Money Matters Update December 1, 2015 Please Read

Money Matters airs this Thursday December 3, 2015 NOON PST on KVMR FM and www.KVMR.org or at moneymanagementradio.

 

 

Thank you for all kind support with Turkey Matters. We helped buy about 200 turkeys this year. If you want, just send me the reciept of your donation to the food bank of your choice (not the check) and I will still match your donation!~

 

 

 

Dear fans,

For years people have listened to my show and read my columns. Because many thought I made sense and agreed with my economic views, they requested I manage their funds and for years I have refused. I simply had too much work in the radio/ media business. But after so many requests and having given it serious consideration, I have joined a very dear friend at his firm MKB Financial Services in Auburn. Matt Baltz and I think alike. We are like family. We strive to provide the best service, with integrity, straight forward analysis with detailed and concise communication. We offer a full range of money management, retirement planning, income planning, family planning, investment recommendations and more. We have developed 3 portfolios to help meet the needs of our clients. The cost will be a simple fee commensurate with the industry on the amount invested.

I will talk with you quarterly to review your investments and more often if you require it.

Annually we meet and you and I will update your financial information to keep us on track and make sure you and I are up to date on your situation and your expectations.

We will handle the transfer paperwork for you. I will sit down with you and gather your individual situation and your needs, basically getting to know your financial picture so together we can decide what is best for you and your family.

I am excited to be able to offer you this opportunity to go "Money Matters"!

Call me today at my personal number (530) 559-1214 (private cell- do not give out ) to talk with me about meeting with you or just to get more information. I expect to be busy with this announcement so give me a call to beat the expected rush! Or send me an email at  mcuniberti@cambridgesecure.com

Thank you again and I look forward to meeting of all of you!

Website news:

The website moneymanagementradio.com was overhauled to reflect this new opportunity.  It is more streamlined and is at no cost. Recent shows are up and posted. Some older shows are absent but the recent ones are there. It takes about 2- 3 weeks for us to post a show. Newsletters are obviously going out.

Thanks again for your patience and I look forward to speaking with you on and off air! All the best and I am so excited to hear from all of you on my new role in managing your finances if you would like me to fill that roll.

Marc

 

The Federal Reserve in regards to interest rates have not only nailed rates into the floor, they have parked a mac truck on top of them to be sure the head of the interest rate nail doesn’t rise its head or work itself loose somehow.

 

Historically, interest rates are rarely kept near zero for long, no matter who tries it.

 

Low rates can help foster spending as the lower the rates, the more people can borrow and the amount they borrow can be increased as the interest rate they pay is less.

 

But low rates can also cause massive distortions in markets and inflate bubbles in various asset classes. Something or somebody blew a gargantuan bubble in the real estate sector not long ago which almost blew up the worlds banking systems. I say someone or something because these things just don’t happen by circumstance. Bubbles need fuel and someone or something has to provide that fuel and the fuel is money.

 

Low interest rates add fuel to the fire sort of speak and when you add in massive quantities easing, what you end up with is a forest full of dead wood (debt) looking for a match to set it all ablaze.

 

The forest of course being the market and the fuel being all that easy money.

 

When the last forest caught fire in 2008, as the fire raged through the markets burning everything financial in its path, the central bankers of the world sought to extinguish the blaze. No controlled burn for this group. Some argue if the central bankers of world had done nothing, the resulting recession would have cleared some of the rot from the forest floor. Recession and depressions wipe clean bad debt through painful but some argue necessary bankruptcies of companies who over indulged.

 

Since the 2008/19 blow up, the Feds have kept rates near zero and initiated massive QE.

 

Anytime financial fires ignite, they initiate more QE and put off raising rates one more time.

 

Wall Street players love frolicking in the woods of free money from the Fed, plodding to and fro raking in the bounty while literally dancing on the doorstep of the devil, tempting fate with each passing day as possible bubbles blow even bigger from QE and these ultra-low rates.

 

Fast forward to today and by their own admission, central bankers appear to want to turn down the money spigots and essentially lift the pile a bit to allow for higher interest rates.

 

But like stoking a smoldering fire pit, are they tempting setting ablaze the fuel they have strewn about in the form of massive QE?

 

Are the zero interest rates allowing even more fuel to add to a possible financial blaze should one ignite?

 

If a financial fire does break out, will they again dump more QE and keep rates low yet again to squelch the flames? Will a redo of the policies one more time fix it once and for all or, if after repeated attempts with no success, will they     abandon the policies of QE and low rates to try something new?

 

Will they attempt to maintain a controlled burn, lift rates and slow QE?
 

If we do take them at their word, should a credit crisis once again raise its ugly head, we can expect another round of QE and near zero bound interest rates for an even longer period of time.

 

Some would ask how successful that has been, given low rates and QE has been with us so long, it strains our memory as to when there was no QE and rates hovered at a normal 5-6 %.

 

When was that again?

 

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The Federal Reserve as expected held fast on interest rates in their latest meeting once again saying they need to see more data on the economy before lifting off the near zero percent interest rate policy (ZIRP) they have been on since the banking crisis of 08/09.

The Feds again warned and more strongly this time then previous meetings that a December lift off for rates was likely in the cards but no guarantees.

 

Much like the taper tantrum the market threw years ago when then Fed Chief Ben Bernanke talked about slowing QE, the markets again sold off with interest rate sensitive

Equities showing the worst damage.

 

Fixed income assets such as bonds sold off bringing some bond funds down, while utilities, preferred stocks and some Real Estate Investment Trusts (REITS) also suffered.

Gold and mining stocks also sold off. The underlying cross current is rising rates will likely cause a US dollar rally and that will lead to lower prices in all things priced in US dollars although assets priced in other currencies will likely rise as one currency moves against another.

 

One would think the interest rate threat from the Fed was already baked into the price of rate-sensitive assets but investors none the less abandoned some issues that move with rates.

 

Assets sold off during a news announcement sometimes rebound later on and only time will tell if that is the case this time around.

 

With the investing world on alert to increasing rates, the markets seem sensitive and volatile at this particular point in time.

 

With December approaching the chance of a Santa Claus rally looms, where historically the Christmas season can lift investor spirits into a buying spree. With the election year also approaching, politics can also play a part in making an appearance into the markets as administrations look to culture a rising market to appease the voting public.

 

Nothing is cast in stone however and there are as many exceptions to historical precedents as there are precedents.

 

The good news may be that if the Feds do raise rates, the correction we see now may lead to acceptance without incidence

 

 

Months ago I penned an article called “Retail Wipe Out”. In it I detailed how online shopping allow consumers to immediately compare product features, read actual user reviews and finally find the absolute lowest price.

 

No longer confined by location, and with enhanced shipping features allowing costs of transporting the product to be at their absolute lowest if not free, consumers could now shop from the comfort of their own home and forgo the hassles of driving, parking, shopping lines and literally shop boundary free, sometimes as far away as across the country all in the time it takes to punch a few keystrokes.

 

The jest of the article is this new way of shopping would decimate store fronts much like the big box stores like Walmart decimated your local mom and pop retail stores.

 

As Walmart and Costco put more pricing pressure on small retailers, retail store fronts went vacant. Consumers could now buy the majority of their staples for a lower cost and buy many of them at one location. The result over time would be a retail wipe out with literally thousands of small retail stores going out of business. The prognostication of that article could be seen on main streets throughout the country as more and more small stores went under.

 

Now a new retail wipe out is my topic today. It’s not really new but just a continuation and enhancement of the previous wipe out except now the victims will be the big box stores themselves.

 

The same thing that brought us the last wipe out, mainly the convenience and price advantage of online shopping will put pressure on the super stores themselves and for the same reason.

 

With online retailer Amazon offering free or reduced shipping and many others following suit, and with the expansion of their product lines to encompass things not originally available through them, like food, clothing and just about everything else we buy, the consumer will have even more reason to forego the trip to their local mall or superstore to buy even more online, not only saving time and hassle but saving money as well. Without travel costs and saving time by never stepping outside his door to shop, the consumer can now even compare super stores against each other.

 

Although the Costco’s of the world profited through largess, now that same largess is heaping costs onto them that the online retailers don’t have.

 

It’s cheaper to operate an order website and maintain super shipping warehouses than cater to consumers through large retail outlets that require huge parking lots, buildings that cater to live bodies and requiring staffs of hundreds of employees per store. Fully automated online ordering and improvements like robotic packers help reduce the number of employees required, the building and maintenance costs for a live retail store and a host of other costs that a big on-liner avoids.

 

Maintaining a huge inventory at multiple locations is now minimized and instead of floor samples taking up space, an online photo takes its place. In some cases you don’t even need to have the item in stock, you just need to be able to get it, saving even more money in the process.

 

With talk of drone delivery and even grander retailers like Alibaba who sell anything from widgets to witch brooms, online retailers look to threaten even the biggest of super store companies who now must migrate their business online just to compete.

 

Although some products and services will still require a trip to your local storefront, the further expansion will only make things harder for the superstore.

 

Case in point; One of the larger big box stores just report disappointing numbers and their forecast for future earnings didn’t help. Not all super retailer’s problems are likely stemming from online competition, but certainly online competitors are not helping. Among other reasons for its cut in earnings, it stated it had incurred added costs to establish new technologies to likely compete with online retailers.

 

That is it for today's update. Call me if you would like to discuss money management or our services. Use my cell phone if you like or just email me.

marc

 

As usual;

This article/website expresses the opinions of Marc Cuniberti should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. Their website is moneymanagementradio.COM. MKB Financial Services, Money Matters are not affliated with Cambridge.