Category: ECONOMY

468%: Stocks 10-year run becomes best bull market ever…

The longest bull market in history is also the best ever.

The current market boom, which started March 9, 2009, has enjoyed a whopping 468% gain for the S&P 500 through the first day of November, making this record-long bull run also the best-performing one since World War II, according to The Leuthold Group. The S&P 500, which eked out a record closing high Thursday, has soared 472% in this epic run.

The bull market from 1949 to 1956 scored a 454% gain for the S&P 500, the second-biggest return in recent history, the firm said. The explosive bull run in the 1990s saw the S&P 500 rally 391%, while the bull market of 2002–2007 pulled off a 121% gain for the benchmark, according to The Leuthold Group.

More than 10 years off the financial crisis bottom, the market still hasn’t lost its momentum as it currently sits at its all-time high lifted by renewed hopes for a U.S.-China trade resolution. The S&P 500 tumbled to its financial crisis intraday low of 666 hit in March 2009 and roared back to around 3,094 on Wednesday.

“The most outstanding feature of this cycle since 2008 is always going to be fear,” Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC. “I’ve referred to this cycle to some degree as a bearish bull market. It keeps the market from getting so far over its skis that it has to have a bear market.”

CONTINUE @ CNBC

Fiat Chrysler Is Trying To Stuff Dealer Channels With Over 40,000 Cars

As the global automobile market continues down the path of recession, it isn’t just tensions with consumers that are rising.

Fiat Chrysler is apparently at odds with many of its U.S. dealers after trying to get them to accept inventory of about 40,000 vehicles that they didn’t order, according to Bloomberg.

Four dealers came forward and said that the company has revived a “sales bank”, which is a decade old practice that is frowned upon by investors and analysts because it can muddy the waters of an automaker’s inventory figures. Dealers dislike it because it creates pressure to take delivery of vehicles they don’t want.

Chrysler had used sales banks in the two times it needed eventual rescues from the U.S. government – in 1980 and 2009.

How the Fed Boosts the 1%: Even the Upper Middle Class Loses Share of Household Wealth to the 1%. Bottom Half Gets Screwed

It is ironic the Fed puts out this data, as if to show off its success, and how every time the wealth of the 1% is threatened, the Fed comes up with new bailouts, rate cuts, and other shenanigans.

This is the transcript from my podcast last SundayTHE WOLF STREET REPORT:

OK, the Federal Reserve just came out with its quarterly data on the wealth of American households. It’s mostly the headline numbers that are being displayed in the media – how much wealth American households have – namely a new record of $107 trillion, thank you Fed, QE, interest-rate repression, and Wealth Effect. But the Fed’s data also shows the wealth distribution.

Everyone knows that if you’re in the bottom 50% of households in terms of wealth in this country, you’re essentially screwed. At the bottom 50%, you’re chasing after the American dream, and while a few are able to get out of the bottom 50%, for most, the American dream remains just a dream.

But the share that the bottom 50% of households have of the overall wealth, of that record $107 trillion, is minuscule. It’s just 1.9%.

That share is down by half from the already miserably low levels of 1999, according to the Fed’s data. So those folks in the bottom half of households are screwed and we knew that.

But today, we’ll take a closer look at the top 50% to 99% of households by wealth because even their share of the wealth is now declining, while the share of the 1% is surging.

This is the upper middle class and the top of the middle class, and they’re losing out to the 1%. And it’s a big deal in terms of dollars because those households have a lot of wealth, but their share is shrinking as the share of the 1% is gaining.

In other words, this economy – and I will point my finger straight at the policies of the Federal Reserve – is set up to shift an ever-larger share of the wealth to the top 1% and away from everyone else, according to the Fed’s own data. And the Fed is bragging about it.

We already know what is happening at the bottom half of the households: They’ve always been screwed. They’re just screwed even more today than they were 20 years ago, according to the Fed’s data.

As of the new data from the Fed, the bottom half of the households, owns 6.1% of all assets that Americans own. They own just 2.2% of all stocks and stock mutual funds. They own just 2.7% of what the Fed calls “pension entitlements.” The gold-plated executive pension plans are only for the few. They own just 13.5% of household real estate wealth. They own just 0.1% of the “private business wealth.”

But in terms of debt, the bottom half of households carry 36% of the total debt, such as mortgages, credit card debt, auto loans, and student loans. So they own 6.1% of the assets and they owe 36% of the debt.

And the wealth of the bottom half of households – wealth being assets minus debt – amounts to just $2 trillion, or 1.9% of the total household wealth.

These are the people who cannot save anything because their expenses for housing, healthcare, education, transportation, childcare, etc. are eating up their income. And because they cannot save anything, they have no means to invest. The whole system is set up that way.

Healthcare expenses cost roughly the same for rich and poor. The problem is that health care expenses are enormous in the US, and become an affordability issue for the bottom half of the households, a huge burden, and lots of people struggle to pay for it or cannot afford it.

The healthcare sector is now around 18% of GDP, or nearly $4 trillion a year. This business has become immensely profitable with its monopolistic structure, constant mergers, abuse of the patent system to prolong pharma monopolies, outrageous hospital bills as hospitals have become integrated into corporatized medicine. And so on. Paying even for basic healthcare has become a nightmare for the bottom half of households.

For the lucky ones who’re covered by an employer’s health plan, family coverage costs the employee on average $6,000, according to the Kaiser Family Foundation. This is just the insurance premium. Then there are copays and deductibles, etc. And those deductibles can be thousands of dollars.

For families without employer health coverage, the premiums alone for reasonable insurance plans run over $20,000 a year.

Then there are housing costs – whether people own or buy. They have surged in many places in the country. And for the bottom 50%, paying for a roof over the head in a lot of places is straining budgets, or exceeding budgets. Just check out the thousands of parked vehicles that people live in, around Silicon Valley, San Francisco, and other places. These are people with jobs that cannot afford housing.

The costs of higher education have become a huge burden at the bottom 50% of the wealth scale. This burden is carried by the family that now sacrifices in many ways, and it will be carried by the student who will end up with a pile of student loans.

CONTINUE @ WOLF STREET

US Bank Loans to Reach $10 Trillion Monthly Milestone

According to data gathered by LearnBonds.com, loans and leases in Bank Credit of all commercial banks in the United States could reach $10 trillion monthly soon.

Moreover, the value of bank credit of all commercial banks in the United States is close to reaching $14 trillion. Although this is unlikely to happen in 2019, it is expected to take place during the first half of 2020.

Commercial Banks Register Record Loans

Currently, Bank Credit of U.S. commercial banks in October 2019 reached $13.72 trillion U.S. dollars. This represents an increase of 6.52% compared to October 2018.

Bank credit is the total amount of credit that is available to businesses or individuals from banking institutions. Specifically, this refers to the total amount of combined funds that financial companies provide to clients, including both businesses and individuals.

For bank credit to reach $14 trillion, it will be necessary for the industry to expand over 2% in the coming months.

Between 2008 and the beginning of 2012, the bank credit of all commercial banks remained stable between $8.6 and $9.1 trillion. At that time, the world financial crisis affected the banking industry, something that was reflected in the economic activity of these years.

Nonetheless, bank credit expanded since 2012 and reached new record highs in October 2019 with the aforementioned $13.72 trillion.

Loans and Leases in Bank Credit are also expanding. They could eventually reach $10 trillion soon. Indeed, the loans and leases would have to grow 1% as well before being able to hit the $10 trillion monthly milestone.

This is expected to happen in the coming months and there is a large possibility for this to take place before the end of 2019. Nevertheless, it is highly likely this will occur during the first quarter of the next year.

CONTINUE @ LEARN BONDS

Half of world’s wealthy bracing for huge sell-off in 2020, UBS says

A majority of the wealthiest investors in the world are preparing for a huge market sell-off in 2020, according to a new report released by UBS Wealth.

More than half of the 3,400 high-net-worth individuals surveyed by UBS said they think there will be a significant market sell-off before the end of next year, according to the report, which was conducted between August and October.

“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” Paula Polito, client strategy officer at UBS GWM, said in a statement. “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

Overall, almost fourth-fifths — 79 percent — expect volatility to increase next year, with almost 72 percent characterizing the investment environment as “more challenging” than five years ago.

CONTINUE @ FOX BUSINESS

Young Homebuyers Are Vanishing From the U.S.

Faced with higher property prices and piles of student debt, Americans are getting older and older before they buy a home.

The median age of first-time home buyers has increased to 33, the oldest in records dating back to 1981, according to a National Association of Realtors report released Friday. The median age of all buyers also hit a fresh record, 47, increasing for a third straight year — and well above the median age of 31 in 1981.

While the median age of first-time home buyers only rose by one year, the increase reflects a variety of factors facing Americans searching for a home.

A nationwide shortage of affordable housing, coupled with lower mortgage rates, has stoked prices in cities from the coasts to the heartland. At the same time, student loans and other debts make it harder for Americans to save tens of thousands of dollars for a down payment, while tight lending standards can make getting a bank loan difficult for borrowers with less-than-stellar credit scores.

“Housing affordability is so difficult today, especially when coupled with rising rents and student loan debt, that they’re finding different ways to enter home ownership,” said Jessica Lautz, vice president of demographics and behavioral insights at the Realtors group in Washington.

The characteristics of home buyers have changed in recent years. The share of married couples has declined as unmarried couples and those purchasing as roommates has risen.

CONTINUE @ BLOOMBERG

9 of the Best Retirement Locations in the US

Dear Rich Lifer,

When it comes to retirement destinations, you can find an endless number of lists ranking the best and worst spots to live out your golden years.

My take is it really depends on how you want your retirement to look.

Of course, you want to stretch your dollar as far as it will go, but you’re also not going to do it at the expense of losing friends and family.

A survey by Merrill Lynch and Age Wave, found that the top reason people move in retirement is to be closer to family.

So, if your kids and grandkids are living in Michigan and you have your eyes set on sunny Florida, you might not be renting that U-Haul so fast.

That said there are some key factors to consider when choosing where to live in retirement.

Two of the most common factors you should consider are cost of living and quality of life. Other factors to be weighed are:

  • Housing costs
  • Tax rates
  • Health care
  • Climate
  • Overall happiness of residents

As I said, the best place to retire will ultimately depend on the retiree but here are my top 9 destinations in the US.

Most of the cities on this list have a moderate to low cost of living, and all are located in states that exempt all or a portion of retirement income from taxes, with the exception of one.

Bella Vista, AR

Located in the northwest corner of Arkansas, 200 miles south of Kansas City, Bella Vista is a scenic town in the Ozarks.

The median home price is $171,000, 31% below the national median. Cost of living is 4% below the national average.

Pros: Good air quality, warm climate. Many lakes. Low crime rate. Good economy. Adequate doctors per capita. No state income tax on Social Security and up to $6,000 of other retirement income per person. No state estate or inheritance tax.

Cons: Not very walkable.

Delray Beach, FL

Delray Beach is a beach town with a population of 69,000, just north of Fort Lauderdale. Median home price is $205,000, 18% below the national median. Cost of living is 10% above the national average.

Pros: Abundant doctors per capita. Good air quality. Walkable and bikeable for the most part. Good economy. No state income or estate/inheritance tax.

Cons: Serious crime rate above the national average.

Clearwater, FL

Population 116,000 and wedged between the Gulf of Mexico and Tampa Bay, the sun is always shining in Clearwater. Median home price $211,000, 15% below the national median. Cost of living is 5% above the national average.

Pros: Good air quality. High number of doctors per capita. Highly bikeable, somewhat walkable. Strong economy. No state income tax or estate/inheritance tax.

Cons: Serious crime rate somewhat above the national average.

Pittsburgh, PA

Home of Carnegie Mellon University, University of Pittsburgh, Duquesne University, and Chatham University, Pittsburgh is clustered around three major rivers. The population is 303,000.

Median home price is $151,000, 39% below the national median. Cost of living is 6% below the national average.

Pros: High number of doctors per capita. Great for biking and walking. Strong volunteer community. Good economy. No state income tax on Social Security or most retirement income.

Cons: Cold winters. Poor air quality. Serious crime rate above the national average.

CONTINUE @ DR