Eagle Eye Opener: Sequestration Arrives and America Keeps Moving; U.S. Stock Performance Trails Emerging Markets; Will M&A Activity Rebound in 2013?

Eagle Eye Opener

No Deal! U.S. Government Says Bring it on… (Reuters)

Unless a Frank Capra movies breaks out — delivering a happy ending for all — today’s mandatory and automatic sequestration will begin. The areas to be hit hardest by the cuts — and therefore watched most closely by investors — include defense programs, government offices, NASA space exploration, education and law enforcement. Of course, should the president and the House of Representatives reach a deal, or at least a compromise, then the cuts would stop immediately. Do not hold your breath waiting for a deal anytime soon.

U.S. Stock Returns Trail New Markets (CNBC)

Had you bought U.S. stocks last year, you would have made a nice 6 percent return — about what you could get in CD 20 years ago. Had you bought Nigerian stocks — aside from the sick princess or financially imprisoned — you could have tripled your U.S. returns. But Nigeria wasn’t the only market to top U.S. performance. New entrants to that august group include the aforementioned Nigeria, Dubai, Vietnam, Abu Dhabi and Iceland. In this sense, I’ll be interested to see who passes the U.S. in 2013.

Deck Reshuffled but Face Cards Remain the Same (Bloomberg)

It has been five years since the market was so primed for a round of mergers and acquisitions (M&A), at least that’s what top investment banker, Christian Meissner, at Bank of America said. In fact, the market — and by extension, investors — seemed poised for an M&A breakout last year. But according to Michael Cavanagh, co-CEO of JPMorgan Chase & Co, “Boards weren’t  ready to do a lot of strategic deals last year.” And if anyone should know this market, it’s the folks at JPMorgan, as they have topped the Bloomberg 20 list of best-paid investment banks four out of the last five years. Perhaps they’re the ones that deserve watching.

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I quoted Adam Smith last night at a big debate on the "Fiscal Crisis" facing the West. Rollins College, in Winter Park, Fla., sponsored the debate between Charlie Rock and Eric Shulz, of the school's economics department, and me.

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