The Economy: Call it Deer-In-The-Headlights week. First up was The Donald and The Hillary. Each took a turn to be stumped on the stump. But this week’s prize goes to Wells Fargo CEO Stumpf who was grilled, roasted and vilified by lawmakers who wanted Stumpf’s neck on a stump … headlights or no. The fallout from the Wells Fargo morality play is expected to advance the agenda to break up the TBTF banks. The state of California has suspended all official dealings with Wells Fargo following the bank’s scheme that created phony bank and credit-card accounts to collect fees. Oversight committees of other organizations are questioning their relationships with the bank. For the duration, Stumpf has collected more than $250 million in compensation. Senator Elizabeth Warren condemned Stumpf for his “gutless leadership.” Watch the video of the hearings to see the fury of lawmakers. No admission of guilt yet.
Food for Thought: When you change jobs, analyze whether you should take your 401k with you. This is a detail that sometimes falls through the cracks or is postponed. The assets in your 401k belong to you. Your best course of action may be to roll those assets into an IRA. By doing so you exercise more control over your retirement planning. We can help with your analysis. Transferring your 401k is a simple process. Contact us if you have questions.
Music of the Week: JJ Cale’s “Closer to You”
The Economy: High jinx at the Circus on the Potomac highlighted this week. On Tuesday, Wells Fargo’s CEO was excoriated by Senator Elizabeth Warren. Her roasting included comments that the CEO should resign and that he should face criminal prosecution. She pointed out that he has made hundreds of millions as a result of the fraudulent account shenanigans at Wells. But if the 2007-2008 Financial Crisis is a guide, the Wells Fargo board will probably give their guy a raise and millions of additional stock options. Today saw the Fed report out of their latest 2-day meeting with no change in interest rates. This was the expected outcome. Asked if this was a political move inspired by the upcoming presidential election, Fed Chair Yellen denied that she leads a Clinton Fed. Lower for longer remains the name of the game.
Food for Thought: Financial markets usually lead the real economy both up and down. Here in San Diego, our ongoing street poll has begun to show weakness is some sectors of the San Diego economy. There is some evidence that the uncertainty in the financial markets is bleeding over into the real San Diego economy. What we’re hearing is that new money is slowing down. Business owners and executives appear to be taking more of a wait and see attitude towards new endeavors. Increasingly we’re hearing folks say, “I’m waiting for the other shoe to drop.” A recent San Diego Regional Chamber of Commerce poll shows San Diego business confidence at a 3-year low.
Music of the Week: Atlantic Five Jazz Band’s “Bar Music Moods – The Piano Edition Vol. 1”
Bide your time.
There’s no time like the present
Forgive and forget.
Revenge is a dish best served cold
Never put off till tomorrow what you can do today.
Don’t cross the bridge until you come to it.
You’re never too old to learn.
You can’t teach an old dog new tricks.
A word to the wise is sufficient.
Talk is cheap.
It’s better to be safe than sorry.
Nothing ventured, nothing gained.
Don’t look a gift horse in the mouth.
Beware of Greeks bearing gifts.
Do unto others as you would have others do unto you.
Nice guys finish last.
Hitch your wagon to a star.
Don’t bite off more that you can chew.
Many hands make light work.
Too many cooks spoil the soup.
Don’t judge a book by its cover.
Clothes make the man.
The Economy: At some point, news on the economy will focus on the fundamentals of data rather on the whims of Central Bankers. But we’re not there yet. So with the Fed meeting next week, life is on hold while we await more dissembling opacity. There is a growing sense that 7-years of monetary policy have failed and that continuing down the same path is a mistake. How this plays out is anyone’s guess. But one thing is certain, markets don’t like uncertainty. Talking heads and other blithering, blathering idiots are having a field day in front of the last Fed meeting prior to the election. Our call remains that the highly politicized Fed will do nothing to diminish the chances of a Clinton victory. So we say, “No Change; Lower for Longer” on interest rates. … continue to kick the can down the road and hope that somehow, the bubble of extreme asset inflation, can be pricked and deflated without an implosion. Tellingly, former Fed Chair Greenspan has said, that this, “… is the worst economic and political environment …” he’s ever seen.
Food for Thought: The equity markets have demonstrated how chaotic and fragile they truly are. Simply the whisper of a ¼ percent rate hike sent markets down over 2% on Friday. On Monday, the whisper that the ¼ percent hike was off the table sent markets up over 1%. On Tuesday, markets dropped again. We don’t think this is a healthy investing environment. We are focused on protecting assets. We continue to sell positions that are at a profit and put the proceeds into the money markets. You want to have funds available for investing when the opportunity presents itself. We’re not doom and gloomers. Rather we’re veterans of several market sell-offs, crashes and bear markets. At this type of inflection point, investments can often be reallocated to take advantage of opportunity or to make up significant losses.
Music of the Week: Big Mountain’s “Resistance”
The Economy: Economic numbers continue to show a U.S. economy that is slowly expanding. The Fed’s Beige Book was released today and confirmed the “moderate growth” that has become the standard for the past several years. Observers continue to wait to see if growth will accelerate or slow. It’s now been 7-years without some type of confirmation that things are getting better all around. Instead of a sense of wellbeing, we have pockets of folks doing well versus groups who are still waiting for their lives to pick-up. In San Diego, outside of defense and tourism, our informal polling indicates that for most business owners and executives “things are flat; about like they were last year.” Overheard in a restaurant yesterday was the comment, “I don’t think this economy is doing as well as we’re supposed to believe.” Waiting for Godot.
Food for Thought: The proposed Chargers Stadium continues to polarize San Diego voters as the election approaches. One wag was heard to comment that, “I have a problem with billionaires asking for public assistance, so that millionaires can play a game that rich people watch.” Other business owners have been heard to ask, “When do I get my handout from the city for my business?”
Music of the Week: Charlie Byrd’s “The Best of Charlie Byrd”
The Economy: The schizoid global economy continues to make everyone happy … which could mean anything or nothing. If you don’t like the outlook you’re hearing, just flip the page, change the channel or try another URL. Somewhere there’s a data-pipe that will support your world view. These is confusin’ times! The Jackson Hole love fest was a perfect example. Once the self-adulation was done, the Bankers got down to the serious business of contradiction. The Fed took first place with Chair Janet’s dovish speech followed by Vice Chair Fischer’s hawkish comments. Hilarious! Watching their intellectual meanderings reminds me of Snagglepuss and herding cats. You can see these Fed Cats behind closed doors after a news conference, bent over in laughter like seasoned vaudevillian hucksters, “Har! Har! Boy did you see the look on those suckers faces! Har! Har! Yep, we put it to ‘em again. Har! Har! Those idiots actually think we know what we’re doing!!”
Food for Thought: From all of us at Higgins Capital, Have a Great Labor Day Holiday!
Bye-bye, so long, farewell
Bye-bye, so long
See you in September
See you when the summer’s through.
Music of the Week: Tina Turner’s “All The Best”