Bitcoin or Bust?

Twelve months ago, a conservative investor could have invested their money into 1-year treasury yielding 1.19%; treasuries are considered the safest securities and guaranteed by the Federal Government. Conversely, for those less cautious, say the more venturesome and daring types who chose to purchase Bitcoin(s) over this timeframe, they too are nearing a return of just over 1%. Incidentally, the top in the advancement of Bitcoin’s meteoric ascent coincided with the futures markets trading Bitcoin. So what happened? The futures market enabled professionals to bet on the downside, that is, that Bitcoin would crater. Who are the winners and losers?

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#Election2018 – For those interested in tracking tonight’s results themselves, here is a printable scorecard to add to the fun! May this 11/6 be your best yet!

#Election2018 – For those interested in tracking tonight’s results themselves, here is a printable scorecard to add to the fun! May this 11/6 be your best yet!


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#Halloween Chip off the old block!

Today, my son Chip decided to show up at work dressed as me to celebrate the holiday. His point that I wear black on a regular basis is well taken. LOL, I’ve never seen him in glasses or with a sweater.

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Futures Fall

U.S. stocks are poised to follow Asian and European bourses lower at the opening. The S&P 500 is down 6.0% (175 points), since hitting its record high a month ago on September 20. Futures are forecasting the Dow and S&P to be down ~1.5% at the market opening this morning. Skittish investors cite the Fed raising rates, China’s slowdown, election jitters, and death in Istanbul of WSJ journalist Jamal Khashoggi as catalysts accelerating the selloff. Others, see the pull-back as quite normal in a bull market that has increased 300%, in tandem with rising earnings, and exhibited remarkable resilience for over 9 years. Nothing goes up forever, does it?
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What does a downturn in housing starts mean for investors?

Housing Starts:
871 new single-family homes went under construction in September, and markets acted unfavorably to the news. The WSJ, Bloomberg, CNBC, reporting the figures as “Another weak month,” “Continuing soft stretch,” “Housing starts fall more than expected.” Is homebuilding nearing its end or is this setback just a bump in the road? Single-family home construction has averaged 1,030,000 units the past 40 years; currently, single-family housing starts are 15% below the long-term average. During this time span, the population has grown to 328 million people from 233 million. According to the Census Bureau, the U.S. population is increasing by 3.3 million per year. Based on supply and demand, I am not so sure the end is near, and there still may be considerable upside to come.
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What’s the market trying to tell investors?

Why are stocks rallying today? Perhaps, it is that 80% of reporting companies, thus far, have exceeded street consensus forecasts (beats). The market has been at a pivotable state, teetering against opposing forces. There some that espouse the expansion is nearing its twilight and stocks will discount future gains in anticipation of economic slowdown and rising rates. Others see the glass three-quarters full and deem earnings are such that future valuations may justify the bull ride continues apace.

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How Fed Policy is Impacting Financial Markets

On September 20th, the S&P closed at 2,930.75, setting an all-time high. The Nasdaq Composite and Dow Jones Industrial Average were flirting near record levels. Twenty days later, the S&P, DJIA, and Nasdaq are down 6.9%, 6.6%, and 9.6% respectively. What changed in a matter of three weeks? Is it the usual cast of characters: trade war concerns with China, hawkish Fed monetary policy, historical volatility indicative of October, unprecedented severe weather events, political polarity surrounding mid-term elections, stretched valuations, and a bull market that is the longest in history? Mr. Market can be cunning and fickle, yet is incredibly shrewd at discounting all known information and pricing it into stock prices; so is this decline a forewarning, or an opportunity to pick up equities at marked down prices?

From my desk, the catalyst that spooked buyers and emboldened sellers is the ongoing specter of higher inflation, collaborated by the 10-year Treasury note increasing to 3.21% this week, its highest yield since May 6, 2011. On September 26th, the Federal Reserve raised short-term rates for the eighth time this cycle. The Fed aims to prevent the economy from overheating and escalating unwanted price inflation. September’s CPI inflation report issued by the Bureau of Labor Statistics tells a different story. Consumer prices rose a scant 0.1% last month, and are up modestly 2.3% for the year, well below its 3.5% seventy year average. Market participants are warning that the Fed is projecting another rate increase in December, with more to follow in 2019. I am less sure that the Fed’s rate tightening trajectory is ironclad. Chairman Powell and his team of Fed governors are astute. Chairman Powell’s message has been transparent and open. Up to the present, i.e., late September, economic data has supported continuous Fed action to curtail accelerating growth. As 401k, IRA, and equity owners at large assess the damage to their retirement and investment accounts, they are likely to tighten their purse strings until stock indices stabilize; this too will become a headwind to the economy. Additionally, just this week, the IMF projected slower global growth for the year ahead. As the Fed digests all new facts and figures, it may be inclined to softening its stance on further rate hikes.

Inherently, stock prices closely track earnings growth. In the 40-year chart above, I’ve illustrated quarterly earnings by the red dotted line and the S&P 500 price with the bars. Over the past four decades, the S&P Index has closely paralleled its per-share earnings. Over the next twelve months, earnings estimates target $176.52 per share. As of this writing, the S&P trades at 2,738.62, equating to a forward price-to-earnings ratio of 15.5, six percent above its 14.5 multiple the past ten years.

DISCLOSUREThe opinions made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is deemed to be reliable, but its accuracy and completeness are not guaranteed. 1st Discount Brokerage does not accept any liability for the use of this column. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. Investors/traders are advised to satisfy themselves before making any investment. Nothing published on this site/ article should be considered as investment advice. It’s not an offer to buy or sell any security. Readers are solely responsible for their profits or losses.

The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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The Federal Reserve has now raised rates for the 8th consecutive time. How will financial markets fare?

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Are you earning enough money?

When it comes down to living the best life you can, money matters! From the time kindergarten begins parental questions get underway: Will my child be a movie star or choose to work at Starbucks. Should they go the trade school route, or matriculate in college? Which career is best in today’s tech-centric era? Is this your passion? Oh yeah, and the elephant in the room question, how much money does it pay? From the top-down, there are two primary choices in making a career decision, either work in the , or for the . According to the BLS, hands-down government jobs on average pay more. #FinancialFitness

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#PositiveNews – What is the most important indicator of sustainable economic growth?

What is the most important indicator of sustainable economic growth? Jobs, jobs, and more jobs! The U.S. economy has been adding jobs in droves, which is good. The million dollar question is how much longer can it last? Since the unemployment low of Feb. 2010, U.S. payrolls have increased by 20 million! In this week’s JOLTs Report, after this enormous expansion to the workforce, there are still jobs available. Many jobs! During the recession low point there were just over 2 million job openings, now there are nearly 7 million. What does this indicate towards the future?

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