Will they or won’t they is the question weighing on the minds of many investors this week? In question is a Fed rate hike. Economists and strategists are divided. Financial markets say the odds are against a rate hike tomorrow. If it is a question of if the economic data, higher rates are clearly justified. Even by the Fed’s own low standards, the economic data justifies a step away from emergency monetary policy. Unemployment is at the Fed’s target and while headline inflation is temporarily subdued due to falling oil prices and a strong dollar, the underlying trend of inflation remains … [Read more...]
Archives for September 2015
Buying on Margin
Margin calls can ruin a portfolio when the bills come due. This from WSJ Wealth Advisor: Loans backed by investment portfolios have become a booming business for Wall Street brokerages. Now the bill is coming due–for both the banks and their clients. Some lenders, including Bank of America Corp., are issuing margin calls to clients after the global market drubbing of the past week, forcing investors to choose between either putting up more money or selling some of the securities underlying the loans, writes Wealth Adviser at WSJ.com. Banks, meanwhile, are likely to take a hit to a key profit … [Read more...]
The Monday Melee: Apple TV Cutting the Cord
Apple TV Reborn: The new Apple TV is almost here. Will it accelerate the trend of cord cutting among consumers? The updated version of the device will allow developer created apps (aside from those made by Apple), will have a heavy gaming element built in, and will be capable of near full voice control by Apple's Siri product. Cutting the Cord: More Americans are cutting their cable and moving to internet based television. Here a graphic by Pacific Crest shows the trend, which must be terrifying for cable companies. Top 20 Nations in ITIF Broadband … [Read more...]
As Goes General Motors, so goes the Nation
As goes General Motors, so goes the nation was a phrase from years ago that spoke to how much impact General Motors business had on the U.S. economy. While GM doesn’t have the same influence that it once did in the U.S. economy, auto sales still play a big role in economic cycles. That is true for the U.S. economy as well as for the global economy. Today, the more appropriate phrase might be as goes Chinese auto sales, so goes the global economy. China is now the world’s largest auto market with annual passenger sales topping 20 million units. China is also the world’s second largest … [Read more...]
Pensions Headed for Trouble
Pensions are headed for trouble with their still-unrealistic expectations. More than two-thirds of state retirement systems have trimmed assumptions since 2008 as the financial crisis and an uneven U.S. recovery knocked many below their long-term goals, according to an analysis of 126 plans provided by the National Association of State Retirement Administrators. The average target of 7.68% is the lowest since at least 1989. The peak was 8.1% in 2001. On Friday, the New York State Common Retirement Fund, the third-largest public pension by assets, said it plans to drop its assumed returns … [Read more...]
Small Business Losing Momentum
According to the NFIB survey of small businesses out yesterday, small business optimism is losing upside momentum. The 3-month moving average of small business optimism turned sharply lower in recent months after peaking in February. Small business optimism is still off of the deeply depressed levels where it languished for much of this “recovery,” but the recent trend does not send an encouraging message. … [Read more...]
Top 5 Loser States
You don’t want to be stuck in a loser state. In 2013 more than 200,000 people left states with Democrat governors for ones with Republicans according to Americans for Tax Reform. "People move away from high tax states to low tax states. Every tax refugee is sending a powerful message to politicians," said ATR President Grover Norquist. "They are voting with their feet. Leaders in Texas and Florida are listening. New York and California are not." From ATR: Top 5 loser states for Democrat governors in 2013: New York (114,929 people with $5.7 billion in AGI) Illinois (68,943 people … [Read more...]
No More Excuses for the Fed
The jobs report was released this morning and number of new jobs created in August came in at 173,000, missing estimates by about 44,000 jobs or 0.02% of the total U.S. labor force, but last month’s number was revised up by 30,000 jobs. The unemployment rate fell to 5.1%, which is dead smack in the middle of the Fed’s full employment estimates that were released only two months ago. Wage growth also improved in August, rising 0.3% for the month compared to a 0.2% gain during the prior month. On balance the jobs report had more positives than negatives. There is now nothing in the … [Read more...]
VIDEO: There Is No Safe Asset Anymore
Bloomberg: Gloom, Boom & Doom Report Editor Marc Faber discusses market volatility and his investment ideas. He speaks on "Market Makers." … [Read more...]
S&P 500: Top 10 Stocks
You can try this one at home. Ask any investor you know how to calculate a company’s market cap and chances are you’ll be met with a blank stare. A company’s market cap is its shares outstanding multiplied by its stock price. It amazes me how such an influential calculation is overlooked and not understood. The popular S&P 500 and Nasdaq indices are both market cap weighted yet investors don’t know what that means. The larger the market cap, the larger the influence a particular stock will have on the direction of the index. The top-10 stocks in the S&P 500 and the Nasdaq have a … [Read more...]