Personal Economics 101

Markets set new highs Each of the major indices rose more than 2.0% this shortened week and set new record highs, including the Dow Jones Industrial Average (+2.2%), which crossed above 30,000 for the first time ever. The Russell 2000 rose 3.9%, the Nasdaq Composite rose 3.0%, and the S&P 500 rose 2.3%. Value, cyclical, and small-cap stocks retained their leadership roles in this part of the bull market. The S&P 500 energy sector rose 8.5%, and the financials sector rose 4.6%. Every other sector, except real estate (-0.4%), ended the week with gains.   November business activity growth accelerates unexpectedly to begin the shortened week The preliminary Markit U.S. Manufacturing PMI Index for November surprisingly increased to 56.7 from October's unrevised 53.4 figure, unexpectedly moving further into expansion territory denoted by a reading above 50. The Bloomberg consensus estimate called for the index to dip to 53.0. The preliminary Markit U.S. Services PMI Index showed ...

There are numerous posts on this blog, and millions on other blogs and news sites, on the subject of what the rich do different, but it's worth repeating again, I guess. The principles are simple. Still, some two-thirds of Americans live paycheck to paycheck. For many, the act of using all of your monthly income to cover your monthly expenses — with no money left over and none for savings — is a fact of life. Look, I've been there. It can be a mindset, and a trap. Best to get out of it if you're in it, as fast as possible.  Depending on the survey, the percentage of people living paycheck to paycheck runs from half of workers making under $50,000 (according to Nielsen data ) to 74% of all employees (per recent reports from both the American Payroll Association and the National Endowment for Financial Education.) And almost three in 10 adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index . Even many in the upper class are seeing t...

Regional manufacturing data misses (Nov. 16, 2020) The Empire Manufacturing Index, a measure of activity in the New York region, unexpectedly declined to 6.3 in November from 10.5 in October, compared to the Bloomberg forecast of an increase to 13.5. However, a reading above zero denoting expansion. The report marks the fifth-straight month of expansion, as employment growth accelerated but the expansion in new orders decelerated. Another Covid-19 vaccine on track (Nov 16, 2020) Moderna Inc. (MRNA $98) rallied after announcing that preliminary analysis of Phase-3 trial results of its COVID-19 vaccine candidate met statistical criteria with a efficacy rate of 94.5%. MRNA said based on these interim safety and efficacy data, it intends to submit for an Emergency Use Authorization (EUA) with the U.S. Food and Drug Administration (FDA) in the coming weeks and anticipates having the EUA informed by the final safety and efficacy data. MRNA also said it plans to submit applications for author...

The Danish study on the effectiveness of masks – or lack thereof – in protecting us from COVID-19 was just published yesterday in the Annals of Internal Medicine . Researchers in Denmark reported on Wednesday that surgical masks did not protect the wearers against infection with the coronavirus in a large randomized clinical trial. But the findings conflict with those from a number of other studies, experts said, and is not likely to alter public health recommendations in the United States. The study , published in the Annals of Internal Medicine, did not contradict growing evidence that masks can prevent transmission of the virus from wearer to others. But the conclusion is at odds with the view that masks also protect the wearers — a position endorsed just last week by the Centers for Disease Control and Prevention. Critics were quick to note the study’s limitations, among them that the design depended heavily on participants reporting their own test results and behavior, at a time w...

 The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in November unexpectedly improved to another record high, jumping to 90, versus forecasts calling for it to match October's 85 level. A level north of 50 depicts positive conditions. The index notched a record high for the third month in a row and the NAHB noted that this reflects that housing is a bright spot for the economy. "However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front," the NAHB added. Housing starts for October rose 4.9% month-over-month (m/m) to an annual pace of 1,530,000 units, above the Bloomberg forecast of 1,460,000 units, and compared to September's upwardly-revised pace of 1,459,000 units. However, building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future c...

1. Follow a budget. Live beneath your means. 2. Be debt free. Pay cards in full. 3. Have an emergency savings account. 4. Negotiate salary. 5. Save for retirement -- now.  https://youtu.be/8jkri0AeZWQ

From National Law Review  (Nov. 14, 2020): One of the noteworthy moments of the recent Presidential campaign came in the candidates’ last debate, when Vice President Biden made the following comment on energy: “I would transition away from the oil industry, yes. The oil industry pollutes, significantly. It has to be replaced by renewable energy over time.” While much was made of that remark, the term “transition” was an unmistakable reference to specific language in his campaign’s July energy plan calling for a net-zero carbon economy by 2050, coupled with an intermediate net-zero commitment for the power sector by 2035. While reasonable minds may differ as to whether those goals are achievable without major technological breakthroughs or robust use of offset mechanisms (or both), the language of a “transition over time” is familiar. Echoes of such a transition can be found in the climate policies of oil & gas and power sector companies and in policy debates happening in the ha...

Vaccine Study Results Boost Stocks (Nov. 9, 2020) U.S. stocks are surging to kick off the week, with several media reports declaring that Joe Biden won the 2020 presidential election offering some clarity on the contentious political front. However, the big boost for stocks today comes courtesy of Pfizer and BioNTech reporting that a Phase 3 trial of their COVID-19 vaccine achieved more than 90% efficacy. Value and cyclical stocks are leading the charge, along with those tied to industries that had been severely disrupted by the pandemic, while some of the secular growth and work-from-anywhere stocks are lagging behind. Treasury yields are rising sharply as bond prices are falling, and crude oil prices are surging. Gold is falling and the U.S. dollar has turned higher. The economic calendar is void of any major releases today but in other equity news, Dow member McDonald's posted stronger-than-expected Q3 earnings. Asia finished nicely higher and Europe is jumping broadly. Employme...

In one of the smallest annual cost-of-living adjustments on record, Social Security benefits will increase by 1.3% in 2021, boosting average benefits by $20 per month to $1,553 and increasing the maximum benefit for someone retiring at full retirement age in 2021 to $3,148 compared to this year’s maximum of $3,011 per month. The standard Medicare Part B premium, which covers doctor’s visits and other outpatient services, will increase to $148.50 per month in 2021, up $3.90 from this year’s monthly premium of $144.60. Of course, it's not just Part B premiums that are rising. The annual deductible for Part B is also going up from $198 in 2020 to $203 in 2021. And the Part A deductible per hospital benefit period is increasing, too, from $1,408 to $1,484 -- a $76 jump. Higher-income Medicare beneficiaries will pay more. In 2021, individuals with modified adjusted gross income of $88,000 or more and married couples with MAGIs of $176,000 or more will pay additional surcharges ranging f...

Key insights from Happiness is a Choice You Make: Lessons from a Year Among the Oldest Old By John Leland What you'll learn This book began as a series of in-depth interviews that New York Times reporter John Leland conducted called "85 and Up." The book's title is...

This is a good video explaining the principles of dividend investing. In my own portfolio, my own focus has been on dividend, or income, investing for the last few years. I'm getting $12,000 in dividends annually on less total assets than this video says you need, but with more risk. Check it out.

  ISM manufacturing charges on (Nov. 2, 2020) The ISM Manufacturing Index shot up 3.9 points in October to 59.3, its highest level since September 2018, and above the consensus of 56.0, as factory activity gained significant momentum. It was the biggest increase since May 2009, excluding the post-lockdown surge in June. Of the 18 ISM industries, 15 expanded, matching the highest number since March 2019, and indicating broad-based growth. The report also noted that five of the six largest industries posted strong growth. The ISM index is bullish for manufacturing output and broad economic growth.  Construction spending disappoints (Nov. 2, 2020) Construction spending ticked up 0.3% in September, the least in four months, and below the consensus of 1.0%. Private sector spending rose 0.9%, led by residential investment which posted another strong month, up 2.8%. But private nonresidential construction spending, which accounts for about 1/5 of capex, fell a broad-based 1.5%. Publi...