f Joe Biden is elected, “Carson City will become a ghost town and the Christmas season will be canceled,” U.S. President Donald Trump said earlier this month at a rally, but new retail sales figures and holiday spending estimates tell a different story.
There are obvious flaws in the president’s proclamation, starting with the fact that if elected, Biden would not take office until January 20th, well after the Christmas season and more feasibly into the “gift return” season.
But the biggest flaw was this: It seems that nothing and no one can ruin the holiday season for Americans. Not a pandemic, millions of lost jobs, bankruptcies, a struggling economy, social distancing or even a lockdown can crack the holiday spirit. Or more importantly, it can’t ruin holiday spending, which is already breaking new records.
As retailers encourage customers to shift to online shopping in order to avoid crowds during the pandemic, online sales are set to reach $189 billion this holiday shopping season.
According to Adobe Analytics, that is an increase of 33% from last year’s holiday spending.
Black Friday online sales are set to reach ?$10 billion, up 39% from 2019, while Cyber Monday will hit $12.7 billion, an increase of 35%, the report found.
“This year is unlike any in the past, and for the first time we are no longer referring to peak holiday sales as Cyber Week — it’s now Cyber Month,” the analysis said.
They also estimate that a fresh stimulus package from the government would increase the holiday online sales by another $11 billion.
With cases of COVID-19 rising across the country, medical experts have warned that coronavirus cases could spike if people travel out of town and celebrate indoors….CLICK for complete article
America’s big banks make more than $11 billion worth of overdraft and related fees every year, and 2020 could break even more records due to the uncertainty caused by the pandemic. They’re counting on customers being disorganized, strapped for cash–or both.
But now, those practices are coming under intensified scrutiny.
The Center for Responsible Lending (CRL) recently released a report concluding that the biggest banks, “engage in a number of abusive practices that combine to drain massive sums from their customers’ checking accounts”.
The bulk of those fees, according to CRL, are “shouldered by banks’ most vulnerable customers, often driving them out of the banking system altogether”.
Last year, the report found that JPMorgan Chase pocketed $2.1 billion in income from overdraft and insufficient funds fees, followed by Wells Fargo and Bank of America (BAC) with $1.7 billion and $1.6 billion, respectively. According to CRL, TD Bank’s overdraft fees represent about one-third of its non-interest income.
The banks typically charge overdraft fees when the customer overdraws on their checking account. Rather than allowing a debit card to be declined or a check to bounce, the bank will cover the difference and charge an overdraft fee, usually about $30 to $35. CLICK for complete article
A painfully slow economic recovery and elevated unemployment, combined with an abrupt end to government aid and no new stimulus in sight has Americans cutwith the end of government’s aid, has caused Americans to significantly cut back on their borrowing.
According to the newest Federal Reserve figures, consumer borrowing unexpectedly fell in August as credit card balances declined for a sixth consecutive month.
Total credit card debt decreased by $7.2 billion in the month of August after an upwardly revised $14.7 billion gain in July. It also represents the first decline since a $12-billion plunge in May.
Compared with July, revolving debt fell by $9.4 billion in the category that covers credit cards, the sixth decline in that area starting with a $25.4-billion drop in March.
But auto and student loans have defied that gravity, with the combined category rising by $2.2 billion in August, its fourth gain after its first decline in April.
The $2.2 trillion distributed by the government under the CARES Act passed in March is already spent. A $600-a-week federal benefit expired more than two months ago and the sequel of government aid any time soon is now unlikely.
According to new research by a team of economists from four American and European universities, the majority of the money from the first stimulus was spent on rent and bill payments, with extra for food and personal care.
Earlier this week, President Donald Trump called off negotiations on another coronavirus relief package and rescheduled them for after the November election. CLICK for complete article
As COVID-19 developments and the path of global economic recovery remain key points of concern and uncertainty for businesses and investors, financial markets continue to look ahead and currently indicate a better than expected future. Global markets continued to advance during the third quarter of 2020, driven by supportive monetary and fiscal policies, positive vaccine and anti-viral treatment developments, improving economic data, and so on. A number of stock indices, such as the S&P 500, have rallied back to near pre-Covid levels. This can certainly feel like a disconnect from the real economy, where many businesses are either shutting down or operating only at partial capacity.
There is a reason for the disconnect. Despite the remarkable rally on the surface (i.e. at the index level), the recovery has been extremely uneven underneath the hood (i.e. at the sector level). The rally has been led mostly by the Technology sector (driven by large, mega-capitalization growth stocks and work-from-home related stocks), while the economically sensitive sectors, such as Industrials, Financials, and Energy are still lagging in the recovery. Because larger companies carry a bigger weight in the index, the big technology stocks were able to pull the overall index along as they advanced. To use a sports analogy, it’s like the situation where a superstar basketball player can carry the entire team and deliver a victory. However, this type of narrow leadership and heavy reliance on a superstar sector (or group of technology stocks) increases concentration risk and is likely not sustainable. Hence, it is important to see a sustained rotation in the form of capital reallocation back into the economically sensitive sectors to signal a sustainable economic recovery going forward.
Given that major financial markets are near pre-Covid levels again, where could we go from here? As is often the case, some investors will be bullish (positive), while others will be bearish (negative) on the markets. The beauty of the markets is that they have something for everyone, in the sense that it is easy to find evidence to support our viewpoint and confirm our biases if we are not careful.
The bulls will point to:
- Don’t fight the Fed (massive monetary stimulus from central banks)
- Additional government fiscal stimulus is coming (between $1.6 and $2.4 trillion is expected in the U.S.)
- Positive vaccine and anti-viral treatment developments (multiple vaccines are in their final phase 3 trials)
- Improving economic data with actual data beating expectations (we are past the economic trough)
- Sentiment surveys show that investor sentiment is still bearish (often a contrarian indicator at extremes)
The bears will point to:
- COVID-19 is still here with increasing cases and deaths; a second wave could be coming in the fall or winter
- Vaccine efficacy and distribution challenges; people’s level of willingness to take the vaccine
- Stock valuations are stretched with narrow leadership and excessive speculation in technology stocks
- Economic recovery is flattening out after the initial bounce from the trough
- U.S. election uncertainty; a contested U.S. election could create market anxiety (such as Bush vs. Gore in 2000)
The list can go on for both sides. To have a balanced viewpoint, we on the Investment Committee at McIver Capital Management must consider the positives and negatives. Furthermore, we have to consider the weight of each factor as an input into the market, which is a complex system.
Overall, our view is to expect short-term volatility and potential weakness heading into the U.S. election, but longer-term strength beginning almost immediately following the declaration of a winner. As long as governments and central banks are willing to do whatever it takes to support their economies, the markets will have a counter force against economic shutdowns while COVID-19 vaccines are being finalized.
Some people plan for retirement over the course of their careers, while others wait to think about that next stage of their lives when it gets closer. Not all Americans save adequately for their old age, partially because they can’t afford to do so or because they have other, more present-day financial obligations, such as student loans, child care and high costs of living, to worry about.
Still, there’s a portion of the population, albeit small, that pursues retirement early — in some cases, by the time they’re in their 30s or 40s. They do so by living frugally and dedicating most of their income to the stock market. This movement is known as FIRE, short for “financial independence, retire early.” O’Leary, founder of the O’Leary Financial Group, originally spoke about the FIRE movement with Grant Sabatier, an early retiree and host of the Millennial Money podcast, where they also discussed the skills it takes to achieve such a feat.
The “Shark Tank” host, known as Mr. Wonderful on the show, spoke with MarketWatch about how feasible saving for retirement is for most Americans, how they can become millionaires by the time they retire and why Americans need to take the concept of financial independence so seriously. This interview was edited for clarity and length.
The scenario of a contested US election can’t be ignored. So we’ve asked Neil McIver of McIver Capital Management, Michael’s feature guest on this weekend’s radio show, to put together a more comprehensive webinar presentation on potential portfolio strategies. It will take place next Thursday, September 17th at 6:00pm BUT – access is limited so make sure you register as soon as possible.
CLICK HERE to reserve your spot
And we would also be remiss if we didn’t let people know that McIver Capital Management is, once again, accepting new clients.