Markets retrace December losses

It was a week where lackluster earnings battled with the Fed’s willingness to hold off on rate hikes for investors’ attention. The Fed won. Investors bought on the dips and helped to push the markets out of correction territory. From a technical point of view, however, all the U.S. indexes are overbought, extended, and in need of some kind of pullback. Traders know this and have been shorting the market as it climbs, betting that we will see at least a 100-point decline in the S&P 500 Index. It hasn’t happened–yet. Normally, markets will do what is most inconvenient for the greatest number of traders. In this case, the indexes simply keep going up. But before you exhale in relief, be advised that when the last bear throws in the towel, that’s when the markets will blind-side you. For those who followed my advice last quarter and have remained invested, your paper losses are rapidly disappearing. I expect that, despite continued volatility through March, the second half of the year should see all your losses recouped and I expect further gains after that. Earnings, which were not forecasted to match the gains of the last few quarters, have come roughly in-line with investor’s lower expectations. So far, the average results indicate about a 7% gain for the quarter. In cases where a company announced less than that, traders were quick to punish their share price. In some cases, for example, banking stocks, where trading profits were down last quarter as a result of the steep drop in equities, the Algos were whipping prices around on almost an hourly basis....

The pay gap for women is growing

If Citigroup, one of the world’s largest banks, is any indication, women earn 29% less than their male counterparts. It also revealed that only 37% of its managerial jobs were held by females. Wall Street has long been known as “the last bastion” for white males. But to Citigroup’s credit, it just made public its internal assessment of the existing pay gap between the genders. One reason it did so was the new disclosure standards that are now required in the United Kingdom since last April. Last year, when Citigroup first reported these numbers for its UK workforce, women were paid 44% less, and if bonuses were counted, the gap widened to 67%. Kudos to Citigroup for at least narrowing the gap over the last 12 months, but much more needs to be done. However, let’s not pick on Citigroup. Plenty of the nation’s top financial institutions are in the same boat. But, as a result of increasing shareholder pressure, many American companies are being required to fess up and supply data of their own inadequacies in this area. Historically, the wage gap for women in this country has been reported to be 80 cents for every dollar a man receives in compensation. Critics argue that there has been real progress since the Equal Pay Act was passed in 1963. Back then, women only earned 60% of what men did. Over the next thirty years or so that disparity was reduced by half, but it is still 80 cents. Those who think this gap is justified (mostly white, middle-aged and older males) argue that women get paid less because...

Markets bounce 10 % since Christmas

The stock markets have gained almost one percent per day since the beginning of the year. If you had panicked and sold during the Christmas holidays, you are sitting in cash wondering when to get back in. Here is some advice. Patience should be at the top of your “to-do” list. If you believe we are in a bear market, then the kind of rebound we are seeing in the equity markets is completely normal. Bear markets are characterized by waterfall declines followed by sharp, explosive upside rallies. Unfortunately, these fantastic trading opportunities are just that—trades. If you are not living the markets every single moment, day-in, day-out, then forget about profiting from it. Most retail investors will get chopped up into little pieces and spit out by the proprietary trading desks and their quantum computers. Once the markets’ rally hits some kind of peak (usually, but not always a technical resistance point in the indexes), another waterfall decline will occur. Usually this kind of action goes on until whatever low has been put into place is re-tested or breaks. That, my dear readers, is what I predict is in store for us sometime in the first quarter. How you handle that is up to you. My advice is if you can’t stomach the ups and downs of this market, you should take this opportunity to reduce your risk tolerance. That does not mean get out of stocks. It means reduce your exposure to the more aggressive areas of investment but continue to stay invested. “Why,” you might ask,” should I not just sell everything, get into cash, and...

This year brings change to Social Security and Medicare Benefits

As the year begins, those who are retired, or who plan to soon, need to know the changes the government has recently announced to your benefits. The good news is that retirees will get a 2.8% increase in Social Security payments. While that doesn’t sound like much, it happens to be the largest cost of living adjustment in seven years. What that amounts to for the average couple in retirement is about $67 per month, or an average monthly payment of $2,448. If you are one of those workers like me, who waited until 70 years of age before collecting benefits and are considered a “high earner,” then you will be receiving as much as $73 more per month up to $2,861. On the opposite end of the scale, individuals who want to claim their benefits earlier than their full retirement age, (but still plan to work) get a benefit. The amount of money they can make before their social security benefits are reduced or eliminated has increased. This year, a worker younger than 66 can earn up to $17,640 before losing any social security benefits. That is $600 more than last year. After that, they will lose $1 in benefits for every $2 of earnings over that limit. If you are going to turn 66 this year, you can earn as much as $46,920 without jeopardizing your benefits, which is $1,560 more than you could last year. Anything over that new limit will mean you will lose $1 in benefits for every three bucks you make. The earnings cap goes away once you reach full retirement age. That...

The Trump Dump

The sell-of in stocks has now exceeded the 2016 decline. Investor sentiment is as low as it has been since May of that year. The Fed refuses to save us, and Donald Trump insists on his wall or he will lay off thousands of federal workers. Did I say Merry Christmas? The reasons for this rout are well-known by now. The latest disappointment was on Wednesday when, contrary to investor’s expectations, the Fed stood firm in their quantitative tightening agenda. For a more in-depth view of the reasons for their stance, please read my Thursday column “The Fed Stands Tall.” The markets expressed their unhappiness by declining 1.5% in the last four days. But it wasn’t just the Fed. Last Sunday evening, China’s President, Xi Jinping, made it clear in a speech celebrating forty years of Chinese progress and reform that “no one is in the position to dictate to the Chinese people what should or should not be done.” In essence, Xi is calling Trump’s hand while upping the stakes. He is betting that Trump has a weak hand. Between the continuing revelations of the Mueller investigation, the slow-down in the U.S. economy, a divided Congress, and his shrinking popularity among voters, Trump is, at best, a paper tiger. Investors, in my opinion, are beginning to agree with Xi. Despite Trump’s tweets and assurances, the trade war he has started won’t be resolved anytime soon. As that understanding takes hold among investors, the markets are selling off. The prospect of a debilitating trade war has now permeated the economy. It is slowing growth, reducing earnings and transforming a...