Mid Term

Congress agrees on coronavirus stimulus/relief bill–likely to pass tomorrow

Congress agrees on coronavirus stimulus/relief bill–likely to pass tomorrow

On Sunday Congressional leaders reached agreement on a $900 billion coronavirus stimulus/relief. It is expected to be merged with a sweeping $1.4 trillion spending bill that includes 12 annual appropriation bills that would keep the government funded for the remainder of the fiscal year that ends on September 30, 2021 (and that began on October 1, 2020), creating a $2.3 trillion legislative monster that almost no one in Congress has read in its entirety.

Inflation worries? You’ve got to be kidding but bond market starts to price in higher interest rates

Fed promises massive asset purchases for longer

Today’s (Wednesday, December 16) meeting of the Federal Reserve, the last of the year for the central bank, ended with the promise to maintain the current massive monthly bond purchases of at least $120 billion until the Fed sees “substantial further progress” in employment and inflation. This replaces the earlier promise to keep  buying “over coming months.” In other words the Fed’s bond buying policy now fits into the Fed’s interest rate framework of extraordinarily low for an extraordinary long time.

Signs of a market top Part 2: Will an oversupply of new shares take the air out of overinflated stock prices?

Signs of a market top Part 2: Will an oversupply of new shares take the air out of overinflated stock prices?

In most years companies buy back more shares then they sell. That creates a steady upward bias to stock prices simply because there are fewer shares to buy. On average over the last decade companies bought back $3 in stock for every dollar they raised. Not in 2020. For th first time since the global financial crisis year of 2009, companies will issue as much stock as they sell

Vaccine herd immunity calendar from Fauci

Vaccine herd immunity calendar from Fauci

Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said today that he anticipates that “ordinary” Americans–that is those without priorities for receiving a coronavirus vaccine because of age or underlying health conditions or employment as a healthcare worker–will start getting access to a vaccine in April. Assuming that large numbers of Americans decide to get vaccinated, most will have received a shot before the end of August. That would result in herd immunity in the United States by the fall of 2021.

Trick or trend: Black Friday sales disappoint unless you’re an online retailer

Trick or trend: Black Friday sales disappoint unless you’re an online retailer

In person visits to physical stores in the United States fell by 52% on Black Friday compared to a year ago, according to preliminary data from Sensormatic Solutions. That follows on a 95% plunge in foot traffic to stores from a year ago on Thanksgiving Day  as many retailers chose to close that day.
On the other hand, sales at online retailers grew on Thanksgiving Day, climbing to $5.1 billion from $4.2 billion in 2019, according to preliminary data

The returns for 2018 and 2019 for my Dividend Portfolio show the challenge facing dividend income investors during this period of extremely low interest rates.

The returns for 2018 and 2019 for my Dividend Portfolio show the challenge facing dividend income investors during this period of extremely low interest rates.

In 2018 my Dividend Portfolio showed a yield on 3.60%. That produced $6,483 in dividend income that year. The goal of this portfolio is to beat the yield on the 10-year Treasury. On January 1, 2018 the yield on the 10-year Treasury was 2.58%. In 2019 my Dividend Portfolio showed a yield of 4.90%

Trick or trend: Treasury Secretary Mnuchin just undermined the Fed and the economy–how bad will the damage be?

Trick or trend: Treasury Secretary Mnuchin just undermined the Fed and the economy–how bad will the damage be?

On Thursday night, Treasury Secretary Steven Mnuchin sent a letter to Federal Reserve chair Jerome Powell announcing that he was not going to extend beyond December 31 the emergency lending support that the Federal Reserve using as a backstop in its programs to stabilize the bond market. In March, Congress ha earmarked $454 billion to support Fed lending programs as part of that months coronavirus package. The Fed, ever reluctant to take losses onto its own balance sheet, had used the Treasury cash to stand behind loan programs for medium size businessses and municipalities. Much of that money earmarked by Congress has never actually been extended to the Fed, but the Treasury did earmark $195 billion for specific loan programs at the Fed. It’s that money that Mnuchin now says will no longer be available to the Fed after December 31.

Are money managers too bullish?

Are money managers too bullish?

This month’s survey of fund managers (with a total of $526 billion in assets under management) by Bank of America shows that cash holdings are at their lowest level since April 2015 and allocations to stocks rose in November to 36% overweight. That’s close to “extreme bullish,” according to Ban of America strategists.