While the re-election of President Obama resolves one aspect of the uncertainty facing the markets, it does not reduce all of it. Our first article this week discusses the issues that remain, including the “fiscal cliff”, the replacement for Fed Chairman Ben Bernanke, the problems in the Middle East and the debt problems in Europe.  We then turn to the subject of “financial repression” and its effects on the economy. Bill Gross of PIMCO offers a good explanation of what policies have caused it and how investor strategies should respond to it.  Our third article sheds light on the exemption for alternative minimum taxes for the year 2012 and why it needs to be raised.  We wrap up this week with a look at the trends in the cost of a college education. According to new figures released by the College Board, college costs are continuing to increase at a rate higher than the consumer price index.

Election Won’t End Uncertainty – Uncertainty is widely given as the reason the U.S. cannot produce a robust economic recovery. Financial writer Andrew Ross Sorkin believes that the fact our elections are over won’t completely allay the uncertainty.  The growing consensus in Washington, D.C. is that Congress will head off the “fiscal cliff” by delaying all the tough decisions on taxes and spending, possibly until the Fall of 2013. This will foster another year of uncertainty for the markets.  http://dealbook.nytimes.com/2012/11/05/the-election-wont-solve-all-puzzles/?ref=business

Bill Gross Explains Financial Repression – Bill Gross, Co-Chief of Investments at PIMCO, offers a good illustration to explain financial repression.  Basically, this is an economic situation induced by the Federal Reserve where interest rates are lower than the rate of inflation. http://investments.pimco.com/insights/External%20Documents/Investment_Outlook_November_2012_Time_to_Vote.pdf

Alternative Minimum Tax Increase In 2012 Could Affect Millions Of People – In 2011, the Alternative Minimum Tax (ATM) exemption was $74,450 for married filing jointly or surviving spouse.  Currently, this exemption amount is $45,000 for 2012.  This article discusses the impact if Congress and the President do not increase the exemption for this year. http://www.washingtonpost.com/business/economy/middle-class-faces-quick-impact-from-fiscal-cliff-in-form-of-alternative-minimum-tax/2012/11/04/e1ec0636-2523-11e2-ac85-e669876c6a24_story.html

College Board Releases New College Cost Figures – The College Board has released college cost figures for 2012/2013 academic year in its Annual Trends in College Pricing Report.  The cost of a college education continues to increase at a rate higher than the overall consumer price index.  You can look up the cost of any college on the College Board website. http://press.collegeboard.org/releases/2012/new-college-board-trends-reports-public-college-tuition-increases-slow

We hope you enjoy reading these articles along with us and that you find them informative.  Please forward this to your friends and family.

John R. Day and Bill W. Ennis


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