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Update Aug 15, 2020 Inflation and more market news. PLEASE READ

 

Will all this money printing lead to inflation?

Is inflation in our future?

Milton Friedman famous economist once quipped: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output”.


 

Money Update Aug 8, 2020 "Traveling during CoVid

 Traveling during CoVid?  Keep reading!~

The economies of travel

In preparation of a couple of trips I had to make this month, I did some research on what to expect. Like some things in life however, you just can’t find enough good information and actually have to undertake the endeavor yourself to find the answers, and I did.

After making two trips in a row this month, I found out a lot about traveling amidst CoVid.

My first trip took me to Newport Beach down L.A. way, which by the way, is in and surrounded by the most heavily infected counties (Worldometers.info).

What fun this would be cornered on all sides by CoVid.

Traffic to Sacramento International Airports was light. Indeed, traffic everywhere I went on this southern California trip was tolerable, especially considering L.A. traffic is usually nightmarish.

Upon arriving at our airport, we pulled right up at the drop off. No waiting whatsoever and only a handful of cars were there. Dropping the wife and kids, I headed towards the economy lots only to find both were closed. A fact that would have been nice to know ahead of time.

Had I known I would have used the many stay and fly hotels that offer free parking and a shuttle with an overnight stay.

No worries however as the day lot had plenty of space right in front of the terminal. The $29 a day fee took some of the joy out of up close and personal parking spot.

The airport as I said was empty. No one was at the ticketing booth, in fact it was difficult to find an agent. Once we did check in it was a breeze. The TSA security line was nonexistent to the point where we walked right up and got screened immediately.

Only a hundred or so travelers inhabited the entire airport where there once were thousands. Most stores and restaurants at the airport were open and masking was prevalent.  No waiting was the norm for everything.

The plane was on time and seating was prompt. About 40 people were on the plane built for over a hundred. Seating was open but spacing was more than adequate between strangers. I understand now however passenger jet seating is becoming more tightly packed as airlines want to fill the few flights they are operating. I am told to expect to sit right next to somebody but everyone is required to wear a mask on the plane. Bottled water and check-mix was all we were offered during the flight.

Upon arrival at John Wayne airport in Orange County baggage claim was a breeze. Again this usually busy airport resembled a moderately packed ghost town. The whole thing felt like something out of the Twilight Zone.

Getting the rental car was eerily interesting. Most all the counters were vacant. Even though we had reserved a car, we wandered for 15 minutes looking for a manned Budget counter. Turns out the agents weren’t in the actual airport but instead in the garage. Some companies were sort of combined so you had to wander around to find anyone who knew how to get your car.

It was even more confusing returning the car a few days later. We drove around three times being caught by one-way driveways with spikes in search of a live body to return the car to. Eventually we did find one person who was checking in cars for several companies. If you rent a car, be prepared to be diligent and don’t panic.

Newport Beach was fairly packed on the day we arrived but that slowed to a very dull roar as we entered the weekday. Many of the boardwalk shops and restaurants were closed, the employees and owners either not wanting to risk infection or taking advantage of the liberal unemployment checks and the current bonus. About half the people outside wore masks but inside buildings most did.

All in all, the trip was very odd. We got done what we had to get done and returned home. After 10 days had past none of us had contracted any illnesses. We were however very careful being in L.A.

Next week I’ll detail my trip to a destination resort in Reno I had to make. It was just as odd and gave me insight as to why, despite great prices everywhere, the amenities and reasons for going are so hampered and dampened down it might be better to set up a tent somewhere and chill by a campfire or just stay home.

It’s really not worth it.

Traveling during CoVid- An unique experience

 

Part 2:

In last week’s expose’ of my “Economies of Travel- Traveling during the CoVid shutdowns”, I detailed my trip by airplane to Newport Beach and what it was like to travel during the pandemic. My next trip took us by car to a hotel casino resort in neighboring Reno.

We left the Thursday of the Fourth of July weekend, July 2nd.

Although I expected traffic, highway 80 was as busy as I have ever seen it for a getaway holiday.

The typical tailgating at 60 mph jammed both lanes all the way to Truckee.

Half expecting many to be heading to the gambling mecca of Reno like I was, I was pleasantly relieved to see most of the traffic exit highway 267 towards Lake Tahoe. An estimated 250,000 besieged the Tahoe area that week so I hear.

Although Reno streets looked like an average day of traffic, the hotel parking lots was packed. I had been told the hotel was at 80% occupancy during my reservation phone call. The 80% figure is a familiar one as most casinos will always say they are 80% full to appear they are in demand so the reservation phone call didn’t cause me undue panic. Arriving in the parking lot however the level of concern in the car definitely increased.

Entering the casino, a heat camera had been placed over the escalator with a sign said “body temperatures scanned”.

Ok then, but since the camera was on the ceiling and I saw no attendant anywhere, I wasn’t sure if an alarm would go off or what. Apparently our temperatures were ok but at that moment I realized if a high temperature was detected, and no attendant was present, I would be well into the casino before anyone could react.

Humm…….

The lines to check-in were long and those familiar social distancing dots were on the floor. The receptionist was masked and behind Plexiglas. Most patrons we saw wore masks.

Signs were up saying masks required and elevators were limited to 4 people with distances X’s on the elevator floors.

Once checked in, we strolled the casino. This casino had installed Plexiglas panels between each machine but another casino we visited did not.

Honestly I saw a lot less hand sanitizers than I expected and throughout the 3 day visit, I saw few if any employees wiping down the machines. I couldn’t help but think all the “we’re clean” hype was beginning to bring the word “malarkey” to mind. One bar did remind me when my mask ended up around my neck but the rest of the casino locations didn’t really say anything to those that had their masks pulled down.

The hotel had reduced patronage numbers in the pool so unless you got there at 10:00 am, you were wait listed. Both days I got my call three to four hours later. Obviously hanging out at the pool was going to be a nonevent for a family that has kids that sleep in until noon.

The restaurants had reduced seating so a reservation was impossible. We ended up going off site and eating early to get a seat.

The movie theaters only had one showing with familiar but old reruns. A common theme to those of us familiar with movie-going during CoVid.

The buffets were also gone but I’m not a buffet guy anyway so no harm no foul there, at least for me.

We were charged the typical “resort fee” (don’t get me started) but were informed there would be no maid service after the first day. We could order fresh towels and such but there would be no room attention. So much for the amenities paid by the “fee”.  

All in all, the whole thing felt a little desperate. Desperate like those that were there were so determined to “get away”, they would settle for this type of “half access” to just about all the reasons for being there.

After two days we were ready to leave and determined not to come back. And like I said in the conclusion of last week’s article:

“…… despite great prices everywhere, the amenities and reasons for going are so hampered and dampened down it might be better to set up a tent somewhere and chill by a campfire or just stay home”.

Like I said last week, traveling right now is really not worth it.

 


 

Update July 12 2020 READ

 

Is our market now just a gambling casino?

 

The Dow Jones Industrial Average (DJIA) continues to baffle many investors and analysts alike with its apparent decoupling from the American Economy. Off its March lows of mid 18,000 level. It stands pushing once again above the 26,000 mark. Its post CoVid correction high was a hair above 27,200 June 8th.  Technology shares represent a good amount of the gains with the tech heavy Nasdaq (QQQ) already above its all-time highs. Yes, you read that right. The Nasdaq is already higher than it was pre CoVid. Analysts attribute this index’s stunning move to the heavy make-up of the many technology companies in it.

Meanwhile the unemployment level sits at around 50 million and with the threat of new economic shutdowns in many states due to the increase in CoVid cases and the unemployment special $600 a week bonus set to end in a few weeks, many analysts are warning the stunning ascent in the stock market may be in jeopardy. Big and small businesses alike are reeling from the shutdowns with many forecasted to never return. The balance sheet damage is that bad.

Making matters worse, the tension among Americans is palatable. Racial issues, the mask debate, the very controversial upcoming Presidential elections and continuing economic inequality is adding even more stress to a populace that is probably wondering what else could go wrong.

The reasons for the recent surge of CoVid is also being hotly debated turning up the heat even farther. Some claim the mass gatherings of protestors is to blame while others blame a premature opening of shutdown restrictions helped spread the virus. Citizens are taking what seems to be extreme polar opposite positions on the mask- no mask debate, with many blaming the “anti-maskers” are at fault for the recent spread while that group insists not wearing them is an essential freedom.

In the markets, gold is reacting by assaulting a multiyear high. Gold is often bought in times of economic stress and political uncertainty.

In other news, the Trump tax reforms which reduced taxes on various companies and individuals were originally thought tp reduce charitable donations due to the rework in the tax law which affected the ability to deduct contributions.  Not so says Giving USA in a report that claimed Americans contributed a record 450 billion to charitable organizations last year.

Way to go America.

Economic recovery forecasters run the gamut in their prognostications of just how long we will have to wait to see things return to some semblance of normalcy. Jim Rickards of the “5” Minute Forecaster reports recent statistics bring 2023 into hopeful focus while worst case scenarios (which might get worse still should CoVid stubbornly hang around longer than expected) puts the recovery well into 2025.

Giddy investors meanwhile are coming out of the woodwork to bid up the share prices of bankrupt company stocks, and yes, public companies stock can continue to trade while the bankruptcy makes its way through the court system. The day trader has also returned in healthy numbers, usually leaning into not only the bankrupt companies in search of quick profits, but buying up the most badly beaten down stocks. These are the companies that were most affected by CoVid, such as cruise lines, airlines, restaurants and the hotel/motel chains. Fast profits and portfolio implosions usually go back and forth for such novice traders.

Despite the markets historic and head scratching run, a record amount of cash sits in investor broker accounts says Zach Scheidt of the “5”. He goes onto give his opinion that this is the reason he believes the markets will run higher. Cash seeks a place to go, or better said, has a tendency to burn holes in investors pockets. If markets continue to run, investors may have the itch to put large amounts of cash to work as the greed DNA twists and turns in anticipation of higher markets.

All in all, its been quite a period for the markets and indeed most every person on the planet as a result of the Corona virus event. Where we go from here is anyone’s guess.

 

This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. Investing involves risk. You can lose money. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249.

 

 

 

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Conflicted we fall Update June 21, 2020

 

Conflicted we fall

 

United we rise. Divided we fall. And so goes it with economies. And since economies are made up of people, how a nations people go, so goes their economy.

Not in recent memory have I seen such divisiveness in our country. Obviously the current Whitehouse resident has unarguably caused a firestorm of controversy since day one. With another election coming up, I can imagine, or maybe I can’t, what will happen with the politically left should the incumbent get the nod for another 4 years.

But that is then and not quite now.

Not to ease up on mankind in any way, shape or form, enter the newest threat, CoVid 19. Not that a virus should divide a populace. Indeed, you would think it would unite us. And one could argue it did, at least for a while. The entire planet had to cope with the little bugger, and one could sense we were all in this together, because we were.

But like an anxiety plagued schizophrenic waiting for the other shoe to drop, mankind would not enjoy his unity for long. We are sinful by nature don’t ya know and so it was bound to happen.

First governments shut down the world. Can’t recall ever reading about that before. The damage was massive. Now hundreds of companies will go four feet up in bankruptcy, millions are out of work, some jobs will never come back and thousands will die of starvation in the months and years to come as governments struggle for funds.

And isn’t that the way of it?

Don’t kid yourself. Some struggling governments will cut off food supplies, as some governments always do when things are tight. The permanent damage is hard to estimate but it’s safe to say it will be immeasurable except to say it will be more than anyone can imagine and I can imagine a lot.

In the midst of the economic implosion thrust upon us some cop murders a black man. Then another. And the world reacts. Protests everywhere. Yes, in the midst of a viral pandemic thousands stand shoulder to shoulder and for good cause.

But a virus like the highly contagious CoVid lives for shoulder to shoulder proximity. And now cases are spiking again. And therein lies the next divisor.

With statues heads rolling in the streets, literally, the anger is palatable. It could be argued some of those angrily tugging on the toppling ropes are expressing deep rooted angers that compound with the racial outrage. Anger against economic equality as well.

Who’s to say they know all the reasons. The human psyche runs deep.

Whatever the reasons, the nation is hurting. Economies are hurting. People are hurting. And with the societal anger compounded with the economic damage, CoVId 19 seems to be in the right place at the right time, at least for a virus.

World governments now say they will not shut down again. The damage was too great. So the question is: is that statement an absolute?

Never say never. And another reason to argue with thy brother arises. The mask/no mask debate arises with a vengeance.

Not satisfied to limit discussion to healthy exchanges, the anger over boils again. And it seems at least to me it falls along party lines, unfortunately.

No surprise there. The devil is very thorough in his mayhem.

Some insist all wear masks. To not do so means you’re inconsiderate in the least, and a cold blooded murderer at worst. Insist everyone wears a mask on the other hand and you are barraged with the catcalls of fear mongering at best to being perfect volunteers for the next train to Auschwitz.

I can’t tell you where all of this is going but I can tell you where we’ve been.

To hell and back in the last year or so, while some will argue longer.

But if the devil does exist, he (or she so cool your jets) is playing a masterful hand.

In conclusion, I am an admin on a large Facebook social media page called Nevada City Peeps. I have the main photo of a lock bridge in Austria. This photo garners some comments how that relates to Nevada City. Some want me to change it.

Considering the hate and outrage I witness daily on this page from my brothers and sisters toward one another, I am considering changing the photo showing two people, nose to nose, screaming in anger at each other.

It’s that bad.

This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. Investing involves risk. You can lose money. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249. Indices mentioned may not be invested into directly. This is not an offer to buy or sell any securities.

 


 

Update June 13 2020 PLEASE READ! Economic news

 

 

Markets plunge!

 

Greetings

Markets plunge!    Keep reading what is next?

 

“Sector rotation” in stocks means money comes out of one area of investment and moves into another.

At any given time, certain areas of investing can be hot while others are not. Certainly during the period leading up to the dot.com stock mania, one could safely say technology stocks were in favor and explosive price growth was the sought after result.

Any stock with a dot.com moniker would be gobbled up by greedy investors looking for fast and furious gains. Meanwhile the old “stodgy” stocks that paid consistent dividends like utilities or oil stocks may have been shunned in favor of the hot stocks of the day. Investors thought the stalwart stock names of oil, food, autos or what-have-you did not offer the lighting-fast, explosive growth that a dot.com stock promised.

Fast forward a few years and dot.com fell from favor. They were replaced by housing stocks and its various related sectors.

Sector rotation can take place at any time and for a variety of reasons. A new discovery such as a cure for cancer could cause a sector rotation into health care or pharmaceutical stocks. History is rife with well-known sector rotations.

A decade or so back, the health benefits of grape related drinks caused a rotation into the wine and beverage sectors. Looking farther back the Texas oil bonanza caused oil and oil related equipment producers to rally. The movement to alternative energy caused related stocks in that sector to rise while hydrocarbon type stocks may have fallen.

The reality is sectors can fall in and out of favor and for a variety of reasons.

It’s this ebb and flow of investor dollars that may cause stock prices in certain sectors to fall in mass for no other reason than a sector is becoming yesterday’s news.

Catch a hot sector early and profits could be made. Be late to the party or stay too long, and falling stock prices reflecting investors vacating the sector for greener pastures could hurt portfolio balances.

Early on during the CoVid shutdown, most all areas of the stock market fell in concert. A few weeks in and investor monies surfaced into a variety of stock sectors. Biotech and pharmaceutical stocks caught an early bid as did the internet communication stocks, streaming movie companies, online retailing and the companies that serviced and maintained the conduits of such businesses.

Meanwhile the hardest hit sectors were the vacation and travel stocks like hotels, theme parks, airlines, cruise ships and similar sectors. Companies that by their nature facilitate people in close proximity to each other like movie theaters and restaurants also suffered.

Sector rotation into the “stay-at-home” economy stocks caused a significant river of investor dollars to flow into certain sectors while other sectors fell mercilessly.

Last week saw another sector rotation that may have taken many investors and advisors by surprise and it was fast and furious in its migration of dollars.

On Friday June 5th, the Labor Department reported that May payrolls increased by 2.5 million, shocking investors and analysts alike.  Forecasters had called for another dreadful report following a sharp decline of 20.7 million lost jobs in the prior month. The gain was the largest positive number going back to 1939.

That report, coupled with the fact that all 50 states were in various stages of reopening, caused an obvious sector rotation out of the “stay-at-home” stocks into what I call the “get-away-from home” stocks.

Video conferencing, health care, online shopping and other related sectors fell hard with little exception or reason, while the hardest hit shutdown stocks like hotels, airlines, cruise ships, retail and other related areas rose.

The stocks in these areas had been stealthily lifting off their lows in recent days and the jobs report lit the afterburners of many of these companies.

This was a clear example of nothing more than sector rotation, based on investor expectations that the lows in some of these stocks may have already been reached and that it was time to go shopping in the bargain basement of the stock market.  Meanwhile holders of the stay-at-home stocks were left scratching their heads as to what had happened to cause their recent favorite stocks to crater. The answer was nothing specifically. They were simply a victim of sector rotation.   

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This article 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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249. No one can predict market movements at any time. Investing involves risk and you can lose money. Consult a qualified financial professional before making any investment decisions and do your own research before investing.