Manarin Investment Counsel, Ltd.

Dr. Mark Perry - "Recently released data from the Federal Reserve show US households have much greater purchasing power than the conventional wisdom believes.  Mainstream thought is that US consumers are still up to their eyeballs in debt and, therefore, can’t increase consumer spending.

But the Federal Reserve’s latest figures on household finances, particularly the household financial obligations ratio, refute this so-called common knowledge.   The financial obligation ratio measures the share of our after-tax income that we have to use to make payments based on the things we’ve already bought.  It includes mortgage payments, rent, car loans, car leases, homeowners’ insurance, property taxes, and all other kinds of debt service, such as for consumer and student loans.

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It’s also important to remember that even if consumer debts are high, that doesn’t necessarily limit total consumer spending.  Remember, one worker’s debt is someone else’s asset.  So if Peter owes Paul a lot of money, the payments may limit Peter’s spending, but enhance Paul’s."

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We often receive questions about the short-term outlook for the market and economy. Our answer is simple: We have no idea. The following two charts below from Davis Funds show that the forecasts made by so-called financial experts often do not hold up to what actually happens.

Instead of attempting to predict what the market and economy is going to do, we seek out investment teams to build diversified portfolios of solid companies that we feel have the ability to endure regardless of what the future holds.

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Nobel Prize-winning economist Edward Prescott examined international labor market data and showed that changes in tax rates on labor are associated with changes in employment and hours worked.  From the 1970s to the 1990s, the effective tax rate on work increased by an average of 28% in Germany, France and Italy.  Over that same period, work hours fell by an average of 22% in those three countries.  When higher taxes reduce the reward for work, you get less of it.

Principles for Economic Revival - Wall Street Journal

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First Trust Economics Blog: The factory sector blow away consensus expectations in August, accelerating its expansion and growing for the 13th straight month. The ISM's employment index came in a 60.4, the highest since 1983.

Yesterday, the Case-Shiller index, a measure of home prices in the 20 largest metro areas around the country, showed an increase of 0.3% in June and is up 4.2% in the past year.

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We are proud to welcome Deb to the Manarin Investment Counsel family!

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Key Point:  Notice how there has been job creation every month since the start of 2010.

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In their August 30 issue, Barron's released its 2010 list of the Top 100 Independent Advisors and Roland Manarin was again included.

Congrats Roland!

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