by ilene - February 12th, 2016 1:07 pm
Courtesy of John Rubino.
The New York Federal Reserve just announced that older Americans are carrying more debt than ever before and, believe it or not, spins this as a good thing:
(NASDAQ) – Americans in their 50s, 60s and 70s are carrying unprecedented amounts of debt, a shift that reflects both the aging of the baby boomer generation and their greater likelihood of retaining mortgage, auto and student debt at much later ages than previous generations.
The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than 65-year-olds had in 2003, according to data from the Federal Reserve Bank of New York released Friday.
The result: U.S. household debt is vastly different than it was before the financial crisis, when many younger households had taken on large debts they could no longer afford when the bottom fell out of the economy.
The shift represents a “reallocation of debt from young [people], with historically weak repayment, to retirement- aged consumers, with historically strong repayment,” according to New York Fed economist Meta Brown in a presentation of the findings.
Older borrowers have historically been less likely to default on loans and have typically been successful at shrinking their debt balances. But greater borrowing among this age group could become alarming if evidence mounted that large numbers of people were entering retirement with debts they couldn’t manage. So far, that doesn’t appear to be the case. Most of the households with debt also have higher credit scores and more assets than in the past.
“Retirement-aged consumers’ repayment has shown little sign of developing weakness as their balances have grown,” according to Ms. Brown.
An important barometer of household financial health is the percentage of this debt that is in some stage of delinquency, and that percentage has been steadily dropping. Only 2.2% of mortgage debt was in delinquency, the lowest since early 2007. Credit card delinquencies also declined, while auto loan and student loan delinquencies were unchanged.
“The household sector looks much better positioned today than in 2008 to absorb shocks and continue to contribute to the economic expansion,” said
by ilene - February 12th, 2016 10:26 am
Courtesy of Pam Martens.
Starting last July, the share prices of the biggest banks on Wall Street have been on a steady downward trajectory. That trend heated up yesterday with Citigroup and Bank of America both dropping over 6 percent by the close of trading. Goldman Sachs and Morgan Stanley were down by over 4 percent. All four of the banks set new 12-month lows in intraday trading.
A strong argument can be made that much of the public’s lack of confidence in these complex banking and gambling behemoths is a result of the dark curtain that has been drawn around their operations. Evidence is piling up that government regulators of Wall Street no longer see themselves as the protectors of the people but as the protectors of Wall Street’s secrets.
The American historian, Henry Steele Commager, once wrote that “The generation that made the nation thought secrecy in government one of the instruments of old world tyranny and committed itself to the principle that a democracy cannot function unless people are permitted to know what their government is up to.”
In that vein, on his very first day in office, January 21, 2009, as the U.S. economy was in tatters from the greatest era of Wall Street corruption in the history of the nation, President Obama promised the American people a new era of transparency. Two months later, under the President’s orders, the U.S. Attorney General’s office issued detailed guidelines on how government agencies were to respond to public and press requests for documents under the Freedom of Information Act (FOIA).
We’ve been living in a dark hole ever since when it comes to Wall Street.
by ilene - February 12th, 2016 10:16 am
Always stay calm while others are panicking – especially in financial markets. There is a lot of talking one`s book going on in the markets with incentives to create panic and hysteria in the financial markets with the media the willing accomplice in playing the game. The world is rarely a worst case scenario – that should never be a baseline position.
by ilene - February 12th, 2016 9:51 am
Courtesy of Charles Hugh-Smith at Of Two Minds
The last hurrah of central banks is the negative interest rate policy--NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled to go blow whatever money they have on something--what the money is squandered on is of no importance to central banks.
All that matters is that people and enterprises are forced to spend whatever cash they have rather than "hoard" it, i.e. preserve and conserve their capital.
That this is certifiably insane is self-evident. If an economy depends on bringing future spending into the present by destroying savings, that economy is doomed regardless of NIRP, for eventually the cash runs out and spending declines anyway.
But NIRP will fail completely and totally due to another dynamic-- one I addressed last month in Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline. As correspondent Mike Fasano noted, negative interest rates force us to save even more, not less:
"People like me who have saved all their lives realize that they their savings (no matter how much) will never throw off enough money to allow retirement, unless I live off principal. This is especially so since one can reasonably expect social security to phased out, indexed out or dropped altogether. Accordingly, I realize that when I get to the point when I can no longer work, I'll be living off capital and not interest. This is an incentive to keep working and not to spend."
If banks start charging savers interest on their cash, savers will have to save even more income to offset the additional costs imposed by central banks on their savings.
A third dynamic dooms the insane negative interest rate policy: what does it say about the stability and health of the status quo if central banks are saying the only way to save the status quo is to force everyone to empty their piggy banks and spend every last dime of cash?
What exactly are we saving by destroying savings and capital? Isn't capital the foundation of capitalism? The answer is we are saving nothng but a rotten-to-the-core, parasitic, predatory banking system, coddled and enabled by…
by ilene - February 12th, 2016 9:01 am
Courtesy of Dana Lyons
The correction in the equity markets has brought the S&P 500 down close to a confluence of key technical levels.
People ask us all the time what we view as the important “levels” in the stock market, e.g., “what is our target level for the Dow?” or “what level will put an end to the correction?”. To be honest, while we do have our areas on the various charts that we view as significant, we are less focused on price levels than we are on the behavior of various market indicators and investors. Levels can be helpful, but sometimes prices overshoot what they “should” and sometimes they don’t quite make it “there”. That’s why we rely on a set of indicators based on market internals, momentum, investor positioning, etc. to help guide our investment posture, i.e., aggressive, defensive, etc.
That said, as I mentioned, we do view certain levels on a chart as significant if prices do happen to reach, or breach, them. And since A) people are most interested in the S&P 500 and B) that index is approaching some potentially key levels, we thought we would present it as our Chart Of The Day.
One thing of note that we have mentioned several times before is that, of all the securities and indices, etc. that one wants to chart technically, the S&P 500 is one of the most unreliable. We have found that typically, the degree of adherence to technical levels is inversely correlated to the number of participants trading it. That is, the more people attempting to technically trade a price series, the less apt it is to conform to traditional technical analysis.
This is not a scientific conclusion but rather an observation of ours. But it does make sense because A) the more competition there is, the more difficult it will be to win, and B) the more participants there are watching the same thing, the more likely it will be that HFT’s, computers or large institutions will be “gaming” that “thing”. And perhaps no instrument has more eyes on it than the S&P 500. That means it is a relatively…
by ilene - February 12th, 2016 6:39 am
Look at the bar chart at the end of the post and ask: Do markets move in cycles? What are my long term objectives? And, is this time different?
Courtesy of Michael Batnick, The Irrelevant Investor
People invest their hard earned dollars to earn a return above and beyond inflation. At a three percent inflation rate, your purchasing power would get cut in half over twenty years. As the value of your dollar diminishes over time, the goal when investing is to maintain and even grow the value of your money.
You’ve seen this chart before, it shows that $1 invested in 1926 would have grown to $5,386 today, a whopping return of 538,547%, or 10% a year.
What you don’t always see is the real growth of $1, or what the returns would be after you factor in inflation. Once this is accounted for, stocks have returned 40,670% over the last ninety years, or 6.9% a year (I used an arithmetic scale here for affect, the chart above uses a log scale).
The chart above clearly demonstrates how much inflation eats into returns. Still, an 8.5% average real return, or 6.9% compounded is pretty darn good. If an investor earned 6.9% for twenty years, their total return would be 280%. Sounds good right? Here’s the kicker. Real returns aren’t owed to anybody, they’re earned the hard way.
Over all ten-year periods, the real rate of return for stocks has been positive 85% of the time. While these are pretty good odds, you probably wouldn’t feel invincible if somebody told you there was a 15% chance that you could lose money investing over the next decade. The image below illustrates that investing is not for the faint of heart.
As you’re probably painfully aware, the S&P 500 hasn’t made any progress over the last two years. If you’re feeling a little frustrated, I have some bad news for you, this is how stocks works. The stock market doesn’t owe you anything. It doesn’t care that you’re about to retire. It doesn’t…
by Market Shadows - February 11th, 2016 11:48 pm
Financial Markets and Economy
When it comes to the selloff in bank stocks, there’s plenty to blame: credit concern, earnings, negative interest rates, and souring sentiment.
Middle income Americans aren't that worried about the choppy stock market (Business Insider)
Many are worried about what the hemorrhaging stock market could mean going forward for the overall economy.
Refineries in the middle of the US are curtailing crude processing as profits shrink, leaving behind oil that’s adding to a supply glut and pushing prices to the lowest since 2003.
U.S. stocks fell for the fourth day in a row as concerns about global economic weakness intensified, even as the Federal Reserve chairwoman, Janet L. Yellen, reiterated her confidence in the U.S. economy.
This isn’t 2008, but it isn’t great either (Economist)
So far, 2016 has been something of a disaster around global markets. Equity and commodity prices have been hammered. Yields on safe government bonds are plumbing extraordinarily low levels. Investors seem to be terrified. But of what?
A group of hedge funds, convinced they have found the next Big Short, are looking to bet against bonds backed by subprime auto loans. Good luck finding a bank willing to do the trade.
Global stocks are in a bear market (Business Insider)
That's it: Global stocks are officially in a bear market.
Surprise, surprise! Crude oil is falling again. The week’s big loser: US benchmark West Texas Intermediate, which
by Insider Scoop - February 11th, 2016 11:00 pm
Courtesy of Benzinga.
I would like to extend a warm welcome to our new colleagues at NICE. We have signed an agreement to acquire this leading provider of software and services for high performance and technical computing.
Products for HPC
From their headquarters in Asti, Italy, NICE delivers products and solutions to customers all over the world. These products help customers to optimize and centralize their high performance computing (HPC) and visualization workloads while also providing tools that are a great fit for distributed workforces making use of mobile devices.
For Existing Customers
The NICE brand and team will remain intact and will continue to develop and support the EnginFrame and Desktop Cloud Visualization (DCV) products. Customers will continue to receive world-class support and services, enhanced with the backing of the AWS team. Going forward, NICE and AWS will work together to create even better tools and services.
Still Day 1
As Jeff Bezos often says, it is still day 1 and we don’t have all of the answers yet. However, I did want to share this news with you and let you know that we are looking forward to meeting and working with our new colleagues. We expect the deal to close in Q1 of 2016.
by Insider Scoop - February 11th, 2016 11:00 pm
Courtesy of Benzinga.
Some of the stocks that may grab investor focus today are:
Pandora Media (NYSE: P) reported weaker-than-expected earnings for its fourth quarter. The company has been involved in talks regarding a potential sale of the company, according to sources as reported by New York Times DealBook on Thursday. Pandora shares fell 5.93 percent to $8.57 in the after-hours trading session.
Wall Street expects Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) to report its quarterly earnings at $0.82 per share on revenue of $294.33 million. Red Robin shares gained 1.24 percent to close at $58.77 yesterday.
Activision Blizzard, Inc. (NASDAQ: ATVI) reported downbeat results for its fourth quarter on Thursday. Activision Blizzard shares dipped 13.99 percent to $26.25 in the after-hours trading session.
Groupon Inc (NASDAQ: GRPN) reported stronger-than-expected results for its fourth quarter on Thursday. Groupon shares surged 18.30 percent to $2.65 in the after-hours trading session.
Analysts are expecting American Axle & Manufact. Holdings, Inc. (NYSE: AXL) to have earned $0.68 per share on revenue of $979.59 million in the recent quarter. American Axle shares fell 0.40 percent to $11.70 in after-hours trading.
FireEye Inc (NASDAQ: FEYE) reported a narrower-than-expected loss for its fourth quarter, but the company missed analysts’ revenue estimates. The company also issued a weak earnings forecast for the current quarter. FireEye shares rose 0.16 percent to $12.43 in the after-hours trading session.
Analysts expect Interpublic Group of Companies Inc (NYSE: IPG) to report its quarterly earnings at $0.62 per share on revenue of $2.19 billion. Interpublic Group shares declined 0.29 percent to close at $20.36 yesterday.
Dr Pepper Snapple Group Inc. (NYSE: DPS) lifted its quarterly dividend by 10.4 percent to $0.53 per share and added $1 billion to its share buyback plan. Dr. Pepper shares slipped 0.06 percent to $89.59 in after-hours trading.
by Insider Scoop - February 11th, 2016 11:00 pm
Courtesy of Benzinga.
Deutsche Bank recently issued a report on Flowers Foods, Inc. (NYSE: FLO) after a recent selloff of the stock. Analysts at Deutsche Bank downgraded Flower Foods from Buy to Hold, and lowered their price target from $25 to $18.
Eric Katzman and Mario Contreras, analysts and associates at Deutsche Bank, wrote, “[W]e note Flowers has a strong balance sheet with 2.2x net debt/EBITDA, 110 percent FCF efficiency and a relatively attractive 6 percent+ FCF yield. But to remain positive on the shares, such supportive details aren’t sufficient and we don’t see how the landscape improves intermediate term or allows the stock to regain lost ground.”
Analysts at Deutsche Bank gave two key reasons why they downgraded Flowers Foods:
1. Industry Competition
Deutsche Bank noted that the baked foods industry has become increasingly competitive in recent years, which has put pressure on Flower Food’s margins and ability to drive top line growth. Going forward, analysts believe that to grow sufficiently, Flower Foods will have to introduce new products to the market in order to differentiate themselves from other major companies.
2. Input Cost Volatility
Deutsche Bank wrote that Flower Foods is exposed to fluctuations in items such as wheat and energy, which have the ability to negatively affect the company’s bottom line. While company management has made strides in improving operating efficiency, analysts believe that the volatility in input costs has the ability to be a negative headwind in the near term.
At the time of this publication, Flower Foods was trading down 2.14 percent on the day at $16.45.
Image Credit: Public Domain
Latest Ratings for FLO
|Feb 2016||Deutsche Bank||Downgrades||Buy||Hold|
|Feb 2016||BMO Capital||Downgrades||Outperform||Market Perform|
|Feb 2016||SunTrust Robinson Humphrey||Downgrades||Buy||Neutral|