Accidents leading to exorbitant medical bills are unfortunately a part of the reality many Americans face each day. Often medical bills from those accidents end up paid for with negotiated annuities called structured settlements. This is a reasonable arrangement for many victims, but there is occasionally some nefarious behavior attached to the business. Some of the planners who create the structured settlements are offered incentives to steer victims into the products sold by particular insurance companies. These kickbacks could influence planners to recommend plans that aren't in the best … [Read more...]
Can China Restore Confidence in the Heat of a Trade War?
China's economy is slowing down, with GDP growth at 6.5% in third quarter. That's the lowest rate since 2009. The question for Chinese policy makers is whether or not they can restore market confidence in the face of a trade war with the United States. Lingling Wei reports in The Wall Street Journal: Restoring market confidence is proving to be one of the toughest economic challenges for China’s leadership. Soon after the financial mandarins’ remarks were released, the official Xinhua News Agency published an interview with Vice Premier Liu He, President Xi Jinping’s economic captain, in … [Read more...]
A Story of Retail Dominance Ends
Sears filed for bankruptcy this week. NBC News provides a timeline of Sears' storied history. Sears was the Amazon of its day, creating businesses in many different industries and disrupting the dominant retailing model of the time. Here's how Sears got its start: 1886 — Richard Sears begins selling watches at a railroad station At age 22, Sears, who was working as a railroad station agent in North Redwood, Minnesota, began selling watches to fellow agents as a way to supplement his income. 1886 — Mail order business, the Amazon of its time Within six months, Sears’ watch business … [Read more...]
The Four Stocks Propping up Global Equity Markets
You wouldn’t know it if you rely on CNBC for your financial news, but outside of a select group of U.S. growth stocks, global equity markets are down YTD. The MSCI All-Country World Index is down 2.4% for the year, while the same index excluding U.S. stocks is down 9.34%. Emerging equity markets have already dipped into bear market territory (down 20% from high), and developed equity markets outside of the U.S. are not far behind, falling 15% from their January peak. Two thirds of the 3,000+ stocks in the FTSE All World Index (similar to the MSCI All Country Index) are down … [Read more...]
Robinhood Markets? No Such Thing as a Free Lunch
Despite offering no-fee stock trades, Robinhood Markets is still getting paid. The company is using a controversial process called "payment for order flow," to generate revenue. Despite its "free" trades, investors should always remember that there's no such thing as a free lunch. Bloomberg's Simone Foxman, Julie Verhage and Suzanne Woolley report: Here's how it works: Retail brokers like Robinhood focus on recruiting customers and building the trading interface, but don't actually execute their clients' orders. They outsource that to firms—including Citadel, Two Sigma and Wolverine … [Read more...]
Higher Rates Help Banks
Higher interest rates and a steepening yield curve, driven by strong economic growth and a winding down of global central bank stimulus are helping banks. Interest margins are expanding at some of the nation’s biggest banks as interest rates on loans rise faster than the interest cost of deposits. So long as higher interest rates don’t dent loan demand, a rising interest rate environment can be positive for the banking industry. The WSJ has more. Finally, there was no sign anywhere that consumers or businesses are having trouble staying current on their loans. Both JPMorgan and Wells Fargo … [Read more...]
Ginnie Mae (GNMA) Bond Yields
What do Ginnie Mae (GNMA) bonds yield? The table below lists the yields on two of the major Ginnie Mae (GNMA) indices as well as the latest SEC yield on some of the top Ginnie Mae (GNMA) dedicated funds. A note of caution when you are looking at yields on Ginnie Mae funds. Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch and Barclay’s Ginnie Mae (GNMA) indices. Description Symbol Yield as of 8/31/2018 Yield as of 9/30/2018 Merrill Lynch Ginnie Mae … [Read more...]
Government Inflation Measures Miss the Mark
The CPI Inflation numbers for September came in below economist estimates. A big driver of the miss was a drop in used car prices which fell 3% in September vs. the prior month. That matched the biggest drops on record for used car prices, but did used car prices really plunge 3% in the face of a booming economy? Not likely according to Manheim Consulting’s used Vehicle Value Index which hit a record for the third consecutive month in September. As is typical with many of the prices the government reports in the CPI, the reality on the ground tells a different story than is being … [Read more...]
Higher Interest Rates are a Positive
Yesterday’s stock market rout has been at least partly attributed to rising interest rates. With bond yields up, investors who were once pushed into the stock market by the likes of Ben Bernanke and Janet Yellen are finally getting some well deserved respite under Chairman Powell. The President isn’t happy about rising interest rates, blaming the Fed for the sell-off, but he should be. Many of his retired and soon to be retired supporters are in favor of higher interest rates. A little air coming out of the stock market isn’t a bad thing. Stock prices have been distorted for years by … [Read more...]
The Internet: The Perfectly Competitive Market We’ve Been Waiting For
Jacob Passy, writing at MarketWatch, explains that the Internet is taking what was once difficult—finding the best price—and making it easy. Because e-retailers can't have the physical advantages a location can generate, they are forced to compete on price. In economics, perfect competition is sometimes just a theory, but the Internet is bringing that theory closer to reality for retail consumers. Passy writes: As more shoppers move online, the competition they are fueling between e-retailers like Amazon AMZN, -0.50% and traditional retailers like WalmartWMT, -0.08% and … [Read more...]
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