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Topic Title: Heads up
Topic Summary: What to watch for in the economy and finance
Created On: 01/15/2015 09:17 AM
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 01/15/2015 09:17 AM
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jdbman

Posts: 12159
Joined Forum: 07/28/2003

Any one remember 2006-2007? All you thought that your house was a bank. Then through pure stupidity the bushwackers wrecked the party?

If you had any savy you would have watched how the G-7 yield curve flattened.
Historically inverted yield curves are predictors of recession. So right now in the US the 10 year tresury is at 1.818, the 5 year is 1.279. The diff is .539. So right now this is not flat or inverted.

After flattening or inverting the timing sequence is usually 2-3 quarters before negative GDP sets in.

I am not saying this is going to happen.

But its a good idea to pay attention. The bond market is a good lead indicator of business cycles

However, something is developing, apparently. May go flat or invert latter this year. It could happen very quickly.

Alot of banking stocks are getting hit right now.

No one knows what the Fed will do. I have been hearing that interest rates will rise for the last 7 years. I say, when you see it, there it is.

I think from an investing, economical and fiancial perspective that is going to be a very volitile year.

Just trying to help out you repugs and teabags who have proven that you are unable to grasp any concepts of this nature.

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So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.
 01/15/2015 09:51 AM
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sw

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Joined Forum: 10/13/2005

So do you have any sense about the housing market in Brevard this year?

We're toying with the idea of picking up a 2nd "home" that would allow us to have a presence in Brevard again (been living in D.C. burbs the past two years so the kids can be close to extended fam). We're not rich, so if we could swing it we'd have to rent it a good chunk of the year to break even, but at least then we'd have a pad to return to occasionally when we're surf starved or frostbitten. Would only consider beachside (has to be walking distance to the ocean) between the inlet and the port.

After losing all our savings on our first-ever home (bought in 2007-2008 in Viera...watched it go into the dumps before unloading it for a huge loss in 2010), my wife is forever cured of the "your house is the best investment you'll ever make" idea that was deeply ingrained in her from youth.

With interest rates so low right now, and with a little financial wiggle room in our bank account, we'd love to have the inside scoop (doesn't everyone) on whether rates and property values are going to rise or fall in the next year or two........

Would love to hear some educated guesses from anyone with insight
 01/15/2015 10:24 AM
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worksuxgetsponsered

Posts: 8728
Joined Forum: 01/19/2005

have been hearing that interest rates will rise for the last 7 years.


It's been kept artificially low for too long, it's bound to happen.

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Specializing in sarcasm and condescending rhetoric since 1971.
 01/15/2015 10:53 AM
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jdbman

Posts: 12159
Joined Forum: 07/28/2003

On housing; Your house is your home its not an investment. As worksux says interest rates cannot go down so at some unknown point they will rise. If you are in Japan they have not risen for 12 years plus. Are we Japan? Most likely not.

I had a house in Sat Bch that I sold a year ago.

If you do need to live someplace and prefer ownership to renting, then financing right now is at historic lows. A 15 year fixed rate loan makes lots of sence.

I own my home outright. I was fortunate enough to get out from under the interest rate rat race.

I really do see alot of benefit to renting.

10 year is now at 1.776 ( 1/15/2015 @ 12:53pm ) but the spread is widening. Most home loans have some correlation to the 10 year. Pick some lenders and check some rates.

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So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.
 01/15/2015 01:02 PM
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tpapablo

Posts: 43831
Joined Forum: 07/25/2003

Thank you, O enlightened one. Just kidding. Appreciate you sharing your perspective. Volatile year sounds about right.

I am cash heavy right now, waiting for a bear market, which looks to be coming. I buy when everyone else is bailing. Then I'll ride the next bull market into retirement, if I want to retire. Also, for the first time in 30 years, I am going to finance the purchase of a car. Rates too low to resist. I think I can do better than the interest rate.



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 01/15/2015 01:20 PM
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3rdworldlover

Posts: 22495
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Plan on getting raped for "insurance"
 01/15/2015 01:33 PM
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jdbman

Posts: 12159
Joined Forum: 07/28/2003

Yea I know how difficult it is to sort numbers and stuff out if you are a repug teabaggers. I know your buds at Faux and beer rat are much better at analyzing how much face surgery Pelosi had done and the reasons why Reid's top lip quivers at the mention of tax reform.


After another stellar year for muni bonds, looks like it's still a good place to be. I also really like the biotech sector. I 'm looking for wti to get around 40. I filled up my truck this am for $35, Look for the $ run to continue for quite awhile.

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So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.

Edited: 01/15/2015 at 01:39 PM by jdbman
 01/15/2015 03:15 PM
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sw

Posts: 901
Joined Forum: 10/13/2005

Edit: sorry for the thread hijack...gonna post it in a new thread in NPNR
 01/16/2015 08:18 PM
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cheaterfiveo

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Your info is priceless  your anger towards anyone not prog is suspicious

 01/17/2015 06:09 PM
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pompano

Posts: 5804
Joined Forum: 01/06/2005

yes, watch the junk bond market in reference to energy.  When they start to get nervous, you may want to look at some slight adjustments.  My energy stock investments are down 10%, but I expect it with the oil dumping.  I just buy more. Solar is making a really serious subtle comeback across the world, but we'll have to watch if China stomps the competition, again. 

 01/29/2015 11:51 AM
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jdbman

Posts: 12159
Joined Forum: 07/28/2003

today the 10 yr is at 1.753, the 5 year is at 1.276. The diff is .4777. With me so far? So the last time I posted on this the diff was .54. Not a real big change, but clearly the curve is starting to flatten. Oil continues to decline and the $ continues to rise. Listen boys its your Uncle Johnny here just trying to give you a heads up.

Your lives, wealth and general well being are more influenced by this change than anything blowhard politicians do.

Nevermind, back to posting bs political crap.

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So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.
 01/29/2015 01:22 PM
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havanabama

Posts: 3719
Joined Forum: 07/23/2003

I wish I had sold about 30% of my port to cash during the xmas rally. I expect a flat market till something makes it correct. Hope I get another chance to sell before I get a chance to buy. Thank JDB for the convo on finance.

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Ah, religion, bigotry dressed up as morality.
 01/29/2015 03:08 PM
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tpapablo

Posts: 43831
Joined Forum: 07/25/2003

Originally posted by: 3rdworldlover Plan on getting raped for "insurance"

I always plan on getting raped by insurance. Hell, I'm expecting double penetration on this particular car. What can you do?



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 01/29/2015 04:40 PM
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dingpatch

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Joined Forum: 07/24/2003

Why the automotive industry's good times could end in a crash
Aki Sugawara By Aki Sugawara
January 26, 2015 11:00 AM
Motoramic

It's seemingly a new golden age for gearheads - between cars like the Ford GT and Acura NSX basking in the spotlight at the 2015 Detroit auto Show, and the 707-horsepower Dodge Challenger Hellcat selling briskly. With the revival of General Motors and Chrysler from the brink (albeit, at an $11 billion cost to taxpayers), the recession in 2008 is fading as a distant memory.

Yet underneath all the fanfare of a recovery, the automotive industry isn't as healthy as it seems, and could get a lot worse.

Ridiculous click bait you may say, citing how companies like Honda posted all-time annual sales records in 2014, or how oil prices threaten to drop down to $40 a barrel. The professional forecasters expect U.S. auto sales to hit 17 million this year, a near-record level. Yet dig into the data though and a more ominous picture emerges - here are five points why:

Year-over-year wage change in hourly earnings of all U.S. employees (Chart: New York Times; Source: Bureau of Labor Statistics)
Year-over-year wage change in hourly earnings of all U.S. employees (Chart: New York Times; Source: Bureau of Labor ...
1. Consumers aren't making any more money, but are buying pricier cars: The average price of a car reached a new high of $34,367 in December last year according to Kelly Blue Book. That's in spite of stagnant wages, which although increased by about 2 percent, cancels out when factoring inflation based on the Consumer Price Index (CPI). Some would argue CPI understates inflation since it changed how it calculated quality and substitution adjustments back in 1996 - which would mean the middle-class has been on the decline since 2008. That'd be consistent with how the majority of Americans feel like they're falling behind the cost of living.
2. Expensive rides are increasing the debt burden of consumers: If people aren't making any more money, how can they afford an Audi A4, which starts at $35,000? In a word, debt. Conventional wisdom says to buy based on the 20/4/10 rule - a 20 percent down payment, a 4-year loan and the total cost adding up to no more than 10 percent of the gross annual income.

But given stagnant wages, it's no surprise that a 20 percent down payment isn't feasible for many, especially when considering the average amount in a savings account is below $7,000. Hence, more and more buyers rely on longer-term loans with little down payment. According to Experian Automotive, one fourth of all new-car loans were 6 to 7 years long in 2014 - with faster growth than any other type of loan - and the average length for a car loan reached an all-time record of 66 months last year. Why should that be a cause for concern? Because of the dreaded "S" word.


3. Subprime automotive lending at its highest since the subprime housing crash: Loans purchased with poor credit are on the rise, according to Equifax, and make up 30 percent of all loans. Analysts are quick to defend the data, saying only 0.71 percent of subprime loans are in default. But there's no sign of abating, and 8.4 percent of borrowers who took out loans in the Q1 of 2014 and had weak credit and missed payments by November, according to Moody's analysis of Equifax's data. That's the highest since 2008, when the subprime housing market came crashing down.
Granted, automotive subprime doesn't nearly have the same risks as housing subprime because it's much easier to reposess a car than a house, and there's no counterpart to toxic mortgage-backed securities. But as recent Federal Reserve figures show with the $15 billion increase in non-revolving credit, the burden for auto loans is only getting worse. Plus, unlike houses, cars are a depreciating asset that drop in value as soon it goes off the lot. So if somebody goes underwater in payments three years into a six-year loan, the person might be inclined to just hand back the keys.

4. The trap of low interest rates. How can I be such a Debbie-downer, in face of all the sunshine rhetoric about recovery? Much of it comes down to the Federal Reserve's policy of zero-percent interest. The Fed chair - both Janet Yellen and her predecessor Ben Bernanke - have insisted that the rate depends on progress of the economy, namely, inflation and unemployment. The drop in unemployment to 5.6 in December has some cheering from the rooftops, but the labor participation rate is at its lowest since 1978 at 62 percent. At best, the recovery is fragile; at worst, it's exacerbating the rise of non-revolving debt.

Yellen has said she'll bump up interest rates later this year to keep inflation in check and prevent another housing/asset bubble, but even if they were to revert back to 5 percent interest as it was in 2006 - as opposed to the 10+ percent in the '80s - the market for those fully loaded Ford F-150s would shrivel up given the lack of consumer liquidity. New-vehicle loans are stretching out when the average interest rate for buyers with great credit is 2.6 percent; would we see 9-year car loans if those rates rose to 4 or 5 percent? And even if unemployment, labor participation rate and wages start recovering, it wouldn't be the same, because...

5. The younger generation is broke. Generation Y has no money to drop a hefty down payment on a car, or afford a shorter-term loan to offset the inevitable rise in interest rates. Adults under 35 have a negative savings rate of 2 percent, and have been burdened by spiraling student loans, which have increased by more than 500 percent since 1999. Oh and that 5.6 percent unemployment rate? Much of that comes from the older generation reentering the workforce, while labor participation for those 35 and under has dropped by 4 percent. Maybe that partially explains the decline of the youth-oriented Scion brand.


What does it all mean to average American? These are longer-term trends, whose effects may take years to materialize - at least, while the economic turmoil in Europe keeps the U.S. dollar strong. Housing starts alone may keep the U.S. pickup market soaring in 2015, and the pent-up demand for new vehicles among wealthier buyers has proven durable so far. So you probably won't wake up Sunday morning to a headline in your Facebook or Twitter feed that the auto industry suddenly tanked. But on a practical level, there's always this sage advice: live within your means - even if it means forgoing that Sublime Green Dodge Challenger Hellcat glistening at the dealership.

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