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Money Matters UPDATE August 16, 2014 READ
"Humm, is the economy broken or just broke down for a while. Maybe if I just keep doing what I am doing, it will start running again"
Could this be Janet Yellen, Federal Reserve Chief stance on the economy?
Marc’s notes:
In their most recent statement on the economy, the Federal Reserve still believes the markets and the economy need the fix of low interest rates and monetary easing or money printing as it more commonly known as.
Fed Chief Janet Yellen in her most recent utterances on the state of the economy indicated they will continue to taper their Quantitative Easing (QE) programs but stopped short of giving a definite date to start raising interest rates.
Yellen believes we’re still not out of the woods yet and you have to wonder after trillions of dollars and 6 years or so of ultra-low interest rates, when will the Feds take their foot off the monetary gas pedal and start raising rates.
The reason for halting the QE and raising rates is twofold. The first reason is the Feds need to normalize rates and halt QE so if there is another crisis they have some room to maneuver again. That maneuvering room means they can drop rates again and do more QE and if rates are already close to zero and they are still doing QE they won’t be able to.
The other reason is that low rates and QE cause inflation and although inflation has not yet made the evening news, it’s certainly one of the topics I hear about in coffee houses and supermarket waiting lines.
If you want to get a handle on what the Fed will do, inflation will be your key to the future. If inflation continues to plague consumers and or gets even worse, look for the FED to raise rates and cut QE shortly thereafter.
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Low interest rates set by the Federal Reserve continue to juice the stock markets and even though the average Joe may not be singing the high notes of increasing wealth, Wall Street certainly is.
The Dow Jones Industrial Average is not quite at an all-time high but it is pushing on the 17000’s again up from a crisis low of around the mid 6000’s, almost a 300 percent increase and that certainly is impressive.
Ten trillion or more in quantitative easing (QE) from the central banks of the world has been juicing the markets for close to six years now and you have to wonder when the quantitative easing stops, will the markets stop their ascent as well?
The Feds are tapering back on their money printing (QE) and the stock markets are starting to slow but whether we will see an outright halt to the Dow’s ascent remains to be seen. Half the analysts I read are certain the markets will falter soon while the other half says buying the markets is a no brainer.
The statistics we analysts look at are mixed at best. Many mom and pop investors are still not convinced the markets rise is for real and there still is a lot of cash on the sidelines.
Employment numbers are improving and corporate profits are up and many of the contrarian indicators that usually precede a market fall are not yet present but other indicators are indeed starting to flash a reddish tint.
In my opinion, the market has further to run before any meaningful correction takes place and that means the green light is still on for you to put at least a small portion of your investor dollars in stocks. Stick to only the biggest of names however and for the most part stay away from stocks that don’t pay dividends. For the list of stocks I own, see my SUPER DIVIDEND PAYERS LIST on the website.
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Walmart the nation’s largest retailer reported earnings that were in line with expectations
but its forecast going forward was reduced for the next reporting period.
What’s going on you might ask.
That’s a good question. Is the American consumer flat lining and just not spending as much or is there something else at work here?
Increasing rumors of shoddy stores, poor service and a drop in overall quality is plaguing Walmart sales. The grass roots movement against Walmart’s low wages may also be in affecting its foot traffic but many retailers pay equally low wages so the cause of Walmart’s reduced forecast is a mystery for now.
Keep in mind many other retail outlets in general are suffering from a general malaise of flat consumer spending.
You would think Walmart, the low priced retailer that caters to the lower income classes would do well no matter what but that’s not what the forecast by the company execs is telling us in their latest update.
It’s too soon to tell whether consumers are once again sinking in a hole of empty pocket books or if Sam Walton’s Walmart is suffering now that Sam himself is no longer,
but Walmart is the bell weather of the American economy and if it’s hurting so are we.
Only time will tell if Walmart is also suffering from its own problems but no matter what the reason, investors should pay attention to Walmart stock and what it will say in the months to come.
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Want to buy a new car? You’re not alone. New car sales are booming and to get a truly good deal, you must know how the car dealers work.
I don’t know of anyone who didn’t think they got a good deal on their purchase of a new car and it’s a strategy of dealers to convince you that your deal is the best deal.
Don’t you believe it.
Tricks like paying $100 bucks over invoice or a special holiday sale is all smoke and mirrors.
Ever notice how once a special onetime sale is over another one takes its place?
And how could any car dealer survive on a profit of $100 dollars over invoice?
The truth is they can’t, and they’re making thousands on each and every car they sell despite that “invoice cost” they love to tout.
They do the proverbial “start high” on the asking price and depending on how pushy you are, they go down from there. If you’re not very pushy, they make even more, but even you tough-negotiator types are probably paying way more than you should.
I know how car sales work because I put myself through school selling cars.
How do you get the best deal and buy that car at the lowest possible price?
Over the years I have found getting the lowest price is easy if you’re willing to spend a few hours sending out some emails and putting up with some pushy sales people using age old tactics.
First off, don’t ever go into a dealer ready to buy unless you know exactly what model and extras you want and the exact price you will be paying. You do that by identifying the car you want down to the very last detail, then sending multiple emails to at least half a dozen dealers. You may have to email dealers an hour’s drive away from you or more but don’t worry; it’s all part of the process.
Email the internet sales manager only. Ask him by email for his best “out the door” price with all destination fees, taxes, prep fees and all. Many dealers will try and hide a fee until you show up to buy the car so make sure you get your price as OUT THE DOOR and in writing.
Many will ask you to come in person to discuss your deal or to negotiate the best possible price .
Don’t do it. Persist with emails only and push until you get firm quotes for an OUT THE DOOR PRICE.
Then shop one against the other (dealers hate this as it pushes down the price to the absolute lowest) until the dealers bow out one at a time. You will find a lot of flakey dealers not being responsive or trying to get you to come down and visit but hold fast.
It may take days, even weeks of hammering but eventually you will start to notice just how low in price they will go. Continue to shop one price against the other multiple times back and forth between dealers. Many will get mad and disappear but the truly hungry ones and the ones with integrity will make themselves known. You won’t make any friends doing this. In fact you will only have one friend at the conclusion. The one you buy the car from.
Stick to it and be persistent. Be resolute in your task and shop prices until they won’t go any lower. You can even email the remaining dealers that you are buying a car that day and ask them to go away. You will get even lower prices after that email.
And stay away from any added extras when you pick up the car like the special “paint sealant” (not worth it) or extended warranties. If you want any of those, know that going in and get those in your out the door price BEFORE you go.
In the end you will save many frustrating trips, gas money and thousands on your car, and if you are like me, have a little fun in the process.
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That’s it for this week’s update. Email me with your questions or comments or if you wish to meet with me.
And now here is an article that is getting a lot of positive feedback so I listed it again for your reading pleasure:
If you’re like most people, you’ve considered solar powering your home at one time or another yet balk at the price of such a system.
I too looked at solar power systems more than once over the last 10 years and each time a solar company came out to my house, the result was a potential cost of tens of thousands of dollars. In my case, systems started at $20,000 for very small array to a more adequate size for my needs exceeding $50,000 or more. After doing the math, sizing up the chances of maintenance and/or breakdowns, the opportunity cost of the money I would spend and how much I would save, the payback of such a `system` just didn’t make sense.
By the time I paid the `system` back and started saving, the efficiency may have dropped off, my panels or controllers could require servicing, and knowing my luck, I would have to fix the darn thing for some reason or another and end up not saving much of anything.
That was until I read about a no-cost program from Solar City, the brain child of entrepreneur Elon Musk (touted as the next Steve Jobs) who also started Tesla, the electric car phenomenon and Space X, the private rocket company that now takes up the worlds satellites and services space stations for entire countries and has signed an agreement with no other than NASA.
Their program is a simple one as you would expect from the likes of Musk. The company installs the `system` at their cost and I mean everything from the equipment to the permits and all costs in between. The company insures the panels and `system` against damage and promises to fix it if it ever breaks: every bolt, nut, wire and computer chip. The company monitors the `system` 24/7 from a wireless modem in your house for potential problems and checks efficiency daily. You pay nothing nor touch nothing. For a tech-neanderthal like me that suits me just fine.
The company then bills you a flat rate of 16 cents per kWh. For a residence like mine, where I constantly am paying for electricity in the upper tiers as high as 34 cents or more that’s a bargain as my highest payment to PG&E is in the upper tiers. In my case, I’m looking at a cost savings of over $1000 annually at current rates. With the anticipated increase in rates in PG&E over the life of the system, I look to save even more. Solar City will increase my rates a maximum of 2.9 % a year but compared to potential PG&E increases, that’s a great deal and if rates rise even more, I do even better. To protect their investment I agree to keep their array for 20 years but have no problem what so ever in saving money for at least that long!
If I move residences Solar City will either transfer the contract to the new buyer (who by the way will probably be thrilled to get solar on his new house) or move the `system` for a small fixed cost. The same applies to a roof repair. They will remove the panels for a small fee.
Although I won’t save as much as a `system` I might own, I also didn’t pay a dime for my `system` nor have to maintain or repair it if it breaks. I might add the company has been a pleasure to deal with. Every company employee I have spoken with from the consultant to the people on the phone to the installers were as pleasant as can be. My contractor friends who have visited me have all viewed the installation and all have said it’s a quality installation on all counts.
As a money guy, I couldn’t think of a better way for me to go green without spending any of my hard earned money and the money I save will go instead to supporting my family and our community. And how good is that.
If you would like to contact the Solar City representative who did my system, you can call Andrew Mckibben at (916) 628-5774.
This article expresses the opinions of Marc Cuniberti. Mr. Cuniberti hosts “Money Matters” on KVMR FM 89.5 and 105.1 FM on Thursdays at noon and syndicated on over 30 radio stations throughout the US. He has been featured on NBC and ABC television and on a host of made for TV documentaries for his economic insights. His website is www.moneymanagementradio.com
