Master Financial Education

Financial and Economic Daily Commentary 2018
The  most intensive and extensive on the Web

E. F. Moody Jr.

click above for bio


USA Today- "This is a high-powered personal bookmark list that spans the spectrum of the truly useful."

FORBES- "You'll find some great information."

BUSINESS WEEK: "For an Expert, Click here"  

World Statistical data
Market Quotes by TradingView

Courtesy of: Visual Capitalist

From an adviser: It is a daily read for me. Clearly biased towards the client. Great perspectives and links to thought provoking material. Greatly appreciated.

Knowledge makes obsolete the inequities that ignorance and prejudice justify

Investor/Investing Risk of Loss: Identify, Manage and Limit Investment
Risk of Loss on Mutual Funds and ETFs

Four Phase Process that will change the investment dichotomy for 75% of Middle and Lower Income investors overall and up to 90% for 401k Investors 

Losses limited to about 12% for recessions

Patent Pending

Morality, Sexism, Ethics, Corrupt Equilibrium

Critical reference to the limited fiduciary capabilities in the planning industry (and more) and why they may/will remain as such given sophomoric DOL rules and flaccid organizational enforcement. Specific commentary to sexism and ethical and moral lapses of society impacting women. Not the standard drivel

 Target Date and Bond Funds

 Retirement Fiduciary Breach

Analysis for investors and advisers. The economic changes from the Great Recession caused major adjustments in investing. One of the major issues is the flip flop of the correlations in bond funds versus equities  coupled with a truly lower return and an increased overall risk. It will take a lot more effort to provide adequate return for those in need and the discussion will address pros and cons particularly for retirement purpose Emphasis on risk, Click for full article.

“It’s not the Fed’s job to stop people from losing money.”

Jay Powell- head of the Federal Reserve


4/25: 1% above 2016 is NOT chickenfeed

the International Monetary Fund raised its forecast for world economic growth to 3.9 percent for both 2018 and 2019. Most advanced societies — the United States, Japan, Europe — grew faster in 2017 than expected, and the momentum has carried into 2018.

Consider: In October 2017, the IMF predicted 2.3 percent growth for the U.S. economy in 2018; now the forecast is 2.9 percent. For the world, growth in 2018 is expected to be nearly one percentage point higher than in 2016.

An extra one percentage point of production translates into nearly $1.3 trillion more of clothes, cars, computers, tractors, tourism, health care — and much more.

the biggest danger is debt. If the world economy is overly dependent on debt — loans to households, businesses and governments — and debts are reaching (or have already reached) unsustainable levels, then there’s obviously a huge contradiction at the core of the recovery.

EFM- look at this chart and the increases from 2007 to 2016. Look what emerging markets did. I admit when the countires effectively gave money away they still had an obligation to stop before it got out of hand.

Don Ellis Jazz Orchestra

Niner Two

You have never heard anything like it, But you will really want to stand up and clap. Simply amazing chart and musicians

4/24: What a drag

clients include a number of traders, analysts, bankers and FAs, declared in a conversation with this reporter that many of his millennial clients were “a strung-out, rattled mess” working killer hours and trying to deal with job stress by relying on prescription and street drugs, among them, marijuana.

Now, he argues, that stress compounded by high market volatility has made both young FAs as well as many seasoned advisors reliant on weed to ease anxiety and is a cause of their losing that much-needed performance edge.
marijuana clouds thinking and kills motivation.

4/24: The illustration is exaclty how life works. And your investments

4/24: Health care cost increase at 2% projected

Report estimates health care costs for 2018 retirees will rise 2%

A 65-year-old couple retiring in 2018 can expect to pay an estimated $280,000 in health care costs in retirement, according to a new report. That marks a 2% increase over last year and a 75% increase since 2002, the report said.

EFM- The $280,000 or similar is a worst case scenario. Many people will not be able to afford that- certainly for two- and while there are ways to cover part of the costs, Medicaid may be final result. Not a stretch here- it just involves money which most retirees will simply not have. Yes, if a house is involved, it looks like coverage is available.

4/24: Typical Long-Term Care Claims Are for Home Care, Group Says)

AALTCI found that the percentage of new LTCI claims filed for insureds getting care provided in a nursing home fell to about 28% in 2017, from 32% in 2016.

The percentage for people getting care at home fell to 52%, from 54%.

The percentage for people getting care in an assisted living facility increased to 20%, from 14%.

Insurers paid a total of $9.2 billion in LTCI benefits for 295,000 insureds in 2017, up from $8.7 billion in benefits for 280,000 insureds in 2016, according to AALTCI.

4/24:Policy changes helped homeowners avoid crises after hurricanes

A move to a uniform assistance policy for homeowners hit by natural disasters, coupled with changes in lending standards after the financial crisis, helped keep foreclosure figures for hurricane-affected areas in Texas and Florida below pre-storm levels. Meg Burns, a former official in the Department of Housing and Urban Development who now works on housing policy issues at FSR, said the effects of Superstorm Sandy "informed our thinking to get all of the government entities around the table to make some consistent policy."

4/24: SEC Proposes 'Best Interest' Guidance
"While the proposed regulation is titled 'Regulation Best Interest,' the proposal does not define the term 'best interest' ... Rather, its view is that whether a broker-dealer acts in the best interest of a retail customer when making a recommendation will depend upon the facts and circumstances of the particular recommendation and the particular retail customer, along with the circumstances of the four specific components of the Regulation Best Interest[.]"

EFM- This appears to be nothing more than 'what is suitability' Neither of which set any type of standards required by the broker/agent. And push come to shove and it ends up in arbitration, the consumer will get the short end of the stick. Why? The arbitrators are not required to know anything about investing- though you would think otherwise. Basically, arbitrations are simply two attorneys droning on and on about superficial elements and whoever can muster up the best story for the arbitrators wins. I trivialized some elements to make a point. But the full description exists in "The Failure of Securities Arbitration" which I wrote in 2012.While the mechanics of arbitration has changed, the knowledge needed to understand how investing is done in the real world is never taught to arbitrators.

"Nothing can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent.

Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts.

Persistence and determination alone are omnipotent."

Calvin Coolidge

4/24: Long term care

option for insuring against long-term care risk is growing: life insurance policies that combine universal life insurance with long-term care protection. Life combination policies have been enjoying strong growth in recent years—256,000 were sold in 2016, up from just 86,000 as recently as 2012.
The worry among older Americans about long-term care risk is that nearly half (45 percent) of retirees aren’t confident that they will be able to pay for long-term care, according to a survey by the Employee Benefit Research Institute; an even higher percentage of workers (57 percent) share that same concern. A poll by LIMRA in 2016 found that 44 percent of retirees are concerned about long-term care expenses, up from 31 percent in 2006.
How substantial is the risk? Recent research by Rand Corp. concludes that 56 percent of people aged 57 to 61 will spend at least one night in a nursing home during their lifetimes. People in this age group run a 10 percent risk of spending three years or more in a nursing home, and a 5 percent chance of spending more than four years in one.
The big financial risk lies with those longer stays. The median annual cost of a private nursing home room this year is a bit over $8,000 per month, according to Genworth’s annual cost-of-care survey, and it’s far higher in some states ($9,700 per month in California, for example).
But none of the commercial insurance options are making a significant difference in meeting the huge unfunded need for long-term care protection. Overall, just 12 percent of people in their late 50s and early 60s have purchased coverage, according to Rand.
Meanwhile, the traditional LTCI market continues to decline. Insurance companies have had a tough time pricing risk accurately or profitably, which has led to repeated rate hikes on existing policies. Rate increases approved by regulators have averaged more than 20 percent annually in recent years, according to a study by the Society of Actuaries. Many carriers have simply stopped writing new policies.

4/24: Health care costs, desire to keep active cited as reasons for working past retirement age
A change in plans
by Philip Joens / News Tribune
Older workers, defined by the Bureau of Labor Statistics as workers ages 55 and up, made up the smallest segment of the workforce between 1970-2000. By 2023, the BLS projects, 41 million older workers will participate in the workforce, including 13 million ages 65 or older.
In May 2017, the BLS projected the workforce growth rate for 65- to 74-year-olds will grow by 55 percent. The percentage of people age 75 and older working will grow by 86 percent. During that same time frame, the BLS expects the overall labor force to grow by only 5 percent.
Last year, the bureau said baby boomers are primarily responsible for these increases.
“They are healthier and have a longer life expectancy than previous generations,” the BLS said in a 2016 study. “Changes to Social Security benefits and employee retirement plans, along with the need to save more for retirement, create incentives to keep working.”
About 27 percent of older workers work part time and about 40 percent of people ages 65 and older work part time, the BLS said. Hardenbrook, from AARP, said changing retirement benefits are one reason many people work later in life now

4/24: Not comforting at all

The Bank of England is heading for 'a car crash' when the next financial crisis starts

A report from the Institute for Public Policy Research (IPPR) argues that the bank has kept interest rates too low for too long.

4/24: Just the last sentences....

Eurozone blues: The past week has brought two troubling pieces of news for the health of the single currency area, warns Wolfgang Münchau. First, a meeting between Angela Merkel and Emmanuel Macron confirmed that the two leaders have very different ideas about the future. It now seems certain that Germany will not agree to a central eurozone budget, nor a common deposit insurance to weather macroeconomic shocks. Second, a sudden decline in eurozone economic activity means another downturn is not unthinkable. That data could be a fluke; if not, the combination could be lethal. 

EFM- It may be that global activity will be OK for 2018, but if so, 2019 could finally be when the mess starts


4/24: A teenager invented this- getting plastic out of the ocean

 the machine should be able to collect half of the detritus in the patch – about 40,000 metric tons – within five years.

The Great Pacific Garbage Patch (GPGP) spans 617,763 sq miles - more than twice the size of France, and contains at least 79,000 tons of plastic,

More than 8 million tons of plastic is dumped into our oceans every year, according to the US-based Plastic Oceans Foundation.

Up to 90 per cent of the world’s plastic items are never recycled, and scientists believe nearly every piece ever created is still in existence somewhere, in some form, with most going into landfill or the environment. Single-use plastic, such as water bottles and nappies, take 450 years to break down.

4/25: Treasuries 10 year

4/24: If you see it, report it. Nice thought at times but it did not help McKayla

McKayla Maroney’s dark journey
The Olympic champion suffered years of sexual abuse by US team doctor Larry Nassar — and powerful institutions failed to protect her at every turn

EFM- And another homily- 'the truth will set you free'. Maybe, but not where a lot of money is concerned.  Even more so where women were involved since men tended to be the corporate bigwigs. . 

Half bath

4/23: Whole life insurance

whole life remains the most popular product in the industry, having accounted for 36% of life insurance premium in 2016, followed by index universal life at 21%, term life with 21%, and variable universal life at 6% (versus 33% in 2000), 



Americans age 65 to 74 spent an average $5,832 on entertainment in 2015, according to a study from the Employment Benefit Research Institute, based in Washington, D.C. Entertainment spending declines with age; people 85 and over in the study spent $2,232 on average

a married couple in their late 60s can expect to spend close to $13,000 a year in medical expenses. That assumes $8,000 in Medicare premiums and supplemental insurance premiums, $1,200 for drug coverage, and $3,700 in out-of-pocket expenses.

4/23: The FED and the Economy

"Financial imbalances," in Fed speak, are asset bubbles, a phenomenon when prices are out of whack with economic reality. In a credit-based economy, assets are collateral for debt. And inflated asset prices put the financial system, meaning the lenders, at risk when those asset prices deflate. Since the Fed has to take care of the financial system, and since it blew up so wonderfully last time due to asset bubbles deflating, the Fed is right to be worried about it. At first the hawks, the rare ones; and now even the doves.

even after the mini-selloff since the end of January, prices are still too "elevated." And then she goes into my favorite metrics, the bond market bubble where investment-grade yields are low and junk-bond yields are ludicrously low, with paper-thin spreads or risk premiumsthat don't pay investors for the massive risks they're taking, the bubble in "leveraged loans" and collateralized loan obligations (CLOs), and the bubble in commercial real estate, particularly in multifamily and industrial:

Corporate bond yields remain low by historical comparison, and spreads of yields on junk bonds above those on comparable-maturity Treasury securities are near the lower end of their historical range.

Spreads on leveraged loans and securitized products [CLOs] backed by those loans remain narrow.

Prices of multifamily residential and industrial commercial real estate (CRE) have risen, while capitalization rates for these segments have reached historical lows.

Second, business leverage outside the financial sector has risen to levels that are high relative to historical trends. In the nonfinancial business sector, the debt-to-income ratio has increased to near the upper end of its historical distribution, and net leverage at speculative-grade [junk-rated] firms is especially elevated.

As we have seen in previous cycles, unexpected negative shocks to earnings[though they're actually not unexpected, as we've seen in the brick-and-mortar meltdown] in combination with increased interest rates could lead to rising levels of delinquencies among business borrowers and related stresses to some banks' balance sheets.

4/23: Low wage and going nowhere

If you're one of the approximately 65 million Americans in low-paid service jobs, getting a share of that economic prosperity may be unbearably difficult. Jobs may be plentiful, but finding one that pays better than your current gig is much more rare than commonly believed, according to new research paper from the Federal Reserve Bank of New York.

"If you start in one of those low-wage occupations, you have a higher probability of becoming unemployed than moving up the career ladder,

The authors looked at 175,000 workers in so-called low-quality jobs -- with low pay, unpredictable scheduling and few or no benefits -- and examined how those people's jobs changed over a six-year period ending in 2017. Of this group, only 5.2 percent were in a higher-paying job one year later, the authors found. By contrast, more than 10 percent left the workforce and 6.7 percent became unemployed.

Typical jobs they upgraded to included work as nursing aides, customer service representatives, administrative assistants or wholesale and manufacturing sales. None of the "better" jobs typical for workers leaving low-wage work were in production, the paper notes.

The most common "better" job that low-wage workers moved into was truck driving. About one in 300 made this move. That's in line with other research that has found some kind of truck driving a common "opportunity job," paying around the national average and accessible to people without college degrees. Other opportunity jobs included clerks, automotive technicians and repair workers.

These findings directly contradict the rosy discussion of today's job market. Those who favor minimal regulation and oppose raising wages for service jobs often say such jobs are short-term and entry-level, providing workers with a first step on the ladder up job mobility. 

The New York Fed study's authors say, "If low-wage jobs are simply a stepping stone to higher-quality jobs, then the problem of low-wage work can be solved via the labor market." But, they added, "If, on the other hand, people tend to get trapped in low-wage jobs that are difficult to escape, then some more proactive policies may be warranted."

EFM- the article ended with this-"The only way to create a large number of family-supporting jobs that will rebuild the middle class is by upgrading the millions of precarious, low-skill, and low-wage service class jobs we already have."

Just what is meant by upgrading the millions of precarious, low-skill, and low-wage service class jobs we already have.?????"

It doesn't make sense. If you take a hamburger flipper- how is that going to be upgraded?? In truth, that job will be lost to a robot by the early to mid 2020s. It was written by someone analyst at the New York Fed so one assumes it carries some credence. Darned if I can figure it out.

4/23: ETFs. This is from Proshares. Look at all the different types and, particularly, the start dates. Tough to figure out how some will fare when the market implodes. Expense ratios are fine until you get to the esoteric structures

4/23: America in decline

America’s share of global wealth is shrinking. By some estimates, the United States accounted for roughly 50 percent of global output at the end of World War II. By 1985, its share stood at 22.5 percent. It has fallen to 15.1 percent today, and the International Monetary Fund projects that it will slip to 13.7 percent by 2023.

The proliferation of various technologies — from crude explosives to advanced robotics — has made it easier for even relatively small and weak countries and nonstate actors to challenge the big and powerful United States.

The United States  spends more on its military than the next seven or eight nations combined. Total annual expenditures, including for the wars in Iraq and Afghanistan, have averaged $561 billion since 2001. So, how much more must Americans spend to maintain a military edge sufficient to deter attacks against others?

About $196 billion more, on average, over the next five years. The Trump administration projects spending $3.78 trillion from 2019 to 2023, or $756.9 billion a year.

I truly wish this was a funny cartoon. But the debt will kill U.S. growth later on

4/22: Taxation of retirement benefits: social security, pensions, IRAs and 401ks, other taxable accounts, gifts and bequests. Short concise read,


4/22: Best and worst funds and ETFs . I put the whole article here due to the number of graphs and because I wanted this in one place for some work I am doing. Bon Apetit.

At the beginning of the second quarter of 2018, only the Consumer Non-cyclicals sector earns an Attractive-or-better rating. Our sector ratings are based on the aggregation of our fund ratings for every ETF and mutual fund in each sector. Our fund ratings are based on aggregations of the ratings of the stocks they hold. See last quarter’s Sector Ratings here.

Investors looking for sector funds that hold quality stocks should look no further than the Consumer Non-cyclicals and Technology sectors. These sectors house the highest rated funds. Figures 4 through 7 provide more details. The primary driver behind an Attractive fund rating is good portfolio management, or good stock picking, with low total annual costs.

Attractive-or-better ratings do not always correlate with Attractive-or-better total annual costs. This fact underscores that (1) cheap funds can dupe investors and (2) investors should invest only in funds with good stocks and low fees.

Our Robo-Analyst technology[1] empowers our unique ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund’s holdings.[2]

See Figures 4 through 13 for a detailed breakdown of ratings distributions by sector. See our ETF & mutual fund screener for rankings, ratings and reports on 7000+ mutual funds and 400+ ETFs. Our fund rating methodology is detailed here.

All of our reports on the best & worst ETFs and mutual funds in every sector are available here.

Figure 1: Ratings For All Sectors

Source: New Constructs, LLC and company filings

To earn an Attractive-or-better Predictive Rating, an ETF or mutual fund must have high-quality holdings and low costs. Only the top 30% of all ETFs and mutual funds earn our Attractive or better ratings.

Fidelity MSCI Consumer Staples Index ETF (FSTA) is the top rated Consumer Non-cyclicals fund. It gets our Very Attractive rating by allocating over 71% of its value to Attractive-or-better-rated stocks.

Rydex Energy Services Fund (RYESX) is the worst Energy fund. It gets our Very Unattractive rating by allocating over 67% of its value to Unattractive-or-worse-rated stocks. Making matters worse, it charges investors annual costs of 7.73%.

Figure 2 shows the distribution of our Predictive Ratings for all sector ETFs and mutual funds.

Figure 2: Distribution of ETFs & Mutual Funds (Assets and Count) by Predictive Rating

Source: New Constructs, LLC and company filings

Figure 3 offers additional details on the quality of the sector funds. Note that the average total annual cost of Very Unattractive funds is over three times that of Very Attractive funds.

Figure 3: Predictive Rating Distribution Stats

* Avg TAC = Weighted Average Total Annual Costs

Source: New Constructs, LLC and company filings

This table shows that only the best of the best funds get our Very Attractive Rating: they must hold good stocks AND have low costs. Investors deserve to have the best of both and we are here to give it to them.

Ratings by Sector

Figure 4 presents a mapping of Very Attractive funds by sector. The chart shows the number of Very Attractive funds in each sector and the percentage of assets in each sector allocated to funds that are rated Very Attractive.

Figure 4: Very Attractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 5 presents the data charted in Figure 4.

Figure 5: Very Attractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 6 presents a mapping of Attractive funds by sector. The chart shows the number of Attractive funds in each sector and the percentage of assets allocated to Attractive-rated funds in each sector.

Figure 6: Attractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 7 presents the data charted in Figure 6.

Figure 7: Attractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 8 presents a mapping of Neutral funds by sector. The chart shows the number of Neutral funds in each sector and the percentage of assets allocated to Neutral-rated funds in each sector.

Figure 8: Neutral ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 9 presents the data charted in Figure 8.

Figure 9: Neutral ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 10 presents a mapping of Unattractive funds by fund sector. The chart shows the number of Unattractive funds in each sector and the percentage of assets allocated to Unattractive-rated funds in each sector.

The landscape of sector ETFs and mutual funds is littered with Unattractive funds. Investors in Telecom have put over 57% of their assets in Unattractive-rated funds.

Figure 10: Unattractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 11 presents the data charted in Figure 10.

Figure 11: Unattractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 12 presents a mapping of Very Unattractive funds by fund sector. The chart shows the number of Very Unattractive funds in each sector and the percentage of assets in each sector allocated to funds that are rated Very Unattractive.

Figure 12: Very Unattractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

Figure 13 presents the data charted in Figure 12.

Figure 13: Very Unattractive ETFs & Mutual Funds by Sector

Source: New Constructs, LLC and company filings

4/22: Most dependable cars


"The Political Impact of Immigration: Evidence from the United States" Fee Download
CEPR Discussion Paper No. DP12848

ANNA MARIA MAYDA, Georgetown University - Department of Economics, IZA Institute of Labor Economics
University of California, Davis - Department of Economics
Government of Canada - Bank of Canada

In this paper we study the impact of immigration to the United States on the vote for the Republican Party by analyzing county-level data on election outcomes between 1990 and 2010. Our main contribution is to separate the effect of high-skilled and low-skilled immigrants, by exploiting the different geography and timing of the inflows of these two groups of immigrants. We find that an increase in the first type of immigrants decreases the share of the Republican vote, while an inflow of the second type increases it. These effects are mainly due to the local impact of immigrants on votes of U.S. citizens and they seem independent of the country of origin of immigrants. We also find that the pro-Republican impact of low-skilled immigrants is stronger in low-skilled and non-urban counties. This is consistent with citizens' political preferences shifting towards the Republican Party in places where low-skilled immigrants are more likely to be perceived as competition in the labor market and for public resources.


"Insurers as Asset Managers and Systemic Risk" Fee Download
CEPR Discussion Paper No. DP12849

CHOTIBHAK JOTIKASTHIRA, Southern Methodist University (SMU) - Finance Department
Indiana University - Kelley School of Business - Department of Finance, Centre for Economic Policy Research (CEPR), European Corporate Governance Institute (ECGI), University of Naples Federico II - CSEF - Center for Studies in Economics and Finance
International Association of Insurance Supervisors, c/o Bank for International Settlements
University of North Carolina Kenan-Flagler Business School
Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM), Centre for Economic Policy Research (CEPR)

Financial intermediaries often provide guarantees that resemble out-of-the-money put options, exposing them to tail risk. Using the U.S. life insurance industry as a laboratory, we present a model in which variable annuity (VA) guarantees and associated hedging operate within the regulatory capital framework to create incentives for insurers to overweight illiquid bonds ("reach-for-yield"). We then calibrate the model to insurer-level data, and show that the VA-writing insurers' collective allocation to illiquid bonds exacerbates system-wide fire sales in the event of negative asset shocks, plausibly erasing up to 20-70% of insurers' equity capital.

4/22: A lot more people are going to need more coverage with the more powerful storms from now on.\ We have pissed off Mother Earth

Tornado and severe weather insurance checklist

4/22: . Five myths about recycling.   Better to recycle than not but the accumulation of plastic will keep adding up. .We pretty much made the ocean a plastic garbage pit. See below for more concise commentary.

4/22:  Just How Much Is Needed for Health Care Expenses in Retirement

Data from the Health and Retirement Study (HRS) finds out-of-pocket health care expenses are typically miscalculated, as the median cumulative for long-lived elderly people (those who pass away at 95-years-old or older) rounded out at $27,000. Yet, this doesn’t signify low health care costs, either. Ten percent of this group reported spending $172,000 in health care expenses, and 5% said they paid $269,000 in out-of-pocket medical costs. Services included hospital stays, nursing home stays, outpatient surgery, doctor’s visits, prescriptions drugs, dental services, home health care and hospice care, according to EBRI. Additionally, all participants surveyed were at least 70 years of age.

Of the services listed, nursing home amenities resulted in higher costs. Of those in the 10% and 5% group, out-of-pocket medical costs declined to $96,000 and $154,000, respectively, without the nursing home services.

EFM- It is true that if you had to pay all expenses for nursing home, etc. very few will be able to afford it. The result for those with limited assets will be Medicaid. It will require  a spend down of assets to state requirements and, if you own a home, any excess costs you  were unable to pay for care, the state will put a lien on your home when you pass. The rules are lengthy and involved and if you do not have a lot of money and this cost of medical care (I particularly reference Alzheimers since it can take a decade or more to die) will pass through a lot of red tape so be aware and do some homework. I taught an 8 hour long term care.course for continuing education for insurance licensees and it is tough stuff due to the myriad of ways one is given care. But except for skilled nursing home care, Medicare does NOT cover nursing hoe care and certainly not assisted living.

4/22 OIL

Oil prices fell on Friday morning following a string of bearish news, but the market soon rebounded and prices look set to continue their upward trend.


Actuary: Huge pension cuts likely without PBGC fix

More than 1 million Americans could face cuts to their pension benefits of about 90% if Congress does not act to shore up the Pension Benefit Guaranty Corp., pension actuary Ted Goldman told a congressional committee. Goldman said about 100 multiemployer pensions insured by the PBGC are likely to fail in the next two decades, and even if they don't, the agency could still run out of money to cover pensions by 2025.

4/22: Passive investing

U.S. investors have wholeheartedly embraced passive investing. Nearly $6.7 trillion rested in passive funds at the end of 2017. While actively managed U.S. equity funds saw $207 billion in outflows last year, passive U.S. equity funds raked in $220 billion in new money. Not to be outdone, passive taxable-bond and international-equity funds each also enjoyed inflows in excess of $200 billion last year. Clearly, indexing is no longer something investors do just for cheap U.S. equity exposure.

4/22: No idea it was THIS big

Yellowstone National Park sits squarely over a giant, active volcano that's 44 miles across.

EFM- See it before you die

4/22:Global debt at record-high $164T, IMF says

Public and private debt worldwide has reached a record high of $164 trillion, according to the International Monetary Fund. If this trend continues, nations might have trouble paying off debt and handling a recession should financing conditions worsen,

4/22: And consider this;

Sub-Saharan Africa is falling into a new debt crisis, with 40% of the region now at high risk of debt distress - double the proportion of five years ago. Officials at the IMF are now urging all African countries to raise taxes to provide more scope for paying interest, which has increased to levels last experienced at the start of the century

EFM- If a recession occurs soon (say within 1.5 years, I have no doubt that adding more debt to get us out of the mess will destroy growth for more than a decade.

And where is the IMF telling the U.S. to raise taxes?


Health care will cost $280,000 in retirement — and that doesn’t include this huge expense
The cost of health care for a 65-year-old American couple retiring this year rose to $280,000 — a mere 2% if that’s any comfort — but that’s no reason for a sigh of relief. The figure doesn’t include long-term care costs, and it’s going to go up every year for the foreseeable future, experts said.
The estimate, calculated by Fidelity Investments, has jumped 75% since the company’s first estimate in 2002 (then $160,000). The figure includes life expectancies for the couple, and also includes Medicare coverage and copays, vision, over-the-counter medications and dentures.
Without much doubt, the cost of health care in retirement will continue to rise, said Hope Manion, senior vice president and health actuary at Fidelity Investments Benefits Consulting. “Things will still continue to increase and sometimes steeply, particularly as new treatments come to market and new drugs come to market and they’re effective,” she said. For example, the estimate jumped 6% between 2016 and 2017, Fidelity said.
But there’s one thing these numbers do not include: long-term care cost, which is “extremely expensive” and in an unpredictable insurance market. An American turning 65 today has a 70% chance of needing some type of long-term care service, which supports daily living tasks (think: eating, bathing, going to the restroom), according to the U.S. Department of Health and Human Services. The national average cost for long-term care in the U.S. in 2016 was $225 a day (or $6,844 per month for a semi-private room) in a nursing home (and $253 per day, or $7,698 per month for a private room); $119 per day, or $3,628 per month for care in an assisted living facility; $20.50 an hour for a health aide, or $68 per day for services in an adult day health care center, according to the U.S. Department of Health and Human Services.

How horrific is it that we are particularly disturbed by one way of killing Syrian children but not the other?”

April 15, 2018 | Mara Karlin, The Washington Post

4/20: Leading Economic Indicators

Still good


4/20:IMF upgrades growth outlook for global economy

The International Monetary Fund has raised its forecast for global economic growth this year and next year to 3.9% from 3.7%. However, the IMF has warned trade restrictions could undercut future growth

EFM- Maybe it's just my nature but I do not feel very optimistic for the latter part of the year. A big offset to that is if we get a GOOD negotiation with North Korea. That will drop global risk by a few minutes on the nuclear doomsday clock

4/20: 2018 Contributions (Skloff)

4/19: Update on yield curve

Flattening yield curve raises alarms. WSJ's Daniel Kruger and Sam Goldfarb: "The gap between short- and long-term Treasury yields is at its narrowest in more than a decade, reflecting investors’ confidence that the Federal Reserve will maintain its current pace of interest-rate increases despite continuing skepticism about the longer-term outlook for economic growth and inflation. The difference between the two-year Treasury yield and the 10-year Treasury yield, known on Wall Street as the 2-10 spread, settled Tuesday at 0.428 percentage point, its tightest since 2007, before steepening modestly Wednesday. Two-year yields tend to rise along with investors’ expectations for tighter Fed interest-rate policy, while longer-term yields are more responsive to sentiment about prospects for the economy."

4/19: Simplified Underwriting is One Way Life Insurers Can Reach the 19 Million 'Stuck Shoppers'
LIMRA researchSimplified Underwriting - Life Insurance shows there are about 19 million “stuck shoppers” - potential life insurance buyers who start the process but never finish. To help combat this issue, many companies are implementing simplified underwriting processes to lower costs and improve customers’ buying experience.
LIMRA finds only 15 percent of all U.S. households shop for life insurance in a 24-month period. Of those, just two-thirds actually get a quote for a life insurance policy. A possible deterrent can be the time consuming and complicated nature of the full underwriting process. Fifty-two percent of potential life insurance buyers said they would be more likely to purchase life insurance if they didn’t have to go through a physical exam, according to the 2018 Insurance Barometer Study by LIMRA and Life Happens.

EFM- The 'no physical; quotes may be higher than those who will go through full medical review. Those who take the 'no physical' may be a pool of those with less than perfect health

4/19: OPM doesn’t have a contingency plan if long-term care insurance market upends
Long-term care insurance premiums rose as much as 126 percent the last time OPM re-competed its contract for the program back in 2016. The premium hikes affected roughly 264,000 active and retired federal employees, who are paying an average of $111 more per month for the same coverage they had in previous years.
With the current pace of change in the long-term care insurance market, FLTCIP participants could see even higher premiums in the future, the IG said. Premiums rose the previous time OPM re-competed its long-term care contract in 2009, but the increases weren’t as dramatic.

4/19:. The probability that the Fed will raise rates three more times in 2018, derived from prices in futures markets, rose above 80 per cent on Wednesday, up from 66.3 per cent a week ago. (FT)

EFM- I am not so sure of three time. Twice- yes.

4/19: Tracking down a lost 401k or pension plan

4/19: A global survey on the state of Investor Trust 

4/19: Far too many men

Nothing like this has happened in human history. A combination of cultural preferences, government decree and modern medical technology in the world’s two largest countries has created a gender imbalance on a continental scale. Men outnumber women by 70 million in China and India. Now both nations are belatedly trying to come to grips with the policies that created this male-heavy generation.





IMS/Marsh survey: Risk management isn't keeping up with technology risks

Survey respondents generally felt they lacked sufficient knowledge about disruptive technologies. Read More

4/18: OIL

In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

Urgent: Before we take a look at this week’s data, we would like to inform you that we've just published a special report on a breakthrough technology in solar. This report along with several other reports will turn you into an expert in the rapidly growing and dynamic solar power industry. Find out how you can consistently make money from investing in renewable energy. Click here to find out more.

U.S. oil production is expected to rise by another 125,000 bpd in May, compared to a month earlier.

-    The gains will, unsurprisingly, come from the Permian basin, which is expected to add 73,000 bpd.

-    Interestingly, the number of drilled but uncompleted wells (DUCs) continues to rise, an indication that supply chain bottlenecks are causing some delays.

4/18: The bold says it all

1.   Self Confidence Spillovers and Motivated Beliefs


Ritwik Banerjee (Indian Institute of Management Bangalore, Bannerghatta Main Road, Sundar Ram Shetty Nagar, Bilekahalli, Bengaluru, Karnataka 560076 India); Nabanita Datta Gupta (Department of Economics and Business Economics, Aarhus University, Denmark, and IZA, Bonn. Fuglesangs Allé 4, 8210 Aarhus V, Denmark); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France; IZA, Bonn, Germany)



Motivated beliefs, spillovers, self-confidence, competitiveness, Affirmative Action, experiment


C91 J15 M52




See the source image           Image result for trump head                                                                                                                        
                                                                                                                                                                       Giraffes have been a friend to fly fisherman for decades. They are comfortable, easy going and their
                                                                                                 long necks allow them to see fish that the angler couldn't.
                                                                                  Here you see the angler trying to put a  Large belching Trump fly with a 5x tippet in front of a hippo which has just risen because he heard a loud Twitter on the water..

4/15 Capital accumulation occurs through savings, investment, and economic growth. Unless all three factors exist in sufficient quantities, a society’s ability to provide retirement benefits to older citizens declines.

Unfortunately, in the US, all three factors are moving in the wrong direction:

1.    Savings. In the 1970s, Americans saved 9% to 15% of their income. Today, we save only about 4%.

2.    Investment. In an era of near-zero interest rates, it’s a lot tougher to generate safe investment returns. When my father retired in 1981, he could buy a certificate of deposit (CD) that paid 14% interest. Sure, inflation was higher in 1981 than it is now. But his after-inflation return on investment was nearly 6% higher than it is today.

1981 inflation rate: 10.3%

1981 three-month CD interest rate: 14%

Net return on investment: 3.7%

2018 estimated inflation rate: 2.38%

2018 three-month CD interest rate: 0.75%

Net return on investment: -1.63%

  1. Economic growth. In the 1970s and 1980s, there were six years in which the economy grew at a rate of 9% or higher. Since then, the growth rate has exceeded 5% in only a handful of years. In 2017, the economy expanded at only a 2.3% rate.
The confluence of these factors forces retirees – and anyone thinking of retirement – to save a great deal more money to supplement Social Security and pension income they receive or expect to receive

Best audience I ever had.
Rapt with attention

4/18: SS

The proportion of people paying into the Social Security system to beneficiaries is now at a historic low. And in the next 25 to 50 years the ratio will go even lower. In 1960, the worker-to-beneficiary ratio was 5.1:1. In 2005, it was 3.3:1. In 2020, it will be about 2.6:1. It is projected to be 2:1 by 2060.


CPI since 2007

CPI Categories


College Advice for Deaf and Hard of Hearing Students -

Scholarships and Resources for Deaf and Hard of Hearing Students -

Disability Resources For College Students -

4/17: In a new international comparison, the United States health care  looks a lot like ...........

Findings  In 2016, the US spent 17.8% of its gross domestic product on health care, and spending in the other countries ranged from 9.6% (Australia) to 12.4% (Switzerland). The proportion of the population with health insurance was 90% in the US, lower than the other countries (range, 99%-100%), and the US had the highest proportion of private health insurance (55.3%). For some determinants of health such as smoking, the US ranked second lowest of the countries (11.4% of the US population ≥15 years smokes daily; mean of all 11 countries, 16.6%), but the US had the highest percentage of adults who were overweight or obese at 70.1% (range for other countries, 23.8%-63.4%; mean of all 11 countries, 55.6%). Life expectancy in the US was the lowest of the 11 countries at 78.8 years (range for other countries, 80.7-83.9 years; mean of all 11 countries, 81.7 years), and infant mortality was the highest (5.8 deaths per 1000 live births in the US; 3.6 per 1000 for all 11 countries). The US did not differ substantially from the other countries in physician workforce (2.6 physicians per 1000; 43% primary care physicians), or nursing workforce (11.1 nurses per 1000). The US had comparable numbers of hospital beds (2.8 per 1000) but higher utilization of magnetic resonance imaging (118 per 1000) and computed tomography (245 per 1000) vs other countries. The US had similar rates of utilization (US discharges per 100 000 were 192 for acute myocardial infarction, 365 for pneumonia, 230 for chronic obstructive pulmonary disease; procedures per 100 000 were 204 for hip replacement, 226 for knee replacement, and 79 for coronary artery bypass graft surgery). Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the US vs a range of 1% to 3% in the other countries. For pharmaceutical costs, spending per capita was $1443 in the US vs a range of $466 to $939 in other countries. Salaries of physicians and nurses were higher in the US; for example, generalist physicians salaries were $218 173 in the US compared with a range of $86 607 to $154 126 in the other countries.

Conclusions and Relevance  The United States spent approximately twice as much as other high-income countries on medical care, yet utilization rates in the United States were largely similar to those in other nations. Prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the United States and other high-income countries. As patients, physicians, policy makers, and legislators actively debate the future of the US health system, data such as these are needed to inform policy decisions.

4.17:  But in another study the U.S. was not that bad at all.\

When it came to many of the measures of health system function, the United States was in the middle of the pack, not an outlier, as Dr. Jha had expected. Many analysts have called for the country to shift its physician training away from specialty care and toward more primary care medicine, for example. But the study found that 43 percent of U.S. doctors practice primary care medicine, about typical for the group.

It’s often argued that patients in the United States use too much medical care. But the country was below average on measures of how often patients went to the doctor or hospital. The nation did rank near the top in its use of certain medical services, including expensive imaging tests and specific surgical procedures, like knee replacements and C-sections.

The data are consistent with other evidence that health care systems are beginning to converge, as information and technologies spread around the world among doctors and administrators.

4/17: Evictions 2016

4/17: Venezuela: the other humanitarian crisis
A generation ago, it was the wealthiest country in Latin America. Now, following the implosion of the economy, thousands of desperate migrants are fleeing into Colombia and Brazil daily. At the current rate, over 5 per cent of Venezuela’s population will depart this year.

EFM- I gave up on South America a long time ago.. So much is in conflict that it will take two decades to- at a minimum. 


county natural change map

4/17: Overdose deaths from heroin, synthetics like fentanyl, and prescription painkillers, reached 42,000 in 2016

4/16: Estimates put the number of Amazon Prime members at 65 million.

4/16: Occupational living will and senile dementia

This is  a medical advanced directive but expressly intended for one’s professional life.

Depending on the stage of the disease and the degree of disruption of brain systems important for self-awareness, patients have widely varied insight into their predicament and appreciation of the impact of their neurological disease on their work.

This lack of self-awareness was disturbingly evident in the case of a professor in her mid-60s who continued to give lectures, supervise students and even consult, despite being diagnosed with Alzheimer’s disease of mild to moderate severity.

(EFM- someone must step in to 'correct' the situation due to, among other things the liability exposure of causing harm to others. That said, a lot of employees may not want to take action because  the person is a superior. Even if not, there still is the element of getting fired because it was not your job, not every one would agree (enablers) etc.

"When strong cognitive-testing evidence of her deteriorating mental status and examples of her difficulty carrying out professional responsibilities were brought to her attention, she insisted that her problems were only minor. "

EFM- Studies also show that the person may have absolutely no clue to their situation and refuse to receive any feedback on their condition. I had thought that most people- certainly in  'higher functioning' positions - would know something was going wrong from the beginning of dementia- was simply wrong.

"It is estimated that 15 to 20 percent of adults who are 65 years and older suffer from mild cognitive impairment and 10 percent from dementia.

Handling the decline

No blueprint exists to guide me in this process, so I have broken down this seemingly overwhelming task into manageable steps:

1. Crafting a written document articulating advanced directives for work that represent a personal commitment to how, depending on my cognitive status, I would want to comport myself in the future.

2. Sharing the document with others I trust, who can support me through this process.

3. Recording a video that communicates my wishes and can be used to speak to my future self.

4. Identifying a few peers or colleagues I can confide in, who can access my work and make a fair and reasonable assessment of my functioning.

5. Explicitly empowering these individuals to share their observations with me.

6. Finally, if concerns are raised, having a plan in place for evaluating — via formal assessment by a cognitive neurologist or geriatric psychiatrist — whether my decline exceeds the bounds of normal aging and is truly worrisome."

Worth a full reading

4/15 Australia nailed it          pay attention to the comments

  • Australia's central bank is concerned riskier assets such as stocks and high-yield corporate debt could be set for widespread losses if there is a sudden increase in government bond yields.
  • The bank warns current asset valuations, which are reliant on global bond yields staying low, are "elevated relative to history."
  • In addition, it says returns for holding many risk assets have fallen to record low levels.

bond yields

The RBA cautions that a sharp increase in long-term government bond yields toward historically normal levels "could result in widespread asset price falls if it is not accompanied by stronger growth".

"Valuations for fixed income securities could fall sharply if interest rates rise substantially because of higher realised or expected inflation, while valuations for assets more broadly could fall if risk premia return to historically more normal levels."

This chart from the RBA shows how riskier assets performed during the "taper tantrum" of 2013 when US bond yields spiked as the Federal Reserve announced that it would begin reducing monthly asset purchases as part of its quantitative easing program.

asset of total returns

4/15: The History Of The Modern Portfolio

Nice simple overview so give it a shot.

But my issue with this and all other risk identification for the last 60 years is this .......article led people to the conclusion that risk, not the best price, should be the crux of any portfolio. Furthermore, once an investor's risk tolerance was established, building a portfolio was an exercise in plugging investments into the formula.

Risk for an investor dealing with retirement or some other specific goal ends up being some type of superficial and sophomoric 1) drivel of simply asking the investor. And broker dealer firms questionnaires back up what the investor state by asking how much experience have you had in the market. Rubbish. Being in a 401k for 20 years does not make sophistication. What about the agent/broker> On what basis will the expertise come from. Not from licensing training where you do not have to know how to use a financial calculator. Not from software- many now extolling their value because they include behavioral elements. Nope. Better maybe(?) but still subjective. So as repeated here (maybe too often I admit) is to break down the various investments to how much they can lose. Admittedly the analysis can only estimate for the worst case situation (recession) for mutual funds and ETFs (with track records) so that the range of numbers can be delivered to the client with the statement. "this is how much you will probably lose in a recession. Is that acceptable/" As to what range that loss is in (conservative, moderate, etc. here is a link to a Linkedin article explaining the first phase of the Preliminary Patent Process noted above.

4/15:Relocation Stress Syndrome

Over the past decade, medical professionals have increasingly been diagnosing and treating seniors with relocation stress syndrome (RSS), also known as “transfer trauma.” The syndrome is characterized by a combination of symptoms – including anxiety, confusion and loneliness – that often present themselves after a move to a senior living.


4/15: Just another heads up

US yield curve flattens as investors brace for rate rises

4/15: .Slowing down?

A series of downbeat business surveys in the eurozone, plus an unexpected third successive monthly fall in industrial production in February, have cast some doubt on the robustness of the European recovery. Employment in the US has been weaker than expected, as has Japanese consumer spending and wage growth, meaning Japan is likely to remain below its 2 per cent inflation target for some time to come. Activity in the Chinese economy, meanwhile, also appears to be soft. Overall, the global economy is performing below expectations: Citigroup’s economic surprise indicator, which measures actual data relative to predictions, has turned sharply down. More policy-induced risk, especially from such an erratic source as US President Donald Trump, is precisely what the world does not need.

bad news should remind policymakers that the world economy remains in uncharted territory. Wage and price inflation have manifestly failed to respond as normal to years of sustained growth. Expectations that economies are at or close to sustainable capacity and that prices are just about to take off have repeatedly been confounded. Even in the US, wage growth remains weak. Perhaps the most dangerous idea in modern policymaking is that of normalisation: the belief that the world economy went through a time-limited period of extraordinary weakness following the global financial crisis, but that it will necessarily return to the status quo. The reality is that the growth in sustainable output may have slowed indefinitely since before the crisis across many of the advanced economies. And even so, given that the monetary policy pedal is still pressed close to the floor in some economies, particularly Japan, it is far from clear that policymakers can sustainably maintain domestic demand expansion sufficiently to fill the output gap.

EFM- I have had and continue to have a rather a bleak attitude toward the world economy. With a potential trade war, Syria, North Korea and a raving mad President, it may be possible to get through 2018 but a lot of bad stuff will through the world out of spin in 2019. Should be pretty bad with Trump.

Fake News?????

4/15: Statistics:

One way to understand China is to look at the statistics. Real income per person has increased nearly tenfold since 1990. Since the early 1980s, the number of extremely poor people in China has fallen by more than three-quarters of a billion people, more than half the population of the country. China consumed more cement in a recent three-year period than the US used in the entire 20th century.

Some will be tempted to dismiss the statistics as irrelevant book-learning, and declare that only personal experience matters. There is certainly something in that, especially when a situation is fast-moving or contains soft, hard-to-quantify details. As the Nobel laureate economist Friedrich Hayek remarked, the “knowledge of the particular circumstances of time and place” is important and often neglected.

HR McMaster — who before he was US president Donald Trump’s former national security adviser, was a counterinsurgency pioneer in Iraq — had a similar concern. He once told me the army used to wrongly believe that “situational understanding could be delivered on a computer screen”. It would be convenient if that was possible, but as Gen McMaster and his colleagues learnt the hard way, it is not. Sometimes you have to be there to understand
A new book by the late Hans Rosling and his family, Factfulness, advocates the merits of understanding the world both through the data and through personal experience — not of news stories or tourist traps, but of the everyday lives being lived all over the world. “Numbers will never tell the full story of what life on Earth is all about,” wrote Rosling, despite being the world’s most famous statistical guru. But the story they do tell matters. In statistics, as elsewhere, hard logic and personal impressions work best when they reinforce and correct each other.

4/15: Financial literacy:

The need to increase financial literacy “seems like an obvious solution,, but “like many obvious solutions, upon closer inspection it’s clear that financial education alone hasn’t worked — and perhaps it never can.” She suggests that this is because “the way our brains are wired to process information typically works against us when it comes to making sound financial decisions, and changing behavior takes more than a single class.”

EFM: But ....The Consumer Financial Protection Bureau (CFPB) shares that view, Menard points out, citing a 2016 NPR broadcast in which the CFPB said that, “There’s no clear link between taking personal finance classes and saving more, paying off debts or raising your credit score.”My issue when hearing of financial literacy covers investing, mutual funds et al. What is really disconcerting the fact that the issue of savings et al is done at the grade school- certainly high school- level. I can do the instruction for people who have had some basic' knowledge of the world.' But an instructor for the schools noted that the students did NOT learn- or at least retain- what they were taught and it would not work unless and until there were real life examples to validate the learning. He then said that the school coursework was a failure.  As to that level of knowledge, it is next to impossible for my effort to succeed.

The article noted,

“One of the problems with financial education,” says Menard, “is that it can become obsolete in a relatively short span of time,” adding that “new financial products are engineered and introduced more quickly than organizations offering financial education can keep up with them.” She argues that “old rules of thumb” are not sufficient now. Other problems, she says, are:

  • a cognitive bias to lend more importance to present needs and wants than those in the distant future;

  • overconfidence;

  • a tendency to hold on to the first bit of information one acquires as a baseline for comparison;

  • a bias toward new information that confirms preconceived notions, and to ignore evidence that contradicts them; and

  • loss aversion.
  • EFM- I submit that loss aversion is a key element but my recent work pretty much changes that concern. However, it may never be recognized by the industry since it changes the status quo of investing. In essence even though one builds a much better mouse trap, no one may know about it if the powers to be want it squashed. I do not have the power- read lots and lots of money- to force the system to adhere to a fiduciary duty. I know what I have done and it will keep major losses to about 12% in a recession. No liquid alternatives, hedging, futures, derivatives, yada, yada, yada. Simple. Another issue is the new financial products ARE growing like weeds. Certainly with all the indexed offerings which seem to come out each week. . But different than Menard's comments above, the industry never has been that astute anyway, They cannot grasp (as a whole) new products because they do not have the requisite skills to begin with. Pundits and advisors have railed at this for a long time but the simple fact is that no broker, registered investment advisor or insurance agents has been required to know how to use a financial calculator. You  CANNOT do financial  'whatever' without some skills in what the numbers represent. Purchased software does not include formulas or lessons to work in the real world. I mean, a life insurance agent able to grasp the nuances of a new indexed annuity without running pertinent numbers on a calculator??
  • Here are further comments: The CFPB also offers some ideas, Menard says. She cites a 2017 CFPB report in which it sets forth five principles of financial education that can lead to greater success:

    Principle 1: Tailor information to individuals’ specific circumstances, challenges, goals and situations.

    Principle 2: Provide timely information that is relevant and that can be used to address a specific situation or meet a specific goal.

    Principle 3: Build general skills such as knowing where to obtain reliable information and how to process it.

    Principle 4: Build individuals’ confidence regarding meeting financial goals and support their ability to focus on their standards and values, and to persevere when challenged.

    Principle 5: Help create habit and systems that make it easy for individuals to implement their decisions.

    Menard suggests that employers and retirement plan professionals that are pondering instituting a financial education program may find the following considerations helpful:
  • What does the financial education look like? Will it work for our organization?
  • EFM- who is doing it?? What background? Has done education for how long? Does it include insurance ,(life and disability), long term care, life settlement ( as applicable)

  • Does the program offer access to human coaches or advisors?
  • EFM-  Only for large companies. Can get expensive

  • What problems will the program address? How does it help employees to address their financial needs and set goals?
  • EFM- Everything starts with risk. Which is not taught for investing in the real world

  • Is there mechanism that encourages employees to be accountable about their financial decisions?
  • EFM- An ongoing budget which many hate to do. Monthly or quarterly newsletter (though must be simple)

  • Does the program include a way for employees to estimate their income during retirement?
  • EFM- it can be done without too much difficulty.But must consider RISK of LOSS first and foremost. Most practitioners will screw this up if employee may not have enough .
4/15: Frankly I do not believe that consumers recognize just how far AI and automation will go. AI et al will take over many/most functions of humans by 2050. We may become 'unnecessary" 

Office automation is about to lead to a 'massacre of the Dilberts'

Bank of England Governor Mark Carney's comments come in the same week that EY warned 330,000 jobs in London alone are at risk of automation.

Boy, am I happy!!!

4/13: Inverted Yield Curve

An inverted yield curve remains a powerful signal of a looming recession and that is still the case even if the current ultra-low level of U.S. interest rates are taken into account, according to fresh research by the Federal Reserve Bank of San Francisco.

A negative curve, where the return to investors on shorter-dated securities is above that on longer-term bonds, has predicted all nine U.S. recessions since 1955, with a lag of six to 24 months. Some have argued that this time is different, because interest rates are so low and a flattening yield curve doesn’t necessarily mean the U.S. economic expansion is heading for trouble.

The findings, published Monday in the San Francisco Fed’s regular Economic Letter, show that the term spread, or the difference between short- and long-term interest rates, is as good today as it’s always been at spotting problems ahead. But there’s no urgency just yet. While relatively flat, the current yield curve doesn’t signal a high risk of a downturn even though the U.S. economic expansion is already the third longest on record.

“Forecasting future economic developments is a tricky business, but the term spread has a strikingly accurate record for forecasting recessions,” study authors Michael Bauer and Thomas Mertens, who are both economists at the San Francisco Fed, wrote in their analysis. “While the current environment appears unique compared with recent economic history, statistical evidence suggests that the signal in the term spread is not diminished.”

“While these hypotheses have some intuitive appeal, our analysis shows that they are not substantiated by a statistical analysis that incorporates the suggested factors into the type of predictive models we use,” they wrote. “An extensive analysis of various models leads us to conclude that the term spread is by far the most reliable predictor of recessions.”


he Brookings Papers on Economic Activity (BPEA) is an academic journal published by the Brookings Press twice a year. Each edition of the journal includes five or six new papers on a range of macroeconomic topics currently impacting public policy debates.

Technology and the farmer

4/13: a San Francisco Fed Economic Letter outlined the value of the yield curve as an economic forecaster and how an inversion has preceded every recession in the last 60 years. Although the authors agree with the notion that the current flattening may not mean what it has in the past, they conclude that the yield curve remains a valid and formidable predictor.

The concern is the extra supply of bonds and other upward pressures on longer rates even as the Fed hikes, keeping long-term yields from falling below short-term yields. The ballooning budget deficit that will exceed $1 trillion next year and debt held by the public will rise from the current 74.3 percent of gross domestic product in coming years to more than 90 percent in 2026 — and that doesn’t include the impact of the recent tax reform. Debt-to-GDP was barely 40 percent at the end of the Reagan administration. The deficit has to be financed, and I suspect that will mean ever-higher rates, which will curb economic growth, to attract overseas buyers because we don’t have enough savings on the domestic front to do it on our own.

(EFM- we end up with a bunch of bozos who vote for a 1.3 trillion dollar budget and nary a one had read the 2,200 page summary. It had only been put together the night before. Actually  this is a fine example of what Congress does- it attacks a number of critical areas/errors (such as Facebook) that may deserve additional scrutiny but where there own kitchen is dirty. Facebook will hurt a number of people whose background was stolen. Every person in America is going to get creamed by the deficit blowing up on us due to incompetency by Congress. )

It’s not only about government debt. Corporate debt stands at a record 45.3 percent of GDP, and companies will face massive refinancing needs — at higher rates — as that debt matures over the next few years. All I ;lhear is that the money saved from lower corporate taxes and the overseas cash — mostly held in Treasuries, by the way — that can now be brought back to the U.S. will be used for more share buybacks and M&A activity, not to reduce debt. Again, a source of upward pressure on rates.

Now add in tariffs, which can raise prices inefficiently, thus giving an upward tilt to inflation that is not based on demand. In the case of steel and aluminum, the U.S. produces far less than it uses. The consulting firm Trade Partnership put out a report saying the Trump administration’s proposed tariffs would eliminate a net 179,000 jobs, overwhelming any gains enjoyed by the U.S. steel and aluminum manufacturers. And, we don’t even know the impact of any retaliatory tariffs by other countries or if certain countries decide to respond by purchasing less U.S. debt. Either way, this again points to upward pressure on yields rates for reasons unrelated to actual growth or demand-based inflation.

Foreign ownership of U.S. Treasuries. Source: Bloomberg

Need more? Consider that real income gains remain tepid and consumption that has been fueled by a lower savings rate, which fell to a 10-year low of 2.7 percent in the fourth quarter. Presumably, borrowing at higher interest rates will prove at least somewhat problematic to consumers. Oh, and the Fed said last month that American households’ outstanding debt climbed to a record $13.1 trillion in the October-December period. (EFM Just look at the margin debt right now, Way out of whack.)

U.S. davings rate drops to lowest since 2007. Source: Bloomberg

The change in the structure of U.S. deficits, the ownership of debt, and influences from the likes of tariffs and stimulus well into an economic recovery suggests the path to a yield curve inversion will be harder than before. Looking at recessions before the 1950s, only about half were preceded by an inverted curve.

This is all to say we may not need an inverted yield curve as the final arbiter of a recession. I could see it as a late 2019 event, just before the 2020 elections.

4/13: Flood danger greater than currently identified:  41 million Americans are at risk from flooding rivers. That’s more than three times than the current estimate of 13 million people.

“Because climate change may cause so-called ’100-year’ floods to occur more frequently, even more people may be exposed to flooding in the future. All of this highlights the critical need for comprehensive floodplain and flood risk management planning,”

4/13: Annuity rates- I know the FED wants to keep raising rates but I am  not sure the global markets will hold up.

   •   3 year surrender period guaranteeing 2.50% for all 3 years

   •   5 year surrender period guaranteeing 3.60% for all 5 years

   •   7 year surrender period guaranteeing 3.85% for all 7 years

4/12: Alzheimers and difficult behavior. READ THIS

4/12:Participants Prefer Workplace Plans, Want More Employer Help

Have Americans accepted a shift in responsibility for their own retirement security? A new study by MetLife seems to indicate that they have. … READ MORE

EFM-I understand why employees- or just about anybody- wants additional help.with investing (and more). Very few people of average income can afford to lose another 50%+ in this next recession. Problem is their employer has no idea who is best utilized in providing solid risk education with mutual funds.  Ergo, education will help in certain areas but will continue to be woefully inadequate in preparing for retirement (and other goals) but few . It starts with risk................... 

4/12: Not a bad idea- Companies should fund pension plans, not pay big dividends, Pensions Regulator says

Thinking about you at lunch today

4/12: Global debt levels have hit another record high.

  • Global debt levels rose by $US21 trillion last year to $US237 trillion, the highest level on record.
  • 80% of the increase in global debt levels over the past five years has occurred in emerging markets.
  • With nominal GDP growing faster than debt in 2017, the global debt-to-GDP ratio fell to 318%.

global debt levels rose by a further $21 trillion last year (US dollars), leaving total outstanding debt at $US237 trillion, the highest level on record.

All sectors recorded an increase in debt loading from the end of 2016, lifting by $4.5 trillion, $6.5 trillion, $4.5 trillion and $5.5 trillion respectively for households, non-financial corporates, governments and the financial sector.

IIF debt loading by sector 2017IIF

IIF debt and debt to gdp
IIF debt and debt to gdpIIF

In contrast, total debt in mature markets rose by a smaller $4 trillion over the same period to $174 trillion.

However, while overall debt levels increased sharply last year, it was actually slower than the increase recorded in nominal GDP, seeing the global debt-to-GDP ratio fall to 318%.

"With world GDP growth running above potential, the debt-to-GDP ratio continues to decline," the IIF said.

"With global financing conditions still relatively benign, the risks of such a rapid increase in the debt burden remain largely under the radar."

Over the past past five years, the debt-to-GDP ratio for mature markets fell from 387% in 2012 to 382% in 2017, partially offsetting an increase in the ratio for emerging markets which surged to 210% from 171% over the same period.

The IIF said Argentina, Nigeria, Turkey and China recorded the largest buildup in debt ratios over the year, the latter fueled by ongoing growth in indebtedness of households and the nation's finance sector.

"While China's total debt growth slowed notably in 2017 with a drop in the non-financial corporate debt-to-GDP ratio largely offset by rising household and financial sector debt," the group said.

And while most emerging market debt continues to be issued in local currencies, the IIF said that foreign currency denominated debt issued in these nations swelled by $800 billion last year to a record high of $8.3 trillion.

4/12: Alzheimers  

If you are old, expect to get old, know any old people- pay attention to the impact of alzheimers on the patient him/herself and the impact on caregivers. A most terrible disease and one that I do not see pharmaceuticals getting a cure. Large firms have recently canceled trials AND the effort to continue since none of the new drugs worked.

She raised her hands, exasperated. “They don’t have my yogurt!”“Is there some other brand you could eat?” I prompted.“I can’t get back here to the store. I’ve got a sitter taking care of my husband who is crazy! Crazy! You don’t know,” She shook her head as if clearing visions that she wanted to forget.

“You’re probably right,” I agreed soothingly. She took a deep breath and tried to read the names of the other brands of yogurt.

“I like low-fat yogurt,” she said. “With peaches. Not this custard stuff.”

“Have you tried the custard stuff?” I asked gently. “Because it’s pretty good.”

“I just want my yogurt.” She almost stamped her foot. I didn’t blame her. When a caregiver’s life has gotten way out of her control, she wants something simple, like her flavor of yogurt, and it doesn’t seem fair to that she can’t have it.

“I know,” I said, reaching past her for the custard stuff.

“I don’t usually look like this,” she said waving a red rough hand at her outfit.

It wasn’t pretty. She wore an old jogging suit, and the top didn’t match the bottoms. Her walking shoes were dirty, and the cuffs of her pants were covered in red dust.

“I’ve been for a walk, and I really needed that walk. I’m trying to live.”

I nodded, positioning my buggy to leave, but the nervous lady stopped me. “My husband has Alzheimer’s disease, and I’ve hired a new woman to sit with him so I can take a walk and buy my peach low-fat yogurt, and I won’t be able to get back until I don’t know when.”

I nodded silently.

“He’s my second husband. We haven’t been married very long, just two years. I’ve placed calls to his oldest son, but he doesn’t return them. I need help!” She said the words as if she thought I’d argue otherwise.

“You do need help. You can’t do it alone,” I assured her. “No one can.”

She focused on me, her face pale, the skin tight with tension, no laughter in her eyes at all. Not even the memory of it. I knew that look. I used to wear her expression and a version of the same outfit she had on.

“My father had Alzheimer’s,” I said softly. “It’s hard. Keep calling his son, and hire all the help you can. You really can’t do it alone.”

She inched closer, as if I had forgiven her of some trespass. “Could I ask you something horrible?”

“Yes,” I said.

“It’s an awful question,” she warned me fiercely.

“Ask it,” I said.

“My husband… husband,” she repeated the words emphatically, “propositioned the lady who was taking care of him before. I got an emergency call on my cell phone, and she was yelling hysterically. I hurried home and asked my husband what he had done. He drew back and said clear as a bell, `Obviously I was mistaken about her intentions. She was being awfully fresh with me though.’ How could he do that? How could he talk like that—so normal and do something so, shocking?!”

“Alzheimer patients can do shocking things and sound normal too,” I agreed. “And he has cursed people. He knows curse words I’ve never heard! Who did I marry?” She screeched. Other shoppers heard her and scurried away.

“You married a man who was probably already sick and is getting sicker,” I said gently, because I remember that it was hard to hear other people talk to me. I didn’t think anyone understood anything at all about the way it is to live with an Alzheimer patient. In order to survive, one must try to understand what it’s like in the alternative reality of the patient: what dementiaville must be like. One must be able to navigate it while not taking up citizenship there. Tough duty. “My daddy had Alzheimer’s. I took care of him,” I say.

“And your Daddy said awful, awful things?” she asked.

“Sometimes,” I said. “It was a stage that passed. Another stage took its place that was shocking in a different way.” At the time it all felt traumatic. Shocking and heartbreaking. Now, when I remember those days I see that they were really more messy than tragic. One more mess after another to clean up.

“That’s good to know,” she affirmed. “It helps.”

We pushed our buggies toward the checkout where the woman got right in front of me without apology and reached aggressively for a couple of packages of cigarettes. Yogurt and cigarettes. I could see how she needed them both.

She answered the cashier’s routine questions quickly, her eyes darting toward the door. She was already headed home; she just wasn’t in the car yet. I knew that focus: that sense of urgency that is suspended and then suddenly returns like a fever that spikes because you’ve left your patient at home and he might need you to protect him from others—to protect him from himself. Or herself.

When it was my turn to check out the cashier said, ““That was nice of you to let her go first. A lot of people come in here--they are in such a hurry.”

“I see them,” I said, as I watched the woman who was like the old me get in her car and peel wildly onto the street. The caregiver thought she was invisible—that people only saw her sick, shocking husband, but I saw the newlywed caregiver and I could see the future and how she would be again, and I wanted to call after her, “You’re not the only one it’s happening to, and you really will be all right again.”

4/12 The oceans' circulation has not been this sluggish in over 1,000 years

The Atlantic meridional overturning circulation (AMOC)  has declined in strength by 15 percent since the mid-20th century to a “new record low,” the scientists conclude in a peer-reviewed study published in the journal Nature. That’s a decrease of 3 million cubic meters of water per second, the equivalent of nearly 15 Amazon rivers.

The AMOC brings warm water from the equator up toward the Atlantic’s northern reaches and cold water back down through the deep ocean. The current is partly why Western Europe enjoys temperate weather, and meteorologists are linking changes in North Atlantic Ocean temperatures to recent summer heat waves.

the AMOC has slowed over the past 150 years and similarly found that it is now weaker than at any time in more than a millennium.

“The last 100 years has been its lowest point for the last few thousand years.

So what you say?

a strong warming off the coast of the eastern United States, paired with a cooling south of Greenland, which sometimes been called the cold “blob”:

The research finds that the odd alignment, which has produced regions of record cold and record warmth right next to one another, has been developing since the 1950s and closely matches what a very high resolution climate model predicted would occur.

that has had major effects on fisheries. The Gulf of Maine, for instance, has seen a giant boom in the local lobster industry and crash of the cod fishery.

“A lot of these changes are happening relatively fast, and our fisheries management is unable to keep up,” Saba said. “We’re trying to figure out how to deal with some of these species shifts that we’re seeing.”

It’s not just fisheries: If the slowdown trend continues, it is expected to drive strong sea-level rise against the Eastern Seaboard. Previous research has already shown that from 2009 to 2010, sea level in the region suddenly shot up five inches, thanks in part to a brief slowdown of the circulation.

predicts the circulation will only weaken further as climate change advances. It may not be slow and steady: There is great fear that there may be a “tipping point” where the circulation comes to an abrupt halt.

“I think in the long run … Greenland will start melting even faster, so I think the long-term prospect for that ocean circulation system is that it will weaken further,” Rahmstorf said. “And I think that’s going to affect all of us, basically, in a negative way.”

EFM- Add this to AI, population explosion of 1.5 billion more by 2050, lack of food production and distribution, diversity/animosity of race and religion. a complete disruption of water supply,  pollution of the oceans and finality of fish,  faster loss of land due to melting ice, obesity, opiods, etc.,  and mother earth might give us a swift kick in the pants send our civilization on its way

I'm not kidding.  Getting to 2050 will be a major where I don't believe we will make it with current global policies.