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Regional banks are not the only entities losing money by holding longer term, low interest rate securities. Turns out the Fed has the same problem. This month they should hit $100B in losses.
The Fed’s 12 regional banks, which used to make a lot of money, are now running big collective deficits. That’s because they’re paying more than 5% on trillions of dollars that they’ve borrowed from money-market funds and other financial institutions, while their own portfolios remain loaded with low-yielding mortgage and Treasury securities that they bought during the days of near-zero interest.
TSLA engineers confused FSD with F1 G-force and expected it to corner at 6G. Musk is sure they will achieve both this year and will be taking deposits for the new Tesla F1FSD. You will have to pass medical tests to buy the new Model BS..:). Sanity tests are optional.
Long term investors could open a position here. I'd be more interested below $50.
While I'm still quite cautious regarding this market, one reason I don't see a market crash in our future is the CBOE put/call ratio. By mid-2021 it had reached historic lows as the market topped over the remainder of the year. Since then ratios have normalized. That is; the market is already reasonably cautious. 20-year chart below:
The economy continues to slow down marginally, (see notes from the WSJ below). Also the St. Louis Fed calculates that since the bottom in April of 2021 US consumers have accrued an additional $267B in credit card debt - an additional 36%. Also the first student loan payments in almost four years are due October 1st. As I've been saying for a while now, it appears to me the US consumer will tighten their financial belts over the next two quarters. Exactly when is impossible to tell but I'm watching the, somewhat lagging, consumer discretionary sector which is still up 36% since the beginning of the year. See 5-year chart below.
August Job Gains of 187,000 Extend Summer Cooldown
June, July payrolls revised lower as jobless rate increases to 3.8%
Slower summer hiring and the August unemployment rate offered signs the labor market is moderating amid high interest rates. Over the past three months, 150,000 jobs were added monthly on average, down from 238,000 in March through May.
It's a fun movie. Like most people that make one great call, Burry is now getting hammered as he's been short the market for several months, convinced we're about to see another crash.
It's so flat in Florida, I thought you knew..:)
If only hope really was a strategy...or even a strategery..:)
It's written in all caps and italicized, how can it possibly be incorrect? Maybe it needs to be bold as well.
EINSTEIN'S RELATIVITY PROVES THE EARTH IS FLAT
Not surprising. As I reported here two weeks ago regarding my experience renting a Model 3.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172590064
As expected, core PCE came in at 4.2%, up .1%. The Fed meets again on Sept. 19-20.
AAA 2-year munis are 4.10% this morning.
PCE will be reported this morning and is expected to be flat to up slightly @ 4.2% inflation with consumer spending up .7% MoM.
Hi Dew. For me it's a bit early to understand if 3M can pay down $15B+ in agreed payments while maintaining their cash flow. I think the dividend is safe but I don't see how they maintain that and grow earnings in this environment. I may be a bit overly cautious as I was also a long term investor in T and the dividend has not helped much as a badly managed company has fallen to half its recent value. The same is true here. If I had to choose between 5.75% in MMM dividend and a .1% treasury, I'd probably decide to put 2-3% of my retirement in MMM but I'm making well over 5% in treasuries and CDs. The taxes are a bit higher but I'm free to go fishing with some friends during the week. It's not a bad tradeoff while this higher interest rate environment lasts.
These are the same people that supported Brexit to prove they were still a world power. Why would we expect any policy from them that makes sense? I fear we may also be tilting at windmills as we walk a long but similar crooked path. Let's hope we take democracy seriously enough to vote for it next year. I don't think it's a foregone conclusion.
It makes sense to me. If this god 'loves you' but will send you to eternal damnation for not believing he loves you, wouldn't Trump just be a minor warning? A sign of how much this god loves you? Over 80% of Americans still profess a belief in this god. That only 30-some percent believe in Trump must be a blessing...from god? Why not...:).
A married couple, (really any two people), can gift up to $68,000 a year to any other two people; quite often, a child and their spouse without any effect on the federal estate tax limit. Any amount over $68,000 annually, ($17,000 per person/per recipient), will decrease the estate tax limit by that amount. Of course gifts can be made on December 31st and January 1st to effectively double that amount.
Goofy fascist leaders are about to find out that democracy has a big stick. We await orange Hitler's prosecution. It appears it will be next March.
DOJ seeking 33 years in prison for ex-Proud Boys leader in Jan. 6 case
The Department of Justice (DOJ) is seeking 33 years in prison for former Proud Boys leader Enrique Tarrio, who was convicted of seditious conspiracy earlier this year in connection with the Jan. 6, 2021, Capitol attack.
He and four other Proud Boys in May were convicted of entering a seditious conspiracy against the U.S. government to stop the certification of the 2020 presidential election.
As national chairman of the right-wing extremist group, Tarrio was a “naturally charismatic leader” and “a savvy propagandist,” prosecutors said in a sentencing memo published late Thursday.
“In that capacity, he had influence over countless subordinate members of his group and members of the general public, and he used that influence to organize and execute the conspiracy to forcibly stop the peaceful democratic transfer of power,” they wrote.
Though Tarrio was not at the Capitol on Jan. 6, prosecutors portrayed him as the leader and main driver of a plot to keep former President Trump in power.
The 396-month recommended sentence is the longest the DOJ has requested for individuals linked to the Capitol attack and, if accepted by a judge, would be the longest sentence given. Oath Keepers leader Stewart Rhodes, who was convicted of sedition last year for his role in the riot, currently holds the longest sentence for Jan. 6 rioters, of 18 years.
Prosecutors are also recommending a 33-year sentence for Joe Biggs, a Florida Proud Boy convicted of sedition earlier this year. A one-time correspondent for conspiracist Alex Jones’s “InfoWars,” Biggs was accused of leading Proud Boys to the Capitol and talking with the first person to breach police barricades just minutes before he acted.
For Zachary Rehl, president of Philadelphia’s Proud Boys chapter, prosecutors are asking for a 30-year sentence. They’re recommending a 27-year sentence for Washington state Proud Boy Ethan Nordean. Both men were convicted of sedition.
Dominic Pezzola, the only Proud Boy acquitted of seditious conspiracy following the months-long trial, should receive a prison sentence of 20 years, prosecutors say. He was convicted of other serious felonies, including obstruction of an official proceeding, and assaulting, resisting and impeding certain officers.
According to court filings, Biggs requested a sentence under three years, Rehl a sentence of three years or less, Nordean a sentence under two years and Pezzola a five-year sentence.
Tarrio on Friday asked the court for less prison time than the DOJ recommends, arguing against the use of a terrorism enhancement in deciding his sentence. He did not request a specific sentencing range.
The Proud Boys grew in notoriety when Trump urged them to “stand back and stand by” during his first debate against President Biden. During a four-month trial, prosecutors said the Proud Boys saw themselves as “Donald Trump’s army,” participating in every major breach of the building that day.
“The defendants understood the stakes, and they embraced their role in bringing about a ‘revolution,'” prosecutors wrote in court filings. “They unleashed a force on the Capitol that was calculated to exert their political will on elected officials by force and to undo the results of a democratic election.
“The foot soldiers of the right aimed to keep their leader in power,” the prosecutors continued. “They failed.”
We're Baacck! Student loan payments start again next month. From the WSJ:
Student Loans Are Emerging From Deep Freeze, and Borrowers Are Confused
Interest on federal loans restarts on Friday and the first payments are due in October
Student-loan borrowers are finding out that restarting a $1.6 trillion federal program is much more confusing than switching it off.
With pandemic relief ending, borrowers will start owing interest as of Friday. They are learning of new payment schedules, often via email, from servicers they might have never heard of—and could be reluctant to pay. That is because about four-in-10 borrowers’ loans transferred to a new servicer during the pause that began in March 2020, according to government data.
Millions more have graduated or otherwise left school during the pause and have never been required to make a payment until now. And many must consider a flurry of enticing, but novel, Biden administration changes to repayment plans and debt-forgiveness programs.
The first payments are due as soon as Oct. 1.
Geri Critchley, a 75-year-old former nonprofit employee, is among those attempting to navigate the system. She paid graduate-school loans for more than 20 years. She has $14,000 left, but no clarification as to what she will owe each month and how to pay.
After three years of no payments, she called her loan servicer and the Education Department to ask about forgiveness options, payment deadlines and amounts. But getting through to a human at each place took some work. Critchley encountered what many borrowers fear: long hold times, constant redirections and dropped calls. When she finally got through to her loan servicer, the voice on the other end of the line suggested she call back in January when call volume would be lower—three months after repayment is set to start.
“The Department of Education person said to me, ‘I’ve been working in this field for many years, and I admit it’s the most complicated process I’ve ever been involved in,’ ” Critchley said.
Borrowers such as Critchley must work with their servicers and government tools to determine the most beneficial repayment strategy. That includes an income-driven repayment option rolled out by the administration last week that could significantly lower their monthly payments and put them on a path to debt forgiveness after 20 years of compliance.
They must also decide whether to make payments at all, or use a 12-month “on-ramp,” during which interest accrues but loans aren’t marked as delinquent or reported to credit-rating companies.
The department has sent out early payment reminders via email this summer and is working with servicers to increase individual communications with borrowers, a spokesperson said. After Oct. 1, they will send notices to borrowers who didn’t make their first payment offering additional resources.
Loan servicers are adding staff to handle the expected deluge of calls this fall. Job listings for Edfinancial Services, a company that handles millions of federal accounts, say it is “urgently hiring” customer-service representatives in Tennessee, Alabama and Texas. The company referred a request for comment to the Education Department.
After three years without payments, many federal student-loan borrowers might feel overwhelmed as they plan for resumption. Below, a guide to how to prepare:
Know your dates. Student-loan payments officially resume in October, but interest will pick up again in September.
* Contact your servicer sooner rather than later. Callers can expect long wait times. Should you have a question that requires you get in touch with your servicer, make sure to do so before the payment deadline—and be ready for hold music. The Education Department can help identify a borrower’s servicer.
* Don’t forget to check if you qualify for another repayment plan. The Biden administration announced changes to income-driven repayment plans that could potentially lower your monthly payments and speed up your repayment process.
* The handful of companies with department contracts say they are hamstrung by flat funding from Congress for the Federal Student Aid office, despite the administration requesting a $600 million increase.
“When the system is undergoing a major transformation, there’s going to be some backlogs,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group.
Beyond answering questions about the payment restart, servicers also advise borrowers about complex financial decisions such as whether to consolidate loans or enroll in the income-driven program, called Saving on a Valuable Education, or SAVE.
The administration enlisted advocacy groups to promote the program. President Biden filmed a video promoting the launch of the program’s application last week.
Republicans criticized the new program as a workaround after the president’s mass debt-cancellation plan was struck down by the Supreme Court this summer. That would have forgiven as much as $20,000 for qualified borrowers. Most Democrats support the administration’s efforts, but some are worried about borrowers’ readiness to pay without debt forgiveness.
The Biden administration agreed to not further extend the payment pause as part of the deal with House Speaker Kevin McCarthy (R., Calif.) to suspend the debt ceiling this spring, just weeks before the Supreme Court decision.
“They could have waited—this particular group needs relief,” said Florida Rep. Frederica Wilson. She and more than 80 other Democratic lawmakers, including Senate Majority Leader Chuck Schumer, wrote to Biden last week about their repayment concerns and urged him to try again on mass cancellation using other legal authorities. Still, she is optimistic about the SAVE program’s success in the long term.
A complication for the administration is that some features of the plan, such as cutting monthly payments from 10% to 5% of discretionary income, won’t be available until next summer, after the regulatory process concludes.
To ease the confusion, more borrowers are seeking outside financial counseling to manage their student-loan decisions.
“A lot of folks just have no idea where to start,” said Meagan McGuire, a consultant at Student Loan Planner, a financial-advisory firm. “With the website and servicers not being super helpful right now, that’s leading to more confusion—newer borrowers are just throwing their hands up.”
Davie Morales-Miranda, who works while attending graduate school in Nashville, Tenn., is concerned that interest will again begin accruing on his $50,000 of federal student loans in September, even though he won’t be mandated to start paying because he is in school.
“I know the power of interest,” the 29-year-old said. “It’s been three years. We forget what that was like.”
Viktor Orbán has certainly made Hungary a prime example of 21st Century fascism within a quasi-democratic structure but that doesn't exonerate us from our horrible downfall over the last 40 plus years. Over the last four days we drove through over 2,000 miles of the US and homeless encampments are everywhere. Since I lived in CA when Reagan was Governor I remember him closing 'insane asylums' as quickly as he could to toss these poor folks out on the street in the mid-70s. Over the last 50 years every other government entity followed suite and now our cops have to manage the fallout. So, of course, many of the best people have left the policing business, same for the education business as managers take the place of educators, (that's another issue). Our fascists are hard at work undermining democracy and it starts with undermining trust in all of our institutions. Let's not demonize Hungary without acknowledging our own slide down this path. CPAC held their convention in Hungary last year. By a large margin, those that remain in the Republican party support Trump even if he's convicted of one or more of his 91 crimes. Are we that different?
Anyone can 'gift' you $16,000 a year without that gift incurring any federal tax consequences. Beyond that, anyone can gift you an additional $12MM+ lifetime without federal tax consequences. All state tax levels are different. If someone gifts you more than the $16K limit in a single year it only discounts your federal limit by that amount. Within these limits there are no federal tax consequences.
General Motors did their part by making 125% loan to value home equity loans.
I remember 125% loans to equity in 2007. What most do not understand is that 'liar loans' had been around for 25 years or more before that. My wife and I have always been entrepreneurs. At least one of us have always owned a business. When we bought our first home in 1980 the mortgage broker told my wife to 'estimate' the earnings for her new clothing store. He then suggested the earnings and we both said, sure. The bank did not ask for a P and L, balance sheet, etc. Why? The loan was a 2nd at 18%. It was all about the money in 1980 and home prices were moving up so banks took zero fiduciary responsibility. It never changed. As we bought more homes we continued to 'estimate' our earnings. It always worked out for us because we had a plan to pay down loans as quickly as possible. I see the same problem with student loans. Most people don't take this easy money understanding how they'll use it as an investment. Like liar loans, it's just a trap. This is a tough country for anyone without a plan to get ahead.
While I'm still out of the market now that treasuries / CDs, etc. are paying so well, UL is one of my standard bond-like holdings in my retirement account.
For Hawaii Electric, the situation is going from bad to worse. It's beginning to look like a PG&E situation. From the WSJ:
Maui Alleges Hawaiian Electric Caused Lahaina Wildfire
County files lawsuit against the utility claiming negligence
Maui County filed a lawsuit Thursday against utility company Hawaiian Electric, alleging that its power lines caused recent wildfires on the island—including one that destroyed the town of Lahaina and killed at least 115 people.
The suit was filed in state Second Circuit Court in Hawaii against Hawaiian Electric and its subsidiaries on Maui, alleging the company failed to maintain the electrical system and power grid during a windstorm that lashed the island, resulting in three different fires that erupted on Aug. 8.
The fires in Lahaina and another community, Kula, burned over 3,000 acres, destroyed more than 2,200 structures and caused an estimated $5.5 billion in damage in the nation’s deadliest wildfire in more than a century. Some 1,000 people are still unaccounted for.
The lawsuit claims that the utility, known as HECO, acted negligently by not pre-emptively cutting power despite a warning the prior day from the National Weather Service of high winds and temperatures, along with low humidity—prime conditions for a wildfire. It also says HECO’s failure to maintain its system led to energized, downed power lines causing the fires.
Maui is seeking unspecified civil damages to cover losses to public infrastructure, fire response and other costs, decreased tax revenue, environmental damage and losses of historical and cultural landmarks.
“Maui County stands alongside the people and communities of Lahaina and Kula to recover public resource damages and rebuild after these devastating utility-caused fires,” the county said in a press release.
A HECO representative said in a statement, “Our primary focus in the wake of this unimaginable tragedy has been to do everything we can to support not just the people of Maui, but also Maui County. We are very disappointed that Maui County chose this litigious path while the investigation is still unfolding.”
The Wall Street Journal reported last week that HECO was in talks with firms that specialize in restructuring advisory work, after investors sold off its stock and bonds and Maui residents began filing lawsuits alleging it was negligent before and during the fires.
The utility’s power lines have been a suspected cause of the fires since videos surfaced of grass and brush being ignited near Lahaina and Kula and numerous home electronic sensors detected faults around the island. The fires were fanned by high winds as Hurricane Dora passed hundreds of miles to the south.
Several people reported utility equipment igniting fires. In the hills above Lahaina, Dominga Advincula said she was leaving for work between 6 a.m. and 6:30 a.m. on Aug. 8 when she heard a power transformer blow in a field nearby. “It sparkled like fireworks and landed in tall grass,” said Advincula, 56. “That started the fire.”
Proactively shutting off power lines to reduce wildfire risk is common practice among utilities in California, but that strategy has to date been rarely used elsewhere. Utilities across the West are working to establish formal plans for doing so when dangerous winds pick up.
PG&E, the utility company serving most of Northern California, has relied heavily on shutoffs after its equipment ignited more than a dozen destructive wildfires, including the 2018 Camp Fire that killed 84 people and destroyed the town of Paradise.
But shutoffs pose challenges. A range of critical infrastructure requires electricity, as do customers who need it for medical reasons. Utilities planning to take such measures are working to determine how best to alert customers of the need for outages and minimize their impact by installing technologies that allow them to pinpoint risky areas.
Trump mentioned going to Russia the other day. Maybe he should reconsider as he'll be useless to Putin unless he can keep the faithful sending money to him.
There are some services that should always be socialized. Some may know that fire departments in the US were private enterprises in the 19th Century. That didn't work out well for anyone who was not connected or the high bidder during a large fire. Electric services should be socialized in the 21st Century. I'm not sure that will happen since we don't understand that education should be socialized at the federal level so we can educate all of our kids at the same level and find the genus children who happened to be born into poor families.
This headline from the WSJ:
Dick’s Sporting Goods, Macy’s Flash Warnings Over Consumers
Come on, this board is too important for anti-government drivel from the WSJ editorial board. I read the WSJ every day but their editorials are mind-numbingly stupid. Many, if not most, significant ideas are funded by the government through universities and other entities and then handed off to business as it makes economic sense. Example: Solar panels cost $1,000 a watt when the government developed them for the space program, then oil companies stepped in when solar was $100 a watt and pot growers stepped in when they cost $10 a watt. Now panels are under $1 a watt. The right hates the government, the left hates oil companies and we demonized pot growers for decades until we figured out how to monetize and tax pot.
The internet was invented at UCLA and a few other universities with government money. I first ran into it a decade later consulting for JPL. Yup, more government money. Then Berners-Lee, (government funded at CERN), put a hypertext/hyperlink front end on the old tree structure Web 1.0 was ready for who? Pornographers. Pornographers were the first real wave of entrepreneurs to monetize the web. And of course today, the web is the backbone of every important business. There's a reason Jefferson saw religion as one of the three great evils of mankind.
The utter stupidity of the political left and right in this country drive me nuts. Our system works very well and we don't need the editorial goofballs at the WSJ or Mother Jones selling us their political opinions as fact when it's nothing short of religion. I don't care if they pray for salvation or the end of micro-aggressions but I do care when they try to upset a well oiled machine like we have in the US.
I grew up in Northern LA County and in high school my friends and I would make regular weekend trips to Death Valley in the cooler months and into the Panamint Range in the hotter months. We were much less interested in the geologic importance of these areas than the idiosyncratic nature of the people who lived there. In the Panamints there were still old prospectors searching for the next vein of silver which had clearly run out 40 years before. Along with viewing mountain goats and trekking through the valley we'd also attend Marta Becket's Opera House when in Death Valley. I would attempt to describe her performance but anything I write will miss the surreal experience of listening to a truly horrible operatic performance in full regalia surrounded by mid-west gamblers bused in from Las Vegas to take in "opera in the desert".
When I met my, now, wife, I had to go through the interview process with her step-father. That lasted for about two minutes until we realized we'd gone to the same Los Angeles college, (Barry went there), and that we had a complete fascination with Death Valley and surroundings. He was a geologist and now he had an eager intern who would help him scout locations and draft curriculum for his class field trips. It was shortly after our first trip that my wife said, "I guess I'm stuck with you". It's worked out pretty well..:).
The former guy is going to have to bail himself out of jail before the end of the week. So the Republican front runner will officially be out on bail. When a defendant is allowed out of jail on bail, the judge sets rules for that defendant. Here are some of the rules for Donnie: The defendant shall make no direct or or indirect threat against any member or property of the community. This includes, but is not limited to, a post or repost on social media. I give Donnie 24 hours before he can't stand it and breaks the rules. Let's hope Vegas let's us bet on the over/under. They've already set the indictment check-in weight over/under at 273.5 lbs. Fat shaming is of course awful but I'll give everyone a pass on this one.
In other news: Trump is leading in Iowa by almost 25% but almost 60% of Republican who caucus in Iowa don’t want Donnie leading the party. It seems he’s rather limited to the crazy caucus. I see Republicans, thankfully, turning on him.
Hilarious. You couldn't make this stuff up. I read new real estate listings in Annapolis weekly and occasionally the editing is less than excellent. Today I read this:
Specious 3 Level Home
I understand it's Hurriquake season in LA...:).
In Pasadena where they're strongest, the Santa Ana winds have been over 100 mph.