One More Reason to Doubt the Stock Market Rally

My Comments: I’m now out of the markets with the exception of a Vanguard fund focused on high dividend yield stocks. And I may get out of that today… or not…

By Daren Fonda \ Nov. 30, 2018

Dovish comments by Federal Reserve Chairman Jerome Powell sent the stock market soaring on Wednesday. But bond investors yawned at the news. So who has it right?

The fixed-income crowd, according to economist David Rosenberg, chief economist and strategist at investment firm Gluskin Sheff.

Rosenberg, a longtime bear, has been warning that the U.S. economy isn’t as healthy as it might appear. Scores of indicators point to underlying softness, including a widening trade deficit, declines in home sales, weaker capital investment in equipment, and a slowdown in consumer spending as higher interest rates start to bite.

Add it all up, and the economy’s tax-cut fueled gains could be short-lived. And if the Fed really does pause in increasing rates-the stock market’s big hope-it would signal a recession coming sooner than expected

“The irony with Powell is what history tells us about what happens when the Fed pauses,” Rosenberg tweeted on Thursday. “The inevitable recession starts six months hence. The bulls should pray he has reason to keep tightening!”

While the stock market surged Wednesday, bonds held steady. Bonds, in theory, should be rallying on signs of a new dovish stance at the Fed. But as Rosenberg points out, yields at the front end of the Treasury curve (the most sensitive to Fed rate policy) barely moved. The two-year Treasury yield fell two basis points, or hundredths of a percentage point, to 2.8% after Powell’s comments. “As usual, the’bondies’ have the story right,” he wrote in a note.

At the center of the tug of war between stock and bond investors is the “neutral” federal-funds rate-the Goldilocks point at which it’s neither stimulative nor restrictive to economic growth. History shows that the neutral rate lies 100 basis points below nominal growth in gross domestic product. Nominal GDP growth in 2019 is likely to average 4%, Rosenberg estimates, which would put the neutral fed-funds rate at 3%.

But the Fed’s base case for nominal GDP growth is 4.5% in 2019. If that turns out to be the case, the neutral fed-funds rate would rise to 3.5%, up from the actual level of about 2.25% now.

Either way, he maintains, markets are pinning their hopes on the funds rate topping out at 2.5%, a level it would reach with just one more 0.25 percentage-point increase. But that may be wishful thinking. The Fed doesn’t have a great record in ending a tightening cycle before it tips the economy into a recession, indicating it waited too long.

“The Fed has not once completed a tightening cycle without raising the funds rate above neutral, even during the’soft landing’ episodes in the mid 1960s, mid-80s, and mid-90s,” Rosenberg writes.

If he’s correct, the stock market rally will soon peter out. Enjoy it while it lasts.



Our Man in DC

My Comments: I wrote this is May of 2017. I set it aside in an effort to help minimize potential bad feelings from friends and associates who didn’t, and perhaps still don’t, share my values as a Social Capitalist. I’ve reached the point in time where I no longer give a damn if anyone ‘unfriends’ me.

I didn’t vote for Trump though I had misgivings about Clinton. I rationalized my acceptance of him after the election as a necessary step in the evolution of our society where we stop and evaluate the decisions made over the past 70 years. Is racism ok? Do public parks still have value? Is it ok to lie through your teeth if you are making a political point? Is Social Security still a viable mechanism to limit poverty among our elderly? Is Medicare and Medicaid a viable health care model for certain people in society? Does it matter that there is growing income inequality in this country?

Here’s what I wrote in response to what I saw as a developing chaos among elected leaders in this country:

Maybe I’ve read too many spy novels or watched too many movies.

One recent story line involves several characters, one of them a global real estate mogul, declaring his intention to run for President of the United States. Surrounding this person are dedicated people, few of whom have ever held public office, or government service of any kind. It’s an entertaining story, especially when our key player succeeds. All the players are in over their heads, mistakes ensue, but all ends well.

Another story line involves the same characters but there is a cloud overhead. While perhaps entertaining, our story leads us down a path with global implications, most of them negative. We’re talking about possible war with economic chaos and human suffering.

In this story, the key player’s rise to prominence comes with help from questionable money that comes from Russian oligarchs. Their wealth was created following the collapse of the Soviet Union and their survival as individuals is linked to their friendship with Vladimir Putin. Somewhere along the way, our key player seems to have done something incriminating that, if revealed, would thoroughly compromise him.

Puzzlement surfaces when the key player and his entourage say lots of very nice things about Russia and the Kremlin leadership. This despite recent attacks by Russia on civil society outside their borders and decades of Russian efforts to diminish American and European influence on the world stage.

Meanwhile the US election process is evolving. Reputable sources declare when it’s over that the Kremlin influenced the outcome. What is not clear is the extent to which the key player and his inner circle were involved with the Russian efforts. They may in fact be innocent, but something is causing a large cloud to appear overhead. Did something happen in years past that compels the story?

Our man in DC never expected to become President. Running for the office would satisfy his ego and increase his standing in global real estate circles. Time passes and our man in DC finds himself increasingly drawn toward Russia and their ability to create fake news.

He has a compelling message for the electorate. He also discovers he can redirect our attention from his plausible faults by promoting the idea of fake news. He persuades the electorate the messages from traditional news sources are actually fake news. By election day, the resulting confusion, coupled with his promise to ‘drain the swamp’, was enough to carry the day. He wins and America hopes this will all play out well.

This alternative story line includes an emerging pattern among those in the candidates inner circle. They conceal facts, such as meetings with Russians diplomats here and there. Another is our man’s refusal to reveal his tax returns. Do they contain something toxic? Maybe not, but maybe something.

With victory, our man and his team gets ready to assume office. His team is vetted to gain access to classified information. As this effort moves forward, several of those in his inner circle decide to omit meetings they have with foreign nationals. Initially, it’s considered an oversight.

With every passing day, the cloud gets thicker with additional scrutiny from the media and law enforcement. Inner circle members Paul Monafort, Jeff Sessions, Carter Paige, Mike Flynn, Jared Kushner, and perhaps more are under this cloud. They are alleged to have not revealed meetings with Russians going back 18 months or more. While under oath in confirmation hearings, some fail to disclose these meetings with Russians.

By design or incompetence, the pattern of concealment grows. Is alleged Kremlin efforts to elect our man in DC, and gain political leverage, a success? After all, “Our Man in DC” is now the President of the United States!

The background murmurings are now appearing as though written in stone. Watergate taught us it’s not the alleged crime that kills you, it’s the cover up. Having top level meetings with a Russian emissary is not illegal; it’s the failure to report those meetings on your security clearance affidavit that’s illegal.

The pattern of concealment that began before the election is now apparent. Even our man’s son-in-law admits to concealed meetings, one of which was to promote covert communications with the Kremlin. The reader is compelled to assume something is amiss. If not, why bother.

Was there an effort to collude by our key player? Probably not. That implies overt intent. If our man is compromised from day one, there’s just the effort to hide the truth. One inner circle member was successfully promoted to lead the Justice Department. What better position to help keep that long ago event or action in the shadows.

The story is not over, but don’t hold your breath.

Successful Retirement Secrets™

My Comments: I am now among the ranks of internet publishers!

Almost four years in the making, Successful Retirement Secrets is an internet course that teaches a system to help you process retirement information.

The goal is to arrive at retirement ready with enough resources to live your life to the fullest with a minimum of financial stress and frustration.

Among other things, you’ll learn what has to happen between now and then. You’ll discover it’s not about having more stuff, but about knowing how much is enough and the questions you must ask of yourself to get it right.

There are three courses, and only one of them is free. But I do have FREE PREVIEWS to get you started.

An enrolled student will develop a system that works in the background, helping someone retire with more money and not less money.

Click on the image above with the train taking you toward the mountains, and watch a short, 60 second video. At the end, there’s a link to the home page where you’ll find the free previews. Then decide if enrollment in one or both courses will help you achieve the success you expect when you ultimately retire…

Retirees Will Spend a Third of Their Social Security on This One Big Expense

My Comments: My efforts to coach people to start thinking seriously about their future retirement is complicated. For every positive associated with retirement there are just as many negatives. This is one of them.

Unless you plan to die before you reach retirement, you should find time to get your ducks lined up well in advance.

by Christy Bieber \ Nov 17, 2018

You probably have lots of plans for your retirement. Unfortunately, if you’re counting on spending your Social Security benefits on enjoying retirement, you may be surprised to find much of your money is eaten up by one expense that isn’t very much fun but that’s very necessary. 

That cost: healthcare. A new study from the Center for Retirement Research (CRR) shows that seniors spend an average of almost $4,300 annually per person on out-of-pocket healthcare costs.

These expenditures consume around one-third of the total amount of monthly benefits seniors receive from Social Security.

Your Social Security benefits will be consumed by healthcare expenses

According to the CRR, the average senior’s annual out-of-pocket spending on healthcare totals $4,274 per person, with $2,965 of that money going to insurance premiums.

Premiums generally must be paid for Medicare Parts B and D. Some seniors opt for Medicare Part C plans or Medigap plans that charge higher premiums but reduce coinsurance costs for care.  

Spending so much on healthcare significantly reduces income available to retirees. The CRR revealed the average retiree had just 65.7% of Social Security benefits remaining after paying out-of-pocket healthcare costs and just 82.2% of total household income remaining after paying for care.

And, for many senior households, things are even worse. Close to one-fifth of all retirees had less than half their Social Security income left after healthcare spending, and 6% of retirees spent more than half of total household income from all sources on healthcare.

Spending this much is a major problem, especially when many seniors are overly reliant on Social Security and have too little income to begin with

How can you keep healthcare costs down?

The best way to make sure you can afford your care as a senior is to save money specifically earmarked for healthcare.

If you’re eligible to contribute to a Health Savings Account, you can get big tax benefits. If you aren’t, you should set aside extra money in other tax-advantaged accounts, such as a 401(k) or IRA, specifically for care. 

Unfortunately, if you’re already in retirement and don’t have a fortune saved to cover healthcare, you’ll need to find ways to keep costs as low as possible. Some of the best ways to keep your healthcare expenditures low include:

  • Talking with your doctor: Medical professionals can often help you find generic versions of expensive medications, may have prescription drug coupons to offer, and can otherwise find ways to help you reduce spending if you’re struggling. 
  • Taking steps to stay healthy: The healthier you are, the lower your care costs. To stay healthy, get preventive screenings (which are often free under Medicare) so you can fix little problems before they turn into big ones. Avoid smoking, exercise regularly, and get help managing chronic conditions. 
  • Matching your insurance coverage to your needs. You have the option to buy a Medicare Part C plan to replace original Medicare, and some of these policies provide more comprehensive coverage. You can also opt for a Medigap plan to supplement traditional Medicare. By comparing what different policies cover — and cost — you can either choose to pay higher premiums for more coverage or reduce premiums and get a skimpier plan if you don’t use many medical services during the year. 
  • Determining if you can qualify for Medicaid. Medicaid can help you to more easily afford your care. Depending upon your income, Medicaid may provide help with Medicare premiums and coinsurance costs. Medicaid can also cover certain kinds of care Medicare doesn’t pay for, such as unskilled nursing home care. 

It’s up to you to find ways to keep healthcare costs as low as possible if you don’t want to lose a third — or more — of your Social Security benefits to healthcare costs. 

Healthcare is expensive — so make a plan

The new data from the CRR makes clear just how much of your money will be eaten up by healthcare. Experts have been warning for a long time that seniors will need a lot of money to pay for their care.

The sooner you start making a plan for taking care of your health needs as a senior, the more easily you’ll be able to afford them without skimping on everything else you’d hoped to spend money on during retirement. 


Public Pensions Could Become Retirement Crisis for Everyone

My Comments: Too many people are wondering where the money will come from to pay for their retirement. And too many people will not have enough money to live the way they want to. And too many people will not have the necessary resources to pay for health care in retirement.

All this is leading to a crisis in this country as the baby boomers continue to retire and live longer and longer. The pressure on the economy and on the mental health of struggling people will be immense.

At the risk of being called on the carpet for brazen self-promotion, click on the image on the right showing a train headed toward the mountains. It’s a link to my online course on retirement planning. There are a bunch of free videos for you to share with anyone trying to figure out what to do before they retire.

by Peter Reagan \ November 9, 2018

It’s become fairly common knowledge that public pensions are on the verge of either radical overhaul or extinction.

Worldwide, pensions are set to reach a shortfall of $400 trillion. This is a larger amount than 20 of the world’s largest economies, according to Sovereign Man.

It was even reported that Congress is planning for pension fund failure in the U.S. Not to mention, Philadelphia has considered tapping public utility payments to cover their shortfall.

Add it all up, and the situation doesn’t look good for public pension plan payees. Many police, fire, public education, and municipal personnel are (or will be) directly affected.

But even if you’re not drawing a public pension — the majority of us do not — don’t think you’re safe. You might think failure of a state public pension wouldn’t affect you. It’s a reasonable thought, and partly correct. That’s because it likely wouldn’t affect you directly.

But the indirect effects may prove to be a burden for anyone in or entering retirement. There are two primary reasons for this.

First, according to a recent Washington Examiner op-ed, almost half of Americans have no retirement savings to deal with these indirect effects (emphasis ours):

Despite the existence of IRAs and 401(k) plans to encourage retirement savings, almost half of Americans have no net assets at all, and little or no retirement savings. Many of them have no money to save and no retirement account to put it in.

And second are “hidden” consequences of failing pension programs at the state level, which may affect every person who pays taxes.

The Potential Ripple Effects of Failing Public Pensions

Martin Smith is a correspondent for PBS who has reported on America’s growing retirement crisis. Speaking to Richard Eisenberg, he revealed the imminent potential for cutting services or a federal bailout if state pensions fail:

“About half the states have pensions that are 70% funded or much worse. The states can’t borrow or sell bonds to China.” So, Smith adds, in four or five years, some of those states will likely have to either cut their services (the equivalent of a state bailout) or they will need a federal bailout.

Imagine if the police force or firefighters in your city suffered dramatic cutbacks to account for pension shortfalls? Or, if your taxes went up to account for a federal bailout of state pension programs?

Neither ripple effect is desirable for any person. But both could happen if pension shortfalls become too much of a burden at the state level.

Retirees from private and public sectors are looking for other options because of “dwindled pension funding” and potential reduction of Social Security benefits.

According to a PlanSponsor article, “employer-sponsored retirement plans” and IRAs look to be alternative options, among other savings ideas. But some still feel stuck in their current situation.

Eisenberg’s report, republished at MarketWatch, ends on a somber note from a teacher: “I have no savings. My pension is everything. Without that, I won’t survive.”

That’s a stark reminder to make sure we don’t put all of our nest-egg in one basket.

Start Building a Resilient Retirement Now

It’s important for you to start making your retirement as resilient as possible. This will give you the best chance to enjoy your “Golden Years.”

Over at The Hill, Olivia Mitchell offers some suggestions that may help. She recommends that you “understand that your pension and Social Security are not fully guaranteed.” Benefit cuts are always possible.

She continues by suggesting you “delay retirement as late as possible” because benefits can pay out higher at later retirement age. This also reduces the time you receive payouts, so your fund can last into your later years.

Finally after suggesting part-time work to supplement income (if possible, and if necessary), she suggests cutting spending now as much as possible.

If you don’t have any retirement savings yet, the best time to start is now. As time goes on, you can consider adding some stability to your portfolio by shifting a percentage of assets into precious metals like gold and silver.

But whatever you do, don’t wait. The ripple effects of public pension program failure aren’t going to wait for anyone.

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

Source: Public Pensions Could Become Retirement Crisis for Everyone |

The clear message in the United States’ shifting demographics

My Comments: Do you want to re-invent the present so it more closely resembles the past that you know and understand and were happy with? Good luck with that.

The present and the future is the only thing we can influence. Whether it’s over millennia or the next decade, the sooner you come to terms with ‘adapt or die’, the happier you are likely to be.

Someone this week asked if I was a racist. It was in response to my sharing a post about Trump’s mother being an immigrant welcomed to the US with no issues. I suggested it was because she was white. He than asked if I was a racist.

Perhaps I am. I’m also a white immigrant who became a US citizen because my father and mother thought our life in this country would be better than if we stayed in Europe. 

But to me, Trump’s threat to close the border with Mexico is because those folks are not white. Don’t tell me the government couldn’t find enough qualified people to properly process those folks in a timely way, consistent with US laws, instead of using tear gas in an attempt to change their minds. Fundamentally stupid and inconsistent with our long held values as an open society.

The MAGA crowd, which I’m guessing includes that woman in Mississippi who made comments about hangings, appear threatened by those who are genetically different and not white. I’m suggesting they adapt or die.

Sam Fulwood III \ Jun 25, 2018

Within our lifetime, the United States will be a majority minority country, no matter how loudly the MAGA crowd shouts.

As difficult as it might be for some recalcitrant Americans to believe or embrace — Trumpsters, listen up, this column is especially for you — the United States is in the midst of a profound and irreversible demographic shift. 

Two dramatic changes in the nation’s population are occurring simultaneously: we’re getting older, and more racially diverse, according to a U.S. Census Bureau tip sheet released last week. Census figures show that fewer than 17 percent of U.S. counties reported a decrease in median age from April 2010 to July 2017, with the majority of those counties clustered in the Midwest. Nationally, the median age rose to 38.0 years in 2017, up from 37.2 years in 2000.

“Baby boomers, and millennials alike, are responsible for this trend in increased aging,” Molly Cromwell, a demographer at the U.S. Census Bureau, said in a statement released with the report. “Boomers continue to age and are slowly outnumbering children as the birth rate has declined steadily over the last decade.”

As the nation grows older, it’s also becoming more racially and ethnically diverse.  “Nationally, the population of all race and ethnic groups, except for the non-Hispanic white alone group, grew between July 1, 2016, and July 1, 2017,” the Census statement said.

Specifically, the Census Bureau reported:

  • The Hispanic population increased 2.1 percent to 58.9 million.
  • The black or African-American population increased 1.2 percent to 47.4 million.
  • The Asian population increased 3.1 percent to 22.2 million.
  • The American Indian or Alaska Native population increased 1.3 percent to 6.8 million.
  • The Native Hawaiian or Other Pacific Islander population increased 2.1 percent to 1.6 million.
  • The population of those Two or More Races increased 2.9 percent to 8.7 million.
  • The white alone-or-in-combination population increased 0.5 percent to 257.4 million.
  • The non-Hispanic white alone population decreased .02 percent to 197.8 million.

Of course, none of these revelations are particularly earth-shaking. Keen demographers and social scientists have been tracking the so-called “browning of America,” for years.

But in the current political environment, it bears repeating over and over, if for no other reason than to remind more Americans of the inevitability of change. Soon — within the lifetimes of the vast majority of Americans alive today — the U.S. will no longer be a white-majority nation.

And that’s why this column is directed to Trump’s MAGA crowd, which seems hell-bent on returning the country to some idealized era of the 1950s or earlier, when white men were the unquestioned arbiters and beneficiaries of the nation’s politics, culture, and economy.

Indeed, the hateful atmosphere brought about by Trumpism and echoed in archly right-wing media has its roots in a vocal white nationalist movement, which seized on the president’s embrace of their racist rhetoric as permission to openly act on impulses that previously were tucked away from public view.  

“Clues in the president’s language and behaviour led the alt-right to hope that he might really be one of them, and critics to accuse him of inciting racial hatred,” The World Weekly, an international online news magazine, reported recently. “Mr. Trump’s flagship campaign promises were music to the ears of self-described ‘white advocates,’ whose numbers swelled under Barack Obama.”

For all their bluster and bravado, however, white nationalists are whistling past their own graveyards. The numbers and unrelenting facts of demography stare in the face of those who believe they can restore some non-existant glory of white supremacy.

Valerie Wilson, director of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy (PREE), estimates that by the year 2043 — about 25 years from now — the U.S. will reach the tipping point when the country transitions to a majority-minority population. Among working-class Americans — made up of working adults without a college degree — she estimates the tipping point may arrive nearly a decade sooner, possibly by 2032,

In a 2016 PREE paper, Wilson observed the significance of these changes, and how important it will be to accept and embrace them, noting “the working class is increasingly people of color, raising working class living standards will require bridging racial and ethnic divides.”

What’s more, Wilson argues that there are policy challenges the nation must address to make the transition better for all Americans. “The best way to advance policies to raise living standards for working people is for diverse groups to recognize that they share more in common than not, and work together,” she wrote.

The sooner most Americans come to terms with this reality, the sooner the public will rally support and encourage politicians to deal with the changing demographics from a position of national strength, and not as the fearsome dilution of white superiority. One thing is certain: the changes coming to America aren’t going to suddenly shift into reverse, no matter how loudly Trump, his subservient congressional leaders, and white nationalists complain.

So, MAGA crowd, get with the future. It’s in your and the nation’s long-term, best interest to embrace the demise of white superiority in America.


3 Awful Reasons to Take Social Security at 70

My Comments: Retirement mistakes are rarely obvious until long after you make them. And then it’s almost always too late to find a remedy.

Don’t let yourself fall for the argument that on it’s face says you get more money if you wait to claim your Social Security benefits. Regardless of when you start, you’re going to get about the same amount over time given that they end when you die.

My recommendation in almost all cases it to file when you reach your Full Retirement Age or FIA in SSA parlance. There are some charts in the original article that I didn’t bring over to this post so if you want to see them, click on the link at the bottom.

Brian Stoffel \ Aug 27, 2017

The first two are simple arithmetic. The third is much deeper.

It doesn’t take a rocket scientist to figure out why someone would wait until 70 — the latest possible age — to claim Social Security benefits. By waiting, monthly checks are 76% higher than if you claimed at 62, and 32% higher than if you claimed at full retirement age of 66.

Think about that. This is the difference between annual checks of $12,000 and $21,000. It’s not a small deal — and could be a major incentive.

But the reality is that waiting isn’t all it’s cracked up to be. In fact, if you’re considering waiting to claim Social Security benefits, make sure one of your reasons for doing so aren’t included below.

You want to maximize your lifetime payouts

The Social Security Administration isn’t stupid. They’ve used actuarial tables to figure out how long the average American is going to live and ensure that overall lifetime payouts will be roughly the same no matter when you claim.

That’s because while the 70 year-old might get $21,000 per year in benefits, he or she will also have eight years of receiving nothing, while the early claimer is collecting checks for 96 straight months — albeit at lower levels. In fact, while the exact numbers will vary depending on your lifetime earnings record, you can see that lifetime payouts don’t eclipse earlier claimers until you hit your early to mid-eighties.

You want to maximize spousal benefits

In households where one partner significantly out-earned another, it will make more financial sense for one partner to rely on spousal benefits. But understanding the basic ins and outs of such benefits is crucial.

Consider Taylor and Bailey, who are married. Taylor earned much more than Bailey. Thus, Bailey will rely on spousal benefits. Bailey can’t claim such benefits until Taylor does as well. At that time, Bailey’s monthly checks will be half of Taylor’s. If Taylor passes away first, then Bailey will forfeit the normal payment and just assume Taylor’s higher monthly check.

As such, if they want to maximize payouts from the moment they file, it might sound reasonable for both to wait until they’re 70. But there is a catch: spousal benefits max out at half of Taylor’s benefits at full retirement age, or 66 years old.

Let’s say both are the same age. It turns out that claiming at 66 (assuming you both live to the same age) remains the best choice all the way until your 80s, and waiting until 70 doesn’t become the best financial choice until once you enter your 90s.

Obviously, if Bailey is younger than Taylor, it makes even less financial sense for Bailey to wait until 70 to claim Social Security.

Because… money!

Of course, the unspoken assumption here is that more money is better. But once you enter your Golden Years — and hopefully well before — time and contentment become the real commodities worth savoring.

It’s definitely true that you need enough money to make ends meet, and if waiting until you are 70 to claim Social Security is the only way to do that, then you have little other option.

But it’s worth exploring what your real level of “enough” really is. It might be far lower than you think. And if that’s the case, you should retire as soon as possible. That’s because studies that are representative across America’s demographics show that retirees are far and away the happiest cohort in the country.

While waiting until 70 to retire might make sense for some, if trying to maximize individual or spousal benefits is your main motivator, it’s actually an awful reason to put off what is apparently the most enjoyable part of many Americans’ lives.