Wednesday, December 5, 2018

How the Economy Works -- In 30 Minutes

Explained so just about anyone can understand.

Raymond Dalio is an American billionaire investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds. As of January 2018, he is one of the world's 100 wealthiest people, according to Bloomberg.

Why Did Markets Get Hammered Yesterday?

First, most markets are closed today in honor of President Bush, or "Daddy Bush," as we call him in Texas. 

The New York Stock Exchange (NYSE:ICE) and Nasdaq (NASDAQ:NDAQ), will be closed, while SIFMA recommended that bond markets should close, meaning the 10-year Treasury note could see limited action. CME Group (NASDAQ:CME) will also shut down trading of futures and options products at 8:30 am ET, though energy and metals futures will have a regular session.

The theories being presented for yesterdays "crash" are among these. My sources are Barron's and CNBC. Also some analysis available from Schwab. Personally, from a technical stand point, the market was showing weakness anyway, even with Monday's short-lived rally, and these issues just became reasons to trigger big money movements. 

  • The supposed trade truce between China and the U.S. began to look more like a vague agreement to do nothing concrete. A Sunday night rally in S&P 500 futures that topped 2 percent got wiped out by midday Tuesday.
  • The first inversion of any portion of the Treasury yield curve in more than a decade awoke the specter of a recession, while the relentless flattening of the slope elsewhere sent financial shares careening to the worst day since February. On Monday, JPMorgan Asset Management said cash will likely outperform equities.

  • Technical levels buckled, then broke. The 50-day average in the S&P 500 was first to go, then the 200-day got obliterated. “There was some forced selling as we got to important technical levels,” Tom Essaye, a former Merrill Lynch trader, said. “It wasn’t a specific event that caused it, it’s just been building all morning.”

  • Angst that the housing market is ill resurfaced. Toll Brothers, one of the high-end builders, posted results that pointed to softening fundamentals.
  • Momentum names from Square to Advanced Micro plunged the most. Apple didn’t help. Another iPhone supplier cut forecasts after the close Monday, the latest in a string of cautious pre-announcements that suggest the tech giant faces slowing sales.
  • Geopolitics lingered in the background, with NATO and the U.S. Secretary of State issuing concerns about Russia’s compliance with the treaty on nuclear forces.
  • The never-ending Brexit negotiations joined the list of worries after the U.K prime minister’s government was found in contempt of Parliament after refusing to release the attorney general’s legal advice on the divorce, raising prospects for a potential “hard” exit.
  • Forced selling added to the woes. According to Charlie McElligott, cross-asset strategist at Nomura Securities, trend-following quant funds are in the process of shedding over $50 billion in notional exposure to U.S. equities on Tuesday.
  • JPMorgan Chief Executive Jamie Dimon said at an investor conference that he saw the fourth-quarter trading environment as flat, adding to woes in the financials.
In reference to the yield curve inversion, I would always try not to read too much into any one number, however, and overstate its predictive ability. There have also been several occasions when a yield curve inversion was not followed by a recession, and the two-year and 10-year yields haven't actually flipped.

Click for larger version

So while today's moves don't necessarily mean a recession is coming, the market's reaction shows just how scared investors are that one might be.

I'll be on the road for a few days, but will try to keep everyone updated as time permits. 

Tuesday, December 4, 2018

Markets Were Up. Is it Time to Celebrate?

Just hold your horses there buddy. Markets may open slightly lower this morning. But, someone is having a party. As summarized by Barron's last night:
Jubilation. Stock indexes worldwide followed up one of their best weeks of trading in seven years with another day of gains. President Donald Trump and his Chinese counterpart Xi Jinping agreed a three-month trade war ceasefire at Saturday's dinner meeting, giving investors optimism that it's just the first step in de-escalating a conflict that has weighed heavy on stocks in recent months.
But none of the indexes held their opening prices yesterday. By noon they'd given up almost 200 points from the open.  Bad sign or good sign? Time will tell. Maybe it was the big money guys and gals covering their short positions. Hard for us little guys to know.

I do know not to get to "jubilant" and go crazy here. While I did move some cash into a dividend paying stock ETF (SCHD), I did not go hog wild. Remember, pigs get fat, hogs get slaughter. 

I looked to move into some blue chips that pay dividends, in case this is not an uptrend and if the market goes sideways again for a time, I'll pick up some dividends along the way. I'm waiting for more confirmation before I go with the growth hi-fliers. But that's just me. 

I talked with a "Professional Financial Advisor" last week for over an hour who would have me in 70 percent stocks and 20 percent bonds and 10 percent "alternatives" (like gold) all the time. I'll repeat: ALL THE TIME. Bull markets, bear markets, side-winders, ALWAYS BE FULLY INVESTED. Just re-balance your portfolio and you'll do fine. While he's laughing all the way to the bank with the fees he's collected from me...

This is the way they operate. I've only met one (Ken Moraif) so far who'd actually get you out of the market and into cash or bonds in a bear market, rather than watch his client's portfolios go down an average of 37 percent (the average bear market). He can't time the markets better than anyone else, but a 10 percent loss is better than some bear markets that are 50 or 60 percent losses. He had all his clients in cash during the 2007-2009 bear market for 18 months.
Back to present reality, according to the futures outlook, markets look to open lower this morning. And note the last bar on the right. It's red. We might must wait for it to turn green.  While the weekly SPY chart looks a bit bitter, it's only been one day. 

Sunday, December 2, 2018

Temp Trade War Truce Called: Now What

Futures markets were up last I checked. The Dow E-Mini was up 400+ at 8:30 CST. the S&P 500 E-Mini was up 44. 

Very briefly, from Barron's. 

Trump and China Called a Truce in the Trade War. Now What?

From Investor's Business Daily:

I wouldn't use the word "skyrocket", but tomorrow should be interesting. My suggestion, don't buy at the open. Wait to see what happens.

Random Thoughts for the Day

How can we solve racism? Quit talking about. Quit making it the most important issue. Not everything is about race. 

Sunday morning news: U.S. President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days as the world’s two largest economies negotiate a lasting agreement. (Maybe that that should have been the lead.)

When you get into a trade, start looking for signs right away that you are wrong. If you see them, then get out before your stop is hit. When in doubt, get out.

Call someone. Have a voice conversation. 

Pigs get fat. Hogs get slaughtered. Don't be greedy. 

Government-run (single payer) health care is not good idea. How's the post office and VA doing? How are most government-run programs going? 

Saturday, December 1, 2018

Weekly Market Wrap and a Challenge to You

When I was in the Air Force during the First Gulf War, George H.W. Bush was my Commander-in-Chief. Rest in peace. He was a good C-in-C. Second only to Ronald Reagan, who took a demoralized military and made us proud to wear our uniforms again.

President Bush had four principals he followed as Commander if he had to go to war: 1) It was a last resort, 2) Form an overwhelming collusion, 3) Go to war with overwhelming force, and 4) Have an exit strategy. He stuck to all four. It was called the Powell Doctrine

In other news this week, markets were up. Investor's Business Daily called it the best weekly raise since March. They changed their market watch from "market in correction" to "confirmed uptrend." This indicator is worth watching, but aren't the only indicators out there. 

IndexNov 23Nov 30+/-+/- %
S&P 500
- 103.71+ 4.93
+ 159.03+ 2.32
+ 1252.51+5.15

Just because IBD changes tune, don't throw caution to the wind. Dip your toes into the water first. Follow your plan. You do have a plan, right? If you don't, keep your money buried in the back yard. It will be safer; though inflation will burn it all up in 10 years. Think of this: You put $1,000 in a bucket in your back yard 10 years ago. That buys you about $800 worth of stuff today. That's not my plan. My plan is for my $1,000 today to be worth $1,800 (assuming 6% growth) -- and that's without saving any extra. 

If I add just $1,200 to that each year: $18,000. Now let's say that I have $1,000, I'm going to earn the average market rate of about 8 percent a year, and I'm going to save $5,000 a year. Know what that's worth after 20 years? About $200,000. 

You feel me now? Pass by the Starbucks and start now.

Here's the overall market as of yesterday. I don't think there is anything wrong with waiting until all the bullshit politics are over this weekend and the markets have a chance to shake it out. 

But the bottom line: If here are more buyers, the market goes up. If more want to sell, the market goes down. I can make no recommendations. Neither legally nor ethically, excpet for this: If you're in the market, stay. If you're out, dip a toe in. 

SPY Weekly. Click for larger version

What I'm reading today:

Wall Street Breakfast: What moved markets this week
Investopedia: The importance of a trade plan
Barrons: The Best Reason for Optimism? The Meeting of Trump and Xi

Investor's Business Daily: Pelosi: Republicans Only Win Elections When They Cheat

I challenge you to watch this video five times over the next five days. That's 10 minutes a day.

Friday, November 30, 2018

TV: What a Waste of Time

At least is was somewhat entertaining. Normally for lunch I'll turn on a re-run of Big Bang or Last Man Standing, or some such trash, for some good laughs -- or at least lighten the day.
At least Jon Stewart was funy
At least Jon Stewart was funny. 
Today, it was the talking heads on Fox Business and CNBC. I want their job. Basically they all had to say the same thing. "This might happen...But then this might happen... But then it might not...And if this happens, who knows?" Just from three guys and gals, who are supposedly "experts" in their field. 

Guess what they concluded? Markets would close up, not much change, or a small rally at the close in anticipation of this weekend's meeting. They were a third correct. Pretty good, thirty-percent odds. (It closed with a very small rally, except for the last 30 minutes. Oops)

Rich (or wealthy, or the well-off, or happy, or successful)  people don't watch TV. Ask Gates or Buffet. RAFB. 

Now, I want to know how to I apply for a job where I really don't know what is going to happen? I could easily do this.

Even our weather forecaster has a better idea, though not much. Today was supposed to be sunny. Guess what? 

Slow Day?

Not much happening in the markets today. I guess everyone is waiting on the G20 which starts tomorrow, and of course the meeting between President Trump and China’s President Xi Jinping over the on-going trade wars. Can there be an agreement? My prediction (which is actually a guess), is that they'll come up with some meeting of the minds, which would be in everyone's best interest. But both are tough negotiators. So it will be interesting. 

Of note was the jobless claims report
Initial claims are up for a third straight week, 10,000 higher in the November 24 week to a 234,000 level that is outside high estimates for 228,000. The 4-week average is up a sizable 4,750 to 223,250 which is suddenly the highest reading since July. There are no special factors distorting today's report. 
Also moving higher are continuing claims, up 50,000 in lagging data for the November 17 week with this 4-week average up 20,000 to 1.668 million. This reading is coming up from a 45-year low in late October at 1.635 million. The unemployment rate for insured workers is unchanged at 1.2 percent, which is very low but up 1 tenth from a month ago.
Unemployment claims do appear to be shifting higher which doesn't point to another month of outstanding strength for the November employment report.
If you can decipher that, more power to you. All it may mean is the Fed may soften its stance on raising interest rates again. But don't count your chickens yet. 

On another note, I did a couple of trades in oil futures (Feb 19 contracts) this week, so I'm up about $1,400, so I'll take the rest of the day off. I'll detail these trades this weekend when I do my market wrap.

Other than that, Wall Street is usually -- emphasis on usually -- quiet on Friday afternoons, so I suggest you find a good book to read. 

Thursday, November 29, 2018

U.S. Top Oil Producer, Thanks to Obama

You read that right.

The U.S. is now the largest oil producer in the world, according to the EIA, producing some 15 million BOE per day, surpassing Russia and Saudi Arabia. (Remember back when Jimmy Carter said in 1979 the answer to our energy problems was to wear a warmer sweater...but you probably don't. He actually said this on national TV).

The United States is the top oil-producing country in the world, with an average of 14.86 million b/d, which accounts for 15.3% of the world's production. This is down from 15.12 million b/d in 2015, but it was enough to land the United States in the No. 1 spot, which it has held for the past four years running. (Source: Investopedia.)

Guess who takes credit for it? Granted, this increase in production began in 2012, but only because of private industry and the fact that the price of oil was at nearly all-time highs. And it dipped in 2016 because of Obama's anti-oil policies! 

But here he is again

Former President Barack Obama sure likes spiking footballs that others scored touchdowns with.
While talking at Rice University’s Baker Institute, Obama decided to take credit for the fact that America became one of the top oil producers in the world.
“I was extraordinarily proud of the Paris Accords because, Look, I know, I know we’re an oil country and we need American energy,” Obama said, “And, by the way, American energy production. You wouldn’t always know it, but it went up every year I was president. And that whole, suddenly America’s like, the biggest oil producer and the biggest gas — that was me, people…”
Obama continued by proclaiming that he did great things for the economy while he was in office and said that he should be thanked for it.
I for one, am not thanking him for anything. He tried to curtail energy production at every step in favor of his crony solar and wind companies, and restricting oil production on federal lands and off-shore. 
The arrogance of the man never ceases to amaze me. 

Wednesday, November 28, 2018

Fed Chair Speaks; Market Reacts

I wish I could give a speech and have the market go up like it did about that time. And not just one market, but curriences, gold, etc. All except for oil, which had the opposite reaction.

But it was a busy day on the economic calendar. Here's a recap, if you can get through it all.

On the negative side, new home sales were down. Not unexpected with mortgage rates going up. This is an indicator to watch. The consensus was 575,000, and the actual was 544,000.

Two wildcard components are slightly more exaggerated in the third quarter's revised GDP data while readings on the consumer and housing are mixed. At the headline level, the second revision to third-quarter GDP is unrevised at a very strong 3.5 percent annualized growth rate but inventories, contributing 2.27 percentage points to the total, added a little more than the first revision while net exports, subtracting 1.91 points, pulled down GDP by a little more.

Consumer spending's growth rate of 3.6 percent is 4 tenths below the first estimate and 1 tenth below Econoday's consensus with its contribution nearly 2 tenths lower at 2.45 points. Still this is the third straight contribution in the mid 2 point range. Residential investment pulled down third-quarter GDP but, at minus 0.10, slightly less than the first estimate.

Business investment slowed sharply in the third quarter after sharp tax-cut driven gains in the first half of the year but still contributed 0.35 points to the quarter which is up from the first estimate's marginal contribution. Government is the final major component and, at 0.44 points, contributed a little less than the first estimate.

Inflation wasn't a risk in the third quarter with the GDP price index unchanged from the first estimate at a 1.7 percent rate. Year-on-year, this reading has been trending higher but did dip 1 tenth in the quarter to 2.3 percent.

Though consumer spending was strong in the third quarter, it was an outsized build in inventories that proved to be a decisive plus. Whether the inventory build will extend to the fourth quarter is uncertain as is the nation's trade situation. Initial data on October goods trade, also released this morning and which will be an input into fourth-quarter GDP, shows unwanted deepening. In the end, however, consumer spending will be the fourth quarter's most important input and will reflect the success or failure of the holiday shopping season.

Consensus Outlook

The second estimate for third-quarter GDP is expected to come in at a 3.5 percent annualized rate which would be unchanged from the first estimate. Consumer spending is expected rise at a 3.7 percent pace, a bit less robust than the first estimate's very strong 4.0 percent. Inventories were a central positive in the first estimate with trade and residential investment major weaknesses. The GDP price index is seen unchanged at 1.7 percent.

All in all, not bad. Chart is neutral, but getting ready for a change I think. Toss a coin whether it's back in buy territory or not.

Tuesday, November 27, 2018

The Big Challenge of Life

Here’s the big challenge of life: You can have more than you’ve got, because you can become more than you are. That’s the challenge. And of course, the other side of the coin reads: Unless you change how you are, you’ll always have what you’ve got.” – Jim Rohn

An excerpt from The Nature of Personal Reality, Jane Roberts, 1974

Experience is the product of the mind, the spirit, conscious thoughts and feelings, and unconscious thoughts and feelings. These together form the reality that you know.

The Nature of Personal RealityYou are hardly at the mercy of a reality, therefore, that exists apart from yourself, or is thrust upon you. You are so infinitely connected with the physical events composing your life experience that often you cannot distinguish between seemingly material occurrences and the thoughts, expectations and desires that gave them birth.

If you have strongly negative thoughts, these actually form bars between you and a more fulfilling life. Still, you often look through the bars, not seeing them. Until they are recognized they are impediments. Even obstacles have a reason for being. If they are your own, then it is up to you to recognize them and discover the circumstances behind their existence.

Your conscious thoughts can be great clues in uncovering such obstructions. You are not nearly as familiar with your own thoughts as you may imagine. They can escape from you like water through your fingers, carrying with them vital nutrients that spread across the landscape of your psyche – and all too often carrying sludge and mud that clog up the channels of experience and creativity.

An examination of your conscious thoughts will tell you much about the state of your inner mind, your intentions and expectations, and will often lead you to a direct confrontation with challenges and problems. Your thoughts, studied, will let you see where you are going. They point clearly to the nature of physical events.

What exists physically, exists first in thought and feeling. There is no other rule.

Consciousness proceeds form. There is no other way. If you admire a great piece of art, amazing architecture, a beautiful composition of music, they first began as a thought. Not the other way around.

You have a conscious mind for a good reason. Why does the goose fly south for the winter? Because it’s a goose. But you are not at the mercy of unconscious drives unless you consciously acquiesce to them. Your present feelings and expectations can always be used to check your progress. If you do not like your experience, then you must change the nature of your conscious thoughts and expectations. You must alter the kind of messages that you are sending through your thoughts to your own body, to friends and associates.

Each thought has a result, in your terms. The same kind of thought, habitually repeated, will seem to have a more or less permanent effect. If you like the effect then you seldom examine the thought. If you find yourself assailed by physical difficulties (make sure you see a physician to rule out an actual physical illness), however, you begin to wonder what is wrong.

Sometime you blame others, your own background, or a previous life – if you accept reincarnation. You may blame God or the devil, or you may simply say, “That is life,” and accept the negative experience as a necessary portion of your lot.

You my finally come to a half-understanding of the nature of reality and wail, “I believe I have caused these ill effects, but I find myself unable to reverse them.”

If this is the case, then regardless of what you have told yourself thus far, you still do not believe that you are the creator of your own experience. As soon as you recognize this fact you can begin at one to alter those conditions that cause you dismay or dissatisfaction.

No one forces you to think in any particular manner. In the past you may have learned to consider things pessimistically. You may believe that pessimism is more realistic than optimism. You may even suppose, and many do, that sorrow is ennobling, a sign of deep spiritualism, a mark of apartness, a necessary mental garb of saints and poets. Nothing could be further from the truth.

All consciousness has within it the deep abiding impetus to use its abilities fully. You see and feel what you expect to see and feel.

This does not mean that effort is not required, and determination. It does mean you are not powerless to change events and that each of you, regardless of your position, status, or circumstance is in control of your own personal experience.

Markets meandered today. Not much excitment

There are all sorts of headlines out there as to why the markets didn't do much. The Fed didn't spook anyone. The trade "war" isn't resolved and so not much news there. 

It's really quit simple. Buyers and sellers were pretty much in equilibrium, without much pressure on either side. I'm waiting for oil and/or gold to make a strong move, but not much there either. Unless you count the bear market in oil over the last six weeks, but it will turn at some point. And gold did drop about $10 per ounce today. That's less than 1 percent.

The consumer confidence index, at 135.7 in November, continues to hold in the mid-130s area and not far from the all-time high of 144.7 reached in 2000. November's strength is in the present situation which is a favorable indication for holiday spending, at 172.7 for an 8 tenths gain from October. Expectations, however, eased by 4.1 points to 111.0 as optimism over future job and income prospects is easing slightly. Yawn. 

Housing prices where flat at .2% year over year. Another yawn. 

In the meantime, I'll enjoy the pleasant weather here in Austin, TX. Forecast is for mostly sunny and mid-70s for the next five days. 

The Markets Up! The British Are Coming!

Don't take one day of a 354 point rise in the Dow to start the celebrations. (The markets may open flat today -- or not -- based on the overnight futures). 

Patience is the key to any good investment strategy. 

Most the the increase was because of Amazon. Who cares? How about the other 499 stocks? Hope you get my point.

I've never cared about the FANG stocks much. So maybe I missed on the big upswing. But I'll bet I miss on the big down side. What goes up fast goes down faster. 

Here's a weekly chart of the boring Russell 2000 Ishares ETF (IWM), which represents 2,000 smaller companies. Nothing to write home about yet. keep your power dry.

Sunday, November 25, 2018

Markets for Monday, Nov 26

I'll be honest. I don't have a clue where markets are going. Futures markets opened at 5 pm CST and it's been like watching paint dry.

The indexes are up slightly, which might bode well, but the London and Frankfurt markets haven't woken up yet. If you have a mind to get up at 3 am CST to take a look, go ahead. 
Oil at 9:30 pm 11/25/2018
Oil is flat at 50.79 a barrel as I write this. Gold is boring also. The dollar is up, so that should put pressure on the Euro. And the British pound, which don't seem to care much.

Small caps might bear watching later. The Russell 2000 futures show a little action. Dow futures are up about 200. 

But generally speaking, watch your favorite show and have a good night's sleep. Be up around 7:30 am CST to have another look. Might be some action then. 

Immigration is a defining economic issue of our time

If we stick to economics only, and don't stray into ethical, political or other types of issues -- impossible to do since half the country is brainwashed -- then the argument for or against immigration depends on both the specific economic environment and the point of view of the individuals involved.

The bottom line in economic law: as supply rises, prices come down. This hurts someone. 
From U.S. News and World Report:
A MASSIVE IMMIGRATION study...attempts to break down whether mass influxes of foreign workers ultimately are a net boon or burden for the domestic economy.
The answer: It's complicated.
The National Academies of Sciences, Engineering and Medicine released a roughly 500-page report that pooled data from more than a dozen individual economists, professors and immigration-minded specialists. (My note: probably got 500 opinions). It says America's immigrant population climbed by more than 70 percent between 1995 and 2014, when it stood at 42.3 million, accounting for roughly 13 percent of America's total population.
The study's findings ultimately suggest immigration is neither 100 percent beneficial nor completely detrimental to the country's economic and financial well-being. And they've helped fuel immigration arguments across the political spectrum.
But what a minute. As usual, are we talking legal or illegal immigration? We don't know, because the media today lumps it all together. If you're against illegal immigration, your a racist. If you're against legal immigration, you're a racist. If you're against immigration, you're a racists. 

But that's left-wing propaganda. The hard, cold message is that illegal immigration is a negative affect on our country and our economy. This might be hard for many Americans to process, but anyone who tells you that immigration doesn’t have any negative effects doesn’t understand how it really works. When the supply of workers goes up, the price that firms have to pay to hire workers goes down. Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent. Even after the economy has fully adjusted, those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants. 

Good for business, I guess. Bad for workers, especially low-skilled workers who need a place to start. 

Here's some of your favorite politicians in the 1990s (before it became popular to support open borders): 

Bill Clinton: 

Barrack Obama 2006 on the border fence“The bill before us will certainly do some good,” Obama said on the Senate floor in October 2006. He praised the legislation, saying it would provide “better fences and better security along our borders” and would “help stem some of the tide of illegal immigration in this country.”


And here's my favorite dumb-ass headline for the week, month, year, from the Atlantic (doesn't any right-minded people even read this tripe): 

There Is No Immigration Crisis

My take: Enforce the laws. Don't like them. Change them. 

We Need More Government Over Sight -- My Holiday Rant

Ah, Thanksgiving. Where many Americans don't have a clue what to be thankful for. Hey, try living in a third-world (or even second-world) country first.* Then you'll thank God you are an American, whether 8th generation or 1st. 

*Before you say I don't know what it's like to live in other countries (or even visit there) try Thailand, Panama (and not the beach), Turkey, Italy, Chile, Ecuador, etc...). I would add Germany, but there weren't third world when the wall came down in 1989, but they're getting there...). Try sitting on top of an M-113 in the jungle -- then have a little Thanks.  

Not to offend anyone, or even some, it is a holiday for families to come together. I have nothing wrong with that. Except for all the stories hear of the dreaded holidays spent with dysfunctional families. If yours isn't celebrate. Otherwise go to South Padre island. 

But back to my own rather nice get-together before the Turkey was served up, politics inadvertently came up -- my mistake to start a casual conversation -- as I was reading the Austin Statesmen American (or it is the American Statesmen? I really don't care, as I don't read the rag anyway.) But I let slip a quote from reprinted article about how Republicans want less government on  just about everything ... well can't remember which they wanted more or less of...probably something about Turkeys. 

I mentioned that was was a left-leaning publication, so it probably had some bias. 

"I'm a Democrat," says an attendee a the party, as if it was a badge of honor. Which answered most my questions.

"Oh. OK." Was my response. As far as I was concerned, end if story. But I had to ask: "So you believe in more government?" In reference to the article.

"I believe we must have government oversight."

"More oversight into what?"

"Consumer protection. We need more consumer protection."

"You do know I'm a Libertarian?"

"So you believe in not having any government," she stated. Statement, not question. 

"Or course we need government." But what more could I say? This very nice lady was so misinformed that I really didn't see the purpose of any future discussion, especially on T-Day. This supposedly well-education woman actually thought that being Libertarian meant no government. As if we're gun-toting red-necks from our compounds in the woods. 

Of course Libertarians believe in government, as the Constitution calls for it.  

But the morale of the story is that the average American is not very informed, nor do they have a long memories. It was just 10 to 15 years (2005) ago Republicans had congressional hearings about the need for more over-site on the housing market, namely Freddie and Fannie, but Democrats said no, "Everything is fine as long as poor people can buy homes they can't afford." 

We all know how that worked about. 

Even before then, almost every democrat wanted stronger enforcement on illegal immigration, and --- wait for it -- border walls, or I think they called them fences. I think they jumped the fence once they realized who those people were. Voters, and lots of them. 

But back to the story; she obviously believed that to vote Democrat was to protect the consumer. Believe me, Barack Obama, Nancy People, and Chuck Shumer don't give a shit about you. Nor does Paul Ryan or Mitch McConnell. Nor does that new socialist from New York, Alexandria Ocasio-Cortez’s, who only cares where her first rent check is coming from, since she actually hasn't had a real job yet. (Sorry to you food servers, I didn't mean it like that.)

These people don't stand for you. They stand for power. And how to keep their power. They'll do anything to get re-elected. Doesn't matter which party they belong to. Shake up their system and they get pissed (oops, along comes Trump.) 

In future posts I may point out some these glaring facts, if you have a mind to read them. They do affect your net worth. You believe what you believe and you're not going to change that unless it affects you, your family or your pocketbook -- and try to tell me differently.

In the meantime, we'd better start getting ready for tomorrow's markets, because that affects my pocket book. And if you're along the for the ride, it affects yours. 

But please read my disclaimer first (in the upper right) about not being able to provide any "legal" advice. That's the politicians protecting their "rights" to provide that advice. Like I'd believe them. So screw the politicians. You know they have a rule for everything, including how you're supposed to apply your mailing label on a package. Look it up.

So now comes the next "holiday." Spend, spend, spend, Keep the economy growing. You do know that Jesus was born in the spring?

In the meantime, be nice to each other.

Friday, November 23, 2018

Market Wrapup: Sellers in Control

Not a pretty week for the bulls.
The last time crude oil went into a bear market? It began in June 2014. Oil tumbled from around $107 to a low of just above $26 in January 2016. 
U.S. equities did not fall as much. But the S&P 500 suffered at least three intermediate corrections of 10% to 15% over that time frame. The S&P 500 eventually hit new highs in July 2016.
Volume on Friday fell sharply vs. Wednesday as Wall Street closed its session at 1 p.m. ET, rather than the usual closing time of 4 p.m. But compared with the turnover at 1 p.m. on Tuesday (roughly 1.4 billion shares) and at 1 p.m. on Wednesday (981 million), Nasdaq turnover also ran lower at that hour. 
IndexNov 16Nov 23+/-+/- %
S&P 500
- 103.71- 3.79
+ 159.03- 2.19
+ 576.08- 2.29%

An interesting point for me this week is that our local ABC affiliate, on their 5 pm news, finally ran a news story (rather than a 30-second "Hey, the market is down") story on the Wednesday broadcast, rather than jut flashing numbers between commercials. After the Dow Jones was down nearly 2,000 points. 

My point for you: Turn off the damn mainstream media. Another point is that when these dunderheads start paying attention, it's too late. (Or maybe looking for buying opportunities). Warren Buffet: Sell on greed, buy on fear. 

If you're going to put your hard-earned money into markets, learn about markets. Otherwise, find a money market fund. 

Most people -- maybe 80 percent or more -- lose money in the market. The first pillar of any successful life is philosophy, which means having the knowledge to make better decisions.  

Please note this. Do more than just note it. Write it down. And do it. Phil says "While you're waiting, you're learning, reading, studying, and building your watchlist." 

Start with these books: 

Recommended reading list (Start with the first and work you way down. Already read them? Read them again. 

Wednesday, November 21, 2018

Work is Not a Four-Letter Word

There are seven million job openings, waiting to be filled. Mike Rowe, the Dirty Jobs guy, thinks we need to change the way we think about work. 

His speech at the Independent Women's Forum is worth watching. Listen closely. (Hint: you can skip to 16:00 to get the real message).

"What we need to do in our country is change the way people think about work. We have to change the perceptions, the misperceptions, the myths, the stereotypes and the stigmas that are affirmatively keeping millions of kids in this generation from pursuing the millions of opportunities currently in the offing...We have to look at our language.  We have to look at our messages...We need to tell better stories of men and women who master a trade, and then go on to succeed. We have to put these people on a poster. We have to celebrate them.  We don't need American idols; we need American icons. Icons of work...We need to stop talking about education in a cookie-cutter fashion that leaves us with no choice but to conclude the best path for the most people is the most expensive path.  Friends, this is nuts...Seventy-five percent of [our] available jobs don't require a four-year degree. They require training."

Tuesday, November 20, 2018

Market Sell-Off Continues

Markets are down again today. After gapping down at the open, the DJIA was down more than 500 points at 1 pm CST, and both the Nasdaq and SP 500 are down about 2 percent. 

Oil (WTI) was down $4 a barrel to less than $53. It hasn't been this low since last November. 

As I indicated yesterday, the Nasdaq fell 3 percent below its 200-day moving average. The SP 500 and Nasdaq hit that level today. 

However, the SP 500 index is still holding above the October low, which is a key level for chart watchers.

This is not a market to be buying. The February 2018 low on the QQQ (Nasdaq ETF) was about 150. Current level is about 159. 

What happens next is anyone's guess. Patience is the key for now.

Monday, November 19, 2018

NASDAQ Enters Bear Territory

Update at 3:00 PM. Market close. Short rally of a few points reversed before the close. S&P 500 closed down 45, but off session lows. 

Update at 2:30 PM. Markets are showing small bounce after hitting supply zones mentioned below. 

Using the three percent rule on the 200-day moving average, the Nasdaq moved into bear territory this morning. 

Both the S&P 500 and DJIA are near this level, but haven't crossed over to bear status yet. There is some demand for the SPY at 267-268. If the prices bounces off in this zone, we may get a small bounce. No way to predict this of course. 

At this point, while I can't really make recommendations, it's probably safer to be in money markets right now. I sold off one ETF for a break even this morning and moved it to a money market that pays 2.08 percent. I tightened my stop on my SCHD dividend ETF to manage my risk. 

Chart of the Nasdaq QQQ ETF
Click to expand. Purple line is the 200-day MA for the QQQ ETF, which is a Nasdaq index fund.

Danger, Will Robinson

I suspected the state of personal savings were bad, and they are indeed. From USA Today: "Experts agree that for true protection from financial emergencies, it's best to sock away up to six months' worth of living expenses in the bank. For the typical household in a major metro area, that's about $23,000. But the average American has less than $4,000 in savings, while 57% of U.S. adults have less than $1,000 to their names."

I knew the savings rate was low, but this is a disaster waiting to happen. But is this really true? How can it be? When interest rates are held at artificially low levels (by the Fed) then individuals and business tend to save less and borrow more. This can create bubbles and crashes

When it comes to savings, depends on what your are counting, whether retirement savings or emergency funds or both. But the numbers are astounding. A great number of people are not prepared. 

A new study finds the median American household has $4,830 in a savings account. That's enough to cover minor emergencies and potentially even a few months of living expenses. Overall, between bank accounts and retirement savings, the median American household currently holds about $11,700, according to MagnifyMoney.

Almost 30 percent of households have less than $1,000 saved, MagnifyMoney finds, though the amount varies drastically by age. As of June 2018, millennials have less saved than baby boomers, because older Americans have had over three decades longer to save and larger salaries to work with.

But even with three decades of extra time, boomers have pitiful amounts of savings. Most of my own generation are going to retire poor.

Here's how Americans' median savings (non-retirement) breaks down by age:

  • Millennials (born 1981-1998): $2,430
  • Gen X (born 1965-1980): $15,780
  • Baby Boomers and older (born before 1964): $24,280
Other surveys and studies have found similar results. Using data from the Federal Reserve's Survey of Consumer Finances, SmartAsset found earlier this year the median American household had about $5,200 in savings. And according to a 2017 GOBankingRates survey, about 12 percent of respondents had between $1,000 to $4,999 in a savings account, while more than half of Americans (57 percent) had less than $1,000.

Americans may still owe more in debt than they save. The Northwestern Mutual's 2018 Planning & Progress Study recently found Americans now have an average of $38,000 in personal debt, excluding home mortgages. That's up $1,000 from a year ago.

If you fall into this category, isn't it time you took action to change. Today. Please see my recommended reading list to help you get started. 

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