One of my favorite columnists, Dan Neil on the automobile bubble: But there’s a lot of paper out—over $1 trillion in outstanding automotive loans in 2016, according to the credit-score company Equifax. About 20% of auto loan originations are subprime and delinquency rates have climbed steadily. And just like risky mortgages, delinquency-prone car loans are securitized, bundled and sold as asset-backed securities (ABS), which never worked out badly for anyone, ever. Quietly, auto execs are worried sick about any contraction in auto-loan credit, but they would tear their tongue out before … [Read more...]
American Manufacturing Hit Particularly Hard Since 2000
The editors of The Wall Street Journal's Daily Shot email recently highlighted that, compared to other major manufacturing hubs in the world, manufacturing employment in the U.S. has been hit quite hard. I have recreated a chart below that the Daily Shot had featured showing that compared to other relatively free manufacturing focused economies like Germany, Japan and South Korea, employment in America's manufacturing sector has been hardest hit since 2000. The editors go on to show that despite rapid automation in both Germany and Japan compared to the U.S., they still performed … [Read more...]
Is a New Market Driven Wealth Record Really Healthy?
“U.S. household net worth climbed to a record $92.8 trillion in the fourth quarter of 2016, as the end-of-year surge in stocks and a steady climb in home prices added more than $2 trillion of wealth to household balance sheets. The biggest contributor to the increase was the stock market, which added $728 billion to household balance sheets in the fourth quarter, according to the Federal Reserve’s quarterly financial accounts report,” reports the WSJ. Haven’t we seen this movie before? Josh Zumbrun writes: The report provides no information on the distribution of wealth among households. … [Read more...]
Rage Gauge: Is the World a bit too Comfortable?
How are you feeling? According to my March RAGE Gauge, pretty darn good. It’s never looked so good. That’s a warning sign right there. When the coast appears to be clear, it’s time to consider putting up your defenses and to continue thinking about survival first and making money second. This month the FBI reported the first drop in February pistol background checks in three years. They also recorded the first trailing 12-month decline in NICS checks in 26 months. Stocks are up, interest rates are invisible, and yet gold is up. What are gold investors telling us? Determine your margin of … [Read more...]
When You Think Risk is Gone You’ll Get Really Hurt
You read here and here about the decline in Nascar’s ratings where I wrote: “The danger is gone. Or at least it’s not what it used to be. It reminds me of the decline of fights in hockey. Fighting is part of the game. Drivers have a way of self-regulating. They don’t need rules committees telling them the right way to drive.” There used to be unwritten rules in sports that didn’t need refs to regulate them. When hockey fights were an accepted part of the game there were consequences. There were consequences for taking cheap shots at star players. Ironically, when self-regulation is taken … [Read more...]
It’s Only ‘Safety First’ That Will Make You Money: Part III
Billionaire investor Warren Buffett, on the heels of releasing his annual report, said, Monday, that the stock market isn’t in a bubble and “measured against interest rates, stocks actually are on the cheap side compared to historic valuations.” In the same interview, he also warned “That doesn’t mean the stock market can’t go down 20% tomorrow.” A buying opportunity he’d welcome with open arms. It’s good to be Warren. Retirees and savers have carried the burden of low interest rates. Many are simply increasing risk without proper adherence to their own margin of safety. Brian Hershberg … [Read more...]
It’s Only ‘Safety First’ That Will Make You Money: Part II
Billionaire investor Warren Buffett, on the heels of releasing his annual report, said that the stock market isn’t in a bubble and “measured against interest rates, stocks actually are on the cheap side compared to historic valuations.” In the same interview, he also warned “That doesn’t mean the stock market can’t go down 20% tomorrow.” A buying opportunity he’d welcome with open arms. It’s good to be Warren. Believe me when I tell you that I appreciate the methods Warren Buffett deploys to make money. One big one being that at the core of his methods he’s America's #1 stockbroker. Between … [Read more...]
These 14 Simple Tax Changes are Needed Now
America desperately needs a tax overhaul to fix a system that has become unwieldy and difficult for business. Reforms could boost the economy, and even the thought of tax reforms has sent markets soaring. Here, from Fidelity, are fourteen tax changes that could show up in any potential reform package. Tax rates: The Trump plan and the House plan would both cut the top rate to 33 percent from 39.6 percent, raise the lowest rate to 12 percent from 10 percent, and collapse the number of brackets — different tax rates at different income levels — to three from seven. The Senate leadership has … [Read more...]
Is the Old Retirement Model Broken?
In an interview with Fidelity Viewpoints, Stanford Center for Longevity founding director Laura Carstensen says the old model of retirement just won't work anymore. Life expectancy throughout most of human evolution was somewhere between 18 and 20 years. Life was short. By the mid-1800s life expectancy had reached the mid-30s in the United States, and in 1900 it was 47 years. By the end of the century, life expectancy had reached 77. It gained 30 years in one century—that’s unprecedented. More years were added to average life expectancy in the 20th century than all the years added in all … [Read more...]
IRS Fraud Getting Better, but Risks Remain
Since peaking in 2014 at 766,000, the number of reports of tax-ID theft involving federal returns has dropped dramatically. But risks remain to tax filers who don't protect themselves. Thieves are using new methods to get access to tax filers' information in order to file false claims in their names, and then pocketing fraudulent refunds before anyone knows what's happening. Laura Saunders writes in The Wall Street Journal: And thieves are constantly trying to defeat new detection efforts. In some recent schemes, phishers pretend to be high-level executives requesting W-2 information for many … [Read more...]
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