Downsizing boomers on the move

If you are one of 450 million baby boomers worldwide (born between 1946 and 1964) who are planning to downsize your real estate to help afford retirement, best to get a move on. The plan is very popular.

By far the largest group of homeowners in the world fall into the over age 50 category.  Some 70% of those over 65 in North America have paid off their mortgage.  The 30% who have not cite debt taken on in the refinancing boom of the 2000′s, smaller down payments and the use of home equity lines of credit for preventing them from becoming mortgage free.  (This is up from 22% over age 65 who were mortgage free a decade ago.) Mortgage free or not, most are planning on selling their homes to free up money needed for retirement.  See:  Selling the family home is liberating for many retirees

“With home and home-related expenses the largest cost for every age group 50 and older, according to research from the Employee Benefit Research Institute, it’s worth considering if you will be able to afford the cost of living where you are, whether you want to stay there and what your other options are.

“They need to sit down and figure out their retirement plan — what’s coming in and what’s going out,” Ms. Canan said.

The E.B.R.I. report, based on research from 2007 through 2011, shows declines in spending on housing costs, but whether the spending patterns will continue remains to be seen. “The crash had really changed some spending patterns,” Sudipto Banerjee, a research associate with E.B.R.I, said.

Even those with considerable investment portfolios are aware of the uncertainties in the financial markets. “They say, ‘I don’t know now how the return will be. The bottom line is I need to save more.’ That’s why we’re seeing these big spending cuts,” Mr. Banerjee said.

According to a study from the Society of Actuaries, Personal Risk Management: 2013 Risks and Process of Retirement Survey Report, cutting back on spending or intending to “is not as income-sensitive as might intuitively be imagined.”

Among retirees with annual incomes below $50,000, 79 percent had already cut back on spending or planned to, while 73 percent of those with incomes greater than $100,000 were spending less as well.”

 With the younger population behind the boomers under-employed, underpaid, under-saved and over-indebted, the pool of those who can buy expensive properties from all of the boomers looking to downsize is relatively shallow.  Global trends remain focused on reducing debt, lowering expenses and saving more.

Posted in Main Page | Comments Off

Energy companies bounce as the loonie heads south for the winter

As the Great Yellen-dini dazzled with her carefully contorted syntax on Wednesday, aimed at creating inflation out of hot air, the algos went wild for a couple of days and the most shorted stocks (like energy cos in black below) rebounded sharply. But as the dry ice dissipates and the revelation returns that absolutely nothing fundamental has improved…Treasury yields and the loonie have resumed their fated journey south once more.  Higher North American growth in 2015? It seems they beg to differ…

XEG and C$

Posted in Main Page | Comments Off

Rising greenback weighs on commodities, EM and S&P earnings

As the greenback makes a run to break above 90 on the DXY basket of global currencies (not seen since 2006), emerging markets, commodity prices and US multinational earnings are all feeling the downward pressure. All those assuming that the effects are a short term blip, might be wise to consider the alternative…a sustained, secular uptrend in the US dollar, intensifying asset price deflation for the next several quarters, possibly years…

Bloomberg’s Andrea Wong and Mia Saini examine the potential impact of a strong U.S. dollar on corporate earnings.  Here is a direct video link.

Here is a direct video link.

Posted in Main Page | Comments Off

Deflationary indicators yawn at Fed’s growth confidence

The jabbertalk parsers have rarely been in finer form than following yesterday’s latest Federal Reserve comedy hour. It is truly incredible to hear the Yellen-syllable analysis now engulfing the stock twits. Silliness aside, the fact remains: the Fed thinks it will begin hiking interest rates within the next 4 months. That would not just be ‘tapering’ but actual tightening my friends, and that is not bullish for today’s insanely valued financial assets.

There is much reason to doubt the Fed’s plan, of course. Their growth forecasts have been hopelessly optimistic with every single guess since 2007. And now, energy–the miracle driver of the anemic North American growth we have seen since 2009–is suffering body blows daily from a violent liquidity exodus likely just getting started. With government revenues plunging for the ride, and corporations and aging consumers buried under debt, the next great hope for surprise economic growth is nowhere to be seen.

Indeed, copper and energy prices are steadily weakening once more today as traditional safe-havens–Treasuries and the US dollar continue to rise.  Note the move of the Swiss Central Bank today to implement negative deposit rates for their banks, is aimed at pushing safe haven-seeking-cash out of the Swiss Franc–and into other ‘safe-haven’ options like the U$.  This is helping to strengthen the rise of the greenback while further weakening commodity and energy prices, US exports and S&P earnings.   All our life’s a circle.  The US 10 year Treasury yield continues to signal slowing growth.

10 year Dec 18, 2014

Posted in Main Page | Comments Off

Danielle on The Financial Survival Network

Danielle was a guest today with Kerry Lutz on The Financial Survival Network talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

Posted in Main Page | Comments Off

Historical reminder on the mirage of central bank ‘control’ on markets

The wheels of central planners are coming off all over.

As Russia is re-learning this morning, Central Banks tinker at the edges of sentiment. Sometimes they are successful in swaying it one way and another–at least for a while. But in the end, their ‘bold’ interventions fail miserably, lurching from one crisis to the next, evaporating buckets of taxpayer dollars in the process.  See: Russian rate hike fails to stop the Ruble’s crash.

Here is a direct video link to a BBC documentary on the Sterling crash of September 1992 when the British government lost ‘control’.

Contagion is spreading through the world’s closely coupled risk markets.
Confidence cracks spreading

Posted in Main Page | Comments Off