Wondering why interest rates on treasury bills and notes are staying so close to zero? It's all about the insatiable demand for U.S. demoninated debt from the nations of the world whose own currency is so unreliable, they need more of ours. For those borrowing money, low rates are a blessing. For savers, it is pure punishment. Worse yet, there's even a chance that interest rates on safe, liquid, short term money could go negative soon, like in Switzerland and Germany.
Demand is also coming from major brokerages. Behind the sudden epic hunger for government debt is a rule change that has Fidelity Investments and other money-fund managers hustling to snap up short-term Treasurys. Listen in as Steve and Sinclair review an article in the Wall Street Journal, with facts and figures. In segment 3, Steve does an analysis of the new Nationwide Index Annuity, which he finds most people misunderstand. It is a 3 year index not a one year index, and is based on managed futures inde--not a simple annual reset of the S & P. The income rider comes without a competitive guaranteed increase. Steve brings up five points you should understand before signing on the dotted line.
The biggest landlords in the U.S. are being crushed under a mountain of packages, leading one large apartment operator to stop accepting deliveries and others to experiment with ways to minimize the clutter, according to the Wall Street Journal.
The moves are at the center of two colliding trends: an increase in apartment living and a surge in online shopping (can you spell Amazon Prime?). The result is a rising tide of packages with no good place to go. The onslaught has turned management offices of apartment buildings into de facto receiving centers as landlords grapple with recording packages, tracking tenants down to pick them up and finding places to store the parcels.Some have stopped receiving packages. Many tenants are saying they won't renew leases. Where's it going. Steve and Sinclair review.
The Journals says that managers can afford to enforce a few rules now while occupancy rates are high, but with more apartment construction adding to supply soon, they may not have the leeway. In the Q & A segment, Certified Financial Planner® Murray Titterington with IQ Wealth joins the A-Team to discuss the rise in Part B medicare premiums and how it may affect social security claiming.
Is the cost of rising health insurance benefits hitting the big delivery companies? According to the Wall Street Journal, FedEx Corp. is raising its fuel surcharge for the second time this year, jolting e-commerce companies, retailers and other shippers with price increases just as they gear up for the make-or-break holiday sales season.The Wall Street Journal says the increase, which takes effect Nov. 2, would add about $170 to the bill for shipping 100 shoeboxes. UPS’s surcharge would add about $200 to the cost of shipping the same 100 shoeboxes, the analysis found.
The increases are coming just in time for the holiday season. With fuel prices lowering, one would think delivery costs would be falling. But both Fed Ex and UPS are seeing their overnight delivery businesses sink like a rock because of email and instant messaging. And, with more home deliveries, more gas is burned. Could it be the cost of providing health insurance under Obama Care? Steve and Sinclair review. In the Q & A, Sinclair and Steve review several key points from the Mastering Money Retirement Workshop at the Museum of the West.
Today, Tesla is a brand name for cars but over a hundred years ago the prolific inventor Nikola Tesla predicted “an inexpensive instrument, not bigger than a watch, [which] will enable its bearer to hear anywhere, on sea or land, music or song however distant.” They're available at the Apple Store and Bestbuy.
The Yugoslavian born Mr. Tesla foresaw the transmission of electricity directly through thin air, particularly radio waves. Steve and Sinclair review an article by Christopher Mims in the Wall Street Journal on this technology's rapid progress using chips that re the size of a peel and stick price tag and will eventually charge your phone when you simply walk into the room. In the Q & A segment, real estate Attorney Christopher McNichol joins the A Team to discuss risks and opportunities in the purchase of tax liens as an investment.
In segment 4, Steve and Sinclair review the Mastering Money workshop held over the weekend with Steve and Gary Kaltbaum in Scottsdale.
Wondering how the stock market has climbed so high in the past six years, while the economy sits in the tank? Think low interest, leading to a gusher of borrowed money by corporations (bonds), who are turning around to buy back shares. Bingo. Add margin debt and the generosity of the Fed and here we are. In the past 12 months, companies in the Standard & Poor’s 500 have doled out nearly $1 trillion to shareholders in the form of both dividends and stock buybacks, the highest level since 2007. For years, hedge fund managers have been big proponents of share buybacks, even actively advocating for it. Now, though, they are viewing them with a more critical eye, says Sarah Max writing for Barrons. Worse yet, a handful of well known companies have borrowed over a trillion dollars in the first nine months of 2015--more than the U.S. deficit--and used the money to buy back shares in an attempt to boost their share price or make their slide look less discouraging. QualComm was one of them.Steve and Sinclair review a timely article by Sarah Max of Barrons on the subject. In the Q & A, Steve answers some hard questions on annuities and income planning.
England has already fallen officially in to deflation territory, the USA is on the verge. According to Jeff Cox writing for CNBC.com, the math is pretty simple: A lack of purchasing power for consumers has led to a lack of pricing power for companies. At a time when policymakers are hoping to generate the kind of mild inflation that would indicate strong growth, the reality is that DE-flation is looming as the larger threat. Declining prices often would be treated as a net positive by consumers, but when it gets prolonged and wages keep falling, income weakness is now affecting corporate and small business profits. How will it affect markets?
Though jobs have been added and have lowered the "U-2" unemployment rate, CNBC reports that most of the jobs are service related and not high paying. Restaurant workers, whose ranks have swelled by 376,000 over the past year (according to the Bureau of Labor Statistics), saw real pay declines of 8.9 percent for cooks, 7.7 percent for food preparers and 4.8 percent for waiters and waitresses. Steve and Sinclair review data from the U.S. Treasury, economists at Citi, and analysts at B of A Merrill Lynch. In the Q & A segment, Fox News Contributor and Money Radio talk show host Gary Kaltbaum joins the A-Team.
While most investors have feared inflation for years, the specter of deflation has begun to grip the global economy. England has officially slid into deflation as of last month. Job creation in the United States has taken a suspicious and surprising downturn. In August, the jobs report came in at 147,000. Typically, the number is revised after a month, and has been revised upward for most of the past few years. Analysts at Goldman Sachs have been very accurate on the revision estimates, and published a report predicting the jobs number would be raised to 210,000 or more. Instead, the final revision fell to 137,000, a nearly shocking revelation. Goldman is now saying that the economy is at a fragile tipping point and that the market crisis in emerging markets and Asia is not just a passing trend, but another wave of the 2008 derivative meltdown. Steve and Sinclair review reports from Goldman and Jeff Cox and CNBC. In the Q & A, estate planning attorney Richard Dwornik joins the A-team to review the five key elements of a solid estate plan.
Falling profits and increased borrowing at U.S. companies are rattling debt markets, a sign the six-year-long economic recovery could be under threat, says Mike Cherney writing for the Wall Street Journal. The Journal reports that Credit-rating firms are downgrading more U.S. companies than at any other time since the financial crisis, and measures of debt relative to cash flow are now rising. Analysts expect profits at large companies to decline for a second straight quarter for the first time since 2009. What does it mean to you as an investor, especially in or near retirement? Steve and Sinclair review and discuss the changing bond market, and how an S & P downgrade can cause a loss in a bond fund or Target Date fund, even if interest rates don't go up. In the Q & A, Steve and Sinclair review some of the most frequently misunderstood aspects of annuities--which ones lock up your money, and which ones don't.
Steve and Sinclair bring you up to date on the markets for a Monday.
Nick Grovich and Sinclair dig into the current dynamics of precious metals and consumer tips on dealing with coin dealers.
Nick's company does several million dollars a month in coins and is known industry-wide as one of the 'good guys."
Steve gives some consumer tips on annuities in segment 4.