July 12, 2013

Weekend Topic Suggestions

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Comment by Blue Skye
2013-07-12 05:37:11

From the Oswego River in Central NY: There were a few cruisers at the wall in Phoenix and a few waiting in Oswego to cross Ontario. Passed two on the river. The turbulent conditions at some of the locks, especially at Minetto were challenging because of all the water. The lock master there expressed surprise that some are still traveling with all the high water. Well, there were no alerts posted!

Again on the Oswego River zero construction and only one For Sale sign. Everything is well kept, no sign of any (newly) abandoned houses. Definitely Twilight Zonish.

Waiting for a fair crossing, soon to leave the realm of the Blue Heron and the Bald Eagle.

Comment by Blue Skye
2013-07-12 07:00:21

Oops, meant to post this in the bits….

Comment by elvismcduf
2013-07-12 06:13:07

…so the past, present and future walk into a bar…it was tense…

Comment by goon squad
2013-07-12 07:13:26

Two fish swim into a wall. One fish looks at the other fish and says “Dam!”

Comment by Bill in Los Angeles
2013-07-12 19:56:51

A man walked into a bar carrying a chunk of asphalt under his arm: “Give me a beer…and one for the road”

A dyslexic walks into a bra

Comment by Ol'Bubba
2013-07-13 04:36:41

And don’t forget about the agnostic dyslexic insomniac.

He lay awake in bed all night wondering if there really is a dog.

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Comment by Whac-A-Bubble™
2013-07-12 21:30:06


C,E-flat and G go into a bar.
The bartender says, “Sorry, but we don’t serve minors”
So E-Flat leaves and C and G have an open 5th between them.

After a few drinks the 5th is diminished and the G is out flat. An F comes in and tries to augment the situation but is not sharp enough. A D comes into the bar and heads straight for the bathroom saying,”Excuse me, I’ll just be a second.”

An A comes into the bar but the bartender is not convinced this relative of C is not a minor. Then the bartender notices a B-Flat hiding at the end of the bar and exclaims, “Get out now! You’re the seventh minor I’ve found in the bar tonight.”

Not easily deflated, the E-Flat comes back to the bar the next night in a 3-piece suit with nicely shined shoes. The bartender, who used to have a nice corporate job until his company downsized, says, “You’re looking sharp tonight, come on in! This could be a major development.” This proves to be the case as the E-Flat takes off the suit and everything else and stands there au natural.

Eventually C sobers up and realizes in horror he is under a rest. The C is brought to trial, found guilty of contributing to the diminution of a minor, and is sentenced to 10 years of DS without Coda at an upscale correctional facility. On appeal, however, the C is found innocent of any wrong doing, even accidental, and that all accusations to the contrary are bassless.

Comment by Carl Morris
2013-07-12 21:47:13

Yeah, I’ve heard that one :-P.

Comment by Whac-A-Bubble™
2013-07-12 07:00:46

Is it too late to get in on the summer stock market rally?

Comment by Whac-A-Bubble™
2013-07-12 21:54:00

I have to confess, thanks to some stock purchases I made over the past couple of years, while holding my nose, I have actually chalked up some recent portfolio gains. In case a crash happens later on this year, I’m hedged against that, too, as I have been accumulating fixed income fund shares while the smartest guys in the room panicked. And I don’t face the prospect of two-to-three decades of capital losses on a depreciating domicilic money pit.

So in short, it’s all good!

Comment by Whac-A-Bubble™
2013-07-13 00:18:38

Robert Lenzner, Forbes Staff
7/12/2013 @ 7:57AM
How Bernanke Manipulates The Markets In 3 Easy Steps

Question: How do you make stocks and bonds rise in price at the same time and increase the wealth of the investor class?

Answer: You declare your intent to buy $85 billion of bonds and mortgages every month for a considerably extended period as a way to maintain the lowest rates of interest in recent history.

Question: How do you drive the price of stocks and bonds lower at the same time, reducing the wealth of the investor class, and threatening the housing recovery?

Answer: You announce your intention to introduce tapering and reduce the amount of bonds and mortgages you are buying every month, with the intent of ultimately ceasing such purchases completely at some uncertain date in the future.

Question: How do you correct(reverse) the intent to begin phasing out quantitative easing in the light of stock and bond markets reacting in an overly negative manner that threatens the economic recovery?

Answer: You announce that you may indeed reduce the dollar amount of bonds and mortgages you are buying, but not right away. And you will certainly not be increasing the interest rate for borrowing money in the foreseeable future, or most certainly not until the unemployment rate falls from 7.6% to 6.5%.

Question: What do you do if the latest attempt at manipulation (changing signals) may not be sufficiently convincing. After all, the yield on the 10 year Treasury note is close to its recent peak of 2.70%. The cost of a mortgage has backed up as well.

Answer: You strongly hint that even if the U.S. unemployment rate falls to 6.5%, the Fed may well, probably will, keep interest rates near zero. This is a major revision to what Bernanke has been positing ever since May 22nd, when bond traders began getting net short Treasuries. They meant to coin profits in the instant spike in interest rates.

Comment by Whac-A-Bubble™
2013-07-12 07:03:52

Whither gold and other commodities from here?

I can’t help but thinking that gold investors are in for another good screwing before this is over.

Gold looks vulnerable after Bernanke ‘one-night stand’

July 12, 2013, 8:15 AM
“Dear Ben: We had such happy times. I think you still love me, but can’t be sure. Yours always, Gold.”

Comment by Whac-A-Bubble™
2013-07-12 07:07:48

With the Fed’s reaffirmed commitment to low rates forever, is higher inflation pretty much “in the bag” now?

P.S. A monthly rate of producer price inflation at 0.8% translates into an annualized rate of (1.008^12-1)*100% = 10.0%.

July 12, 2013, 9:47 a.m. EDT
Wholesale prices surge in June on gas spike
Producer price index jumps 0.8% to mark second straight increase
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — U.S. wholesale prices surged in June for the second straight month as the cost of gas shot up, but inflationary pressure remained subdued in most other segments of the economy, according to a government report released Friday.

The producer price index rose a seasonally adjusted 0.8% last month, the Labor Department said. Economists surveyed by MarketWatch had predicted a 0.5% increase.

In Friday action, U.S. stocks rose in early trades.

Comment by Neuromance
2013-07-12 08:02:18

• Japan had ZIRP plus deflation.
• We have ZIRP plus inflation.

That’s a big difference. Much more purchasing power erosion here. Perhaps even purchasing power increases in Japan.

Median and average incomes from 1990 to 2011

Comment by Neuromance
2013-07-12 07:56:29

All this talk of people being rich because their primary residence has increased in value (a 2x increase in house value and a dollar will get you a cup of coffee), got me to thinking: Just who exactly are/were the actual winners and losers of the housing bubble?

What were the actual impacts on individuals’ net worth outside of primary residence?

1) Seniors with savings. 500K in savings would yield 25K with 5% interest. Now it yields maybe a one to two thousand dollars. Ouch.
2) Pre-bubble property owners net result was higher property taxes.
3) First time buyers saddled with heavier debt loads as a result of higher prices.
4) The taxpayer, bailing out the bad decisions of lenders and debtors.
5) People who lost their houses to foreclosures or forced into short sales.
6) Flippers who didn’t get out before the music stopped (prices plateaued).

1) Flippers who did get out before the music stopped.
2) People who moved to a lower priced locale.
3) Financial company executives who saw record bonuses before and during the financial crisis.
4) Realtors.
5) Loan originators.
6) The Fed, which got a lot more power, despite being asleep at the switch.

Others options for the winners/losers categories?

Comment by Al
2013-07-12 09:22:20

I’d lump mortgage brokers in with realtors, although I woudn’t say that they were in general winners. Many of them made some major income during the bubble, but how many saved any of it and/or are still have an income?

Comment by crusty perkins
2013-07-12 12:34:32

Others options for the winners/losers categories?”

You kept your job = winner

Comment by perkonkrusts
2013-07-12 13:26:40

Hey, I see what you did there. You flatter me, as I’m sure you intended.

Comment by sleepless_near_seattle
2013-07-12 14:38:37

Losers (given #2 in your winners list):

Those of us in (relatively) lower priced locales. (pricing power still resilient here…)

Comment by Whac-A-Bubble™
2013-07-12 08:22:08

Is the bond crash over yet?

Comment by Whac-A-Bubble™
2013-07-12 08:25:04

Updated July 11, 2013, 11:15 p.m. ET
Bruising Quarter for Bond Fund Managers

Large Funds Posted Losses in Quarter

A sudden surge in U.S. interest rates has dimmed the luster of some of the bond world’s brightest stars.

Bill Gross, Dan Fuss, Jeffrey Gundlach and Michael Hasenstab were among portfolio managers whose funds posted losses during the second quarter.

The tumble in Treasury prices led to the biggest-ever quarterly loss for Mr. Gross’s $268 billion Pimco Total Return fund. Investors in the fund at Pacific Investment Management Co., a unit of Allianz SE of Germany, have lost more money than holders of the average bond fund this year, a rare setback for a manager who has consistently beaten the market over more than two decades. Of the four large bond funds, Pimco Total Return was the only one to trail its benchmark in the second quarter and full year.

The culprit: a rapid rise in Treasury yields that started in May amid fears the Federal Reserve would pull back its stimulus. The yield on the 10-year Treasury note has risen about a percentage point since early May. On Thursday, the yield fell to 2.576%. Bond yields move inversely to prices.

The reversal was particularly brutal for holders of emerging-market bonds and Treasury inflation-protected securities, or TIPS, which compensate investors for rising inflation. Neither bet panned out as funds rushed out of poorer-country markets and U.S. inflation softened. Mr. Gross allocated 18% in the two asset classes in the bond fund at the end of May, according to Pimco.

Mr. Gross declined to comment. A spokesman for Pimco, of Newport Beach, Calif., said the fund has delivered “investor value over myriad market cycles.”

The performances highlight the degree to which even veteran investors were shocked by the bond-market shakeout. Many had warned that rates were unlikely to stay at the ultralow levels they reached in early May, but few were able to get out of the way of the investor stampede out of bonds.

“The selloff has been rather unhinged, frenzied at times,” said Christopher Sullivan, chief investment officer at the United Nations Federal Credit Union in New York, with $2.2 billion of assets under management.

Comment by cactus
2013-07-12 12:37:07

Is the bond crash over yet?”

has Gold bottomed out ?

Comment by Bill in Los Angeles
2013-07-12 19:57:57

I think it has!

Comment by frankie
2013-07-12 08:32:11

REMINDER: Exclusive 0% interest offer to buy a new iPhone 5

you can now spread the cost of a new iPhone 5 over 12 months.

Was an email I just received. So far this year I have been offered a 0% deal for a car/carpet/various goods from a variety of firms. My question is how much of the perceived upturn in the economy is down to offers like this. I also noticed that the car offer was repayable over 60 months, in the past I seem to remember it was a maximum of 36 months and you’d struggle to get that and certainly not at 0%.

Comment by Al
2013-07-12 09:25:33

I heard an ad on the radio offering 84 month, 0% terms for financing a car. Don’t remember which make. I do believe that most economic ‘good news’ is based on more debt.

Comment by AmazingRuss
2013-07-12 10:07:19

Good news for the insurance industry too. Full coverage forever!

Comment by Al
2013-07-12 11:24:53

Have you ever checked out new boats or RVs? You can get 20 year loans. No idea what the interest rates are like.

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Comment by oxide
2013-07-12 10:00:09

The 36-month maximum was gone long ago. When I bought a car in 2007, I had to force the salespeople to give me a 36-month loan. 60 was the norm, and there were ads for 72 months, especially behometh trucks.

Comment by (Neo-) Jetfixr
2013-07-12 10:22:47

60s and 72s are SOP around here.

It’s amazing how cheap/easy financing for cars is, when you have a 700 plus credit score.

Comment by In Colorado
2013-07-12 10:25:19

I also noticed that the car offer was repayable over 60 months, in the past I seem to remember it was a maximum of 36 months and you’d struggle to get that and certainly not at 0%.

We got a 60 month, 0% car loan back in 2005 from GMAC.

Comment by sleepless_near_seattle
2013-07-12 15:53:40

60 month offers started showing up in the mid-90s, IIRC.

I remember a friend buying a Mazda on that plan and then immediately regretting it…

Comment by rms
2013-07-13 04:16:36

“you can now spread the cost of a new iPhone 5 over 12 months.”

Back when I was a self employed journeyman windows washer and “deep pockets liability” recently arrived I recall my insurance guy telling me, “I have bad news and good news.” Bad news: your liability premiums are quadrupling. Good news: there are several financing options available. Ah yes…more innovation.

Comment by (Neo-) Jetfixr
2013-07-12 10:28:43

My question:

Given the limitations of the typical 401K, when it comes to investment choices, where does one park his money/cash, after rolling out of S&P 500 index funds?

“Buy and hold” is for the birds. Not when anyone who is paying attention knows that a major correction is coming sooner rather than later.

I’ve decided to take a more active role in my “pump and dump” 401K.

Or maybe I’ll buy a house……..

Comment by crusty perkins
2013-07-12 12:27:17

“Not when anyone who is paying attention knows that a major correction is coming sooner rather than later.”

hahaha U better get UR investment advice from some place besides this Blog

S&P index funds can’t be beat by most mutual funds over any lenght of time after expenses.

” I’ve decided to take a more active role in my “pump and dump” 401K.”

good luck buddy U will need it

Comment by Bill in Los Angeles
2013-07-12 20:00:50

Then don’t buy and hold. How about buy and hold and rebalance?

My average gain since January 1 2009 is above 15%. I just do the “buy and buy” approach and dollar cost average. Well that 401k is now just a hold and rebalance, with $454,000 worth of mutual funds since I changed companies.

Comment by crusty perkins
2013-07-12 12:30:21

“The stock market is at all-time highs! The simple observation of seems to demand some sort of action; a celebration or period of reminiscence. At the very least individual investors should take the opportunity to buy or sell something, right?

Not so fast says The Reformed Broker Josh Brown. “I hate the idea that new highs prompt us to have to do something,” Brown says, in the attached video. He’s not immune to the appeal that yesterday marked the third leg of a triple top, he’s just more willing than most to concede that making the Big Market Call is a game for suckers.

“People have trouble rationalizing being in the market because of where it was six months ago or five years ago. The best thing you can do to overcome that is study history,” suggests Brown.

Of course he’s right. Bull markets make new highs almost by definition. “Double tops,” like those made in 2000 and 2007, and extended periods of ticking against resistance as the Dow did in the ’70s, are the exception not the rule.

Selling the all-time high made in 1982 would have gotten investors out ahead of the longest market rally in history. Dumping stocks when they hit the Big Round Number of Dow 10,000 didn’t work for the long haul.

Until yesterday selling on the headline “Stocks Hit All-Time Highs” worked exactly once. That was 2007 when the S&P 500 recovered its loses incurred after the tech bubble popped.

As of yesterday’s close not even dumping in 2007 was a particularly prudent move.

Taken a step further, history also shows that market crashes don’t come immediately on the heels of new highs. The drops in 1929, 1987, 2000 and 2007 all came months after market peaks. If you believe in market timing, and I do, use trailing stops rather than dumping on the New High headlines.

As an investment strategy Brown is a proponent of putting money to work in stages and on a schedule. Shouting “Top!” makes for theatrical television but in the real world it’ll get you nowhere.


Comment by Bill in Los Angeles
2013-07-12 20:02:05

Gold not at an all time high. So if “anyone” is nervous about the stocks at all time highs, based on markets ALWAYS being cyclical, gold has room to advance. Particularly gold stocks.

Comment by Whac-A-Bubble™
2013-07-12 21:56:13

I’m guessing there will be a point between today and 12/31/2013 when both gold and long-term Treasurys see a tremendous flight-to-quality move over a period of a few short days. It happened on Black Monday (October 19, 1987) and there is absolutely no indication it won’t happen again exactly the same way some time in October 2013.

Wait for it!

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