Timing & trends

Make 2016 a New Year of Financial Resolutions

Posted by Darcie Crowe

on Monday, 21 December 2015 19:53

darcieAs another year comes to an end, we all begin to think about our resolutions for the New Year. While these resolutions often focus on improvements to our physical health; this is also a time to think about enhancements to our financial health.

By setting out realistic and obtainable financial goals, establishing an action plan and monitoring progress, you can make significant strides in your financial security while also achieving peace of mind.

Typical financial well-being goals include saving more, spending less and reducing debt. While these are all important goals, I`d suggest some additional recommendations to improve your family finances.

Put a financial plan in place: All too often we hear that putting a financial plan in place is “on my list of things to do”. The earlier a comprehensive financial plan is put in place, the more effective it can be.

Be an active participant in the management your wealth: Whether you work with a financial advisor or choose to manage your investments on your own, it is imperative that all men and women are active participants in the management of their wealth and have a full understanding of their financial circumstances.

Maximize your registered plan contributions when possible: Both RRSPs and TFSAs provide Canadians with registered investment plans to grow our capital on a tax-free basis. The compounding effect of this tax-free growth can be substantial.

Talk to your family about money and family values: Families are failing to sustain wealth across generations. A sound inter-generational wealth plan includes passing on family values relative to wealth, open communication and enhancing the financial knowledge of future generations.

Assess your insurance coverage: Any time we experience significant life changes, insurance should be reviewed to ensure the required protection is in place. If 2015 brought any transitional events such as marriage, children, divorce or an inheritance, it is important to ensure that you have the appropriate insurance in place and beneficiaries are updated.

Financial security plays a key role in our overall health and happiness. We each have our own unique financial goals and objectives.  As you begin to map out your New Year resolutions for the year ahead, consider making a commitment to yourself that 2016 will be a year of prioritizing you.

Darcie Crowe is a Sr. Investment Advisor and Portfolio Manager at Canaccord Genuity Wealth Management.

www.crowewealthmanagement.com

Mission Accomplished

Posted by Peter Schiff - Euro Pacific Capital

on Monday, 21 December 2015 15:03

UnknownOn May 1, 2003 on the flight deck of the USS Abraham Lincoln then President George W. Bush, after becoming the first U.S. president to land on an aircraft carrier in a fixed wing aircraft (in a dashing olive drab flight suit), declared underneath an enormous “Mission Accomplished” banner that “major combat operations” in Iraq had been concluded, that regime change had been effected, and that America had prevailed in its mission to transform the Middle East. 13 years later, after years of additional combat operations in Iraq, and a Middle East that is spiraling out of control and increasingly disdainful of America’s influence, we look back at the “Mission Accomplished” event as the epitome of false confidence and premature celebration.
 

The image of W on the flight deck comes to mind in much of the reaction to this week’s decision by the Federal Reserve to raise interest rates for the first time in nearly a decade. While many in the media and on Wall Street talked of a “concluded experiment” and the “dawning of a new era,” few realize that we are just as firmly caught in the thickets of failed policy as were Bush, Cheney, and Rumsfeld in the misunderstood quagmire of 2003 Iraq.
 
In its initial story of the day’s events, The Washington Post (12/16/15) declared that by raising the Fed Funds rate to one quarter of a percent The Fed is “ending an era of easy money that helped save the nation from another Great Depression.” Putting aside the fact that 25 basis points is still 175 points below the near 2.0% rate of core inflation that the government has reported over the past 12 months (and should therefore be considered undeniably easy), the more important question to ask is into what environment the Fed is apparently turning this page.
 
Historically, the Fed has begun its tightening cycles during the early stages of expansions, when the economy had enough forward momentum to absorb the headwinds of rate increases. But that is not at all the case this time around.
 
Prior to the recent Great Recession, there had been six recessions since 1969, and over those episodes, on average 13.3 months passed from the time the recession ended to when the Fed felt confident enough in the recovery to raise rates. (The lag time was just 3.5 months in the four recessions between 1971 and 1991). (The National Bureau of Economic Research, US Business Cycle Expansions and Contractions, 4/23/12) 
 
But after the recession of 2008 – 2009, the Fed waited a staggering 78 months to tighten the monetary levers. Those prior tightening cycles also occurred at times when GDP was much higher than it is today. Over the prior six occasions GDP, in the quarter when the Fed moved, averaged a robust 5.3%. While the current quarterly GDP is still unknown, the data suggests that we will get a figure between 1% and 2% annualized. (Bureau of Economic Analysis)

 
Another key difference is the level of unemployment at the time the hikes occurred. As they started tightening much earlier in the expansion cycles, unemployment at the times of those prior recoveries tended to be high but falling. The average unemployment rate at the time the six prior tightenings occurred was 7.5%. But that average rate had fallen to 5.1% (a level that most economists consider to be “full employment”) an average of 42 months after the initial Fed tightening. In other words, those expansions were young enough and strong enough to absorb the rate hikes while still bringing down unemployment. (Bureau of Labor Statistics; Federal Reserve Bank of NY)
 
Our current unemployment rate has already fallen to 5.0% (mostly because workers have dropped out of the labor force). Few economists allow for the possibility that it could fall much lower. This is particularly true when you acknowledge the rapidly deteriorating economic conditions that we are seeing today.
 
As I stated in my most recent commentary, there is a growing troth of data that shows that the U.S. economy is rapidly losing momentum. Some data points, such as the inventory to sales ratio and the ISM manufacturing data suggest that a bona fide recession may be right around the corner (among them, this week’s truly terrible manufacturing PMI and industrial production numbers, a very weak Philly Fed Outlook, the weakest service sector PMI of the year, a big drop in the Kansas City Fed Manufacturing Index, and the announcement that the Third Quarter current account deficit had “unexpectedly” increased 11.7% to post the widest gap since the fourth quarter of 2008, are just the latest such indicators).
 
Given that the U.S. economy has, on average, experienced a recession every six years, the 6.5-year longevity of the current “expansion” should be raising eyebrows, even if the data wasn’t falling faster than a bowling ball with wings.
 
So what happens when the Fed postpones its first rate hike until the death throes of a tepid recovery rather than doing so at the beginning of a strong one? If unemployment starts ticking up during an election cycle, can anyone really expect the Fed to follow through with its projected additional rate hikes and allow a full-blown recession to take hold prior to voters casting their ballots? All of this strongly suggests that this week’s rate hike was a “one-and-done” scenario that does nothing to extricate the Fed from the monetary trap it has created for itself.
 
Another big question is why the Fed decided to move in December, after doing nothing for so long. Clearly the markets were surprised and confused by the Fed’s failure to pull the trigger in September, when the economy appeared, at least to those who chose to ignore the bad data, to be on relatively solid footing. At that time, the Fed suggested that it needed to see more improvement before green lighting a liftoff. And while I tend not to place much stock in the pronouncements of most economists, one would be hard-pressed to find anyone who would claim that the data in December looks better than it did in September.
 
A much more likely explanation is that through its rhetoric the Fed had inadvertently backed itself into a corner. Even though the Fed would have preferred to leave rates at zero, the fear was that failure to raise them would damage its credibility. After having indicated for much of the past year that they had believed that the economy had improved enough to merit a rate increase later in 2015, to continue do to nothing would suggest that the Fed did not actually believe what it was saying. This was an outcome that they could not abide. If we could doubt them about their economic pronouncements, perhaps they have been equally disingenuous with their professed ability to shrink their balance sheet over the next few years, contain inflation if it ever reared its ugly head, or to prevent financial contagion from spreading during a new recession.
 
In truth there should be very little confidence that a new era has begun. A symbolic 25 basis point credibility-saving gesture, coming just two weeks before year-end, is really a non-event. It’s the equivalent of a credibility Hail Mary, with the Fed desperately trying to infuse confidence into a “recovery” that for all practical purposes has already ended.
 
The question will be whether such a small move will be enough to push an already slowing economy into recession that much sooner. Over the past seven years the U.S. economy has become dependent on zero percent interest rates. But as with the famous Warren Buffet bathing suit maxim, these dependencies won’t be fully revealed until the tide rolls out and those zero percent rates are taken away. The bigger question is how quickly the Fed will reverse course. Will it move once it becomes painfully obvious to everyone that we are headed into another recession, or will it wait until we are officially knee deep in a contraction that is even bigger than the last one?
 
The new rounds of rate cutting and Quantitative Easing that the Fed will have to unleash will echo the military “surge” in Iraq in 2007. Those fresh troops were needed to roll back the chaos that the Administration had ignored for so long. But just as that surge only bought us a few years of relative calm, look for the gains brought about by our next monetary surge to be even more transitory. That is a development for which virtually no one on Wall Street is preparing.
 

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1. Dismal performance of actively managed funds

by Sensible Investing TV

The 3rd part of the incredible behind the scenes look at the multi- billion dollar investment industry. The stories fund managers world-wide would rather you didn’t see! – more HERE

 

3.  “Buy high quality assets overseas for next to nothing”

by Simon Black

When I did the math in my head last week, I had to pull out my phone’s calculator just to make sure I hadn’t mentally misplaced the decimal point.

It turns out I was right. My rental car in Cape Town would cost me just $8/day. And that included all the silly taxes and fees and nonsense – read more HERE

  

3. The Great Deflationary Collapse Continues …

by Larry Edelson

One, there’s simply way too much debt in the world. At more than $200 trillion of official total global debts — there is simply no way printing money could offset the deleveraging process that must occur.

….read all HERE

 

 

Faber: Federal Reserve Rate Hike At ‘Precisely The Wrong Time’

Posted by Marc Faber via ZeroHedge

on Friday, 18 December 2015 14:54

Gold Faber-280x300Speaking to CNBC just before the interest rate decision, Faber warned that it’s the wrong time because “the global economy has decelerated very badly, and many countries are already in recession, or going into recession.”

The rate hike separated the Fed from other major central banks – The ECB, Bank of England, PBOC, the Bank of Tokyo and elsewhere that are all battling deflation and desperately trying to stimulate some form of sustainable economic growth.

Yesterday’s hike still leaves U.S. monetary policy extremely loose, and Fed officials have signaled they will act cautiously from to nurture a very tenuous recovery indeed.

Faber said the outlook for American equities looks weak:
“I don’t think U.S. stocks are attractive by any measurement. They are expensive and earnings are going down, and if anything, eventually interest rates will be higher.”

Marc Faber is a strong advocate of owning physical gold and silver which he describes as being a way to become “your own central bank.” He believes an allocation and diversification into physical bullion will serve as vital financial insurance and that storing gold in Singapore is prudent as Singapore is the safest place to own bullion in the world today.

…..continue reading HERE

What Our 5 Risk Indicators Tell About Investors Mood After The Fed Rate Hike

Posted by Investing Haven

on Thursday, 17 December 2015 20:03

The Fed hike interest rates with 25 basispoints. Stock markets rallied unanimously, currencies and commodities ended ‘status quo’. Is a “risk on” mood back, and is it time to become more aggressive?

We review our 5 “risk on” indicators which we closely monitor, according to our methodology, and where we stand in the “bigger picture”.

1. VOLATILITY INDEX

The VIX index spiked above the important 20 level earlier this week, but came down today to close the session at 17.8.

That is encouraging, definitely. But watch the higher lows pattern on the chart below since August this year. We are not there yet, and the next “low” will be an important level to watch! 

VIX 16 dec 2015

…..read 2-5 HERE