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Money (27)

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The Winners And Losers Of A Cashless Society

Courtesy of: The Money Project

 

There is a global push by lawmakers to eliminate the use of physical cash around the world. This movement is often referred to as “The War on Cash”, and there are three major players involved:

1. The Initiators
Who?
Governments, central banks.
Why?
The elimination of cash will make it easier to track all types of transactions – including those made by criminals.

2. The Enemy
Who?
Criminals, terrorists
Why?
Large denominations of bank notes make illegal transactions easier to perform, and increase anonymity.

3. The Crossfire
Who?
Citizens
Why?
The coercive…

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The Trump Effect On Currencies

Courtesy of: Visual Capitalist

Rhetoric has already had an impact on currencies in a big way

Targeting companies or entire nations on Twitter is an unprecedented and controversial method of communication for a President-elect – but one can’t argue with its effectiveness so far.

In today’s chart, we take a look at Donald Trump’s rather unconventional form of “monetary policy”, and how it has potentially influenced the U.S. dollar and five other major currencies since his election in November.

Ready, Aim, Tweet

A preview of President-elect Trump’s “America First” directive can already be seen on Twitter.

Trump’s infamous account, which is…

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Admin

Paper Trading Is Obsolete

I don't actually embrace this headline.  In my experience, yes, emotions exist while paper trading.  It's merely that you can sleep at night knowing your bank account didn't go up in flames but that's just me.  It's also essential in my book that you determine what "type" of trader you want to be.  It's one thing to say you want to invest like Warren Buffett but just what does that entail?  Do you rally know?  It's also super easy to be sucked in by get-rich-quick ads and bloggers who entice you to sign up for their premium edition (none of which I recommend).  Don't underestimate the market.  It's NOT easy, even if you believe you've got a plan and everyone loses.  Everyone.  The trick is not to be fooled.  Ignore the…

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Admin

Don't Be Fooled The Bond Rally Continues

We’ve been bulls on 30-year Treasury bonds since 1981 when we stated, “We’re entering the bond rally of a lifetime.” It’s still under way, in our opinion. Their yields back then were 15.2%, but our forecast called for huge declines in inflation and, with it, a gigantic fall in bond yields to our then-target of 3%.

The Cause of Inflation

We’ve argued that the root of inflation is excess demand, and historically it’s caused by huge government spending on top of a fully-employed economy.  That happens…

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Admin

Seven Ways To Trade The Brexit Vote

Next week will be a historical one for both the United Kingdom and the global economy. On June 23rd the British people will decide whether to leave or stay in the European Union. Polls have been mixed over the last couple months, but the latest out show momentum for leaving, which is scaring the markets.

Loss of British sovereignty is the fundamental reason for leaving the EU, as many supporters want to take back control of U.K. borders in order to curb immigration. Those that wish to stay in the EU say there are severe short-term economic consequences that would make trade difficult and slow the economy. Even President Obama recently said that if there is a Brexit, the U.K. would go to the “back of the queue” in American trade deals.

While debate and speculation is running rampant, markets are watching the British Pound closely. Last week U.S. indices tracked and moved with the Pound tick for tick, showing that traders are very concerned about the upcoming…

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Admin

Business Loan Delinquencies At 2008 Levels

Energy defaults have been heavy on my mind as their Bankruptcies are expected to increase greatly in the second half of 2016.  I didn't even touch on farms and other exploding debt. Clearly I'm not alone in this concern.  It's not housing this time; it's much worse.  If rates rise, what will happen? Emphasis in bold mine.  Read on.

This could not have come at a more perfect time, with the Fed once again flip-flopping about raising rates. After appearing to wipe rate hikes off the table earlier this year, the Fed put them back on the table, perhaps as soon as June, according to the Fed minutes. A coterie of Fed heads was paraded in front of the…

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Admin

We're Shifting Fast To A Cashless Society

We talk about this subject at great length in my neck of the woods and oh boy, is it coming..........fast.  Now let's be honest here and let me ask a few questions.  How much cash are you carrying right now in your wallet? The last time you saw eight year olds selling Girl Scout cookies, did you have to pass them by with no bills in your pocket?  No thin mints for you!  How many purchases do you make per day in cash and how many times do you simply swiping your debit or credit card?  Do your bills come in the mail and get paid via the same method, or are they paid on the internet? 

Love it or hate it, cash is playing an increasingly less important role in society.

In some ways this is great news for consumers. The rise of…

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Admin

Where Money's Been Flowing

When first-generation ETFs launched in the 1990s—such as the SPDR S&P 500 Trust (SPY) and the PowerShares QQQ Trust Series 1 (QQQ)—lead this year's outflows, that is a sign that institutional investors are scared. These first-to-market ETFs have the ample liquidity that big institutions tend to love, with many trading more than $500 million in volume a day. While newer ETFs that may do the same thing or more for cheaper have been launched in the intervening years, early ETFs still tend to curry favor with large investors that value liquidity. These investors tend to be more tactical, and thus outflows from these ETF stalwarts are a bearish sign. 

Photographer: Balchunas, Eric

U.S. Treasuries of all maturities are raking in cash

According to…

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Admin

The Fall Of FICO Standard

Having worked in the mortgage field for a few decades, the scoring of FICO (or disgust of it) definitely caught my attention.  Some of the credit-scoring travesties are given.  In my opinion, they can't make changes fast enough......or merely admit you're only going to lend to the rich.  That's what it's coming down to; slowly but surely.

Naturally, lenders of all stripes have been evaluating credit for far longer than FICO (originally founded in the ’50s as Fair Isaac Co.) has existed. In fact credit rating standardization wasn’t a priority until the 1970s with the passage of the Fair Credit Reporting Act — and FICO data has only been widely available to lenders since 1987. The FICO scoring system (the 300-800) as we sort of understand it today has only existed since 1989 and it  wasn’t until 2003 that consumers had legal access to it.…

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Admin

China On Margin; Oh My

China traders on margin accounts is a thought both wildly exciting, yet utterly terrifying at the same time.  Even more so in the wake of $10 billion in fraudulent currency trades discovered just last week. 

Chinese markets have had a long standing reputation as being nothing more than unmonitored casinos plagued with corruption and insider trading.  What could possibly go wrong?

According to the WSJ, the Hong Kong and Shanghai stock…

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Admin

Value Stocks Hit (or miss) The Mark?

After 5 years of a bull market, the only place left to invest is in value names”
“The best protection in this volatile market are value stocks”

How reliable are these sorts of claims?  Those promoting the approach offer lists of stocks that are considered undervalued typically when they meet such financial criteria as low price/sales, low price/book value, or high, stable and growing dividends. However, they rarely attach timeframes or price targets.

So I decided to do some “back testing”.  By searching the term “value stock lists”, I gathered a small random sample of such lists published in 2012-13; stocks in these lists met one or more of criteria that qualifies them as “value stocks” at the time.  I then compared their stock price on the publication date with that of twelve months later; as a benchmark, those changes were…

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Admin

Which Is Wrong? Bonds Or Stocks?

With so much money flowing into bonds and treasuries (TLT shown) in 2014 while the stock market rose, one must wonder..........which one is going to give?  (click chart to enlarge)

Certainly it would seem not everyone believes the economy is strong enough to support future earnings and rising profits.

Is the five-year bull run finally running out of steam?

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Admin

Sadly Consumers (and Wall Street) Haven't Learned

Americans lust for things they cannot afford continues as credit usage has rebounded since the height of the credit crisis however, with the Fed's current zero interest rate policy (ZIRP), the ongoing use of credit is not necessarily a thing for concern.

After all, if you were able to refinance your home from 6% down to 3%, that's a good thing, right?  Ditto for your credit cards which may have been 9.9% prior to 2008 and now down at much lower levels.  Indeed ZIRP has aided corporations and individuals to grab historic, once-in-a-lifetime opportunities to restructure existing debt and issue new debt for acquisitions for almost nothing.

In that respect, I guess Obama's statement "we're much better off than we were" would ring true here.

What does bother…

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Admin

Stock Buybacks; Sustainable Smoke And Mirrors

My simplistic view of the stock market, the one my muddled brain is able to wrap around, is to imagine that of the waterfalls at the Continental Divide at Glacier National Park in Montana.  Numerous rivers, all converging into to one.  Hedge funds, pension funds, investment firms, your own 401k, option flows, you name it.........and share buybacks.

Throughout the recovery, the amount of cash being held on corporate balance sheets was in some instances, astounding, leaving many investors wondering if/when the cash would be deployed. 

Well if you haven't noticed, they have been deploying more and more.  Just imagine the many streams you see in this image to the right.  One is M&A which can be the acquisition of a company to compliment ones existing…

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Admin

NFA Bars Yu-Dee Chang and His Associated Brokers

Ouch.  I'd hate to go to work and find out the office was being closed.  Wait!  I did (!) however it was downsizing, not misappropriation of customer funds. 

National Futures Association (NFA) has effectively barred Vision Financial Markets LLC (Vision), a futures commission merchant Member of NFA, and Ace Investment Strategists LLC, a commodity trading advisor Member of NFA from membership. NFA also has barred Ace's principal, Yu-Dee Chang (Chang),…

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Admin

EU To Investigate Offshore Corporate Tax Havens

Being reported in the Wall Street Journal, the EU to Investigate Corporate Tax Codes in Ireland, Luxembourg, Netherlands after criticism of their tax rates for Corporate offshore havens.  AAPL specifically being mentioned in the news as theirs use of favorable Irish tax laws allowed it to pay just a 3.7% tax rate on non-U.S. income during its last fiscal year. That, in turn, is a big reason $132.2B of Apple's $150.6B  cash balance at the end of FQ2 was offshore.  Tim Cook was grilled by Congress last year over Apple's offshore tax payments;…

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Admin

Small Business Growth And Outsourcing

We tend to think of outsourcing as being overseas call centers and phone assembly in China however that's not necessarily the case anymore; especially when it comes to small business.  One has to wonder just how much small businesses think of outsourcing as a business advantage or requirement in order to grow.  This cute slideshare laid it out in simple, easy to understand terms and got my mind to thinking...........

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Admin

Federal authorities are examining a series of well-timed trades made by the golfer Phil Mickelson and the gambler William T. Walters, people briefed on the investigation said, focusing on trading in two different stocks. The authorities are also questioning what role, if any, the investor Carl C. Icahn may have had in sharing information about one of the stocks: the consumer products company…

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Admin

The Securities and Exchange Commission has touched off a major bureaucratic scuffle with its fellow financial regulators by proposing to, in the words of one Democratic aide, “rip the heart out of Dodd-Frank.” The SEC, following the wishes of one of its Republican commissioners, has initiated a turf war over which agency gets to monitor a key corner of the financial system.

At issue are so-called asset managers, companies like BlackRock, Fidelity and Pimco, who manage investments on behalf of individuals and groups through mutual funds and other vehicles. Asset management firms collectively control an astonishing $53 trillion in investor funds.

Historically, the SEC has regulated asset managers. But under Dodd-Frank, the Financial Stability Oversight Council, a newly created super-regulator, can designate “systemically…

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