Boost FICO Scores by Changing How It's Calculated

Tens of millions of individuals will now be eligible to get additional credit to take on more debt to buy that new car, home, or just anything, because Fair Isaac Corporation (FICO) is about to change how your FICO score is calculated.  (Can anyone say sub-prime mortgage debt?)  According to the Wall Street Journal, Fair Isaac will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency.  Given this revision alone, some borrowers' FICO scores could increase by at least 50 points.  Lenders, for one, better be caution about these new FICO scores.  If these lending institutions do increase loans of any type, based on these revised scores, they better start increasing their "loan-loss provisions."

You Know the Economy is in Bad Shape When Americans Can Not Even Afford to Eat Off McDonald's Dollar Menu

Year over year domestic July sales for McDonald's Corporation declined 3.2%, which is the ninth month in a row for declining same store sales.  (See the following chart.)  If Americans are spending less on food, what else are they not buying?  This does not portend well for the economy.  But, then again, for those of you that I have been following my blog, you already do that the economy is in the "tank" in spite of what the Wall Street pundits are saying.

Let's Bring Back the Good Old Days (1949-79)

Those good old days were when the middle-class, "Main Street," actually benefited more than "Wall Street." By Main Street, I am referring to the "bottom 90%.  On the other hand, Wall Street is represented by the "top 10%."  Since 1982, it has been all about the growth discrepancy between Wall Street and Main Street, with the major advantage to Wall Street by a wide margin.  (See the following bar graph.)

Ebola Terror in London as Passenger Dies Getting off an African Flight

i24 News

i24news is an international 24-hour news and current affairs television channel based in Jaffa Port/Tel Aviv, Israel. 

Wal-Mart is Hiring. Guess Who?

Old Workers (Wal-Mart Greeters) Hit Record High

As the following bar-chart illustrates (Zero Hedge), while all other age groups posted a jobs uptick for July 2014, it was those in the 25-54 age group that saw a 142,000 jobs decline for July.  (Historically, this age group is the most important and has the highest earnings.)  Those in the 55-69 age group saw an increase of 159,000 jobs. Welcome to the "NEW" normal.

Bear Time, My Fellow Investors?

Preliminary GDP Surges 4% for the Second Quarter 2014

 

Four percent growth in GDP is wonderful news.  But, wait a minute!  Shouldn't we be also looking at the internals of the data and not just the headlines?  Yes, of course, but then again who wants to be depressed with the truth?  I know, go ahead and call me "Mr. Kill Joy!"

Now for the truth, which is always in the details.  Over the past year, GDP rose by $675 billion.  However, 52%, or $351 billion, was due to nothing else but increase inventory stuffing at businesses in anticipation that it will be sold.  (See, if you increase the stock of inventory, GDP automatically rises.) Well, good luck with that business mindset. I don't see that the consumer is financially able to take all the inventory off the shelves.

Price of Electricity Climbs to All-Time Record

Thank you, EPA.  For the first time ever, the average price for a KWH of electricity in the United States has broken through the 14-cent mark, climbing to a record 14.3 cents in June 2014, according to data released by the Bureau of Labor Statistics (BLS).  The previous high was 13.7 cents per KWH. (See the following graph.)

Do You Know the Difference Between the "West Bank and the Gaza Strip?"

A very succinct article describing the differences and similarities between the political factions of the "West Bank and Gaza" can be read at the International Business Times.

Delinquent Non-Mortgage Debt in America

According to a recent study by the Urban Institute, approximately 77 million Americans, or 35% of adults with a credit file, have a report of debt in collections.  In other words, every third person you pass on the street is going to have debt in collections.  Debt in collections involves a non-mortgage bill, such as a credit card balance, medical or utility bill that is more than 180 days past due and has been given to a collection agency. (In regard to the collection industry, it now employs approximately 140,000 workers and recover about $50 billion each year.)

America's Lost Decade of Wealth!

According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline. What the heck has happen to our nation? I, for one, no longer know it. I simply know its name.

GM Announces Another 718,000 Recalls

So what else is new?  Another week and another recall by GM.  Well, to be honest, it has been three weeks since the last recall, not one week.  Of this batch of the 717,950 cars recalled, all were new models built in 2010 and later, such as  Camaro, Equinox, Caprice, Regal.  This brings the grand total of recalls year to date to a 29,200,000 around the globe, which is well over three time the total number of cars sold in the past three years.  My thought is that we should have just left GM stay in bankruptcy and go through a reorganization without a government bailout.

Was Flight MH-17 Diverted Over Restricted Airspace?

Recent MH-17 flight paths, as tracked by Flightaware, show that while all ten most recent paths pass safely well south of the Donetsk region, and cross the zone above the Sea of Azov, it was only today's tragic flight that passed straight overhead Donetsk. (See the following flight paths.)  Therefore, according to Zero Hedge, "the key questions one should ask before casting blame, is why did the pilot divert from his usual flight plan, why did he fly above restricted airspace, and just what, if any instructions, did Kiev air control give the pilot in the minutes before the tragic explosion?"

The Federal Reserve is not Your Friend!

Since 2009, the Federal Reserve's QE data show that it has done little, if anything, to assist Main Street (You) but instead has bailed out banks (Wall Street), enriched the wealthy, and increased income inequality.

Sin City is Screwed

"Lake Mead, the man-made reservoir that supplies 90% of the water for 2 million people in the Las Vegas area, has been reduced by drought to the lowest level since it was filled in 1937, according to the federal government. This shortfall is not only endangering the water supplies to the residents but to the 43 million annual visitors to the Las Vegas area." 

If you live there, you might want to consider selling your home, if you can, and leave.

What is the Worst State in America to Live in According to its Residents?

According to Gallup, Illinois is the winner, or should I say loser.  Why anyone would want to live in this state is beyond me, especially with all its financial problems and excessive taxation.

Jobs Jump by 288,000 in June, U.S. Unemployment Rate at 6.1%

CNN had the following headline: "For 288,000 Individuals: You're Hired! Jobs Recovery Seems to Hit its Stride!"  Fox Business: "Dow Strikes 17,000 for the First Time in History After the Unemployment Rate Fell to its Lowest Level in Nearly Six Years!"  Wow!  Wonderful news.  It is only wonderful if you simply focus on the headlines and not the "internals" of the report.

The media simply does not do its research behind these numbers provided by the Bureau of Labor and Statistics (BLS). They simply accept whatever is given to them as facts.  Speaking of facts, let's analyze these so-called wonderful employment numbers. First, if one takes the 12-month change in total employment added and subtract the 12-month change in the addition to the working-age population, your net gain in jobs added is 1,000!  Yes, our economy only created 1,000 jobs over the past 12 months.  Second, if you analyze the BLS's Birth/Death Model, which is a statistical adjustment, not actual number, used by the BLS, this measure added 743,000 so called jobs over the last 12 months.  However, the BLS counts these Birth/Death jobs as real.  Third, the BLS reports that the number of full-time jobs in June tumbled by 523,000, while part-time jobs soared by 799,000!  Fourth, the labor force participation rate remained flat at 62.8%, which is the lowest percentage since 1978.  (The labor force participation rate is the percentage of actual employment plus those looking for employment to the pool of civilian working age population.)

Now, you have the real facts behind today's employment numbers, which you will not get from the media.

Eleven (11) Things You Probably Didn’t Know You Could Buy with Food Stamps

Currently, approximately 48 million individuals are on food stamps. (And this 48 million number is after six years of so called economic growth.) To put this in perspective, 28 million individuals were on food stamps back in 2008.  According to my calculations, that would be a 71% increase.  From a cost perspective, its cost the taxpayers approximately $110 billion a year to fund this program.  Now, don't get me wrong.  I know there are families in true need.  But, I also know that there are major abuses within this program, which need to be closed immediately.  

According to the Daily Caller, the following eleven things are what one could and have purchased with food stamps (EBT cards):

1. Fast Food: Taco Bell is one of many fast food restaurants that accept EBT cards. Guacamole is extra? Who cares? It’s on the taxpayer. 
2. Bail: Convicted felons – like drug dealer Kimball Clark – have reportedly used their EBT as bail money. Clark reportedly instructed someone to go to an ATM to withdraw money from his EBT for bail. Because it’s difficult to trace ATM abuse, many speculate this problem is more widespread and not just found in isolated incidents. 
3. Lingerie: Kiss My Lingerie, an adult store in Gonzales, Louisiana, accepts EBT. Other adult stores have also been known to accept welfare transactions. In this case, officials said the store doesn’t violate the rules for EBT because of discrepancies in the law. 
4. KFC: Well, chicken is a protein, and protein is good for you, right? KFC is another well-known fast food chain that accepts EBT. 
5. Shoes: While Payless Shoe Source is known for their BOGO sales, they’re certainly not the cheapest place to buy shoes. Despite the prices and functionality, they also accept EBT. 
6. Strip clubs: Last year, the New York Post reported that FOIA requests revealed welfare recipients were regularly making EBT withdrawals at the ATMs near and inside infamous porn shops, liquor stores, lounges and hookah parlors. Technically, it also doesn’t break the law because of the “cash assistance program.” 
7. Lobster: There have been multiple cases of this. As long as it’s not tobacco or alcohol, you’re golden. 
8. Starbucks: While corporate stores don’t accept EBT, any Starbucks in a Target or grocery chain is considered a grocery item. So $7.00 for a mocha cookie crumble frappuccino and pumpkin loaf? Go. 
9. Cold hard cash: Some people are in the business of selling their EBT benefits for cash. Craigslist has been a great conduit for these “creative entrepreneurs.” 
10. K-cups: A lot of people don’t buy coffee in this form because it’s too expensive, but it’s not off limits in the world of welfare. 
11. Cupcakes/Gourmet cakes: It’s considered food, no matter the price. Hello, non-essential $45 cake.

What Are Investors Thinking?

 

Investors did not want "Junk Bonds" in 2009 when rates reached 24%. Now, just five short years later, these same investors are buying all they can at rates around 5%.  They are completely ignoring the inherit financial risk in these types of investments. It is all about reaching for yield at the risk of ever getting their principal back. But, I know it is different this time!  Right?  Complacency is all the place, simply look at the major disconnect between the stock market and the economy.  Yesterday, the GDP for the first quarter came in at a negative 2.9%. What did the stock market do? Oh, of course, it was up. The rationale put forth by the pundits was that the GDP for the first quarter would have been positive, if it was not due to the snow.  Did you read that?  Snow caused the decline in GDP.  Like, we have never had snow before in the winter.

Manufacturing Jobs: Facts to Ponder

Since 2001, the United States has lost more than 56,000 manufacturing facilities.  On average, 15 U.S. factories close every day.  Consequences of such losses are an epidemic of unemployment in this country and the loss of good paying jobs to overseas workers.  (The "Civilian Labor Force Participation Rate" is currently at 62.8%, which is the lowest since December 1978.  In regard to wages,  half the country makes $27,520 a year or less from their jobs.)  Back in the 1980s, over 20% of the jobs in the U.S. were manufacturing jobs.  Today, only about 9% of the jobs in the U.S. are manufacturing jobs. 

$SLV: Somethings Never Change

Words of Wisdom From Mark Twain

10,996,447: Disability Beneficiaries Hit New Record!

The number of Americans receiving disability benefits continues to exceed the populations of Greece, Tunisia, and Portugal and is approaching the population of Cuba, which according to the CIA World Factbook is 11,047,251.

Who is paying for all of this?  Of course, you are!  Isn't America great?  That is, only if you are one of the individuals receiving such entitlements.  As I have mentioned previously, this is not going to end well!

GM Has Recalled 56% More Cars in 2014 Than it Sold in 2013

The total number of global recalls so far in 2014 is 15.2 million cars, which is 56% greater than the 9.7 million cars GM sold in all of 2013.  Guess what?  We still have seven months to go!

For those of you that have purchased the Escalade, you better read the following announcement from GM: "Purchasers of the 2015 Escalade and Escalade ESV were sent overnight letters and instructed them to not let occupants sit in the front passenger seat until the vehicle has been serviced."   

I would probably wait to purchase a GM vehicle until it can figure out its quality control measurements, or lack thereof.

Basic Cost for Health Insurance for an Individual Between the Ages of 25 and 35

Who Got the Jobs in April?

 

Did you notice from the above chart that all the job growth for April occurred with those individuals between the ages of 55 and 69.  The largest decline in jobs occurred with those individuals between the ages of 25-54.  Shouldn't it be just the reverse for a vibrant, healthy economy?  But, then again, who said we have a healthy economy? 

Are You an Institutional Investor or Retail (Small) Investor?

My money is on the institutional investor being correct about the future direction of this market. The tendency is for the retail (small) investor to always buy near the top and sell near the bottom. 

China Ready to Take Out the U.S. as the Number One Economy This Year

 

Well, America, it has been a good ride! But, our status as the #1 economic power and soon to be the #1 military power is about to end.  China should be the new world economic power by the end of this year.  And, the sad part of this is that the majority of Americans are totally clueless about this or really don't care.

Long-Term Perspective of the 10-Year Treasury Note

I still believe that "interest rates" are heading higher over the intermediate term, not lower. The long-term declining trend line from September 1981 has finally been penetrated on the upside.  Does this mean that rates are going straight up from here?  No.  Nothing goes up in a straight line.  If anything, the rate on the 10-year $TSY Note may decline to 2.4%, still above its declining trend line, before reversing to above 3%,

It's All About the Money

 

The about chart clearly depicts the reason why Wall Street hates the Fed's tapering policy, which is a policy of currently buying $65 billion of Mortgage Back Securities and U.S. Treasury Securities down from $85 billion.  In other words, Wall Street's perception is that tapering by the Fed is in reality a tightening position by it.  Also, the chart clearly demonstrates a rather close relationship between the growth of "Federal Reserve Assets," a cause, and the performance of the "S&P 500," an effect! 

Upcoming Lunar Eclipse

A lunar eclipse is scheduled for Tuesday, April 15, 2004.  A lunar eclipse occurs during the night when the earth passes between the moon and the sun.  [It is interesting to note that this lunar eclipse occurs on the same day as the start of Passover (Pesach), which is from sunset April 14 to sunset April 21.]  What are the potential economic/financial implications during such an eclipse?  My answer to that question is to simply keep your eyes on the Middle East during this time  Any happenings in the Middle East during this time would have major consequences on the financial markets throughout the world. 

Chevy Colbalt: The Next Corvair (Unsafe at Any Speed)

 

Do you remember the Corvair?  That was the car that GM produced in which Ralph Nader referred to as "Unsafe at Any Speed."  Well, GM has another Corvair on its hands by the name of Colbalt.  So far, GM as recalled closed to 5 million vehicles, one of which have been alleged to be responsible for at least 12 deaths.  Shame on GM for knowing for over ten years of this ignition problem and doing absolutely nothing about it.  Will anyone within GM go to jail?  Probably not, but someone definitely should.  This is another reason why I will never "buy" a GM product. 

Putin Calls Obama?

A lot has been made of the call that President Putin made to President Obama yesterday.  The media is claiming that Putin called Obama to discuss ideas about how to peacefully resolve the standoff in Ukraine.  However, my sources indicate that Vladimir Putin had simply dialed the wrong number.  He really was trying to dial Wen Jiobro, Chinese Premier. 

GM Halts Sales of Chevy Cruze

What's up at GM?  It has just announced today that it has instructed dealers to stop selling 2013 and 2014 Chevrolet Cruzes.  The unsettling aspect is that GM gave no reason for the halt.  Could it be the massive recall due to the ignition switch problems, linked to at least 12 deaths, or the potential bankruptcy fraud?  By the way, whatever happen to those Chevy Volts?  Are they still around, or did they all catch on fire?  The last I heard about the Volt, besides catching on fire, was that GM was losing $59,000 on every one sold.

$SLV's Critical Price Support Remains at $18

Stock Market Prognostication

 

Those of you that have been following my blog for several years know that I consider September 13, 2015 as a potential date for an economic/financial meltdown for global financial markets. (Go back and read my blog from November 19, 2012 entitled, “Mark this Date for Potential Economic/Financial Disaster.”)  September 13, 2015 marks the end of a “Shemitah (Sabbatical) Year”, which occurs every seven years and starts on September 25, 2014.  By the way, the greatest stock market crash, point wise, occurred on September 29, 2008, which was at the end of a Shemitah year.  Also, the stock market crash caused by the events of the infamous “9/11” tragedy occurred on September 29, 2001, which was at the end of a Shemitah year.  By the way, all these market declines occurred at the “end” of a Shemitah year.  Are these dates all coincidental with severe financial market crashes?  I don’t think so!  You may want to do your own research on what is meant by a “Shemitah Year” and its significance. 

What is very interesting for the upcoming Shemitah year is that it ends on September 13, 2015, which is the same date of a partial “lunar eclipse” and Yom Teurah.  Why are eclipses significant?  Usually, they portend to significant global events.  I guess a major stock market crash would be considered a significant event.  Also, from a Scriptural perspective, Genesis 1:14 states: “And Alahim (God) said, Let lights come to be in space of the heavens to separate the day from the night, and let them (moon and sun) be signs and appointed times, and for days and years.”  As a matter of fact, 2015 has three lunar eclipses [April 4 (Passover), September 13 (Yom Teruah, or Rosh Hashana), and September 28 (Sukkot)] and one solar eclipse on March 20. 

Will this prognostication of a market collapse occur?  Who knows, but at least we will know by the end of 2015.

Do You Know the "Net Worth" of the U.S. Government?

According to the "Government Accountability Office (GAO)," the U.S. Government has a "net worth" of a minus $16.91 trillion.  The U.S. Government's assets in 2013 amounts to $2.97 trillion, which includes cash, financial assets, land, highway system, etc.. Its liabilities amount to a total of $19.88 trillion, which includes the national debt and loan guarantees.  If the U.S. Government was a household, its FICO score would  be 350.  But then again, no one seems to really care about the underlying financial health of our country.  In other words, none of this economic/financial rants matters to anyone until, unfortunately, it matters to everyone.

The Process of Addition Under the Common Core Curriculum

Now, let me see if I understand this new math curriculum under the "Common Core." In the above example, we all know, hopefully, that "7 + 7 = 14."  However, according to the above example, that second "7" is allocated between two numbers, "3 & 4."  Therefore, one should then add the "3" to the original "7," which yields "10."  Then, add the "4" to the "10" and arrive at 14, which is the correct answer.  I believe I fully understand this new math curriculum.  Saying that, I will go ahead and stick with the old way of adding two numbers together.  What about you?

Comparing the 1929 Blemish to the 2014 Giant Pimple

Are You a Sub-prime Borrower? Hopefully, Not!

According to the Corporation for Enterprise Development (CFED), 56% of Americans have a sub-prime FICO score of 660 or lower.  In 2006, the percentage of Americans with sub-prime FICO scores was 48%. 

A FICO score of 660 or lower is just one measure that is used to identify a sub-prime borrower.  Other measures used to identify these sub-prime borrowers are as follows:

1. Two or more 30-day delinquent payments in the past 12 months, or one 60-day delinquency in the past 24 months. (In other words, don't miss that credit card payment!)
2. A foreclosure or charge-off in past 24 months.
3. Bankruptcy in the last 60 months.
4. Qualifying "debt/income" ratio of 50% or higher.

FICO points system ranges from 300 to 850.  The following categories indicate what those ranges are from "Poor Credit to Excellent:"

1. 350 to 619: Poor Credit
2. 620 to 659: Sub-Prime Credit
3. 660 to 720: Prime Credit
4. 721 to 750: Prime Plus Credit
5. 751 to 850: Excellent Credit.

Point & Figure Chart Look of Silver ($SLV)

SLV's Exponential Moving Averages Are Still Bearish

Lemmings Love This Market

Investors are currently more invested in risk assets (stocks) than at any time over the past 34 years, inclusive of 2007.  And, we know what the investment strategy of small, retail, investors is.  That is, buy high and sell low. 

No Bears Here!

The following chart definitely reflects that all those lemmings (BULLS) see no economic and/or financial problems on the horizon.  In other words, there is not a bear to be seen.  According to those bulls, the only thing to do is "BTFATH." If only investing was that easy.  Then again, it has been for the past five years. However, all those so-called gains are delusional, at best, if you are still invested in this irrational market.

GM Channel Stuffing

How do you increase profits? If you are GM, you simply "channel stuff," which means that you book a car sale when it leaves the factory on its way to a dealer.  Now, that car becomes the dealer's problem by increasing its inventory of unsold cars.   As of the middle of February, 805,769 cars were in dealers' inventory, which is the largest ever.  Good luck in selling all those cars.  (See the following bar-graph.)

Would You Purchase This Security?

Update on $SPX's Exponential Moving Average Strategy

Why Today's Market Euphoria?

 Let me count the ways.  First, the House passed the "Clean Debt Ceiling" bill.  What?  If this bill is approved by the Senate, the U.S. will be able to spend as much as it wants until March 15, 2015.  Yes, we will no longer have a debt ceiling.  Our national debt is currently north of $17 trillion.  That figure can now grow exponentially over the next year.  So much for any fiscal conservatives in Congress.  Second, Janet Yellen proclaimed that the easy money policies of her predecessor, Ben Benanke, will continue.  And, there you have the two reasons (fiat money and more fiat money) for today's euphoria.  From the above chart, you can clearly see that the "euphoria" does not end well!

Student Loan Debt

The average debt load for the class of 2012, latest available, was $29,400, according to the "Institute for College Access & Success' Project on Student Debt."  This is up 10.5% from the class of 2011. Now, that is a lot of debt for someone going into today's weak job market.  A good site to visit to learn about student loan basics and interest rates on those loans is at American Student Assistance.

Let's go back and look at what the monthly payments would be for that average debt loan of $29,400 at 6% for 10 years.  According to my calculations that monthly payment is $326.  Now, what happens if that student defaults on that loan.  If you default on a student loan there are statutory penalties, retroactive interest and fees that get added to the outstanding principal balance, since these are all federally-guaranteed, and those penalties and fees frequently run to 50% of the outstanding balance.  If you default on $29,400 of student loan debt, you now owe $44,100, not $29,400.  And, of course, you can't discharge any of it in bankruptcy.

Do Dividend Yields Really Matter?

In the latest edition of the "Elliott Wave Financial Forecast (February 7, 2014)" states as follows: "For instance, few currently perceive any risk conveyed by the DJIA's dividend yield of just 2.09%.  A false sense of complacency may be due to the fact that for all but 5% of the time over the past 20 years, the DJIA's yield has been under 3%.  Historically, however, a 3% DJIA dividend yield attended stock market peaks.  Between 1915 and 1994, the dividend yield remained higher than 3% for all but one brief moment, in 1987, and that reading preceded a stock market crash."

And, there you have it!  Historically, dividend yields do seem to matter.  Today, we are at the junction again with the DJIA's dividend between 3%.  Will the consequences be different this time?  I believe not, but, then again, we shall so find out!