Newsletters - Past Issues

The 2024 December jobs report came out last Friday and it showed an increase of 256,000 jobs following a 212,000 gain in November. Analysts expected 165,000 created jobs for December so saints be praised, the country seems robust!

Not so fast said Wall Street and the Dow subsequently shed  a whopping 696 points on the day sending traders into the local bars at closing to gulp down a couple of double martinis to ease the pain of it all. So good economic news causes the market to crater?

How can that be you say?

Let me explain.

I miss the olden days. Back when sanity ruled Mr. Market, good economic news meant positive market movement. That was before the governmental money guys tried to harness the winds of supply and demand that drove the market in the direction it wanted to go.

Which is to say let it freely meander to and fro in response to a healthy and vibrant U.S. economy that was the envy of markets everywhere.

So the question becomes what happened since then where now good news on the economy causes the stock market to bleed red and bad news might cause a market rally?

What happened was the repeated interventions by the Federal Reserve (the FED) nearly every time the markets got a cold. So many times has the FED intervened, messed with, manipulated and basically tried to steer the market with monetary (money) injections, the knee jerk reaction by investors has now become what will the FED do in response to any economic news that comes out.

Bad news might cause the FED to juice the market by lowering interest rates, making credit easier, and bailing out a bank or two. Good economic news might cause the FED to do the opposite and tighten up on the money spigots causing markets to pull back.

Investors now seem more concerned with FED response to a positive or negative economic statistic than the actual health of the economy itself. What an odd investing world we now live in.

In other news, the Los Angeles fires no doubt will mean higher insurance rates for us homeowners.

Just last month, I penned an article discussing the solvency of the California Fair Plan insurance entity and how they might be, self-admittedly, one large fire away from insolvency. Well, the news is out the latest fires in Southern California might be the costliest insurance event in their history. I have seen social media chat suggesting Cal Fair is in shambles. I can say as a Cal Fair agent, they are still up and running and, at least now, seem no worse for wear. I have no way of knowing their current financial picture, but they continue to communicate and operations continue, at least from an agent’s point of view.  In the article, I mentioned Cal Fair may have to instigate assessment charges on policies throughout the state to cover shortfalls. Much like a property tax bill where you get an invoice for a new road or what have you, a fire assessment would send you a bill out of the blue to help cover costs.

In the middle of the crisis, it’s difficult to tell how this will all wash out. But my guess is the Federal and or state governments along with the insurance companies will all have to contribute massive amounts of money to cover the costs of these fires. A bail out by somebody is in the cards.

A bail IN, where you and I will be asked to contribute is also a possibility.

In conclusion, whatever happens, if you thought insurance rates of all kinds were high now, it’s not rocket science to foresee even higher rates are in our future.

For now, let us offer our prayers and support for those victims and their families, our first responders and all those involved in bringing this horrid event to a close.

“Watching the markets so you don’t have to”    

(end)    

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com

The 2024 December jobs report came out last Friday and it showed an increase of 256,000 jobs following a 212,000 gain in November. Analysts expected 165,000 created jobs for December so saints be praised, the country seems robust!

Not so fast said Wall Street and the Dow subsequently shed  a whopping 696 points on the day sending traders into the local bars at closing to gulp down a couple of double martinis to ease the pain of it all. So good economic news causes the market to crater?

How can that be you say?

Let me explain.

I miss the olden days. Back when sanity ruled Mr. Market, good economic news meant positive market movement. That was before the governmental money guys tried to harness the winds of supply and demand that drove the market in the direction it wanted to go.

Which is to say let it freely meander to and fro in response to a healthy and vibrant U.S. economy that was the envy of markets everywhere.

So the question becomes what happened since then where now good news on the economy causes the stock market to bleed red and bad news might cause a market rally?

What happened was the repeated interventions by the Federal Reserve (the FED) nearly every time the markets got a cold. So many times has the FED intervened, messed with, manipulated and basically tried to steer the market with monetary (money) injections, the knee jerk reaction by investors has now become what will the FED do in response to any economic news that comes out.

Bad news might cause the FED to juice the market by lowering interest rates, making credit easier, and bailing out a bank or two. Good economic news might cause the FED to do the opposite and tighten up on the money spigots causing markets to pull back.

Investors now seem more concerned with FED response to a positive or negative economic statistic than the actual health of the economy itself. What an odd investing world we now live in.

In other news, the Los Angeles fires no doubt will mean higher insurance rates for us homeowners.

Just last month, I penned an article discussing the solvency of the California Fair Plan insurance entity and how they might be, self-admittedly, one large fire away from insolvency. Well, the news is out the latest fires in Southern California might be the costliest insurance event in their history. I have seen social media chat suggesting Cal Fair is in shambles. I can say as a Cal Fair agent, they are still up and running and, at least now, seem no worse for wear. I have no way of knowing their current financial picture, but they continue to communicate and operations continue, at least from an agent’s point of view.  In the article, I mentioned Cal Fair may have to instigate assessment charges on policies throughout the state to cover shortfalls. Much like a property tax bill where you get an invoice for a new road or what have you, a fire assessment would send you a bill out of the blue to help cover costs.

In the middle of the crisis, it’s difficult to tell how this will all wash out. But my guess is the Federal and or state governments along with the insurance companies will all have to contribute massive amounts of money to cover the costs of these fires. A bail out by somebody is in the cards.

A bail IN, where you and I will be asked to contribute is also a possibility.

In conclusion, whatever happens, if you thought insurance rates of all kinds were high now, it’s not rocket science to foresee even higher rates are in our future.

For now, let us offer our prayers and support for those victims and their families, our first responders and all those involved in bringing this horrid event to a close.

“Watching the markets so you don’t have to”    

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com