Mover Mike

We Have Seen This Before

We Have Seen This Before! The Fuse on the Subprime 2.0 Debt Bomb is About to Ignite, says Graham Summers, Chief Market Strategist Phoenix Capital Research:

The Subprime 2.0 story is now gaining traction in the financial media.

By way of brief review, here is the template for Subprime 1.0 (the mortgage meltdown).

1)   Banks, hungry for profits, began issuing mortgages to sub-prime borrowers (people who couldn’t possibly pay the loans back).

2)   Housing prices and sales began to fall.

3)   Subprime borrowers began defaulting on their mortgage.

4)   Subprime mortgage lenders began to collapse.

5)   A crisis unfolds as the issue spreads throughout the banks.

Subprime 2.0 is following the exact same pattern. Just replace the words “housing” with “automobiles” and “mortgages” with “auto-loans.” As the Wall Street Journal  notes…

We Have Seen This Before! Banks Pull Back on Car Loans as Used-Auto Prices Plummet

Car loans have been among the fastest growing consumer lending categories since the last recession. Banks and other lenders began increasing originations about seven years ago in search of more revenue as the mortgage market slumped.

As competition intensified, lenders loosened underwriting standards by courting borrowers with lower credit scores and extending repayment periods on loans. Small nonbank lenders also jumped in, relying on the bond market as an outlet to sell their loans.

But increasing losses have sapped some banks’ enthusiasm. Annualized net losses on securitized subprime auto loans increased to more than 10% late last year, the highest level since February 2009, according to Fitch Ratings. The figure slipped back to 9% in March, but that was the highest loss reading for that month since at least 2001.

Source: WSJ

In terms of the above template Subprime Template, we’re currently at #3 and on our way to #4.

All we need now is some auto-lenders to start blowing up, and the fuse on the Subprime 2.0 Debt Bomb will have been lit.

Keep an eye on Ally Financial (ALLY) and Capital One (COF). Both have large auto-loan exposure.

When Subprime 2.0 ignites the markets will move into crisis mode.

Tags: Banking, Economics, Economy, Investing, trade, trading, Troubled Companies // Add Comment »

10 Things You Need to Know before Moving Abroad

Are you dreaming about or perhaps even actively planning for an international move? It’s exciting to think about the new places, people and scenery you will experience but moving to foreign lands also presents challenges. Here are 10 things you need to know before moving abroad. You should think carefully about them to help your move go smoothly:

 1)  Why are you moving?

This might seem a silly question – until you actually think about it. People move for all sorts of reasons – adventure, escape, career, and climate. The destination they choose is tied up with this. By pin-pointing what it is you want to experience you may be able to choose an even better destination. Things to bear in mind: If you don’t have patience with learning languages, choose a country that speaks your native tongue (or one similar). If you plan to travel a lot, pick somewhere that makes it easy to jump across borders (e.g. Europe rather than Australia). And avoid places with ongoing conflict and unstable economies if at all possible.

2)  Get a grip on the language

Another note on languages. Relocating to another country requires a lot of communication. Knowing how to say, ‘My name is Jane and I have a cat,’ is not going to be particularly useful. If you are moving to a place which requires you to master a different tongue, start classes early, preferably yesterday.

Even if you are moving to a country where the same language is spoken, be prepared for a steep learning curve. From renting to working to taking out the trash, cultural differences can throw even the most prepped traveler.

3)  VISA timings vary – a lot!

That’s between countries, between types, and between individual applications. In fact, the guidelines you will find online are so unreliable as to be almost worthless. The only thing you can do about this is to pay for or secure as little as possible in your new country before your VISA arrives. So leave signing rental agreements and employment contracts or paying international moving company hire deposits until the very last minute.

4)  Tax gets messy

Probably the last thing you want to think about when you’re daydreaming about foreign climes is tax. Sadly, if you are an American, the IRS will not be as keen to forget about you. If you are single and earning $10,350 or more you will need to file your taxes in the USA or you could be in for a nasty surprise. If you are from another country you will need to check out the rules on tax.

5)  Health and banking choices matter

Did you know that you may be able to keep your ACA healthcare benefits providing you spend some of the year residing in the USA? Or that your credit score can be preserved if you keep your home bank open? Unless you have no intention to ever return to the US, take some advice on how best to get the maximum benefit from your health and banking set up. Even if you’re confident you’re in it for the long run, it may be worth coming back home for a few weeks a year to keep hold of your citizen perks.

6)  Your cell phone may not be mobile

Many travelers take their expensive cell phone abroad only to find that it is locked to a US network and won’t take a new SIM card in the host country. What would have been a simple case of paying to have their cell phone unlocked has become an emergency shopping trip for a new device. Make sure your cell phone is truly mobile by unlocking it before you leave.

7)  Bureaucracy is global

So you can’t escape taxes. Neither can you wriggle free from red tape. Regulations exist everywhere on the planet, particularly when you are uprooting from one life and setting up a new one. Whether you are filling in a landlord’s inventory, photocopying old statements for your new bank or wading through an 80-page VISA application expect to be kept busy with paperwork.

8)  Meeting people can be hard

Of course, no one expects to make new friends without effort but it can come as a shock how hard it can be to connect with others. People have their own family and work routines and these can be resistant to outsider interference. Seek out places where like-minded people hang out if you want to make connections. Expat groups (which are easily found via Meetup and other online sources) can be particularly supportive.

9)  You will rely on your travel buddy more than you think

Unless you are one of those hardy souls who are determined to go it alone, you will probably have someone in mind to go traveling with – maybe a sibling, partner or BFF. Choose this travel buddy wisely because you will almost certainly rely on them more than you think. From practical help with finances, carrying bags and emergency cell phone calls to emotional support when things get a bit overwhelming – and they will – your travel companion will be your rock (and you theirs).

10) You will never be the same again

This doesn’t happen to everyone but it’s common enough to deserve a place on the ‘need to know’ list. Many travelers adapt perfectly to blending in with a new culture. They handle the practicalities like a pro. They make a ton of new friends. In fact, everything is perfect until…they visit home. Sometimes termed ‘reverse culture shock,’ expats can find the return to their native land unsettling and even unpleasant. Even the barrage of voices in your own language can be overwhelming at first.

None of the above is designed to put you off your travel aspirations. On the contrary, going into your new life with your eyes wide open will increase your odds of making a success out of your move, wherever your heart takes you.

Pamela Taylor is a professional writer who has an interest in keeping things organized and in order. Her appealing strategy? Never. Stop. Moving. She currently writes on Mexico Movers for the oldest moving company in Mexico – Mudanzas Gou.

Tags: Ex Pats, Moving to Mexico, Travel // Add Comment »

There are 3 ways to vet an investment opportunity. From time to time, we all get the “hot tip” about an investment opportunity or new business venture. These “can’t miss opportunities” are often fast moving, and you need to make quick decisions.  Whether it’s a real estate purchase, a niche investment opportunity or a start-up business, there are general guidelines that may be helpful to consider when deciding how and if to proceed.

3 Ways to Vet an Investment Opportunity

• Management team:

Whether it is real estate, investments or a new business venture maybe you should ask:  Who is behind the opportunity and what is their experience? While we all know to be wary of a proposal or return that sounds too good to be true, knowing who you are dealing with, their track record and experience in this particular field may go a long way to get you comfortable that this venture has a chance for success.

• Other Investors:

Check out the other investors when you are approached about an investment opportunity. You might want to wait to see the size of their investment. That could give you comfort that you are not throwing your money away investing in a project that may never get off the ground. Yes, the first-in are promised a greater return,  but it is safer to wait until the group is closer to its ultimate goal.  It is also important to know the relationship between those seeking the money and the investors that have already infused the group with cash. While a third party investor with experience can add credibility, money from “Aunt Sally” should give you know comfort.

• History:

A group seeking your investment has been in business for a while. If they are looking to expand, they should be able to show you their history. Any existing company worth investing in should have clean books and records. It may not be a bad idea to also speak to their bookkeeper or accountant. These financial professionals can provide you just insight into the cash flow of the business.

Remember:

If a group or individual is approaching you to invest in a rehab project, rental properties, start-up ventures, secondary market structured settlements, franchises, or any of the myriad of legitimate opportunities, They should bend over backwards to give you what you need to invest your hard earned money. If they can’t provide you with the comfort, move on- you aren’t missing any opportunity you are avoiding a mistake.

About the Author:

Kathy Manson is a Finance Coach and Blogger. Currently, she is working on cash for structured settlements at www.catalinastructuredfunding.com. She is very proactive and aware about each and every update of financial changes in the industry.

Tags: Investing // Add Comment »

Financial Stress Coping Guide for Seniors

Last year in August, I wrote an article titled The Retirement Savings Crisis: What Will Fix It?  Jenny Holt read that article and let me know about her eBook:

“Recently, I came across movermike.com while researching a piece inspired by my own family.  A combination of my father being downsized in his 60s and my mother falling ill have combined to seriously affect their financial planning for retirement and has exacerbated their health problems. They have inspired me to write a guide for seniors and their families about the most common causes of financial stress, how it affects the person, and provide some coping strategies. You can read it here:

Financial Stress Coping Guide for Seniors

I thought you might be interested in it after reading your blog post”

Tags: retirement // Add Comment »

Tags: Geology // Add Comment »

#5 Penn State 49, #9 USC 52

#6 Michigan 32, #11 Florida State 33

#10 Colorado 8, #12 Oklahoma State 38

#13 Louisville 9, #20 LSU 29

#16 West Virginia 14, Miami 31

#23 Pittsburgh 24, Northwestern 31

#24 Temple 26, Wake Forest 34

#25 Navy 45, Louisiana Tech 48

Locally:

#4 Washington 7, #1 Alabama 24

Washington State 12, Minnesota 17

Tags: Football // Add Comment »

Useless Advice

To see how misleading the Fed’s interest rate hike projections have been in recent years, have a look at the chart below.
As you can see, projected interest rate hikes compared to actual rate hikes differ drastically.

I don’t know what’s worse… the Fed’s forward guidance track record or the people who actually trade on that guidance.

Yet there I was on Wednesday night watching a Harvard-educated “analyst” on Fox News telling “Special Report” anchor Brett Baier that the most important thing investors needed to be concerned with was the Fed’s plan to raise rates three times in 2017.

That’s utterly worthless advice.

Hold on. I am being kind.

That’s moronic advice.

The data clearly shows that the Fed doesn’t do what is says it’s going to do.

Look, does anyone not sniffing bath salts believe the Fed is going to continue raising rates on schedule if the U.S. stock market craters… or if Europe implodes… or if China’s credit bubble bursts?

Please.

There are countless Fed “variables” it will use to justify altering its plan… as it has in years past.

The bottom line is the only thing of value we learned from the Fed this week is they raised rates on Wednesday.

That’s it.

What it does in 2017 has no relation to its stated projections, just as was the case in 2013, 2014, 2015 and 2016.

Worrying about the implications of the Fed’s rate hike timetable is a time-sucking charade designed to bleed you dry. The Fed and the media are never on your side.

Focus on the only truth you know, and that is the price action of all markets.

Let the price action dictate your actions, your buys and sells. That’s what winners do.

Please send me your comments to coveluncensored@agorafinancial.com. Let me know what you think of today’s issue.

Regards,

Michael Covel
Editor, Covel Uncensored

Tags: Business, Economics, Economy, Government, Inflation, Investing, USD // Add Comment »

Bill Bonner calls our attention to the danger:

You know our prediction: The Fed will never willingly lead interest rates to a neutral position.

It can’t. The FED  has created a debt monster. It must feed this Frankenstein with easy credit.

This time last year, the Fed began its “rate-tightening cycle.” That is, it began raising short-term interest rates.

It pledged to continue to do so in 2016. But then it diddled and dawdled, fiddled and fawdled… claiming to be on top of the situation… watching its “data” come in like a fisherman’s wife waiting for the return of the fleet… and not wanting to admit she was already a widow.

What it was really waiting for was a place to hide.

The Fed can raise short-term rates. But it will have to follow, not lead. It will have to hide in the shadow of rising consumer prices, staying “behind the curve” of inflation expectations.

That way, the expected real interest rate – the rate of return on your money above the rate of consumer price inflation – never really returns to neutral.

Already, the price of a barrel of crude oil – a key input into prices across the economy – is twice what it was 10 months ago. Leading business-cycle research firm the Economic Cycle Research Institute says the inflation cycle has turned positive.

And already, foreign nations are talking about retaliating against Team Trump by canceling orders and imposing new tariffs in their own versions of “better trade deals.”

This, too, is bound to raise prices.

Forget speculating on stocks, options, or other risky, low-probability moneymaking schemes. This wealth-building formula is the most reliable way to make seven figures in seven years or less in today’s uncertain economy…

Funny Money Antics

But if consumer price inflation were really a concern, the bond market would race ahead of the Fed, imposing its own regimen of rising yields.

The Fed’s increases would be too little and too late to have any real effect on the outcome.

Bondholders don’t care much about nominal rates. If consumer price inflation were to rise to the Fed’s 2% target, for example, bondholders might clamor for a 4% yield to give them a positive 2%.

That is a big increase over the 52-week low of 1.32% the yield on the 10-year Treasury note hit on July 4.

But you don’t get that kind of seismic shift without cracking some flower pots.

Much of the world’s $225 trillion in debt is calibrated to borrowers who will have a hard time surviving a 3% interest rate world, let alone a 4% one.

This is an economy that can stand a lot of grotesque and absurd “funny money” antics. It can survive a bizarre financial world; it can’t survive a normal one.

As inflation expectations increase, investors do not sit still and watch their retirements, their savings, and their fortunes get broken by inflation.

They don’t wait for the Fed’s policy-setting committee to meet. They don’t reflect calmly as the Fed’s wonks collect their “data” and create their “dot plots.”

Instead, they act out. The monster gets mad and starts throwing things.

First through the window are the bonds. They get chucked out before inflation manifests itself fully… and long before the Fed increases its key short-term rate.

Then, the “boom” turns quickly into stagflation… as higher borrowing costs pinch off growth even as consumer prices continue to rise.

But more likely, inflation is not really surging… Not yet.

And most likely, it will be the painfully apparent when the U.S. economy goes into recession next year.

Then, it will be stocks’ turn to get tossed out, while bonds sneak back in through the side door.

It will also be apparent that the Fed has taken another false step… that the recovery was a sham… and that it’s the debt monster calling the shots, not Janet Yellen.

Regards,

Bill Bonner

Tags: Banking, Business, Economics, Economy, Gold, Gold Silver, Government, Government Spending, Inflation, Investing, Mortgages, Precious Metals // Add Comment »

2016 Week 14 Football Upsets

Now it is on to the Bowl Games.

#6 Wisconsin 31, #7 Penn State 38

#19 Navy 10, Temple 34

Locally: No upset with the Dawgs

#4 Washington 41, #8 Colorado 10

Tags: Football // Add Comment »

1. 4.8

   178km W of Bandon, Oregon

   2016-11-28 11:07:53 (UTC)

2. 4.9

   221km W of Bandon, Oregon

   2016-11-28 04:34:42 (UTC)

3. 2.4

   14km NNW of Bandon, Oregon

   2016-11-28 02:06:37 (UTC)

Tags: Geology, Oregon // Add Comment »