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Sunday, October 18, 2020
How Netflix Shows Help Me Invest - Mindhunter | Black Mirror | Beats
Saturday, October 17, 2020
The US Economy Has a Stimulus Hangover
I fear the US economy is starting to feel the hangover effect, after binging on $13 Trillion, yes with a "T", trillion dollars of stimulus. I'm not going to argue whether it's needed or not because I previously said stimulus to main street America is definitely needed. But the hangover reminds me of how I felt after a Saturday night of partying in Chicago once we officially transitioned from winter to warm weather --- everyone was out drinking.
When I think about government stimulus, everyone this spring and summer was wasted off of stimulus. If you were unemployed you got an extra shot of stimulus in the form of $600 added to your unemployment pay. For small businesses and then surprisingly large business (remember my post on even the LA Lakers organization getting PPP funds), we benefitted from stimulus if we promised to bring workers back. We soon found out many of my business colleagues graciously took the money and then far too many decided NOT to bring workers back --- why because they were more concerned about tying the funds to when business would come back. But being in the RISK MANAGEMENT business, this is fundamentally flawed thinking. The PPP experiment as I call it was a social experiment to see if as a nation we could band together and do what's best for our neighbor financially. I'm sad to say, the experiment didn't work as business people fought it along the way, while cashing in the money. During a health pandemic where people SHOULD stay home quarantined, you cannot expect business to return back to normal --- use government taxpayer money to keep people afloat.
Note to anyone reading -- What kept people going was the unemployment checks and the extra bump of $600, it caused an e-commerce boom. How do I know, well I am in the Cyber Risk Management business. I have been getting calls from all over the country to help people do more business across the internet. My most amazing story is a company that sells boats and luxury yachts in Florida. They called me and we discussed business. At the beginning of the pandemic, no business because their model was predicated on customers coming in. But they quickly learned they needed a robust web platform as they were getting boat and yacht orders left and right. It sounds like most of us in Corporate America could keep going as we could work from home and buy boats and yachts but I wonder about the front line worker who is exposed to the virus on a daily basis if you're driving a bus, riding the train, or working the grocery checkout system. No national quarantine holiday in my humble opinion was a bad risk management move.
Why do I think we're feeling a hangover let's look at the news:
Company Continue to Announce Layoffs -
- Airlines - this industry announced 35K job cuts and some anticipate this number will top 100K
- Disney - announced 28K layoffs
- Salesforce - initial pledges were made to not layoff, well soon thereafter they announced 1K layoffs
Jobless Claims Continue to Rise
As an investor, how do I keep track of economy. I use one indicator called the Jobless Claims report from the US Labor Department. The data is staggering:
- As of September 30, 2020 25 million required jobless benefits
- Last week (Oct 10, 2020), - 898,000 new persons applied for jobless benefit aid for the first time
- To put this data into context, during the 2008 Financial Crisis that I believe was the worth since the Great Depression, the number of first-time applicants peaked @ 665,000
- France noted that 40% of it's hospital beds are filled w/ COVID patients
- Europe cases are rising
- The rural US is now the leading source of new cases
- And unfortunately people are fatigued or bored with staying home
Thursday, March 26, 2020
The Government Makes It Rain --- Stimulus To the Rescue
Coronavirus Update – Shutdown Has Finally Started
|
Thanks to the
great leadership exhibited from New York, California, and Chicago the nation
is slowly shutting down city by city --- and state by state. While unbelievable,
this is very necessary to starve the virus. There will be debates on
how long and I remind people to look to China’s recovery and the timeline
they used. For example, Wuhan the epicenter of this crisis will remove the
lockdown on April 8th. SO the reality is the longer the better for
the hotspots. Why I demanded leadership --- one voice, one plan. Providing
risk consultation to large corporations puts you in a position to see some
amazing dynamics. People will not do thing unless they know the order has
come from the top…it appears countries are no different. The shutdown should
be federal because if we all go into shelter at the same time, you hope we
can plan to exit strategically around the same time.
Let me give you an example, if you
have a missing child, technology (like the Amber Alert) has allowed for us to
receive notification all at the same time rather than piecemeal. This speeds up the likelihood of finding
the child much better than sending it to one police department at a time. If the coronavirus
shutdown does not come from the top, when one state recovers my question is: “Does
that state allow you to travel or accept visitors from states that did not
shutdown at all or that shutdown much later than your state did. Essentially
this recovery could drag on longer than needed if we cannot move in a
cohesive manner as a country. There could be a lack of trust in the air
which is why I believe countries like Italy, China, S. Korea and others when
into lockdowns all at once.
Make It Rain – Last Resort to Inflate the
Economy
I am hoping for better
coordination so we can begin to recover quicker and get the economy
going. The importance of the pillars
we work on so hard here is to help you during these exact moments. If you
have savings, you have some cushion during these bad times. See these
articles, ripped from the news headlines:
“Many Americans
Biggest Worry is April 1st Rent and Mortgage Payments” -- Washington Post
“Real Estate Billionaire Barrack says Commercial Mortgages on a brink
of Collapse” – Bloomberg
“Jobless Claims Soar Past 3 Million to Record High” -- CNBC
“Mortgage Rates Surge to Highest Level Since
January” – Marketwatch
“2 Trillion Dollar
Stimulus Package” --- See below
These are just a few of the
necessary reasons why the Federal Reserve is making it rain. It’s basically a
blank check to shore up the economy until we can get a handle on the
COVID-19. Like in 2008, the market has
responded with a rally since a “handshake deal” was announced just a few days
ago. This rally will likely continue into the actual signing of the bill. Use
this an opportune time to trade in the relief rally that is not uncommon. But
when the dust settles, I am still not risking my individual retirement
account funds at the moment because we know there is more to come. Mortgages
need to be paid, the rent is due, businesses are asking for a bailout and
jobs are being shuttered. Hopefully all this is temporary but it is a big risk. I
don’t see an all clear sign, just yet.
Urb Lesson of the Day: Account
Diversification
· Savings Accounts – Gets you through the rough patches in life · Investment Accounts – Allows you to take risks when others are NOT – like today · Individual Retirement Accounts – This is truly for your future, why NOT wait for a sign that the recovery is strong |
Wednesday, December 18, 2013
Federal Reserve Announces Taper / World Improving? / Stocks on My Mind
The Federal Reserve has been pumping billions and billions of dollars into the US economy. Today was the first step by the Fed to say that the US economy, their patient, appears to be in steady recovery mode. The recovery appears to be steady enough that they are starting to reduce the amount of medicine they have been giving to the patient...in the form of the stimulus they have been pumping into the economy. This was a pivotal moment in the market and the reaction so far is very positive. Investors believe that the Fed's view that the US is in recovery mode because stocks have catapulted higher. Stay tuned and let's look back in the next 3 to 12 months from now and see if we feel more jobs being created, houses being bought, and you and your friends spending more.
http://www.cnbc.com/id/101279385
ARE ECONOMIES IMPROVING AROUND THE WORLD?
I am consistently the naysayer, as I am always looking for risks that impact the markets. But I must admit the news that I have seen recently is VERY positive. The unemployment rates are coming down in both the US and I saw a story today about the rate in the UK and this is very positive for growth around the world. More people working means companies are hiring and people have more money to spend in the future.
STOCKS/THEMES ON MY MIND
Lululemon (LULU)- This company continues to stumble and has recently fired it's CEO for some very insensitive comments towards women. Not the brightest move considering women are their core target group. But I also know that the YOGA and health movement is serious and people want to look the part when they get fit. I believe they are trading around roughly $59 dollars.
Caterpillar (CAT) - A company that had been in the stuck in the mud and the stock price hasn't been doing well. But they are very much impacted by global growth and with things improving this stock may make a nice move up. Stock price has ranged from $84 to $87. I believe it trades at roughly $87 today.
Stocks Which Support Online Businesses: International Paper (IP), FedEx (FDX), UPS (UPS)
I realize that more than 75% of my purchase habits happen online. I now buy my home goods online and have had dish soap, laundry detergent, door handles, and a host of other products delivered to my house. They always come in a brown corrugated box (International Paper) and are delivered primarily by UPS when I purchase items from Amazon. I've recently heard that groceries can be bought online very soon...see Amazon "PANTRY". I think more boxes and deliveries are coming to both your house and mine.
Health Care: I listened to a very interesting story on National Public Radio the other day. For the first time, health care insurers are taking major steps to advertise their products in response to the Affordable Care Act. I don't know many things but I do know 1 thing...when companies are spending billions of dollars to advertise it's because they see an opportunity to grow and gain market share. Insurance is a business that seems to experience very little turnover once they've signed up a customer. If I am an example, I have had the same auto and health care provider for as long as I can think. There will be a number of winners due to the expansion of the Affordable Care Act. Investors have already realized this a number of these stocks are up significantly this year...but the biggest change to the health care sections in decades will cause some serious gains for years to come.
Saturday, July 20, 2013
Please Don't Kill My Investing Vibe...
Tuesday, March 22, 2011
March Matrix Notes
Ray Dalio (find his discussion on CNBC)
Mr Dalio is the hedge fund titan who runs Bridgewater Associates and rarely makes tv appearances (I heard). After a few moments of defending his unusual methods running his firm, the man behind the world's largest hedge fund was very open about the cycle of leveraging and deleveraging and where the US is at in its cycle after the crisis. He talked about the following subjects:
The money flows will benefit equities
Portfolios are not properly weighted, too much in dollar denominated currencies
Gold is a currency that many are underweight
Stimulus will last through the 4th quarter, and private credit growth will be needed
Monday, August 03, 2009
My Reality Show: Homebuying 101
Rule 1: From a previous post, you learned to CLEAN UP YOUR CREDIT. Click here to learn about how to view your credit for free ---> Free Credit Check
Rule 2: Find a reputable bank or mortgage broker who will pull up your credit and give you a Pre-Approval amount based on your gross income and outstanding debt levels (i.e., credit card balances, car loan, student loans, etc). Knowing "How Much Home You Can Afford" is critical! My rule of thumb is try not to spend more than 80% of what your Pre-Approval amount is. If you haven't received your Pre-Approval use this rule of thumb, don't spend more than 40% of your net monthly paycheck. Remember net = take home pay. This rule prepares you for a few things things that you may still want to spend money on like: the ability to still save/contribute to your retirement, afford new expenses, and still have a life.
Rule 3: SAVE, SAVE, SAVE for at least of a 10% Down Payment. This will be a huge step in determining if you are really ready to commit to buying a home. For instance, the average condominium (in my book) is roughly $300,000. This means you need to come up with $30,000 as a down payment!!!!
Tricks up my sleeve:
- A trick to Rule #1 is to contest all questionable items on your credit report with support and in writing. The nice thing is contesting your credit history can be done online.
- The trick to Rule #2 is to follow my "Rule of Thumb" notes above. Budget for less and you will be able to sleep easier at night.
- And my last trick! For Rule#3, consider or ask if the home you are looking into qualifies for a FHA Loan. This loan is government sponsored and only requires you to put 3.5% Down!!!
Stayed tuned on how to begin your house search...
Friday, May 15, 2009
Urbanomics Market Update ~ May 15
~the update for people that don’t watch the “stock channel”
STOCK MARKET, if you had peeked at the stock market you might have seen that it has been doing really well in the last couple of months. If you feel like you missed the party…DON’T. The reasons vary as to why it was moving up rapid (like people spending their tax checks) but it probably won’t continue going up so quickly much more. This is my opinion but the economic data doesn’t lie. The data recently released says:
- Consumers are saving and not spending money
- Housing foreclosures are on the rise again
- Unemployment continues to reach record monthly numbers
WHAT TO EXPECT NEXT, the talk around the investing water coolers is the next shoe to drop is the realization that the Credit Card and Commercial Real Estate industries are hurting. In a nutshell, unemployment is bad for consumers who stop paying their credit card bills and a recession is bad for businesses that stop paying for the buildings they use. Both of these problems affect banks and real estate companies which have hundreds of billions of dollars at risk.
DOES THE STIMULUS WORK, surprisingly the answer might be yes. The stimulus plan appears to be working with estimates stating that roughly a billion dollars a day has been released in the first 80 days, I will let you do the math ($80B). And states representatives have indicated that they are putting the money to work quickly. For example, I was shocked by the potential numbers noted by the state of Texas, which says they estimate that 69,000 jobs will be saved or created through the implementation of stimulus money for transportation projects.
HOUSING, number from two key sources, the National Association of Realtors & RealtyTrac (foreclosure experts) are out.
- Home Prices fell 14% since this time last year (Largest decline ever)
- First-time homebuyers accounted for HALF of all new sales
- “Distressed” (foreclosures and short sales) accounted for HALF of all transactions
- Foreclosures filing up 32% from a year ago (RealtyTrac record)
- 1 in every 374 housing units received a foreclosure notice
Industry Predictions: Housing may not return to normal until 2010, until then BUYERS are running the show