy “has done a 180 over the past year or two”.
“First, assets that have rallied from the flight into inflation hedges will continue to leak. It is not a coincidence, in my view, that the ‘evolution’ in the understanding monetary policy began right about the time gold and silver prices peaked last year. Ever since, the diminishing market impact of Fed announcements has become apparent to all, and the commodity complex has correspondingly stayed well below its 2011 highs. Yet virtually everyone is still calling for gold to make new all-time highs in the coming year.
From where I sit, many people have crowded into gold and silver (and oil—don’t even look at cotton!) on, inter alia, this flawed understanding of the monetary policy transmission mechanism and this will create selling pressure for quite some time.”
Apple’s Stunning Decline In Perspective (Business Insider)
Apple’s stock has fallen a long way since it hit $702 back on September 19. As analysts continue to cut their price target on the stock or bat in favour of it, Oppenheimer’s chief market strategist John Stoltzfus puts Apple’s decline in perspective. Apple’s decline from September 19 to December 14 “exceeds the cumulative total value of the 54 smallest companies–more than 10% of the companies in the entire S&P 500 index.”
Financial Advisors Find That Clients Prefer Charitable Donations To Holiday Presents (The Wall Street Journal)
Financial advisors have found that clients prefer they make charitable donations in their names over holiday presents. Devin B. Pope an advisor with Albion Financial Group said: “the positive response from clients was much greater than for any book or gift we’ve given in the past.”
Robert Shiller Explains Why It’s Important To Save Charitable Deduction (The New York Times)
The charitable deduction could be altered or even eliminated. The Bowles-Simpson Report had called for it to be replaced with a small tax credit. But Shiller writes that preserving it could curb social unrest caused by income inequality.
“We have to clear our minds of the idea that the charitable deduction is a “loophole” that benefits the rich at society’s expense. Income that is freely given away should not even be considered as taxable income.
Yes, the wealthy use this deduction more often, and give greater amounts of money. But society benefits. And beyond the money involved, the tax break for donors conveys a sort of official recognition, and encourages a habit and a culture of giving.”
In The Long Run Gary Shilling Bets On India, Not China (Business Insider)
In a new column Gary Shilling writes that in the long run he expects India to become the “more significant global economy”. He says this because unlike China India has no limits on population growth, it has a lower dependency ratio, and more “sophisticated companies”. He also says India has benefited from colonial rule since the British left it with a “vigorous democracy”, a well connected railway system, English, the language of commerce and a free press.
Jefferies’ chief global equity strategist Sean Darby expects that policymakers will take the U.S. economy over the fiscal cliff before arriving at a “less-than-optimal” deficit reduction plan in 2013. Under this base case scenario, he expects GDP to contract 2.5 per cent in Q1 2013, before rising 2 per cent in the third quarter.
In terms of the stock market, U.S. equities are expected to out perform government bonds in 2013 and Darby projects the S&P 500 will “rise by a modest double-digit gain of 11%, implying an index target around 1,565”. He thinks corporate profits are peaking and highlights 20 top stock picks that would offer a return of over 11 per cent that include Aeropostale, Starbucks, ConAgra Foods, Schlumberger, Wells Fargo, EMC Corp., Ametek Inc., and Arris Group.