Posts Tagged ‘saving’

The Money Market Piggybank is Shattered

The Money Market Piggybank is Shattered

Courtesy of Joshua M Brown, The Reformed Broker 

USA Today is out with a mystery that I will help them out with…

They ask the question "Where did the $1.1 trillion that just came out of ultra low-yielding money market funds just go?"

Then they go on to point out that the average bank account’s interest rate is .75% versus the ridiculous .04% that traditional money market funds are paying, so maybe some of the $1.1 trillion went there.

Then we are treated to the usual stats about "how much gosh darn cash has been sucked into bond mutual funds" – $700 billion in the last 18 months says TrimTabs.  The growth of assets in bond funds cannot explain the money market sapping alone, because we all know that a lot of those inflows are coming from stock people that are scared and asset allocators that are hopping aboard the bond bandwagon (bondwagon?).  It’s the disillusioned stock market money that’s pumping into bond funds more than anything else.

The article also posits that investors may be skipping the money market funds and going straight for money market instruments, like buying treasuries directly.  I’m not seeing much of that at the retail level at all.

So where did a trillion dollars just go when it left the universe of over 1600 money market funds?

Easy.  Some of it may have gone to bond funds, but my bet is that an inordinate amount went toward everyday Americans paying their everyday bills.  That’s right, I believe that the investor class is finally starting to pay regular expenses and cover the bills with their money market funds, turning that New Normal maxim about the coming of higher savings rates on its ear.

I don’t have statistical confirmation of this hunch just yet (and I’m actually not sure where to get it), but this is what I’m beginning to see firsthand.  Brokerage and investment accounts are becoming a piggybank for investors who are nowhere near retirement.

They will not be buying-and-holding as the commercials have programmed them to do while their businesses and household balance sheets are on their last legs.  They will put the capital that’s been earmarked for "investment" to much better use than a $40 annual return on $10,000 in a money market fund.

With underemployment still raging and business…
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Anemic Retail Sales; Strength of Consumer Recovery Overstated

Anemic Retail Sales; Strength of Consumer Recovery Overstated

Courtesy of Mish 

Economists never expect bad news. Once again they were surprised by weak economic reports, this time by poor retail sales. Bloomberg reports Retail Sales in U.S. Fall as Consumers Boost Savings

Sales at U.S. retailers unexpectedly dropped in May, signaling consumers boosted savings as employment slowed and stocks fell.

Purchases decreased 1.2 percent, the biggest drop since September 2009, following a 0.6 percent April gain that was larger than previously estimated, Commerce Department figures showed today in Washington. Demand plunged at building-material stores, reflecting the end of a government appliance rebate, and sales fell at auto dealers, in contrast to industry figures which showed a gain.

Companies reined in hiring last month, making it likely households will keep a lid on spending, which accounts for about 70 percent of the economy. Discounters Target Corp. and TJX Cos. were among merchants reporting gains in May sales, indicating households are looking for bargains to stretch out their paychecks.

“The strength of the consumer recovery was overstated,” said David Sloan, a senior economist at 4Cast Inc. whose forecast of a 0.7 percent decline was the lowest among economists surveyed. “I don’t think things are going into a nosedive. The economy is in recovery. The outlook is still moderately positive.”

Retail sales were projected to increase 0.2 percent, according to the median estimate of 76 economists in a Bloomberg survey. Forecasts ranged from a decline of 0.7 percent to a gain of 1 percent.

The decrease in demand wasn’t broad-based, with five of 13 major categories showing decreases last month, led by a 9.3 percent plunge at building-material stores.

The decrease at building-material stores followed an 8.4 percent jump in April and a gain in March that may have reflected a surge in appliance sales propelled by a provision of the government’s stimulus package last year that provided rebates for purchases of more energy-efficient products.

Purchases of automobiles dropped 1.7 percent last month, counter to industry figures. General Motors Co. and Ford Motor Co. posted U.S. sales increases in May that topped analysts’ estimates as higher consumer confidence and inexpensive gasoline spurred customers to buy more sport utility vehicles.

“We’re ramping up production to meet continued strong demand for all of our launch vehicles as well as other products,” Stephen Carlisle, vice president for U.S. sales at GM, said


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There’s a Slow Train Coming

There’s a Slow Train Coming

Courtesy of John Mauldin, Thoughts from the Frontline Weekly Newsletter

Transparent clock and moving train (digital)

There’s a Slow Train Coming
A Negative 2% GDP in the Third Quarter?
Small Business Still Has Issues
Italy, Paris, Vancouver, and San Francisco
And a Forbes Cruise to Mexico

Sometimes I feel so low-down and disgusted
Can’t help but wonder what’s happenin’ to my companions,
Are they lost or are they found, have they counted the cost it’ll take to bring down
All their earthly principles they’re gonna have to abandon?
There’s a slow, slow train comin’ up around the bend.

- Bob Dylan

The question before the jury is a simple one, but the answer is complex. Is the US in a "V"-shaped recovery? Are we returning to the old normal? A great deal hinges on the answer, and this week we look at some of the evidence before us.

But first, a follow-up thought to last week’s letter. I wrote about why countries can reduce their private debt, reduce their public debt, or run a trade deficit, but not all three at the same time. If a country wants to see its government run a fiscal surplus (or small deficit) and at the same time its private citizens want to reduce their leverage (common desires throughout the developed world), it must run a trade surplus. That’s a simple accounting statement. If you did not read last week’s letter, you can get to it by going here.

That brings up the deepwater gusher in the Gulf. That it is an unmitigated disaster is an understatement. There is the possibility of the oil getting into the Gulf Stream and going around Florida and landing upon the Atlantic coast. We will be cleaning this up for years.

I am at the moment on a plane to Italy, but if memory serves me right, we run about a $300-billion-dollar trade deficit just in energy purchases. Our trade deficit has been coming down in most other categories but is fairly steady with respect to oil. And as noted above, if we want to get to a place where we are in control of our government deficit, we must reduce that trade deficit.

Oil can and graph with American dollar

Bluntly, we cannot hope…
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May Jobs Report Is ‘Disappointing’

Courtesy of Econophile

From The Daily Capitalist

President Obama has now become a professional economist, because like most professional economists his unemployment forecast was wrong.

While the headline from the Wall Street Journal this morning was "Census Hiring Bolsters U.S. Payrolls," nothing could be farther from the truth. Private sector job growth in May was anemic, coming in at only 41,000. The total number of new jobs was 431,000, but temporary Census Bureau hiring accounted for 411,000 of those jobs. Note that the difference between the two numbers doesn’t add up because net government employment was less than that because state and local governments shed jobs. [I now see that the latest online edition of the Journal has re-entitled their story, "US Private Sector Added Few Jobs In May."]

The consensus among economists surveyed by the Journal and Bloomberg expected 515,000 and 536,000, respectively.

“Job growth is going to be anemic,” said Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.

“Remember, it requires 150,000 to 200,000 jobs in order to reduce that unemployment rate, which is a key focus for the administration,” he said in an interview with Bloomberg Radio’s Tom Keene on “Bloomberg on the Economy.”

These numbers are disappointing considering that April showed modest private employment growth of 218,000 jobs in April and 230,000 jobs in March. Overall the unemployment rate dropped from 9.9% to 9.7%. The broader "U-6" index dropped to 16.6% from 17.1%. This is not what was expected. It is discouraging to see the Employment-population ratio decline YoY from 59.6  to 58.7 (May 2009 to May 2010).

The U-6 report is interesting in that while it fell, it is likely that the fall was a result of people dropping out of the labor force because they can’t find employment. The civilian labor force participation rate decreased by 0.2% to 65.0%. About 6.8 million people have been out of a job for more than 27 weeks, or 46% of the unemployed. This has to be considered in light of population increases: while the population grew 170,000, 322,000 dropped out of the labor force.

Some of the BLS report highlights: manufacturing +29,000, temps +31,000, mining +10,000, health care +8,000, construction -35,000. These numbers well under the levels seen for…
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Phil's Favorites

What the US could learn from Thailand about health care coverage

 

What the US could learn from Thailand about health care coverage

A computer screen promoting this year’s open enrollment, which will run 45 days. In years past, open enrollment continued for months. Ricky Kresslein/Shutterstock.com

Courtesy of Joseph Harris, Boston University

The open enrollment period for the Affordable Care Act (ACA) draws to a close on Dec. 15. Yet, recent assaults on the ACA by the Trump administration stand in marked contrast to efforts to expand access to health care and medicine in the rest of the world. In fact, ...



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Zero Hedge

California Troubled Utility Proposed $2 Billion Rate Hike To Fund "Wildfire Safety"

Courtesy of ZeroHedge. View original post here.

One month after the stock and bonds of troubled California Utility Pacific Gas & Electric cratered after the company hinted of a liquidity crisis as a result of mounting legal obligations following California's destructive Camp Fire, shocking and infuriating its investors...

...



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Kimble Charting Solutions

Dow Theory Concerns? Transportation Stocks Make New Lows

Courtesy of Chris Kimble.

The bull market is experiencing its first real test since the 2014/2015 stock market correction. Volatility is high and key sectors are heading lower.

One such sector is the Transportation Sector(NYSEARCA: IYT) and select stocks.

The age-old Dow Theory call for the Industrials and Transports to lead the market (and confirm each others moves). Currently, both are struggling. But the Dow Transports are on the precipice of a major breakdown. Looking at the chart below, you can see that the Transportation Sector ETF (IYT) is attempting to break down below its 12-month trading range and 9-year rising support line.

If the market doesn’t reverse higher soon, this break down will send a negative message to investors about the economy… and the broader stock market.

A move lower wou...



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Digital Currencies

Crypto Bull Tom Lee: Bitcoin's 'Fair Value' Closer To $15,000, But He's Sick Of People Asking About It

Courtesy of ZeroHedge. View original post here.

Listening to the crypto bulls of yesteryear continue to defend their case for new new all-time highs, despite a growing mountain of evidence to suggest that last year's rally was spurred by the blind greed of gullible marginal buyers (not to mention outright manipulation), one can't help but feel a twinge of pity for Mike Novogratz and Wall Street's original crypto uber-bull, Fundstrat's Tom Lee.

Lee achieved rock star status thanks to ...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga.

  • Data on retail sales for November will be released at 8:30 a.m. ET.
  • Data on industrial production for November will be released at 9:15 a.m. ET.
  • The flash Composite Purchasing Managers' Index for December is schedule for release at 9:45 a.m. ET.
  • Data on business inventories for October will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the recent week is schedule for release at 1:00 p.m. ET.

Posted-In: Economic DataNews Economics ...



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Biotech

Those designer babies everyone is freaking out about - it's not likely to happen

Reminder: We're available to chat with Members, comments are found below each post.

 

Those designer babies everyone is freaking out about – it's not likely to happen

Babies to order. Andrew crotty/Shutterstock.com

Courtesy A Cecile JW Janssens, Emory University

When Adam Nash was still an embryo, living in a dish in the lab, scientists tested his DNA to make sure it was free of ...



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Members' Corner

Blue Wave with Cheri Jacobus (Q&A II, Updated)

By Ilene at Phil's Stock World

Cheri Jacobus is a widely known political consultant, pundit, writer and outspoken former Republican and frequent guest on CNN, MSNBC, FOX News, CBS.com, CNBC and C-Span. Cheri shares her thoughts on the political landscape with us in a follow up to our August interview.

Updated 12-10-18

Ilene: What do you think about Michael Cohen's claim that the Trump Organization's discussions with high-level Russian officials about a deal for Trump Tower Moscow continued into June 2016?

...

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Chart School

Weekly Market Recap Dec 09, 2018

Courtesy of Blain.

Bears are certainly showing the type of strength we haven’t seen in a long time.   A week ago at this time futures were surging on news of a “truce” for 90 days between China and the U.S. in their trade spat.  But the charts were still not saying lovely things despite a major rally the week prior.   And by Tuesday, darkness had descended back on the indexes, with another gut punch Friday.    A lot of emphasis was put on a long term Treasury yield dropping below a shorter term Treasury.

On Monday, the yield on five year government debt slid below the yield on three year debt, a phenomenon which has p...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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