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Greg Mallison's Commentary
 
• Greg Mallison's June 2014 Budget Commentary (PDF)...It has now been more than a year since Ben Bernanke first hinted at a "tapering" of the Fed's QE program, which purchased long-term Treasury notes and bonds.....PLease click the above link to read the entire article.
 
• Greg Mallison's May 2014 Budget Commentary (PDF)...Concern about the growth of the federal deficit seems to have disappeared from the national stage - though no doubt it will make a cameo in the mid-term campaign speeches. While this is not necessarily surprising - I'm sure many people would rather have their teeth drilled than site through a discussion of the national debt....Please click on the above link to read the entire article
 
• Greg Mallison's April 2014 Budget Commentary (PDF)...A few months ago we noted (Taper, What Taper?) that all of the sturm and drang of the Fed's reduction in its Treasury purchases had little effect on the supply at the long end of the maturity curve.....Please click the above link to read the entire article
 
• Greg Mallison's March 2014 Budget Commentary (PDF)...Since federal revenues have finally returned to their previous peak in 2007, I thought it might be interesting to see if the taxes and income from various sources have changed much in recent years...Please click on the above link to read the entire article
 
• Greg Mallison's February 2014 Budget Commentary (PDF)....As we discussed in detail last month, the drop in spending due to increased reciepts from mortgage guarantors Fannie Mae and Freddie Mac ($34 billion more this year). It didn't take long for my prediction that certain Congressmen would start demanding that the government get out of this profitable business-several senators introduced a bill to wind down Fannie and Freddie just last week....Please click on the above link to read the entire article.
 
• Greg Mallison's January 2014 Budget Commentary (PDF).....A large part of the deficit reduction in recent years has been due to the 2013 tax increase; however, another significant chunk has resulted from payments from the mortgage-guarantee companies Fannie Mae and Freddie Mac (the Government-sponsored enterprises, or GSE’s) and from the Federal Reserve.  While this is not necessarily a bad thing, it will marks a growing tendency to use the government’s financial clout to create revenue, and is yet another indication of how much the Federal Reserve’s intervention of the last five years will not be easily reversed...Please click on the above link to read the entire article
 
• Greg Mallison's "A Tale of Two Payrolls" (PDF).....Every entity with a pension benefit faces the same structural challenge--it must provide for both current and former employees. The Pennsylvania School Employee Retirement System (PSERS), for example, paid out over $6 billion in annuities and lump-sum payments to its former workers and their beneficiaries last year. Ideally, the payroll for retirees and other beneficiaries would be met by earnings from the pension fund; however, the PSERS' fund currently only meets about 10% of its benefit payments from the net cash flow from its investments....Please click on the above link to read the entire article
 
• Greg Mallison's December 2013 Budget Commentary (PDF).....The deficit improved substantially in the first fiscal quarter of the year compared to 2013. On the revenue side, most of the increase was due to the 2% payroll tax increase that went into effect in January 2014 (more on this later). Outlays were down in large part due to the $34 billion payment that Fannie Mae and Freddie Mac made to the Treasury.....Please click on the above link to read the entire article
 
• Greg Mallison's November 2013 Budget Commentary (PDF).....Much has been made of the Fed's 2012-13 bond-buying spree known as Quantitative Easing III (QE 3) and the "tapering" which will reduce it. In contrast to the previous two QE programs which were limited in quantity when announced, QE 3 has been open-ended with no restrictions....Please click on the above link to read the entire article
 
• Greg Mallison's PSERS Pension Fund Commentary (PDF).....The common assumption regarding the state pension system is that if we are patient and follow the time-honored methods of dealing with a shortfall - namely, ramp up contribution rates and wait for a rise in equity prices - then the problem will take care of itself, as it did in the late eighties and early nineties.....Please click on the above link to read the entire article
 
• Greg Mallison's October 2013 Budget Commentary (PDF)....The numbers for fiscal year 2012-13, delayed by the government shutdown, are finally in. Readers will recall that in March of this year this commentary estimated annual federal revenues based on the results for the first five months of the fiscal year to be $2757 billion. That looks pretty spot on....Please click the above link to read the entire article
 
Greg Mallison's September 2013 Budget Commentary (PDF)...Last month I offered some comments on the historical trends in federal government spending; this month, let's look at revenue. While the CBO is not releasing its monthly budget summary due to the "shutdown", the Treasury department's resports are luckily considered "essential" and therefore have continued....Please click the above link to read the entire article
 
• Greg Mallison's PSERS Net Seller of Pension Assets article (PDF)...A recent press release from the PSERS fund contains a curious warning about a hitherto unremarked-upon problem-the fund's negative cash flow.....Please click the link above to read the entire article
 
• Greg Mallison's August 2013 Budget commentary (PDF)...I had several people question my comments last month ceoncerning the Fed, suggesting that I was trying to have it both ways on the tapering.  First of all, thanks for the feedback--it is helpful. I think what I was trying to say is that the Fed doesn't have good options regarding its QE policy.....Please click the link above to read the entire article
 
• Greg Mallison's PA SERS - 2012 CAFR review article (PDF)...In the 2008 financial crisis, the Pennsylvania State Employees Retirement System (SERS) pension fund, like most of its counterparts, took a massive hit, with its net asset value falling from $35.5 billion to $22.8 billions.  The response of policy makers was typical - increase contributions and rely on an improvement in market conditions to reduce the shortfall....Please click the link above to read the entire article
 
• Greg Mallison's July 2013 Budget Commentary (PDF)... There has been much rejoicing in the media over the decline in the federal budget deficit--and it is tru that the annual shortfall has decreased substantially over the last year.  Let's not forget, however, how much the government's debt has increased over the last five years....Please click the link above to read the entire article
 
• Greg Mallison's June 2013 Budget Commentary (PDF).... You may have heard some headlines proclaiming June as the highest surplus month since 2008. It will come as no surprise that this is largely due to one-time effects. Remarkably, though, absent the non-recurring boost June did run a surplus - the first non-April month to have done so in five years....Please click the link above for the complete article
 

• Greg Mallison's May 2013 Budget Commentary (PDF)..Supplement to the May 13 Budget commentary (PDF)  With all of the happy talk about the shrinking budget deficit (and it is shrinking) it is important to remember that the year-to-date deficit is larger than any full year deficit prior to 2008 - even in inflation-adjusted terms. Just a few short years ago $400 billion annual deficit was considered cause for alarm; now a shortfall of $600 billion after just eight months is greeted with cries of celebration.....Please click the above link for the complete article

 

• Greg Mallison's April 2013 Budget Commentary (PDF)  April was a great month for the Treasury, the way it used to be before 2008.  Not only were withholding taxes aided by the recent tax increases, but 1040 and estimated tax payments were up substantially....Please click the above link for the complete article

 

• Greg Mallison's March 2013 Budget Commentary (PDF)  One year ago, I wrote this in the March budget review: "Halfway through the 2011-12 fiscal year, the outlines of another greater than $1 trillion deficit are becoming clear: revenues are up slightly from last year, and expenses are flat. The federal budget seems as becalmed as the Ancient Mariner, doomed to drift on a sea of red ink."......Please click the above link for the complete article

 

Greg Mallison's February 2013 Budget Commentary (PDF) So far the sequestration “disaster” appears to be as overhyped as Winter Storm Saturn, but the horrified reaction of the economic punditry to even an alleged $85 billion in budget cuts reveals how politically difficult it really is to reduce federal spending in the present (vague future cuts are much more palatable)....Please click the above link for the complete article

 

Greg Mallison's PSERS - A Tale of Two Stock Market Recoveries (PDF) Pennsylvania’s largest government pension fund, the PA Public School Employee Retirement Fund, recently released its mid-year results for fiscal year 2012-13.  The fund’s net asset value rose to $49.5 billion, an increase of almost $1 billion at the end of June 2012.  Sounds like good news, right?  Like so much of PA pension news, however, the short-term good news obscures the larger truth—the PSERS fund is running on borrowed time, and even a return to record-high stock markets cannot fix the underlying mismatch between resources and responsibilities......Please click the above link for the complete article

 
(PDF) ...The Congressional Budget Office’s report for January trumpets the 12% year-over-year improvement in federal revenues as a sign that both economic conditions and the budget deficit are ameliorating rapidly.  After all, increased tax receipts are one of the best markers of an accelerating economy.  However, when one considers the sources of the increase, the picture is a little more blurry.  At least half of the increase is due to one-time factors which do not reflect an improving economy....Please click the above link for the complete article
 
(PDF) ....Unfortunately, this simplistic comparison ignores the fact that the demographic and financial conditions we face today are fundamentally different than thirty years ago, and that what worked then will not work now.....Please click the above link for the complete article
 

(PDF) Thanks to a fortuitous calendar effect (five Mondays in December) the federal government almost broke even in the month of December, for what would have been the first time since 2007....Please click the link above for the complete article

 
 
 

 

 

     

 

 

 

 



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