Colin Twiggs, Author at the patient investor

January 2, 2013

Rogoff: The Unstarvable Beast | Business Insider

Kenneth Rogoff, professor of economics at Harvard University, writes:

As US President in the 1980’s, the conservative icon Ronald Reagan described his approach to fiscal policy as “starve the beast”: cutting taxes will eventually force people to accept less government spending. In many ways, his approach was a great success. But government spending has continued to grow, because voters still want the services that government provides. Today, it is clear that reining in government also means finding ways to shape incentives so that innovation in government keeps pace with innovation in other service sectors….

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

January 2, 2013

Why the fiscal cliff deal offers little to celebrate | Quartz

Gwynn Guilford writes:

Most immediately worrisome is that [lawmakers] ……let a cut in the payroll tax (which pays for social security) expire. Though doing so will close the 2013 budget deficit by some $126 billion, it means that 160 million Americans — including two-thirds of the lowest quintile of earners — will see around $600-$2,000 skimmed off their paychecks this year. That exacerbates a trend of falling wages in the past few years, and is particularly worrying given that consumer spending is a critical engine of the US economic recovery. In fact, Goldman Sachs’ Jan Hatzius expects that the expired payroll tax cut alone will drain 0.6% off 2013 GDP growth, in the form of reduced consumption.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 2, 2013

2013 Emerging Markets Outlook | Mark Mobius

Mark Mobius from Franklin Templeton:

“One of the biggest risks I see in the year ahead is the ability of politicians in developed markets to take timely, meaningful action to address fiscal policy. If politicians can’t work together and delay any real action, there is a risk that both the U.S. and Europe could slide into recession, erasing much of the gains we generally saw in global equity markets in 2012.”

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 2, 2013

China: Easing one-child policy may not slow aging population [video]

China could ease its one-child policy to address a rapidly aging population — but as Jane Lee reports, rules aren’t the only thing stopping Chinese families from expanding.

http://youtu.be/0XAYxilsEJc

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 2, 2013

Congress Passes Fiscal Cliff Deal – WSJ.com

WSJ writes that Congress passed a compromise bill to avert the fiscal cliff:

The bill …… was passed over opposition from conservative Republicans in the House who objected to the fact that it contained no long-term spending cuts of any significance. Both the U.S. Senate and House of Representatives approved a bipartisan deal to block most impending tax increases and postpone spending cuts. The WSJ’s Mark Cranfield explains what the deal means for the U.S. deficit. The House voted 257-167, with 172 Democrats joining 85 Republicans in supporting the measure. Voting against the bill were 151 Republicans, and the GOP leadership split over the issue: House Majority Leader Eric Cantor (R., Va.) voted against it, while House Speaker John Boehner (R., Ohio) voted for it. Also supporting the bill was Rep. Paul Ryan (R., Wis.) the GOP vice presidential nominee who has been an ardent opponent of increasing taxes.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 1, 2013

Disappointing fiscal cliff compromise

Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R, Ky) brokered a deal that is likely to be approved by the Senate early Tuesday before being put to a vote in the House later in the day. The WSJ writes:

By waiting until the last minute, and reaching a deal on a much smaller scale than either side once envisioned, Washington also deferred many of its thorniest questions for perhaps as little as a few weeks. In late February of early March, the Treasury Department will run out of extraordinary measures to deal with the government’s borrowing limit — which it reached on Monday — and Congress would need to approve an increase. The delay in the spending cuts will run out about the same time. In effect, Congress has delayed the fiscal cliff by erecting a new and potentially more dangerous one.

Read more at The Fiscal Cliff – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 24, 2012

Wishing you peace and goodwill

Christmas

Wishing you peace and goodwill over the Christmas season and prosperity in the year ahead.

I am on vacation until mid-January but will continue to post if I see anything important.

Regards,
Colin Twiggs

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 24, 2012

Stocks: Outlook for 2013

Quarterly charts for the last two decades give a good idea of where stocks will be headed in 2013.

The S&P 500 is headed for a test of its 2000/2007 high at 1550. Declining 63-day Twiggs Momentum indicates that resistance is unlikely to be broken. While this does not mean another fall to 750, it does suggest a strong correction.

S&P 500 Index

Apple Inc. [AAPL] is no longer leading the advance but testing primary support at 500. Failure of support would confirm the primary down-trend indicated by a 63-day Twiggs Momentum peak below zero.

Apple

Germany’s DAX is also headed for a test of its 2000/2007 high, at 8200, but rising momentum indicates that breakout above resistance is likely.

DAX Index

The FTSE 100 is also advancing but is some way off its earlier high of 7000 and breakout appears unlikely.

FTSE 100 Index

India’s Sensex is more bullish and likely to break resistance at 21000.

BSE Sensex Index

The Shanghai Composite is headed in the opposite direction and likely to re-test long-term support at 1800/1750. Rising 63-day Twiggs Momentum (below zero) suggests that a bottom will form at this level.

Shanghai Composite Index

The ASX 200 is headed for a test of resistance at 5000, supported by rising 63-day Twiggs Momentum. Breakout would signal an advance to 6000, but weakness in China and the US may delay this for some time.

ASX 200 Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 23, 2012

How the Welfare State Traps the Poor in Dependency, the British Version « International Liberty

Dan Mitchell describes how withdrawal of welfare benefits as your income rises can create a tax cliff that discourages the unemployed from seeking more work.

A graphic from British newspaper The Spectator gives this example:

John 21, works 25 hours per week at a gross wage of £5.70 per hour.
Of which 63p in tax/National Insurance and £4.18 in benefits (housing and council tax) is withdrawn.
Net income from work: 89p per hour.
84% of wage is lost in tax and benefit withdrawal!

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 19, 2012

Cutting taxes is a largely ineffective strategy for attracting foreign investment | EUROPP

Aidan Regan writes:

The Irish have the second best trade surplus in the eurozone, and productivity per worker is three times higher than Germany….. The truth of this fairy-tale is that US multinational corporations are engaged in transfer pricing. They locate profits in Ireland to take advantage of the low corporate tax regime.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.