Eye onthe Market | July 11, 2014 J.P Morgan Topics: Portfolios, US corporate profits and the Twilight of the Gods (in the US, Europe, China and the IEA) The existing Federal debt is the lesser of 2 problems Items on the table in discussions to reduce the deficit Trillions, USD Revenue raises Spending cuts 100 Carried interest taxed at Discretionary spending cuts 90 ordinary income rates 80 Increased taxes on ordinary |Changing formulas affecting 70 income, capital gains and inflation indexation for 60 qualified dividends entitlements Present value of "Bracket creep": higher tax Defense spending cuts 50 unfunded : : brackets applying to lower 40 entitlement . ‘ obligations incomes more quickly 30 Phase-out of personal Expenditure caps 20 exemptions or caps on 10 Existing debt itemized deductions 0 Changes to grantor retained |Change in entitlement Source: US Department of the Treasury, J.P. Morgan Private Bank. annuity trust required terms eligibility requirements Twilight of the Gods, part 2: Can releases of strategic oil reserves keep oil prices down for more than a few weeks? International Energy Agency member countries agreed to release strategic petroleum reserves to bring oil prices down. They have a lot of ammunition to do so; government-controlled oil inventories are at least 1.5 billion barrels, and so far, all they have done is authorize the release of 60 million barrels. The timeline suggests that 011 markets began focusing on the release of the SPR after the Libyan shutdown, the lack of a sufficient OPEC supply response, and weak economic data in the US. As shown below, oil prices have been rising since the announcement of the supply increase. Are IEA members committed to doing it again if oil prices reach their May levels? Brent oil price and timeline of SPR release . USD/bbl [A] May 2: Advisors lay out SPR release plan to Obama 130 A [B] May 6: Obama calls Abdullah (S.A.) and Sabah al-Ahmad (Kuw) 125 to discuss SPR release 120 D E [C] May 19: IEA urges