Capitalist of the week: Tony Snow

We're actually not sure where Tony Snow stands on free markets or various socioeconomic systems but, c'mon, anyone who starts with a degree in philosophy and later becomes the Press Secretary for the most powerful office in the world, must be a strong believer in free enterprise. Right?

Last week Snow was named White House Press Secretary to replace Scott McClellan in the Bush administration. He will begin his duties on May 8th.

The week in review

• DJIA gained 19.69 or .17% to close the week at 11367.14. Baby steps.
  

• Nasdaq Composite gave up 20.29 or .87% and closed at 2322.57
  

• S&P 500 lost .67 , .05% to close at 1310.61
  

• 10-year Treasury yield rose .057 percentage points and stands at 5.067%.
  

• Oil dropped $3.29 or 4.38% and finished Friday at 71.88/barrel. Well, it's a breather. Will it show up at the pump?
  

Rough duty

Very light blogging this weekend as business has called us to wine country. Honest, it's business. I'll be back soon...maybe.

Death and taxes...and taxes and taxes

You're taxed when you earn it, taxed when you spend it, taxed when you invest it and then, if there's some left when you die, it gets taxed again. The estate tax is regarded as the most unfair of all taxes by many and it's slated to be phased out in 2010. But unless Congress acts, it comes right back to life in 2011. (Anyone who can explain what Congress was thinking when they wrote this legislation gets a gold star!)

Now this:

A new survey shows that 57% of Americans wanted to keep the estate tax - often dubbed the "death tax" - as is rather than reform it.

Just 23% said they favored repealing the tax.

The telephone survey of 910 registered voters was conducted by Washington-based research firm Penn Schoen & Berland Associates Inc. in February and released this month, just as the issue is expected to move to the forefront politically. The Senate is slated to debate next month whether reform is needed on the estate tax.

A lot of folks have the impression that the estate tax only impacts wealthy taxpayers, but unless there is meaningful reform, millions of pretty ordinary Americans will be in for a very expensive surprise.

Cartoon Tuesday

Cartoon by Tab

Capitalists of the week

For convincing a jury to award $32 million in the heart attack death of a Vioxx patient, the family of Leonel Garza and their attorneys win the distinction of "Capitalists of the week".

Merck, the maker of Vioxx, pulled the arthritis medication from the market in 2004 when a study linked the drug to fatal heart attacks in patients who took it for more than 18 months. Mr. Garza took Vioxx for 17 days. Garza was 71 years old when he died in 2001, had a history of smoking, suffered a prior heart attack in 1981 and had quadruple bypass surgery in 1985.

The decision was handed down by a jury in Rio Grande City in a region of Texas notorious for favoring plaintiffs.

"Many courts in other counties would toss this case because of the standard that no reasonable juror could find for the plaintiff in this situation," said Victor Schwartz, counsel to the American Tort Reform Association. "It's been our experience that many of the courts in the Rio Grande Valley are very, very friendly to plaintiffs' counsel and let cases go forward."

The ATRA named the overwhelmingly Mexican-American region at the bottom of Texas Rio Grande Valley the nation's top "judicial hellhole" for 2005, a distinction it gives to places where judges uphold "extraordinary" jury awards and seem to favor plaintiffs over defendants.

$32 million? What a country!

The week in review

• DJIA gained 209.80 or 1.88% to close the week at 11347.45. Woohoo!
  

• Nasdaq Composite gained 16.75 or .72% to close at 2342.86.
  

• S&P 500 rose 22.16, 1.72% to close at 1311.28
  

• 10-year Treasury yield took a breather and dropped 0.043 percentage points to finsh at 5.01%. It's still above 5%, but just barely.

Oil gained whopping $4.35 to rise to 75.17/barrel. This week's tank o' black gold set me back $55.

Oil prices are at record highs and we're all feeling the bite at the pumps, but if it makes you feel any better, adjusted for inflation, we're nowhere close to the all-time high. The inflation-adjusted record, set in April of 1980, is $97.55 a barrel.

Cartoon by Daryl Cagle

The third-best job

Providing financial guidance truly is challenging, rewarding and fun but I never imagined that it would rank as the third-best career choice in a survey.

Advisers couldn't have made a wiser career choice, unless they became software engineers or college professors, according to a survey of the best jobs released this month by Salary.com Inc. in Needham, Mass., and Money magazine, published by New York-based Time Inc.

Advisers have average earnings of about $200,000 a year, according to the survey that accompanied the job rankings.

I've always thought that the paint department at Home Depot would be fun. I wonder where it ranks?

Retirement ready?

According to a new survey by the Employee Benefit Research Institue, most Americans are woefully unprepared for retirement.

Although 70% of workers said they saved for retirement, the survey found, 52% had $50,000 or less in total savings and investments, not including their home or any defined benefit plans.

Even more disturbing, three-quarters of workers who hadn't put money aside for retirement said that their assets totaled less than $10,000, according to the EBRI.

Will you be ready to retire?

Cartoon Tuesday

Keefe, The Denver Post

Capitalist of the week: $144,573 per day

Lee Raymond, the recently retired chairman and CEO of Exxon Mobil was paid more than $686 million from 1993 through 2005. That works out to be $144,573 for each day Raymond led the oil giant and it earns him the distinction of "Capitalist of the week".

Under Raymond, the company's market value increased fourfold to $375 billion, overtaking BP as the largest oil company and General Electric as the largest U.S. corporation. Net income soared from $4.8 billion in 1992 to last year's record $36.13 billion.

Shareholders benefited handsomely on his watch. The price of Exxon's shares rose an average 13 percent a year. The company, now known as Exxon Mobil, paid $67 billion in dividends.

That's some pretty handsome corporate performance. Still, is anyone really worth 144 grand each day?

The week in review

• DJIA gained 17.61 or .16% to close the week at 11137.65. Not much to get excited about but at least it's the right direction.
  

• Nasdaq Composite gave up 12.91 or .55% and closed at 2326.11
  

• S&P 500 lost 6.38, .49% to close at 1289.12
  

• 10-year Treasury yield rose .088 percentage points and stands at 5.053%. First time above 5% in years.
  

• Oil gained another $1.93 to rise to 69.32/barrel. I broke the $50 mark on a fill-up this week with mid-grade at $3.09. Yippee.

Is the Enrgy Department in cahoots with big oil?

This week they released a seasonal outlook warning us to expect higher gas prices this summer. While this might not seem like headline news, doesn't it pretty much give oil companies a green light to go ahead and start raising gas prices? Thanks a lot.

Perhaps the Energy Department should just keep its big gas flap shut.

Tax quiz

For the 2005 tax year, the top marginal tax rate is 35% which is, historically, pretty low. What was the highest marginal tax rate in U.S. history?

a) 38%
b) 45%
c) 91%
d) 94%

Cartoon Tuesday

John Trever, The Albuquerque Journal

Capitalist of the week: Hugh Hefner

Hugh Hefner, one of America's great capitalists, celebrates his eightieth birthday today.

"I never intended to be a revolutionary. My intention was to create a mainstream men's magazine that included sex in it. That turned out to be a very revolutionary idea."
- Hugh Hefner

Born and raised in Chicago, Hefner served in the Army toward the end of World War II. He graduated in two and a half years from the University of Illinois Champaign/Urbana while drawing cartoons for the Daily Illinois.

After several jobs in advertsing and publishing, Hef decided to launch his own magazine. The first issue of Playboy hit newstands in December of 1953 and featured the now-famous calendar photo of Marilyn Monroe. That first issue, produced on the kitchen table of Hef's southside Chicago apartment didn't have a cover date because he wasn't sure he could afford to publish another. But that first issue sold more than 50,000 copies and Hefner's entertainment empire was born.

Happy birthday, Hef!

The week in review

• DJIA gained a whopping 10.72 or .10% to close the week at 11120.04
  

• Nasdaq Composite gave up .77 or ..03% and closed at 2339.02
  

• S&P 500 jumped .67, .05% to close at 1295.50
  

• 10-year Treasury yield rose ..108 percentage points and stands at 4.965%
  

• Oil gained another $.76 this week to 67.39.
  

You know it's a slow news week when the biggest story in the media is about the news media itself. Yes, it's true. Katie Couric will become the first woman to solo anchor a network evening newscast. Yawn.

Oh yeah, there was a national championship basketball game on Monday. Congrats to the Florida Gators!

There was some financial data released this week but a quick look at the market stats above would indicate there weren't any big surprises.

Don't forget, there are just nine days left to get your taxes filed!

Regulatory Update

Capital Gains--The House and Senate cannot agree on a provision to extend for two years the 15% maximum capital gains rate. Democrats in the Senate want the provision left out.

Dems looking to raise taxes...who'd a thunk it?

Capital Gains, Part II--Evan Bahy, D-Indiana, proposed last month that fund companies and brokerages be required to report clients' cost information to the IRS making it more difficult for folks to fudge when reporting their gains and losses.

That's a switch, a politician who doesn't trust the people.

Estate Tax--Senate Majority Leader Bill Frist, R-TN, said last month that he intends to bring a bill to the floor of the Senate in May that would permanently repeal the death tax. It came close to a vote in August but was shelved as Congress dealt with Hurricane Katrina.

Catastrophe Savings Accounts--A bill introduced by Rep. Tom Feeney, R-FL, would allow folks to establish separate savings accounts to set aside money for "qualified disaster-related expenses." Investment returns could accumulate tax-free like health savings accounts but with limits tied to deductibles on homeowners insurance.

Can Congress make things any more complicated? Oh well, it's job security for financial advisors.

To keep up with any of these bills, go to The Library of Congress.

Cartoon Tuesday

Daryl Cagle

Today, We Saved Thousands

Mrs. THC's wheels are getting up there in age and mileage. So, here at the humble THC home, car shopping has been on our agenda for awhile. For the last several months, we've looked at a few models and rented a couple of others -- all part of Mrs. THC's process of (very) carefully selecting a new car. She tends to keep a car for a decade or so. So, she takes this process very seriously...and slowly.

The latest model under consideration was the Toyota RAV4. It's a stylish, smallish SUV -- right up Mrs. THC's alley. On a Sunday morning errand, we popped into a local Toyota dealership today to take a closer look. We were immediately greeted by a most helpful salesperson. (I don't recall car dealerships being open on Sundays.) He graciously explained that the RAV4 is too hot to keep in stock. None were available today.

After exchanging brief pleasantries with Toyota-man, we were about to head back to Mrs. THC's aging sedan. Suddenly, the salesman pointed to a moving object in front of the dealership and said, "Wait! You just have to drive this." We turned to see a bit of our youth pulling into the parking lot. It was a very '70s Land Cruiser looking thing. I thought it looked like a little Hummer. Mrs. THC said it was "cute".

Toyota-man introduced us to the 2007 FJ Cruiser. We went for a test drive. We liked it. In fact, we really liked it. We almost bought it.

Yes, we came dangerously close to making the biggest impulse purchase of our lives. Fortunately, cooler heads prevailed. We stepped back, took a few deep breaths, and the search for Mrs. THC's car continues. And, for today at least, we saved thousands.

Still, we're finding ourselves wondering what it would have been like to plunk down $31,000 on a car we'd never heard of and had driven for only a few minutes.

What's the biggest impulse purchase you've made?

The week in review

• DJIA dropped 170.65 or 1.51% to close at 11,109.32
  

• Nasdaq Composite up 26.97 or 1.17% to close the week at 2339.79
  

• S&P 500 lost 8.12, or .62% to close at 1294.83
  

• 10-year Treasury yield rose .184 percentage points and stands at 4.857%
  

• Oil gained another $2.37 this week to 66.63. Ouch.

Strongest first quarter in years. For the first quarter of 2006, the S&P 500 rose 3.7%, its biggest first quarter gain since 1999. The Dow 30, also up 3.7%, showed its best first quarter since 2002 and the Nasdaq Composite shot up 6.1%, its best first period since 2000.

The biggest non-event of the week: The Federal Reserve began the Bernanke era with a quarter-point rate hike, the fifteenth straight for the Fed, putting the target rate at 4.75%. The guvs surprised no one with this and indicated at least one more increase to come in May. Given the Fed's penchant for overshooting neutral, a year from now inflation concerns will be replaced by worries of a stagnant economy and Fed watchers will be looking for a reversal.