Here is some interesting economic news…

 

The Port of Los Angeles moved more cargo in 2017 than in any time in the Port’s 110-year history, racking up 9,343,192 Twenty-Foot Equivalent Units (TEUs), a 5.5 percent increase over 2016’s record-breaking year. It’s the most cargo moved annually by a Western Hemisphere port.

“We are powering Los Angeles’ economy to new heights every year, because we know that lasting prosperity means investing boldly in jobs, opportunity, and growth,” said Los Angeles Mayor Eric Garcetti. “The success of our Port tells the story of a city whose moment has arrived — and we will continue pushing forward as we expand our role in the global economy.”

https://www.portoflosangeles.org/newsroom/2018_releases/news_011218_2017_TEUs.asp

 

U.S. oil production is expected this year to surpass Saudi Arabia’s output, upending a global pecking order that has been a basis for U.S.-Middle Eastern policy for decades.

Crude output in the U.S. will likely climb above 10 million barrels a day in 2018, which would top the high set in 1970, the International Energy Agency said Friday.

The IEA, a Paris-based organization that advises governments and companies, raised its outlook for U.S. crude supply this year by 260,000 barrels a day, to a record 10.4 million barrels a day, largely a result of the recent rally in crude prices.

Saudi Arabia produces just under 10 million barrels a day, under an agreement with the Organization of the Petroleum Exporting Countries. The kingdom said it has the capacity to produce 12 million barrels a day. But it has never pumped more than 10.5 million daily and has pledged to limit output this year.

https://www.wsj.com/articles/u-s-crude-production-expected-to-surpass-saudi-arabia-in-2018-1516352405

 

The market has had a very good year – in my opinion it is partly due to the expectation that we will see tax cuts this year. But what happens to those expectations if tax cuts are not passed?

This, from Treasury Secretary Steven Mnuchin…

“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin said in the interview. “To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains.”

http://www.politico.com/story/2017/10/18/mnuchin-tax-bill-markets-tank-243890

Yet another reason why having a plan for dealing with the downside of the market is so important.

 

This is not investment advice. You should consult a qualified investment advisor before making investment decisions. Past performance does not indicate future results.

This has to be the perfect example of the adage that three things are important in real estate: location, location, location.

Posting from www.361capital.com

 

There’s good and bad in the announcement below about the IRS relaxing the loan and hardship withdrawal rules from company-sponsored 401(k), 403(b), and 457 plans. The relief is available to those who live or work in the Hurricane Harvey disaster area, and extends to some family members. The provisions even extends to IRA’s.

That’s the good.

Here’s the bad.

Loans and hardship withdrawals must be paid back within 5 years. If not repaid, the amount borrowed or withdrawn will be considered as taxable income. If you are under 59 1/2, there is a 10% penalty for the distribution if not paid back within the 5-year window.

More details are available in the article below.

https://www.financial-planning.com/news/irs-loosens-rules-for-retirement-plans-to-lend-money-to-hurricane-harvey-victims

 

Researchers at Boston College’s Center for Retirement Research analyzed the current status of State and Local government defined-benefit (i.e., “traditional”) pension plans across the nation.  What they found was a bit disturbing.  Despite an assumption that the plans would earn an average return of 7.6% per year, the 170 plans reviewed by analysts actually had an average return of just 0.6% in 2016. This has dropped the average plan funding percentage to just 67.9%.  Given the underperformance with regard to investments, there remain only two viable options—increasing contributions (from governments, their workers, and/or taxpayers), or reducing pension benefits, or both.  Most observers believe that, in the end, it is taxpayers who will once again get the bill.

For anyone who has funded college costs, you know that the costs have soared for years. In fact, over the past 30 years, college tuition has risen a whopping 400%, with annual growth rates far exceeding the rate of inflation.It seems as though market forces have caused colleges to become more competitive in their pricing as last year’s increase was more in line with inflation at 1.9%. For many, college has become unaffordable, and many are quickly ruling out choices based on price, and considering a more affordable institution.

You can read more here… https://www.wsj.com/articles/in-reversal-colleges-rein-in-tuition-1500822001

 

As the stock market continues to grind higher and investors become more complacent, we are reminded by this “stubbornly fail-safe marker” of economic contraction since 1960.  Every time Commercial & Industrial (C&I) loan balances have declined or stagnated—a recession was already in progress or was imminent.  This can be seen in the following graphic, from Zero Hedge using Federal Reserve data.

On a year-over-year basis, after growing at a 7% year over year pace at the beginning of 2017, the latest bank loan update from the Fed showed that the annual rate of increase in C&I loans is down to just 1.6%–its lowest since 2011.  Should the rate of loan growth deceleration persist, in roughly four to six weeks the U.S. would post its first year-over-year loan contraction since the financial crisis.

All gave some, some gave all. As we honor our fallen heroes today, let’s remember their sacrifice that allowed us to live a life in the greatest nation there has ever been.

Opinions & Reality

April 24, 2017

Everyone has heard the term “Put your money where your mouth is”, often times in bar room banter when coaxing someone to back up their statements or opinions by putting some cash on the line.  Schwab Chief Investment Strategist Liz Ann Sonders released a note this week with research showing that consumers are “saying” they have confidence in the economy going forward, but data such as retail sales figures aren’t matching that level of confidence – in other words, they aren’t “putting their money where their mouths are”.  Wall Street analysts and economists collect various measures of data and most can be broken down into either of two groups—“hard” and “soft” data.  Hard data are actual figures, retail sales, number of vehicles sold, etc.  Soft data tends to be consumers or business managers opinions of the economy—e.g. consumer confidence data and purchasing manager surveys.  Ms. Sonders notes that, for example, the Conference Board’s “soft” consumer confidence data hit its highest level in 17 years last month, but on the other hand “hard” data like retail sales fell for a second straight month in March.

 

America’s Patent Lead

February 22, 2017

We often hear talk about the U.S. falling behind in this or that area.  But one measure of forward progress is innovation, which can be concretely measured by the number of patents filed per country.  On that score, the U.S. is the indisputable leader, and no other country is even close.  This infographic shows that the U.S., at 3.03 million patents filed between 1977 and 2015, is almost 3 times as prolific as the next country, Japan.  In fact, just the state of California outweighs all other countries but Japan!