It doesn’t matter how much you talk markets up. It’s like pushing on a string. Despite Chinese media hyping Xi Jinping's personal involvement in a potential turnaround plan, Chinese consumers and businesses aren't keen on the economy's prospects. The Wall Street Journal's Jason Douglas reports on deflation's tightening grip in China, writing: Deflation is becoming more entrenched in China, with consumer prices falling in January at their steepest pace in more than 14 years—a stark symptom of deepening economic malaise that spells trouble for the global economy. The latest data suggest … [Read more...]
You and I Have Had Some Good Conversations
In my conversations with you, we talk about some of the mutual funds you own that you oversee. One common refrain when we dig into the top holdings is the amount of overlap you have across your portfolio. Even with the different names and symbols, too many funds out there mimic each other. When times are good, it is no big deal. What you see in mutual funds is job protection. Because fund managers are under immense pressure to keep up with their benchmarks. When a fund manager misses the benchmark, upper management pays attention. There is nothing that grabs more attention than money going … [Read more...]
Retirees: The Black Swan Can Be So Cruel
Retired and soon-to-be-retired investors are in a tough spot. The idea of living off a fixed income is downright scary. Will the economy plunge into a recession? Will inflation continue to eat away at one’s purchasing power? You know how Your Survival Guy feels about predictions. If there’s one observation that’s true yesterday, today, and tomorrow, no matter how good the economy is or how attractive it might be, some investors always want more. They rub their hands together, wondering when their ship will come in, always feeling like we’re in a recession, and they leverage up to juice more … [Read more...]
The Brake Lights Come on at the Fed on Rate Cuts
The market has priced in a number of rate cuts by the Fed through 2024, but this weekend Jerome Powell signaled on 60Minutes that growth was too strong and inflation was too high to consider cuts just yet. CBS's Scott Pelley asked, "Why not cut rates now?" Powell replied: Well we have a strong economy. Growth is going on at a solid pace. The labor market is strong: 3.7% unemployment. With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully. And we, you know, want to see more evidence that inflation is moving sustainably … [Read more...]
What We Learned from the Federal Reserve Yesterday
What we learned from the Federal Reserve yesterday was just how tightly the market holds on to every word from Fed Chairman Jerome Powell. No sooner did he alter his language on potential rate cuts and markets sold off, especially the speculative Nasdaq. Look at the long-term path of interest rates above and the DJIA, and you can see the connection between interest rates and prices. Now we’re stuck in this no man’s land where finally fixed income investors can get some interest on their savings, and sure enough, the market has a fit. Interest rates are hardly in need of a cut. … [Read more...]
The “Restructuring” Continues
You read yesterday about the "Restructuring" happening at many companies across American business, but it's not isolated to the United States. Deutsche Bank has announced it will begin its own workforce reductions by firing about 3,500 employees. Helena Smolak reports in The Wall Street Journal: Deutsche Bank plans to cut about 3,500 jobs in a bid to reduce costs after it reported a drop in profit due to higher expenses. The German bank—which employs about 89,000 people, according to FactSet—said Thursday that the job reductions are aimed at helping it deliver the remaining 1.6 billion … [Read more...]
Just When You Think You’re Diversified
What happens when everyone is invested in the same stuff? When you look at the S&P 500 and compare it to, say, target maturity funds or a total stock market index, there’s a ton of overlap. Just when investors think they’re diversifying, a simple look under the hood shows most engines running on the same stuff. That’s not necessarily bad, but let’s not confuse it with diversification. What is a great disservice to the average investor is they read the names of their funds and feel like they are diversified. “Hey, it’s the S&P 500,” they think. “That should be good diversification.” … [Read more...]
How Much Can You Make Working at Walmart?
How much can you make working at Walmart? It turns out, quite a bit if you're a Superstore manager and you're good at your job. Walmart has raised the annual pay and bonuses of its best Superstore managers to $400,000. That's a job that doesn't require a college degree. Mike Rowe would be pleased. Sarah Nassauer of The Wall Street Journal reports: Amazon is cutting hundreds of jobs. So are Macy’s and Wayfair. But one retail worker is still in high demand: Walmart superstore manager. Walmart is giving bigger bonuses and adding stock awards to their annual pay packages, pushing the total … [Read more...]
Welcome to the “Restructuring”
You have seen a lot of rosy news about the economy, but in certain corners, things are less than ideal. Many companies are going through "restructuring," which is a boardroom word for firing employees. PayPal is doing its own restructuring, to the tune of 9% of its global workforce being let go. Sabela Ojea reports in The Wall Street Journal: PayPal plans to trim 9% of its total workforce this year as part of a restructuring plan. The digital payments company’s head-count reduction comes on top of a prior round of layoffs of 7% last year and will be made through direct cuts and the … [Read more...]
Time to Get Your Lazy Money Working
When you look at my charts from yesterday, now is a good time to get your fixed-income house in order. After a certain point in an investor’s life, there’s a time to recognize that, “Self, I might not want to work forever. How am I going to make ends meet?” Believe Your Survival Guy when I say retirement is a most stressful time and is in the top ten of life’s emotional events. I know this firsthand because I talk with hundreds of investors about it. There comes a point where you can’t afford to risk your net worth to 100% stocks. Not that you ever do. But at some point, you might want … [Read more...]
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