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Yield Curve Inversions Do Not Cause Recessions

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Without other catalysts such as escalating trade war or central bank over-tightening monetary policy, inverted yield curves do not and have not caused recessions. This requires repeating, inverted yield curves do not cause recessions.

An inverted yield curve can be a signal of a future economic downturn and recession; and, it can be a contributing factor to a downturn or recession if it creates fear and uncertainty that causes consumers to stop spending and/or financial institutions to stop lending.

Thus, the question being asked by investors is…”will there be a recession hitting the U.S. economy in the next twelve to eighteen months”? The answer is that no one knows for certain, but unlikely as long as the consumer remains strong. A second question investors are asking is whether there will be a recession in the next five to ten years? Answer…almost certainly, but, again, no one can say for sure.

The U.S. consumer remains strong and they drive 65% to 70% of the U.S. economy. The labor market also remains strong with unemployment at the lowest rate in over fifty years. Additionally, wages are increasing. Most economists concur that as long as the consumer remains strong and spending, it unlikely the economy will enter into recession.

NFL Channel – A Football Life: Bill Belichick

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New England Patriots Head Coach Bill Belichick, was featured on a 2009 NFL Channel program A Football Life: Bill Belichick. The program was produced in 2009 at a time when the Patriots’ Coach Belichick along with his quarterback Tom Brady had won five Super Bowl Championships.

There are many lessons that can be learned from Coach Belichick.  One lesson was his ability to focus on assessing and correcting the small aspects of the game on the football field. During one program segment, Coach Belichick was seen closely managing the aspects of the game plan needing adjustment.

‘Every battle is won before it is fought.” Sun Tzu

Another lesson learned was his very detailed pregame planning.  In a pregame speech, Belichick stated to the Patriots football players that…”they know what to do, and they should go out and execute their respective position responsibilities aggressively”.

Also, he commented that…”they’ve worked hard and prepared thoroughly; they should celebrate when they or a teammate make a play”. He also stressed that they must play with energy and passion on the field. He indicated that the prior season, when they failed to achieve the team goals, the players were not playing with passion nor celebrating when a teammate made a play.

In the NFL, winning coaches, such as Belichick, must stay several steps ahead of their competitors or allow their competitors to catch and even surpass them. In pregame planning meeting with his coaching staff, he gamed planned what he expected the opposing team would do against the Patriots and what aspect of the opponents game or player they would take away.

It was obvious that Coach Belichick believed in focusing solely on the details of the game during the game”s sixty minutes and delay trash talking to after the game was over. During one game, he is seen commenting to a trash talking opposing team player…”let’s talk after the game and do you see the scoreboard”. In postgame analysis, win or lose, he was brutally honest with the team on what they did well and what they did poorly during the game. Especially, if he observed the team losing focus or failing to execute on the football field of play.

During an expected inclement weather football game, Coach Belichick repeatedly reminded his team that they were not playing the wind and wintry weather, but were playing a NFL professional football team. He wanted the Patriots to focus on the opponents and ignore the blowing snow and sleet.

‘Where you end is the only thing that matters in football and golf.’ Bill Belichcik

Coach emphasized that he was not afraid to go for it. Once, on a fourth and one on the Patriots own twenty-five yard line, he successfully went for the first down deep in Patriot’s own territory. A week later, it was fourth and two on the Patriots own twenty-eight yard line, he was unsuccessful going for a first down. Lessons learned from the experience, regardless of the comments from a plethora of second-guessers, “…do not be afraid to go for it and ignore the noise afterwards, if unsuccessful”.

Annapolis, MD, and the U.S. Naval Academy were Bill Belichick’s boyhood hometown and coaching apprenticeship. Bill’s father, Steve Belichick, was a scout for the U.S. Naval Academy’s football team. As a result, Bill spent countless hours shadowing his father during practices and games as his father coached the Navy football team.  When not at Naval Academy football practices and games,  Bill played on the local Annapolis High School football team.

Coach Belichick consistently stressed  “…getting the team to play the way they need to play” to win.   Especially on the road, it was important for the team to play with mental toughness. Competition is about getting up after each time an individual is knocked down. Also, he emphasized to his coaches and players that winning is all that matters in the NFL and in sports in general.

One additional lessons learned is to ensure the players know individually and collectively, as a team, what is expected of them.  He also ensured that they understood what was at stake and that they execute the game plan accordingly.

He emphasized continuously that you do not dance around and celebrate an expected victory while time remained on the clock, regardless of the of the lead on the scoreboard. He further emphasized how one stupid mistake, one stupid play or one stupid penalty can end the season for the Patriots, especially in the post season.

When injuries occurred, he was quick to quip that a team…”played with the players on hand…with the hand you’re dealt”.  And, once a game was concluded, don’t look back…the focus must be on preparing for the next game and opponent. This aligned with the U.S. Navy Seal’s motto…”the only easy day was yesterday”.

“When you leave here (motto located in Patriots locker room):

  • Don’t believe or feel the hype
  • Manage expectations
  • Ignore the noise
  • Speak for yourself”

In short, New England Patriots’ Bill Belichick has become the NFL’s most successful modern day football coach.

13 High-Yield Dividend Stocks to Watch

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High-yield dividend stocks have gained even more allure lately in the face of shrinking bond yields. However, while a handful are ready buys right now, several more sport alluring yields – at least 5%, and up into the double digits – but need a little more time to simmer before it’s time to dip in.

Patience is a virtue in life. That’s particularly true in the investing world. It’s even true across investing disciplines. Sober value investors wait for their price before buying, but disciplined market technicians also know to wait for the proper setup before trading.

Sometimes, you need to wait for a fundamental catalyst to make your trade worth making. Other times, it’s simply a matter of waiting for the right price. But the key is having the self-control to wait for your moment. Lack of patience can be a portfolio killer.

“We tell our clients during the onboarding process that we won’t be investing their entire portfolio on day one,” explains Chase Robertson, Managing Partner of Houston-based RIA Robertson Wealth Management. “We tend to average into our portfolios over time as market conditions warrant, and we’re not opposed to having large cash positions. Our clients thank us in the end.”

Today, we’re going to look at 13 high-yield dividend stocks to keep on your watch list. All are stocks yielding over 5% that you probably could buy today, but all have their own unique quirks that might make it more prudent to watch them a little longer rather than jump in with both feet.

Click on the link below for more information.

apple.news/A552TdyXQQf23Eq13U7uxnA

3 Secrets to Retiring Rich

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Your ideal retirement may involve a lot of travel, the purchase of a few big-ticket items, and decades of worry-free, work-free days. But it’ll take a large nest egg to get there.

If you want to to retire wealthy enough to achieve your goals, you have to begin planning immediately. Start with these three steps.

Click on link below to read entire article.

apple.news/ArS5WUvycTlGxqinL5ZOQAQ

Staying Invested in the Stock Market

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Staying invested during market volatility can pay off over time

The markets go through cycles, it’s never a straight line. It’s time in the market not market timing.

It’s normal for investors to consider pulling their money out of the stock market during a major market sell off or melt down. But doing so would be short-term thinking. Staying in the market for the long term helps investors participate in future gains and keep them on target for their goals. Missing out on market upswings can have a devastating impact on long-term earnings and returns.

Staying Invested Matters
Six of the 10 best days occurred within two weeks of the 10 worst days.*

*On August 24, 2015, the Dow Jones Industrial Average closed down 588 points. On August 26, it closed up 609 points.

Know

  • Fear is not an investment strategy—emotion-based selling can cause you to miss the market rebound.
  • Think long term—U.S. stocks can be a source of growth for investors who stay in the market.
  • Low markets can be an opportunity to buy stocks at bargain prices.

Do

  • Adopt a disciplined long-term strategy and stick with it.
  • Choose a level of risk that lets you feel comfortable and matches your time horizon.
  • Keep up your regular investments, especially into retirement plans.

Be smart. When investing, smart investors create a long-term, diversified plan to help themselves ride out the market’s ups and downs.

Source: Chase

Consumer Spending and Confidence

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U.S. Consumers remain confident, strong and spending.

Consumers haven’t cut back spending even as their worries grow. Consumer spending represents about 70% of U.S. economic activity. Nevertheless, U.S. Consumer cannot save rest of world economically, but they can insulate the U.S. economy from the slowing global economic growth particularly in Asia and Europe. The U.S. economy is relatively self contained, but it’s not an isolated island and it can be affected by what’s happening in the rest of the world.

U.S. consumer is in a good place because the labor market remain strong. Despite the silly talk from financial entertainment media pundits about U.S. economy going into recession during calendar year 2019, the main risk for consumers are the alarmist recession headlines which may create a self-fulfilling prophecy.

But waning confidence could cause them to cut back their spending in the months ahead, potentially weakening the economy. A measure of consumer confidence fell in August to the lowest level since the start of the year. Additionally, a gauge that measures what consumers think about their own financial situation and the current health of the economy fell to a nearly two-year low. Monetary and trade policies have heightened consumer uncertainty—but not pessimism—about their future financial prospects.

The main takeaway for consumers from the first cut in interest rates in a decade and from a brief inverted yield curve was to increase apprehensions about a possible recession. Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession. Falling interest rates and am inversion of the U.S. Treasury yield curve have long been associated with the start of recessions.

Source: Surveys of Consumers. University of Michigan, http://www.sca.isr.umich.edu/.

Worthy White Wines

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White wines from around the world can be as complex as red wines and like their counter parts, white wines can have vastly different tastes. Like red wines, white wine has a plethora of varietals with region specific vines as well.

White wines should be chilled slightly for serving and are typically fermented at cooler temps during the wine making process to preserve those rich fruity flavors often found in white wines.

Some of the most popular varietals are Chardonnay, Sauvignon Blanc, Riesling, Pinot Grigio, Chenin Blanc, and Verdelho. Here are a few less well known white wine varietals that are being enjoyed by white wine enthusiasts:

Albariño wine (“alba-reen-yo”) is a high-quality, light-bodied white that grows mostly in Spain and Portugal. It’s loved for its high acidity, refreshing citrus flavors, dry taste, and subtle saltiness. For seafood lovers, Albariño is a fantastic choice for pairing with exquisite dishes like ceviche, fish tacos, seafood pasta, and shrimp.

Vouvray (“voo-vray”) is a white wine made with Chenin Blanc grapes that grow along the banks of the Loire River in the Touraine district of France. Wines range in style from dry to sweet, and still to sparkling, each with its own distinct character.

Viognier (“Vee-own-yay”) is a full-bodied white wine that originated in southern France. Most loved for its perfumed aromas of peach, tangerine and honeysuckle, Viognier can also be oak-aged to add a rich creamy taste with hints of vanilla. Viognier is definitely something you’ll like to swirl.

Chablis (“Shah-blee”) is a Chardonnay that rarely uses oak-aging, resulting in a very different style and taste profile. Chablis is 100% Chardonnay that is described as having citrus and white flower aromas with dry, lean, light-bodied flavors of citrus, pear, minerality and salinity. Chablis rarely displays flavors of butter – an indication of oak-aging. In fact, one of the most desirable traits in quality Chablis is a long, tingly finish of high acidity and flint-like minerality.

Foolproof Financial Plan

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The goal of financial planning and a written financial plan are to make your money goals a reality. With smart financial planning and long term investing you can save a modest amount each month, and end up with the financial assets to retire comfortably in 30 years or less. Financial planning and developing a financial plan will help an investor identify their goals and create a long term investment strategy for achieving them.

Think of a financial plan as a written planning guide to remind you of what you want, where financially you want to be in the future, and what it will take to get there. A comprehensive financial plan will include many of the following parts:

  • A personal net worth statement—a snapshot of what you own and what you owe. This will help you know exactly where you stand, and also give you a benchmark against which you can measure your progress.
  • Cash flow is essentially income minus expenses—exactly how much money comes in and goes out every year, and understand if it is sustainable in the long term. The foundation for a budget includes identifying fixed and what’s discretionary expenses and if necessary, devise a debt management plan.
  • A budget–helps to manage your money, to consider your immediate needs and wants, and to prepare you to achieve your long-term financial goals
  • An Emergency fund–ensure adequate cash on hand to cover three to six months of living expenses to handle any unplanned expenses or loss of income.
  • A debt management plan—is a crucial part of becoming financially responsibilities. Debt can be used smartly to achieve one’s financial goals, or debt can be used poorly to buy things a person may not need with money he or she does not have.
  • A retirement plan—specifying how much you need to save each year to achieve the lifestyle you and your family hope to maintain. This includes a recommendation on how best to maximize Social Security benefits, to incorporate any pension funds and to utilize personal savings.
  • An analysis of how current investment portfolio aligns with short, intermediate and long-term goals.
  • A plan for college education funding offspring.
  • A review of employee benefits, including equity compensation or deferred income planning.
  • A review of insurance coverage—the key is to make sure that you have the right types and amounts and that you aren’t paying for unnecessary coverage.
  • Planning for special needs—for a child, parent, or other dependent.
  • Recommendations for creating or updating your estate plan, including charitable giving and legacy planning.

Young and Turning Sixty

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For those of us who are turning sixty years young, we sexagenarian have much in life to be grateful and thankful regardless of the current hand we’ve been dealt. As we ease into the seventh decade of life, just the mere fact that we were able to awake each morning, to take another breath, and to feel the warmth of the of the sun on our skins represents a great blessing.

Furthermore, we should cherish and appreciate each day of walking above ground since the daily walk is not guaranteed and it beats the alternative by a wide margin.

Additionally, we should all be from the school of thought which dictates that as long as you’re alive, you should never, never, never, give up on on this life, or give up on achieving your dreams and goals. You should not fear failure, but you should fear not trying or quitting too early before achieving your dreams and goals. Follow the example of the Ohio born Thomas Edison who was quoted as saying that “I have not failed. I’ve just found 10,000 ways that won’t work.” When trying to create the incandescent light bulb. After thousands of repeated failures, he persevered and never permitted the fear of failure stop him from realizing his dream.

So, my fellow sexagenarians, never give up on pursuing your dreams or passion… since it never too late to write the next great American novel, to visit that faraway dream vacation destination, or to pursue that new skill of learning to play the piano or alto saxophone.

When in doubt, remember the words of the genius Albert Einstein, You never fall until you stop trying.”

Inverted Yield Curve and Recession

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This morning, we awoke to the financial entertainment news hysteria [trying to sell ads] that the Federal Funds interest rate yield curve briefly inverted for the first time since 2007.  Inverted yield curve does not cause a recession, but typically forewarns of a economic recession within eleven to eighteen months of the inversion.  Many of the financial entertainment network commentators and financial pundits appear to imply that the “world is dire” economically due to the inverted yield curve and talked incessantly that a ‘big-bad’ recession is on the horizon for the U.S.

Source: CNBC Squawk Alley

Inversion of the yield curve occurs when the longer term 10 year U.S. bond interest rate falls below the shorter 2 year U.S. bond interest rate.  Historically, a recession does not occur without an inverted treasure  yield curve.  However, investor should be aware that recessions are a normal part of the economic cycle.  And, no one, not even Noble Prize winning economist can predict if or when a recession will arrive on the doorstep of the U.S. economy. 

Even with an inverted treasury yield curve, the stock market can still go up as much as four present in the twelve months following an inversion since economic expansion tends to continue.  Currently, the U.S. economy continues to expand, although the rate of growth is slowing or decelerating.  

The news of the yield curve coupled with slowing economic growth in China and Europe, the turmoil in Hong Kong, and U.S. – China trade tensions have spooked traders causing equity markets, specifically the Dow and S&P 500, to tumble. 

Advice for investors is to stay invested for the long term and review your financial plan.  Eventually, there will be a recession…that is certain since it is a normal phase of the economic cycle.  Whether it is a direct result of today’s new regarding the inverted U.S. Treasury yield curve is anyone’s guess.