History Speaks
Single White Male Seeks Lifelong Friend with (tax) Benefits
Edward Eastwood viewed marriage as the ultimate tax shelter. According to a federal indictment, his love story began with his 1998 purchase of Elina, a mail order bride and citizen of the Republic of Kyrgyzstan.
 | | Edward Eastwood |
The newlywed Eastwood's then funneled Edward's income from his job as a nurse-anesthesiologist into a dummy corporation, all the while reporting none of the income to the IRS. The couple then allegedly used the income to purchase real estate and precious coins. Federal charges go on to say that to complete the tax evasion, the Eastwood's had a sham divorce in which Edward agreed to 'hold harmless' Elina for any tax liabilities he incurred in the marriage. The divorce settlement then conveniently awarded all of the couple's assets to Elina. When the IRS caught up to Edward he informed them that, unfortunately, he had no assets to pay his tax bill. The IRS eventually raided a storage locker once owned by Edward and found, among other items, 76 Saint Gauden Double Eagle gold coins, 36 silver coins, 13 rifles, 3 pistols, and approximately 55,000 rounds of ammunition. (Seems gold and ammunition so often go hand in hand).
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Chart of the Month
No Job... No Love
The chart below indicates that the high unemployment rates since 2008 have probably had a negative affect on the U.S. birthrate.
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Asset Class Returns
Through January 31st, 2013
Returns assume dividend reinvestment and do not include any types of management fees, transaction costs or expenses.
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Commentary
Many Happy Januaries
Global stocks got off to a red-hot start in January, with U.S. and other developed markets up over 5% for the month. This advance has been fueled by the expansionist policies of central banks from Europe, Japan and, of course, here in the U.S.
The September announcement by the European Central Bank (ECB) of the Outright Monetary Transactions (OMT) program has fueled a drop in sovereign bond yields and credit default spreads in Europe.
 | | From the Financial Times |
OMT authorizes the direct purchase the sovereign bonds of member nations and the announcement of the program has been so effective, they haven't actually had to buy any bonds yet! The enthusiasm seen in the bond charts above also spread to European equities have risen nearly 15% since the announcement of the OMT program.
September also saw the election of Shinzo Abe as president of the opposition Liberal Democratic Party in Japan and, after national elections in December, he was chosen as Prime Minister. Mr. Abe is demanding more expansionary policies from the Japan central Bank to help stimulate growth and to lower the value of the Japanese yen. The chart below shows Mr. Abe's effectiveness in jawboning down the yen. Japan's export oriented stock market has rallied sharply on the yen's weakness
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We have seen a seasonal effect in January recently with unusually strong starts to the S&P 500, as illustrated by the chart on the left. Actual economic data have not generally been as positive as the markets would indicate. Despite some positive signs in the housing market, U.S. GDP actually dipped in the last quarter of 2012 and the