While stocks are once again down this morning, a bigger story might be the drop in bond yields … as the 30-year … according to CNBC … is quite close to its all-time low reached in 2016 … as investors are moving toward the safety of government bonds.
This affects a lot of things.
First of all … let’s say you have money put away and were hoping to live off of the interest. Really? Would a rate just above 2% (the present yield of a 30-year bond) be enough? Possible not … for then the decision might have to be made to go into the equity market looking for dividend-paying stocks … which, based on the last few days, could lead to quite a few sleepless nights. It should be noted that … again, according to CNBC … the spread between the 2-year and 10-year Treasury yield … which is a longtime recession gauge … is at its lowest level since early June 2007 … right before some pretty ugly times for investors.
A second issue with low rates, of course, is the question of just how low they really can go. We used to think it was zero … but our attitude has changed. Take Germany as an example. The 10-year bund is now at -0.6% and the 30-year bund is now paying -0.137%. These are negative numbers in the previous sentence … which means you are actually paying to put your money away. What? Really crazy times.
Okay, I’ve been too long on this subject … but there is one fairly interesting … possibly positive … development. Those who own homes with mortgage payments might take a glance at the refinancing rates … as making a move here could save you a few hundred bucks a month from now until the time your house is paid off.
As is sometimes the case, it was difficult this morning to find articles that are interesting enough to really grab my attention … but … as a coffee drinker … the last one included below fits that bill.
It seems that an increasing number of studies have come out claiming that coffee is a “miracle drink” that slows aging, improves your brain, helps you live longer and also assists in losing weight.
I drink plenty of coffee.
The only problem is that if this trade war with China does not get resolved soon … as many see that as the cause behind much of the recent market woes … I might feel the need to reach for something much stronger.
Have a great day,
Joseph G. Witthohn, CFA
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
… as of 11:11 AM today …
Quick Look at the News
While some investors are keeping their (nervous) focus on stocks, bonds could be the bigger worry ... as yields are dropping at a quickening pace (CNBC)https://www.cnbc.com/2019/08/07/us-treasury-bonds-china-sets-the-yuan-below-expectations.html
... and the President has found one place to assign blame ... the Fed ... as he wants rates cut decisively and claims the Fed is too proud to admit mistakes (Reuters)https://www.reuters.com/article/us-usa-fed-trump-idUSKCN1UX1HH
One industry that has long been under fire is tobacco ... but they found that if they can claim to be pro-environment (what?) it certainly helps sales (Stanford.edu)https://news.stanford.edu/2019/08/05/pro-environment-cigarette-marketing-works/
... but, speaking of pro-environment ... to a degree ... Jay Leno ... who is known to have a love affair with cars ... is touting electric cars as the future (CNBC)https://www.cnbc.com/2019/08/06/jay-leno-on-tesla-electric-cars-are-the-future.html
... and with regard to the future ... another company is looking toward the "fake meat" industry ... as Subway is experimenting with Beyond Meatballs! (USAToday)https://www.usatoday.com/story/money/food/2019/08/07/beyond-meatball-marinara-subway-plans-test-new-meatless-vegan-sub/1939942001/
Pity the college student ... who, instead of focusing on an important part of their lives, has loads to worry about ... including tuition (in addition to getting good grades) (USAToday)https://www.usatoday.com/story/money/2019/08/06/college-students-stressed-high-tuition-good-grades/1923407001/
... but they might want to make sure to drink plenty of coffee ... as a few studies claim this to be a miracle drink to slow again and help with weight loss (Inc)https://www.inc.com/bill-murphy-jr/science-says-coffee-is-a-miracle-drink-that-helps-slow-aging-lose-weight-literally-cheat-death-here-are-7-most-exciting-studies-that-prove-it.html