That Was The Week That Was-3rd Week July

 

 

Glitch or Hack? Wall Street, United Airlines and The Wall Street Journal All Had Computer Issues on Wednesday July 8th.

Connectivity issues or routers gone haywire. There were a slew of excuses Wednesday last, including software upgrade goof, which was the reason why trading on the New York Stock Exchange was down for most of the afternoon and United Airlines cancelled flights due to a router malfunction.The online edition of the WSJ was also down. The excuse there was too much traffic trying to get information on the NYSE and United situation. Watching it unfold on television there were Talking Heads appearing too jolly, too warm and fuzzy, too reassuring, with old poops being dragged in front of the camera who said ‘they could remember back in the day when similar things happened.’ ‘It won’t be the last time,’ said another old time floor trader. A few did put the blame on the Chinese and pointed to the Cyber Threat Map at Norse Corporation that purports to show cyber attacks from villains across the ocean in almost a Star Wars video screen.

Norse Intelligence Network Attack Map. You can see this in real time by searching online ‘Norse Attack Map’ and watching an almost Star Wars Data Attack.

Others, who were taking a more sinister reaction, asking why such a coincidence with all three down at about the same time. Americans love a conspiracy and now the question is do we have here another? CNBC, WSJ and Other Sources.

RETIREMENT THEN AND NOW…

Population of people 65+ in U.S. 1980: 8%

2013: 12%

Projected average annual inflation rate 30 years

1980: 3.5%

2013: 2.5%

Personal Savings 1980: 9.7%

2013: 4.8% (We’re probably saving more dollars because of the income inequality.)

Average Price of a non-profit hospital room 1980: $127 a day

2013: $2,157 per day

Percent of private companies that offered pensions 1980: 67%

2013: 17%

Percent people claiming social security @ 62 1980: 60%

2013: 42%

Statistics from Wealth Management.com John Kador 6/30/2015

 

 

Bye-bye Bonds!

Barrons Cover July 11, 2015. Gary Hovland Illustrator.

Okay to own individual bonds and hold to maturity but the days of bond funds and bond ETFs are gone. Barrons.com 7/11/2015

 

Revisiting the Greek Drama…The leading cast of characters…

Greek Leader Frosted Germany’s Merkel Right to the End. Greek PM Tsipras ended up as a powerless pariah in Europe by supposedly dealing in bad faith and angering German Chancellor Angela Merkel. Negotiation ploy of Greece leaving the EU by the Greeks was surprisingly supported by Merkel saying that Greece would have to leave for five years and only then would need to reapply for admission. This game of chicken was started by Tsipras who, the EU leaders felt, delayed any constructive negotiations, increased dramatically the cost of the Greek bailout and fostered a clash between the German led Europe and the IMF. In the end it was Greece that blinked as they realized that Merkel had her fill and would allow them to leave the EU. Sources variety including WSJ 7/13/2015, CNBC 7/13/2015, etc.

Made me smile…

New Yorker May 18, 2015

Played a round of golf with some friends who occasionally read my blog and one complained I didn’t provide enough specific information but mostly ‘easy reading’ news.  (Specific Investment Advice cannot be provided in my blog due to compliance restrictions.)

Markets Up on Greece Deal Monday.  Dow up 200+. It was giddy-up right from the gate and then traded steady for the entire session. The 10-Year Treasury closed yielding 2.45%. WSJ 7/13/2015

Chinese Rebound Fizzles….wait for it…More Pain Due?Supportive government measures uplifted Chinese stocks temporarily but Tuesday 7/14, shares fell as the government stepped back from further intervention. WSJ/7/14

 

THE TREASURY DEPARTMENT AND I.R.S AMENDED TREASURY REGS FIRST WEEK THIS JULY TO STOP COMPANIES FROM OFFERING LUMP-SUM BUYOUTS TO RETIREES WHO ALREADY RECEIVE A MONTHLY PENSION. This has no impact on those plans that already have that language but those plans going forward. Lump sum buy-outs are the worst choice for those retirees receiving a monthly pension. Several local multi-national companies offered this to their retirees and it was a disaster with people who didn’t know anything about investing to suddenly be faced with an investment decision. Not only do retirees suddenly have to come up to speed on knowing everything there is about income strategies but they have to pay new fees on investments that they already paid fees on and new expenses when moving the money to new managers. Source Thinkadvisor.com 7/13/2015

 

New Yorker cartoon of the day 7/14/2015

 

 

Markets Up Tuesday As Earning Season Begins. Markets Down Slightly Wednesday as Greek Parliament Drags Their Heels on Bailout Vote.

Greek Parliament Passes Austerity Bailout Wednesday Evening.

Markets up nicely Thursday.

 

Here’s the Rate Hike Plan… Janet Yellen. Turbulence overseas is not a strong enough reason to deter the Fed from raising rates sometime this year. Some say it could be as early as September while others feel it will be in December. Then there are those that think that 2016 will be the starting date. The Fed Chief said she is more inclined to move on rates sooner and increase them slowly rather than wait a long time and move aggressively. ‘Moving soon and slowly will give the central bank flexibility as it proceeds,’ she said. WSJ 7/15/2015

Carl Icahn (Activist Investor and the guy on the left next to  BlackRock CEO Laurence Fink) at the Hedge Fund Conference Delivering Alpha said that some Bond ETFs (Exchange Traded Funds), have bought so many riskier and infrequently traded bonds that it isn’t clear who will buy them, or at what price, should funds be forced to sell during a market panic. If you remember Bill Gross, of Janus Capital, sent a note to investors last month, bemoaning the lack of liquidity and how “mutual funds, ETFs, and even index funds” might be hit in a downturn.(We are talking bonds and fixed income here). Deborah Fuhr, founder of London based exchange traded product consultancy ETGGI,LLP, said, ‘The reality is that the ETFs are really only as liquid as their underlying asset.’ Even though a bond ETF traded more than 20,000 times on average each day, according to the firm, their top 10 bonds only traded 13 times a day on average. The fact is that market liquidity may seem to be ample during normal times but vanished during market stress. WSJ 7/16/2015 Clients looking for more information can call or email me.

Questions call Paul @ 586 295 0430 or write him @ pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Securities offered through Westminster Financial Securities, Inc., Member FINRA/SIPC.