Wednesday, July 18, 2018

Odds and Ends for July 2018

Trump seems to have more critics than supporters, especially in the media. In his recent trip to Europe he was right in bringing up the matter of economic support by our so-called NATO allies. These people are the first to put their hands in our pockets and almost every nation in the EU has a better standard of living than citizens in America. Sometimes, they bash our policies and sometimes they are correct to do so like the attack on Iraq and the phony war on terrorism.

Not this time...

All Europe gets a free ride in their defense while our deficits, lives and resources go to waste. Only eight of the twenty-one EU members pay the minimum of 2% of GDP towards defense. Guess what? 
Even financially troubled Greece, anti's up the 2% while rich nations like Germany don't even come close and if you add up all the years of NATO by these so-called allies, that is serious money.
I wish that we had the "balls" to drop out of NATO and any foreign defense alliance. Stick to the wisdom of our founding fathers and stay away from dangerous entanglements. In addition, the recent info about the Russian involvement in our last election will hamper any peace or trade possibilities between Trump and Putin because he now has to include this nonsense about the election. As it turned out, Trump sought a peaceful meeting, and now, he gets back lass over the belief in the meddling. Move on! The election is over. Election boards and media outlets need to do a better job in the future. Enough with the sour grapes! We have a lot of positive history with Russia from Catherine the Great, the buying of Alaska, an ally that helped defeat Nazi Germany in WWII and the Space Station. Like War sang, "Why can't we be friends...?"

Back to the market...

According to Trim Tabs, buybacks in public companies continue at record levels. Are these CEO's so blinded by greed that they don't see the dangers of buying at highs and late in a bull cycle? They are not investing for the future in R&D or paying into employee pension funds or even paying down debt. The top five in the idiot cycle of spending of announced $435 billion in buybacks for the second quarter are:

*Apple= called for $100 billion.
*J.P. Morgan, B of A, and Citi= all plan to do buybacks as the Fed will now allow them after passing the stress test.
*Nike= $15 billion, rounds out the top five.

Let me add this...

I'm not alone in worrying about the doings in the market. Four respected firms had either individual analysts or the institution itself made these dire warnings about the state of the market.

*Guggenheim Partners: calls this rally the last hoorah.
*A Morgan Stanley strategist says it's time to go full defense.
*Barclays: not even small caps are immune to any trade war fallout.
*Morningstar Investment Management Group: investors should brace for another lost decade for stocks. OUCH!

I didn't know this:

The final four in World Cup each receive a bonus.
* First place= $38 million.
* Second place= $28 million.
* third place= $24 million.
* fourth place= $22 million.
In addition, the four quarter finalist teams that did not advance to the semi's, will split $64 million.
The Round of 16 teams that didn't advance will split $128 million($8 million each).

This info could be very bad for our NCAA basketball tournament as lawyers will use this for another reason to pay players and not the schools who they represent.

Another problem...

Housing, which is the cornerstone of our economy is providing misinformation. Any report always focuses on rising prices, but the core of housing is destabilized. New home sales have fallen 37% below average in the last five months as compared to the last 30 years or the life of a mortgage. Almost all new homes target upper middle class to the high end which breaks the natural progression of the housing market. They are not building starter homes, and as I have mentioned many times because wages do not meet the price of a entry level homes. You can also see the verification of less sales with mortgage purchase applications. They are down 9% in the best selling month as compared to June 2017.


I want to congratulate team Russia for their effort in the World Cup. They were not gifted with talent, but they displayed excessive heart and made the quarter finals. Also, Putin showed leadership in viewing the game without bulletproof seating. After the championship game he was on the field congratulating the winning French team even with the weather turning bad in pouring rain. Well done!