Higgins Capital Management, Inc.

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The Great Reset

The Economy: Despite a decade of unprecedented Central Bank stimulus, the global economic expansion appears to be slowing. Slowing doesn't mean contracting. It means that the rate of expansion is slowing. Growth in China is down to the 6-7% level. Yet, a 6+% growth rate, for one country with approximately 1/4 of global population, is an economic dynamo that can't be ignored. How this plays out is the great unknown.
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Tariffs, Talking Retirment, and Taking on tarnished Flatware

The Economy: Market participants are dealing with the uncertainty of a trade war between the US and China.  According to the White House, last week they were very close to a deal when China backed out on agreed upon terms.  The US hit back with an extra 25% tariff on $200 billion of Chinese goods on Friday.  The US stock markets tanked.   Monday saw China announce higher tariffs on $60 billion of American Goods, targeting the biggest US exporters.  Let the trade games begin.
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Trade Talks, FTC and Savor & Style Fashion Show

The Economy: The headline story today is that US China trade talks ended earlier today without a deal.  According to the White House negotiator, China reneged on parts of the deal from earlier in the week.  With the deadline passing for a deal, newly implemented tariffs of 25% went into effect on $200 billion of Chinese goods.  US Stocks sell off on the lack of a deal and US treasuries rally on a flight to safety.
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Social Security at Full Retirement

you'll get a bigger check every month. However, how much bigger depends upon what year you reach full retirement age, and how long you postpone collecting benefits. If you were born in 1943 or later, you'll receive 2/3 of 1% for each month that you delay collecting retirement benefits (8 percent more per years), up until age 70. So for example, if your full retirement age is 66 and you delay collecting benefits for 4 years, your benefit at age 70 will be 32% higher than at age 66.
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Old Dog Hot Money

The Economy: The Old Dog has more life in it. Strong results from Microsoft and Facebook kept the NASDAQ positive while industrials such as 3M slumped on plans to cut the workforce by 2,000. Unemployment at 50-year lows. Consumer confidence spiking to near highs. Home prices up 4% yoy. GDP blowout numbers. The numbers show a booming economy with Fed pledges of no interest rate hikes at least through the 2020 Presidential election. The Administration is increasing political pressure for QE.
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Rallies, Resources and Retail

The Economy: The U.S. stock markets hit record highs on Tuesday as equity investors see a better economic outlook than earlier in the year.  The bond market rallied.  Bond investors see the continued low inflation as the catalyst for the Fed to cut interest rates.  We remain cautious as investors flock to stocks and bonds when they historically move in opposite directions.  
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Payrolls, IRS and Heatlh & Beauty Picks

The Economy: The ADP National Employment Report is released the Wednesday before the payroll report. The ADP is a monthly economic data release on non-farm private employment in the U.S. Today's data was lower than expected, signaling to the markets the labor market may be cooling as growth slows.Friday we get the release of the nonfarm payrolls report (NFP) report which is a monthly employment report that represents the total number of paid U.S. workers.
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Rising Market or Recession

The Economy:Construction Spending is up, ISM is up; best quarterly stock market returns in 2-decades. We're entering 1st quarter earnings reports. Where's The Recession...Where Is The Recession? The US expansion continues unabated. But economic data remains mixed as it has for the past 10-years. Central Banks remain active in manipulating numbers, liquidity and asset bubbles. Everything is politicized and weaponized; right down to whether or not your children eat Hostess donuts.
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Mainstream Media, How Much is Enough and Financial Concerns

The Economy: The Mainstream Media and Donald Trump unequivocally agree on one thing: The U.S. economy is the best economy in our history and the greatest economy in the history of the planet. Financial markets wholeheartedly agree with this evaluation as shown by the relentless increase in asset prices since 2009 in general and the December 2018 lows in particular. At Higgins Capital we''re less cockeyed. We see signs of a global slowdown that may be spreading to the U.S. Financial markets
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Fed Surprised, Sources of Income and Sunnylife Beach Assessories

The Economy: Well, the Fed surprised the markets today cutting the growth forecast and stating no more rate hikes in 2019. The knee jerk reaction was for both the stock and bond markets to rally.  However, stocks closed mixed as market participants began to worry about what the Fed knows but aren't sharing. Food for Thought:  You may just spend more time in retirement than you did in the workforce, another 25-
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Home Prices, IRA Contributions and Viva Las Vegas

The Economy: New homes sales fell 6.9% in January to a three-month low.  New home sales are counted when contracts are signed where existing home sales (down 6.4% in January) are counted when the deal is closed.  Economists say new home purchases are a better gauge of the market.  As Californians are well aware, incomes have not kept up with the soaring real estate prices which are reflected in the data.
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Plunge Protection Teams

The Economy: The 2-track global economy continues to manifest. The U.S. expands at a pace that will force the Fed' s hand. The balance of the planet is in various stages of contraction. U.S. real estate may or may not be rolling over … depending on who you're reading or talking with. The rest of the U.S. economy appears to be booming, if the stock market is any indication. China seems to be slowing despite glowing reports by the Chinese Communist Party.
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Caution, Chicken Little or Cockeyed Optimist

The Economy: We're beginning to see consistent evidence that the global economy is slowing. China, Japan, Australia and the EU are embarking on further stimulus efforts. Here at home, recent Fed comments and actions seem to indicate that the tightening cycle is over; a sign of a US slowdown. When it comes to viewing and understanding Fed-Speak, Plato's Cave is the best point of reference. The only thing that matters is what is done, not what is said… or more appropriately …
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Employment, Fraud, and Frocks

The Economy: US Stocks are lower.  Todays employment report number surprised market participants. The employment report is released the first Friday of each month, giving market participants an idea of the current health of the economy.Only 20,000 new jobs were added in February vs. expectations of 180k. This was a real disappointment. It reveals slower growth in nonfarm payroll, but we'll need to wait another month to determine how much slower if at all.
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Fed Reverses Course?

The Economy:  The Fed finished its January meeting Wednesday with a dramatic flip from hawkish to dovish. No change in interest rates and significant revision to their future course of action. The number of rate hikes in 2019 has been reduced from 4 to1; maybe 1 … if financial markets and The Donald agree that it's ok. Shrinking the balance sheet has been dramatically modified with previous lower targets abandoned. Fed Chair Powell has stressed that his Fed is data dependent.
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Back in the Saddle and Back up in Equities

The Economy: We're back in the saddle after a great holiday. The more things change … .We appear to have a 2-speed global economy. The US continues to post stellar numbers; the latest being the blow-out Jobs Report. The rest of the planet appears to be slowing with Europe now following China. Sometimes this bifurcated growth is problematic; sometimes not. Whether this is reflected in financial markets is up to speculation. Earnings season is set to start and we'll see how those numbers look.
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Cracks Appearing, Independent Thinking

The Economy: Holiday Cheer is the global focus. Beaches are packed; Apres Ski at the forefront. The folderol of money and investing is something to think about tomorrow if at all. This week the Fed met and hiked interest rates another 1/4%. Fed Chairman Powell ignored White House pressure to the contrary. Financial markets sold off on the news. To add insult to injury, Powell insisted that shrinking the balance sheet would continue regardless of the blood in the streets.
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Fed Hikes, Facing Taxes and Snow Flurries

The Fed raised interest rates by 0.25 percent to a new range of 2.25%-2.50%. The Fed stated it expects only 2 more rate hikes in 2019 vs. 3, siting weakening economic growth.  This was the 4th rate hike this year.  U.S. stocks reversed a rally and tanked on fear the Fed will not be as accommodating as expected.
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What's next & where to?

The Economy: Stocks rallied and US Treasuries sold off on hope the US and China will continue to work towards a solution vs. a trade war.  Consumers have seen their new worth and confidence soar to records.  The inflation picture remains subdued.  The Fed has met its dual mandate of full employment and a 2% inflation target.  What's next?
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Where are you?

The Economy: Santa or The Grinch? Depends where you are and what you're focused on. US economic numbers remain strong with some softening at the periphery. Global numbers are less robust with China slowing, Brexit stumbling, France rioting and Russia threatening. The Fed has been pounded into discovering that interest rates are at neutral. Oil has been pounded 33% into discovering a new price at $50/barrel. Gold, fixed income and real estate have likewise seen declines.
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Yield curve inversion, College Costs, Festive Diversions

The Economy:  Everything was rosy in the US stock market yesterday on the announcement of a 90-day trade war truce by the US and China.  Today that has been reversed as stocks plummet on the inversion of the US yield curve.  Today we saw the yields on the 2-year and 3-year treasury move higher than the yield on the 5-year treasury.  According to most analysts, an inverted yield curve is a sign of an impending recession within 12-months of the inversion.
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The Fed and Feeling Grateful

The Economy: It's always something. Even in times of milk and honey, whines and groans can be heard from somewhere. Bill Gates has his complaint list too. Yet we've had a decade of unprecedented appreciation in all asset classes. Stocks, bonds, real estate, collectibles and other assets have relentlessly marched upwards. Now the data is beginning to come in mixed and the hot-money is moving to the sidelines.
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Tech stocks, Turkey and Take a look

The Economy:  US stocks are rallying today despite weak economic data.  Tuesday's trading was significant in that US stocks erased gains for the year.  Tech giants that make up the FANG Index dropped into bear territory.  The FANGs are Facebook, Amazon, Netflix and Google parent Alphabet.  Investors are concerned about economic growth with mixed earnings and trade war tensions. Food for Thought:  W
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Retail Sales, Retail Gauge and Ice Skating Rink

The Economy: Analysts look to October retail sales for guidance on the pace of economic activity as we move through the 4th quarter.  Market participants are looking to measure personal consumption over the holiday shopping season.  Retail reports today pointed to solid growth in sales last month.  Individual spending has increased over the past couple of months at a pace not seen in years. 
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Ramifcations of Higher Rates and Buybacks

The Economy: We're into the Holiday Season with year-end driving all considerations. Mid-term election results have been incorporated into projections. Global financial markets are selling off as uncertainty has provided the trigger for investors exiting overvalued positions. But the world hasn't come to an end … and it won't. However, the narrative has changed from unbridled optimism to a more pessimistic tone. Fed officials seem to be uniformly hawkish.
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Interest Rates higher, Alimony Deadline and Jewelry Saver

The Economy:  The Federal Reserve left interest rates unchanged but signaled a hike in December is likely.  The current range is 2.00%-2.25%.  The Fed is anticipating 3 rates hikes in 2019, moving rates to 3%.  Some analysts see 4 hikes in 2019 while others say inflation hovering at 2% reveals underlying economic weakness and the Fed could be 1 and done in December. Food for Thought:  If you are
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Buildup to 2020 Elections and Buy the Dip

The Economy: The Mid-Terms have eclipsed all measure of economic news. With that watershed event behind us, year-end is now in sight. Today the Fed finished its two-day meeting with no change in interest rates. Projections are for another 1/4 point hike in December and 4 more 1/4 point hikes in 2019. But looking out a year and trying to estimate what the Fed will do is a fool's game. Every recession has been preceded by interest rate hikes.
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Heightened worry, Enrollment for healthcare and How to Improve Sleep

The Economy:  The U.S. stock market is selling off today after 3 straight up days.  Apple shares tumble (-6.7%) after revealing stagnant IPhone sales and a lower than expected holiday forecast. New jobs continue to show labor market strength.  Both factory order and durable goods rose more than expected.  Earlier in the week, the home price index for August fell below 6% for the 1st time in 12 months. 
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Stocks Sell-off, Charity Scams and Wax Seals

The Economy:  Today, buy-the-dip market participants did not materialized.  The sell-off in today's U.S. stocks accelerated into the close.  This wiped out the gains for the year for both the Dow and S&P 500.  Yesterday, the US stock markets made a big comeback after plunging in early Tuesday trading. 
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Take Notice

The Economy: Through the hoopla of the mid-terms you can occasionally hear the rumble of thunder. China is supposed to be juggling a slowdown. The EU is supposed to be planning the overthrow of the government of Italy. Russia is supposed to possess new super-weapons. Emerging markets are supposed to be bankrupt because of the rising dollar. Tariffs are supposed to be slowing the global economy. Real estate is supposed to have tipped to a buyer's market.
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Evaluating the Economy and Evaluating your Wealth

The Economy: Evaluating the economy is a matter of thinking locally within the context of the larger national and global picture. The US economy continues to expand as it has done since 2009. A combination of free money from the Fed, rising asset values in real estate/stocks, tax cuts, deficit spending, profit repatriation and a doubling of consumer debt has fueled this growth. All these factors have ended or are close to their limits as the environment has evolved.
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FOMC Minutes, Transitioning Mindset and Wood & Spoon Recipes

The Economy:  Today's focus was on the FOMC release of the minutes from the September 25-26 Fed Policy meeting.  Some of the highlights of the release are:  1) the FOMC sees the risks to the U.S. economy as roughly balanced; 2) Inflation thoughts were mixed with some officials saying that inflation is still too low while others are saying they expect inflation to slightly exceed the 2% target; 3) the Fed is OK with its current balance sheet normalization process;
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Interest Rates Rise and Central Bank Wane ?

The Economy: Mixed news on the economy as we count down to the mid-terms. The Fed has made it clear that tightening is here to stay at least through "neutral." Smart money is saying this is another 1.75-2% on Fed Funds. Mortgages are through 5% and markets have finally begun to take notice. Are these storm clouds going to pass by or are they going to prove more problematic. Word is that real estate in NYC, Seattle and San Francisco has hit the wall.
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Stocks Freefall, The Fed ? and Fun Slippers

The Economy:  Today's US stock market plunged on fears of a trade war with China and higher interest rates.  The Dow closed down 3.15%, the S&P 500 closed down 3.29% and the Nasdaq closed down 4.08%.  This is the biggest drop since February.  Right now, you can earn 2.14% on a 1 month Treasury bill. As interest rates move higher, they compete with investors' money.  
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Yields Climbing, Credit Freezes and Arts Festival

The Economy:  The FOMC unanimously agreed to raise interest rates in-line with market expectations.  The range is now 2.00%-2.25%.  The US treasury market rallied while U.S. stock markets sold off.  The committee dropped "accommodative" from their policy statement.  The markets took this as dovish...the Fed being closer to nearing its rate hiking cycle. 
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Boom Economy, Higher Rates, and Game Plan

The Economy: By all metrics the US Economy continues to boom along. The most important take-away is that the Fed will continue to raise interest rates. The word on the street is that the Fed will continue to tighten "until something breaks." Don't let that something be you caught unaware. We continue to stress the dramatic change in US monetary policy. Interest rates are headed higher and the Fed is reducing their balance sheet. Liquidity will become an increasing issue for busines
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The Fed and Finding you way around Social Security

By Ray The Economy: The Fed met this week and as expected raised interest rates another 25bps (1/4%) to 2.25%. Going forward all new loans and existing loan resets will reflect these higher rates. The Fed remains in a race against time to be at or above 5% on the Fed Funds Rate before the next recession hits. Why 5%? Because the Fed has historically cut rates 5% to salvage the economy in a recession. Kentucky Windage.
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FOMC, Social Security and Adams Ave. Street Fair

By Debbie The Economy:  The FOMC unanimously agreed to raise interest rates in-line with market expectations.  The range is now 2.00%-2.25%.  The US treasury market rallied while U.S. stock markets sold off.  The committee dropped "accommodative" from their policy statement.  The markets took this as dovish...the Fed being closer to nearing its rate hiking cycle.
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Party on Garth - We Quarterback Money®

By Ray Higgins The Economy: The economy appears to be expanding quite nicely and business optimism continues to rise as it approaches new records. The Left Coast, with its gateway to Asian trade, technology and Pentagon spending continues to boom along. Construction cranes fill the skies. New homes are stuffed into every nook and cranny. Roadwork and infrastructure projects are everywhere. New cars abound. Recently launched multi-million dollar yachts overwhelm the docks. Planes are jammed.
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Tariff Tensions and Yield Curve Inversions

By Debbie Higgins The Economy: Investors in the U.S. stock markets are shrugging off any/all tariff concerns. The Nasdaq finished at a new record close on Thursday. This is after a dip in the middle of the week on tariff tensions. Q2 earnings season starts Friday, led by the big banks. On the bond market front, the U.S. treasury yield curve spread drops (2y/10y +26.1 spread; 5y/30y +19.8bps). One more rate hike and the yield curve inverts, historically an indication of an impending recession
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