The June jobs number looks stronger than it really is

I want to be clear; I wouldn’t say this was a bad report, but the headline number that showed an addition of 147,000 jobs in the month of June doesn’t show the full picture. The number did come in well above the estimate for 110,000 jobs and it follows upward revisions in the months of April and May that have totaled 16,000 jobs, but the concerning part I saw was government accounted for 73,000 new jobs in the month of June. This did not come from the federal government as that actually saw a decline of 7,000 jobs, but rather it was state and local governments which added a combined…

Job openings remain strong

The Job Openings and Labor Turnover Survey, also known as the JOLTs report, showed job openings rose 374,000 in the month of May to 7.769 million. This easily topped the estimate of 7.3 million and it also comes during a month where layoffs declined 188,000 to 1.601 million. While this is positive for the economy and shows the labor market remains resilient, it does hurt the chances of a July cut from the Federal Reserve. Fed chair Powell during a panel said, ““In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States…

Why did Apple produce the new movie F1?

Apple is obviously known for the iPhone, the iPad and the Mac, but a top producer of mega hit movies, not so much. Since 2019 they have tried to produce big hit movies like Killers of the Flower Moon in 2023 that starred Leonardo DiCaprio and Robert DeNiro, but the world box office receipts were only $159 million. Another hit movie they tried for that ended up as their top movie in 2023 was Napoleon with $221 million in box office receipts. So why did Apple agree to spend almost $250 million more to produce F1, which stars Brad Pitt? No one seems to understand. Brad Pitt will be paid $20 million for this movie and will get a cut of the films revenue if it’s a hit. It does have some chance…

Don’t be fooled by ultra-high-income ETF’s

I wouldn’t think I would have to warn people that if you’re being offered a yield of 100% or more on a fund, the risk has to be extremely high and there is probably a good chance for loss. However, with that said this year alone $6.4 billion of new money has been placed into these high-risk funds that I assume are unsuspecting buyers who don’t really understand how these funds work. Regulatory filings show that at least 95% of these ETFs are held by individual investors or small financial advisors. The way they generate this high income is by trading options contracts on a single stock. It is misleading how they come up with those ultra-high yields of 100% plus as they…

Financial Planning: Pension lump sum vs monthly income?

When deciding between taking a pension benefit as a lump sum or monthly payments, it's helpful to compare the guaranteed income stream to the return you'd need on the lump sum to generate the same income yourself. Monthly payments offer steady, reliable income for life, essentially acting like a personal pension annuity, but most pensions do not include inflation adjustments, meaning the purchasing power of those payments may decline over time. Additionally, choosing a joint life annuity to continue payments to a surviving spouse will offer a lower monthly amount compared to a single life annuity. Since Social Security income drops when the first spouse passes, a joint annuity is usually more appropriate than a single life annuity to help maintain household income for the surviving spouse. In contrast, rolling over the lump sum into a retirement account gives you full control and the potential for growth. It also provides flexibility to structure income in a tax-efficient way allowing you to manage taxable distributions around…

Companies Discussed: The Goldman Sachs Group, Inc. (GS), Robinhood Markets, Inc. (HOOD), Centene Corporation (CNC) & Columbia Sportswear Company (COLM)

Watch Out For This Chinese Stock Scam!

Yes, there’s another scam out there trying to part you from your hard-earned money. This has happened many times in recent years and it’s occurred in very small Chinese stocks that are vulnerable to manipulation. For some reason some US investors see these and think they’ve hit it big. US regulators try their best, but typically cannot get access…

Is The Current 401K System Out of Date?

The current 401(k) system was first established 42 years ago in 1978 when the use of normal pension plans was in place and when people still worked for a single employer for most of their career. This change in 1978 was beneficial to both the employees and employers, because it gave employees control over their retirement plan and reduced the long-term financial risk for many companies with underfunded pension plans that caused multiple problems form companies during the 2008 financial crisis. Today, times have changed and employees might experience over their 40 years plus work career different jobs that may include side gigs, the launch of a business or…

The Unknown Risk of the S&P 500

Many people love investing in the S&P 500 because the recent performance has been very strong. We have talked in the past about the over concentration of technology in the index, but I was shocked to learn that…

Financial Planning: What is the Net Investment Income Tax?

The Net Investment Income Tax (NIIT) is a 3.8% federal surtax that began in 2013 under the Affordable Care Act, targeting high-income individuals. It applies to any net investment income that exceeds a single taxpayer’s modified adjusted gross income (MAGI) of $200,000 or $250,000 for married couples filing jointly. Crucially, these thresholds are not indexed for inflation, so while they may have seemed high in 2013, today they would equal roughly $270,000 and $337,500 in 2025 had they been indexed for inflation, meaning…

Companies Discussed: Fiserv, Inc. (FI), Pinterest, Inc. (PINS), Duke Energy Corporation (DUK) & General Mills, Inc. (GIS)

May retail sales look stronger than headlines show

After seeing headlines from several media outlets, I was worried May retail sales were slowing to a problem point, but I would say they actually looked quite strong. Compared to April, sales did fall 0.9%, which was larger than expectations for a 0.6% decline. It’s important to point out though that consumer rushed to auto dealers in April to try and beat the tariffs. This led to a 3.5% decline in motor vehicle & part dealers when comparing sales in the month of May to April. Gas stations have also seen declining sales largely due to lower gas prices and actually fell 2% when compared to the previous month. Excluding these two categories, sales would have fallen just 0.1% when compared to April. While the month over month numbers point to a slowing consumer, when we look at the annual comparisons the numbers are impressive. Headline...

Why are big retailers looking at issuing stable coins of their own?

Stable coins seem to be the new buzzword for 2025. It seems at least once a week when I pick up the Wall Street Journal, I see something about stable coins. I recently read that Walmart and Amazon may be looking into using stable coins to get away from using traditional payment systems, which is costing billions of dollars in fees each year. This includes interchange fees that occur when customers make purchases using their credit...

ChatGPT and Perplexity are hurting the Internet

You may not think about it, but Alphabet’s Google search engine is seeing huge declines. This is not just hurting Google, but it also hurts many companies who get their business from people searching on Google. This could have a major impact on companies like TripAdvisor as it gets 58% of its global visits from search. If people get the answer, they need right away from ChatGPT, there’s no need to continue searching and you’ll not see any other ads directing you to other sites that may want to do business with you. Many companies from Netflix to US travel and tourism companies are seeing declines in traffic to their websites by 10 to 20% from one year ago. For example, search referrals to top U.S. travel and tourism were down 20% year over year last month and news and media sites saw a decline of 17%. ChatGPT had 500 million weekly active users in March and that was up almost 70% from the 300 million they saw in December. The reason this is hurting Internet search is since you get your answer from one platform, you close the book and move on. You don’t need to do any more searches on other sites. Google‘s lawsuit for being a monopoly with the federal government will...

Financial Planning: The “Widow’s Penalty”

When a spouse passes away in retirement, the surviving spouse typically transitions from filing taxes jointly to filing as a single taxpayer in the following year, a shift that often triggers what’s known as the “widow’s penalty.” This penalty arises because single filers face higher tax rates at lower income thresholds and receive a smaller standard deduction, which can...

Companies Discussed: Adobe Inc. (ADBE), T-Mobile US, Inc (TMUS), Jack in the Box Inc. (JACK) & Celsius Holdings, Inc. (CELH)

Alternative Assets Appear to Be a House of Cards

I remember using that same terminology back before the tech bust about 25 years ago. I was maybe a little bit early back then, but the house of cards collapsed. The more I read about alternative assets the more I scratch my head and ask how is Wall Street getting away with this? In the end, I believe the small investor will end up paying dearly for investing in these alternative assets. I learned something...

Tariffs Are Still Not Impacting Inflation

The May Consumer Price Index, also known as CPI, showed little impact from tariffs. Headline CPI came in at 2.4%, which was right in line with expectations and core CPI, which excludes food and energy, came in at 2.8%, which was actually below the expectation of 2.9%. The headline CPI continues to remain softer than core CPI due to falling energy prices. Compared to last year, energy...

Health and Human Services Is Receiving a Major Makeover

Back in the 60s, the world looked to America’s health regulators for guidance because they had a reputation for integrity, scientific impartiality and a strong defense of patient welfare. Today and for probably the last couple of decades, HHS has lost trust among many people. This week, a major shakeup of the advisory committee for immunization practices known as ACIP is...

Financial Planning: What If There’s a Recession While in Retirement?

With 8 in 10 Americans already changing their spending habits and 58% expecting a recession, it’s clear that economic uncertainty is weighing heavily on people’s minds. But the reality is if you're retiring soon, or already retired, you should assume you'll face multiple recessions, market corrections, and bear markets during your retirement. It’s not a matter of it, but when. Historically, recessions occur about every 6 to 10 years and typically last 10 to 18 months. Market corrections, defined as a drop of 10% or more, happen about...

Companies Discussed: Lululemon Athletica Inc. (LULU), Petco Health and Wellness Company, Inc. (WOOF), Brown-Forman Corporation (BF.B) & DocuSign, Inc. (DOCU)

Jobs market remains in a good spot

Headline nonfarm payrolls increased 139k in the month of May, which was above the estimate of 125k, but below April’s reading of 147k. A big negative in the report was the fact that March and April saw negative revisions that caused payrolls in those months to decline by a combined 95k versus what was previously reported. Even with that, if you zoom out and look at the big picture the economy is still adding jobs at a healthy rate given the fact that the unemployment rate has remained at 4.2%. I would also say it was a big positive that the private sector saw good growth since federal government payrolls declined by 22k in the month of May and are now down by 59k since January. I still expect losses to accelerate in the coming months for government payrolls since employees...

Office space may be harder to find in the coming years

For the first time in at least 25 years, office conversions and demolitions will exceed new construction, which means there will be less space available. CBRE Group found that across the largest 58 U.S. markets, 23.3 million square feet of space will be demolished or converted to other uses by the end of this year while just 12.7 million square feet of space is expected to be completed by developers in those markets. We do have an office REIT in our portfolio and they recently talked about how leasing has continued to exceed expectations. I continue to believe the office has a valuable place in business and we have continued to see more and more companies implement return to office mandates. With less supply out there and demand remaining strong, we should see owners of office space benefit from stabilizing rents and increasing prices in the coming years. On the other side of coin, I have continued to express concern about the long-term dynamics for multifamily housing due to the construction boom in the space and potential oversupply. It’s not just the new...

Facebook scams are out of control

There’s no way of tracking the exact number of scams or the dollar amount lost from scams on Facebook and Instagram, but JP Morgan Chase said between the summers of 2023 and 2024 they accounted for nearly half of all reported scams on Zelle. An internal analysis from 2022 found that 70% of newly active advertisers on the platform are some forms of scam or low-quality products. Meta, the owner of Facebook and Instagram, does over $160 billion in advertising and is hesitant to put any restrictions that could prevent growth in their ad business. In 2024, the Wall Street Journal discovered documents that advertisers can be hit with anywhere between eight and 32 automated strikes for financial fraud before their accounts are banned. On top of that, Facebook Marketplace, which is its online secondhand market, has now passed Craigslist as the most heavily used platform for free classified ads and it has become a great place for scams. The scam that...

Financial Planning: Retirement Savings Rate Hits Record High; How Do You Compare?

The average 401(k) savings rate, including employee contributions and employer matches, has reached a record high of 14.3%, nearing the widely recommended target of 15% for a secure retirement. This milestone reflects growing awareness of the importance of long-term financial planning, especially as traditional pensions continue to disappear. However, the ideal savings rate isn’t one-size-fits-all. Individuals who begin saving in their early 20s may be able to retire comfortably with a lower contribution rate, while those who delay investing until their 30s or 40s often need to save well above 15% to catch up. Starting early allows compound interest to do more of the heavy lifting, highlighting the value of consistent...

Companies Discussed: Salesforce, Inc. (CRM), The Gap, Inc. (GAP), Wells Fargo & Company (WFC) & Steel Dynamics, Inc. (STLD)

First Time Homebuyers Hit a Record Low

With the high cost of housing and higher interest rates, people trying to get their first home dropped to a record low around 23% in 2024. The average age of the first-time homebuyer has increased 10 years over the historical average to 38 years old. The median income is now $97,000 and the first-time home buyers are coming up with an average down payment of 9% of the value of the home. Many of these young buyers are using FHA loans, which require a very small down payment and according to…

Is Bitcoin coming to your 401k?

I have been concerned with bitcoin and crypto as a whole for several years for many reasons including fraud, illicit activity, and the fact that there is really no way to derive an intrinsic value for it since there is no earnings, cash flow, or anything really backing the asset class. I was disappointed to see the current Labor Department removed language that cautioned employers to exercise “extreme care” before making crypto and related investments available to their workers. They cited…

Inflation report shows continued progress

The personal consumption expenditures price index, which is also known as PCE and is the Federal Reserve’s key inflation measure, showed an annual increase of just 2.1%. Core PCE, which excludes food and energy, showed a gain of 2.5%. Both results were 0.1% below their respective estimates. Overall…

Financial Planning: What it Means to be an Accredited Investor

An accredited investor is someone who meets specific income or net worth thresholds—such as earning over $200,000 annually ($300,000 with a spouse) or having over $1 million in net worth excluding their home—and is allowed to invest in private securities offerings not registered with the SEC. These investments, which include private REITS, private equity, hedge funds, and startups, often promise high…

Companies Discussed: Regeneron Pharmaceuticals, Inc. (REGN), Intuit Inc. (INTU), Target Corporation (TGT) & Toll Brothers, Inc. (TOL)

The U.S. just received a downgrade to its credit rating, should you worry?

Last week, Moody’s announced it downgraded the United States sovereign credit rating from AAA to Aa1. While a downgrade is important to understand and can have negative consequences for interest rates, this downgrade did not seem too problematic. I mainly say that because Moody’s was the last major credit rating agency to have the U.S. at the highest possible rating. The first downgrade carried the most weight in my opinion as it had the highest shock value. Standard & Poor’s was the first to move in August 2011 and the stock market fell 6.66% the session after the announcement. Fitch then lowered its rating on U.S. debt in August 2023 and the stock market lost 1.38%. After this Moody’s downgrade the stock market seemed to have little reaction as it actually had a small increase following the news. While this downgrade may sound scary, I don’t believe it will have long term…

Demand for electric vehicles is falling dramatically

Electric vehicle sales in the month of April declined 5% while the overall car market grew by 10%. This is only the third monthly decline in four years for electric vehicles. The reason for the decline is consumers are watching their spending more than they have in a while and many of the deals and promotions for electric vehicles have disappeared. It was not just Tesla who had difficulty because of Elon Musk’s political association, but even Kia, Hyundai and Ford experienced drops. Rivian was hit hardest on their R1T pickup truck as it saw a 50% decline in sales for…

High risk, private market investments are showing up in more 401(k) plans

Another big 401K provider called Empower who oversees $1.8 trillion in 401(k) assets for about 19 million people has decided it will start allowing private credit, equity and real estate in some of the accounts they administer later this year. I think this is a terrible idea for investors. I have seen the back end of these private deals and many times investors have made no money from them and can only get out a little bit of their money at a time, while they are suffering from low returns and high fees. No surprise Wall Street loves these private market investments because of high fees, which range anywhere from 1% to 2% of the portfolio balance on an annual basis. One way…

Financial Planning: Who Benefits from the new SALT proposal?

The current SALT deduction allows taxpayers who itemize to deduct up to $10,000 of certain state and local taxes, most importantly their state income taxes and property taxes, from their federal taxable income. The new proposal in the House bill would raise this cap to $40,000 for households earning under $500,000, with a phaseout that fully eliminates the expanded deduction at $600,000. Married and single tax filers alike with incomes over $600,000 would be subject to the $10,000 SALT limit. This change is intended to benefit middle- and upper-middle-income taxpayers in high-tax…

Companies Discussed: CAVA Group, Inc. (CAVA), First Solar, Inc. (FSLR), Levi Strauss & Co. (LEVI), & UnitedHealth Group Incorporated (UNH)

U.S. Tariffs are hurting China

Exports from China have dropped dramatically which has weighed on China’s economy. This has caused protests due to lost jobs and wages in their economy. Exports from China to the United States dropped 20% in April, but China did pick up exports from other countries like Indonesia, Thailand and Africa. While this may help a little, the export dollars for China to these other countries pales in comparison to the mighty consumption of the US consumer. China’s economy depends on exports considering the fact that in 2024 1/3 of GDP growth came from exports. The Chinese government is…

Inflation continues to cool

The headline Consumer Price Index (CPI) for the month of April came in at a 12-month rate of 2.3%, which was below the estimate of 2.4% and marked the lowest reading since February 2021. Core CPI, which excludes food and energy, came in at 2.8% which matched expectations and was in line with March’s reading. Energy was a major help to the headline number as it fell 3.7% compared to last year with gasoline in particular down 11.8% over that timeframe. While this is all great many…

Could artificial intelligence create more jobs?

Many people think that artificial intelligence, also known as AI, is going to reduce jobs for people. The CEO of IBM, who admits that AI has replaced hundreds of workers, said it has created more jobs than it has eliminated. He went on to say it frees up investment that the employer can put to other areas that include such jobs as software engineering, sales, & marketing. Normal things like creating spreadsheets and other routine tasks can be done with…

Oil at $50 a barrel?

There is talk that we could see oil drop from around $60 a barrel down to $50 a barrel, which would be a big benefit for consumers at the pump. The reason for this is that OPEC and its allies are increasing production of oil faster than anyone expected. By June they could be producing nearly 1,000,000 more barrels of oil per day compared to current levels. The United States is currently the number one producer of oil in the world with production of nearly 15,000,000 barrels per day. If you’re wondering…

Financial Planning: Trusts and Retirement Accounts Do Not Mix

Naming a living trust as the beneficiary of a retirement account—such as an IRA or 401(k)—is generally not a good idea due to potential tax inefficiencies and administrative complexity. Under the SECURE Act, the "stretch IRA" option has been largely eliminated for most non-spouse beneficiaries, and replaced with a 10-year rule requiring the entire account to be withdrawn within a decade of the original owner's death. If a trust is named as the beneficiary and it isn’t specifically drafted to be the beneficiary of a retirement account, it may not qualify for this 10-year treatment and could…

Companies Discussed: Dick’s Sporting Goods, Inc. (DKS), Charter Communications, Inc. (CHTR), Krispy Kreme, Inc. (DNUT) & Lyft, Inc. (LYFT)