Market Forecast

Tim Marquis:  Now let’s kick it back on over to John Bellows for our five day weather forecast, John.

 

John: Thank you, Tim. Well, not a lot of surprises this week, we are going to have some highs in the mid to upper seventies and things are going to cool down to about to about fifty degrees or so each night. So not quite swimming season just yet, but we are getting there. Let’s take a look at the nation. We’ve been tracking a small cold front that has been moving from the north-west here and what’s that, okay it sounds as though cold front has expanded in size and you can see that here. Okay, and it looks like it is continuing to grow look at that. Okay if we jump back to our five day forecast we are going to see a few changes.

David Scranton:  Well, I guess there is no doubt about it forecasting can indeed be a tricky business and that is true whether you are talking about the weather or the financial markets. But preparing the market forecast is part of the job of any good financial advisor.

And today I am going to share my own forecast for the New Year ahead. The question becomes, Is an overdue storm brewing for the stock market? It’s time to tune out the hype and forecast the facts. Facts that matter to you the Income Generation.  Let’s get started. Get ready to separate reality from myth

David Scranton: How does it affect the market? How does it affect the economy? Thanks to efficiencies and new technology, and a staff of veteran analyst and portfolio managers. Sound Income Strategy try to set new standards and bring institutional style investing to your portfolio. Hello everyone and welcome to the Income Generation. I’m David Scranton your host. Trying to predict changes in the economy and the financial markets before they happen is an ongoing challenge. In fact, different analyst and advisors have different techniques of doing this and frankly many just don’t even bother. They just pair it with whatever the industry buzz might be and pass that off as their own forecast. There are no parrots here today I promise you that much. The markets are still at record highs which means the stakes are too high not to take this year forecast seriously. Now, you may happen to know that I am predicting another double-digit year for the stock market. That’s right, you heard it double-digits. But you’re definitely going to want to stick around to learn exactly what I mean by that. And joining me to help break down the important details and offer his own insight is economist and columnist Peter Morici. We’ll also get you updated on all the latest important market news and we have a few surprises to boot. But first let’s talk about this double-digit year coming up. When I heard that the anticipated rate or target would be perhaps one and a half per cent by the end of two thousand and sixteen and by the end of two thousand and seventeen, two and a half percent, I kind of sat back and had a tough time believing that. For two reasons, number one if that were to happen while you are buzzezing the dollar would most likely strengthen. Historically speaking, which is going to make it very, very difficult for you to hit that two percent inflation marker. The other thing is to keep the spread between short-term and long-term rates at about two percent alright, not compress it, that means that the ten year treasury would have to be between four and five percent. Which I don’t see how that’s going to happen at a time when there is quantitative easing abroad.

 

Female voice 2: And we’ll come back to the implications of that…

 

David Scranton: That was me in December of two thousand and fifteen on CNBC’s closing bell. Looking a couple years younger and having just a bit more hair. But what’s interesting is that the concerns that I shared at that time, still concerns me today two years later. And they’re part of the reason why my forecast this year is for a double-digit year for the stock market in two thousand and eighteen. But it comes with a catch and that catch is that it could be double-digits on the upside or double-digits on the downside. In fact, I believe strongly it’s either or but probably nothing in between. But the question becomes, how do things like short-term interest rates figure into this? And why is that such an important detail for us to consider? After all everybody knows the stock market rose by more than twenty percent in two thousand and seventeen.  And more precisely the Dow gained over twenty-five percent while the S&P’s five hundred Index added about twenty present and the NASDAC nearly thirty percent. Now that looks impressive sure, but what’s been driving all that growth? Well, I believe that only a small part of it has been the economy, despite what Wall Street and a lot of politicians would have you believe. No doubt the economy has moved in the right direction with GDP growth up a bit from last year. Unemployment is down a bit, and wages are no longer completely stagnant, but none of that, none of those bits add up to an economy that’s booming at record levels. Only the stock market has achieved record levels. In fact, to some extent, you might say it’s climbed to record heights in spite of the economy, not because of it. And the reality is, it’s been doing that for years now and for all these years I have been concerned about it as you saw from that clip of Closing Bell two years ago. That show aired in fact on the very same day that the Federal Reserve approved its first short-term interest rate hike in about a decade. And as you might recall the FED lowered short-term rates to near zero shortly before kicking off its first round of quantitative easing back in two thousand and eight. Those artificial stimulus measures were supposed to kick-start the economy out of recession following the financial crisis. The trouble though is that despite lower interest rates Americans weren’t eager or even able to start spending and borrowing again just because of those low rates. After suffering through two major stock market crashes as well as the collapse actually of the housing market in less than a decade, they were more focused on paying down debt and trying to recoup their wiped out retirement accounts. And those were the lucky ones who still had jobs. The point is that the effects of quantitative easing all of the Feds artificial tinkering cannot be overstated, why? Because we’re still feeling it’s effects today. They’re the reason we have this ongoing and even widening disparity between stock market performance and economic fundamentals. Which I believe raised the potential risk factor for stock market investors today. The interest rate part of this is important because it shows how the FED has never really been able to achieve its true goal in spite of all the artificial stimulus, as you saw in Closing Bell. I said I was skeptical about the ability of FED chairman Janet Yellen to raise short-term rates to two point five percent by the end of two thousand and seventeen. And I was skeptical of this for two reasons, one it would strengthen the dollar and as a result, make it difficult for the FED to hit its target goal of two percent inflation. Let’s face it, if we couldn’t hit two percent inflation with interest rates at zero, how are we going to get there by raising interest rates? But also and possibly more importantly was that raising short-term rates that high would mean long term rates would have to be at least two percent higher by the end of two thousand and seventeen. In order to avoid this concern that we’ve talked about a lot on the show of creating a flattening yield curve. And I predicted it was very unlikely that, that would happen. Well, guess what, although the Federal Reserve has indeed approved four more rate hikes since that first one, the current Benchmark rate is still in the range of one and a quarter to one and a half percent as of the end of two thousand and seventeen. And that two and a half per cent goal has been pushed all the way back to the end of two thousand and nineteen. Why? For exactly the same reasons I pointed out two years ago. Inflation, for the most part, has stayed below that two percentage point maker and long-time interest has not risen ahead of short term rates enough to avoid risking a flat yield curve. For example, the ten year Treasure rate was at two and a quarter per cent when I shared my doubts about it reaching that four to five percent range by the end of two thousand and seventeen.

Today it’s at two point four-five percent, in other words, it’s only increased by two-tenths of a percent while the FED’s funds rate is actually up one and a quarter percent. Now I have talked about this a number of times on the show and the importance of this thing call the Yield curve. You see keeping long term and short term rates separated, keeping long-term rates higher than short-term rates typical by at least two percentage points or so is essential. Why? Because Banks depend on that Gap to make lending really financially viable. When the yield curve flattens and long-term rates and short term rates come too close together Banks lose their financial incentive to lend and businesses and consumers struggle to borrow. And that is definitely not a recipe for economic growth. In fact, it’s just the opposite. It’s a kind of thing that could stall an economy completely, put an end to this irrational exuberance we’re experiencing and finally force the stock market to make fundamental sense again. With a major, major pullback. How major? Well, we’ll talk about that a little more coming up in the show. But first, I want to talk about that airy feeling that we’ve all had before that we call Deja Vu, it’s that feeling that we’re re-experiencing something we have already done, seen or heard. Now that happened to me not too long ago when I tuned into CNBC and I watching an interview with one of the federal reserved regional presidents. Actually, the one who voted against the FEDs last rate hike.  And I got this airy feeling because he was explaining his opposition by sharing some of the very same concerns that I shared on CNBC, two years ago. He pointed out three major factors. Number one, unemployment yes, it’s going down the percentage of unemployment and it looks good on the surface. But the problem is that wage growth itself hasn’t really kept up so people are still overall underpaid and that doesn’t bold well for a sustained economic growth. In addition, he noted that at least a million people are still sitting on the sidelines trying to get back into the job market. These people are not included in the unemployment statistic. Next GDP growth, there’s a lot of cheering about it lately because we just had two consecutive quarters barely at three percent annualized GDP growth. Now granted that’s a lot better than last year, but if we can’t do better than that with interest rates where they are, raising them certainly won’t help. And last but certainly not least, he brought up my favorite points about the yield curve. He explained how raising short-term interest rates while long-term rates are still low and actually falling based upon the thirty year treasury rate. Risks flattening the yield curve, which could bring even the modestly improving economy to a screeching halt. He pointed out that the thirty year key bond is actually fallen, I should say the interest rate on the thirty year bond Treasury bond has actually fallen since over the last year. But even though this experience of Deja Vu was airy, it was also in a strange way reaffirming to me. Not only are those warning signs that I saw two years ago still here today, but even a member of the FED admits to being concerned about them. Knowing that, gave me a lot of confidence in formulating my forecast for two thousand and eighteen. We’ll be right back with more after the break and especially some great information from economic expert Peter Morici. Stay with us, we’ll be right back. This is fun, this is very… Three, two, one… But I’d like to take a few seconds and tell you why I decided to write the book entitled Return on Principle. Basically it all boils down to this, let’s face it you deserve to live a happy retirement, it’s as simple as that but for many the subject of money, finance and math is complicated. Here’s a fun fact, many Americans claim that they’d much rather clean a toilet than calculate a tip in a restaurant…thank you I guess. But it doesn’t have to be that complicated, using the seven core values I outlined in my book you too will be able to build a life based upon the right core principles. Cut… Return on Principle isn’t just a book about financial investing it’s about investing in your life, I know for a fact that you’re going to love it. Okay, now it’s just getting weird here… If you’re near or in retirement head over to the Income Generation dot com and download your special report written specifically for the needs of the Income Generation. Again those born before nineteen sixty-six. I’m David Scranton and you’ve been watching the Income Generation. Let’s face it, you simply cannot talk about the stock market today without talking about animal spirits. That’s the term coined by economist John Maynard Keynes to describe human behavior driven by instinct and emotion. And as I pointed out earlier I believe we have a stock market today based far more on those factors than based on economic fundamentals for example. I believe Animal Spirits are running rampant today on Wall Street. The Market has set something like seventy new record highs this year, while the economy has not really broken any new records. In fact, as I discussed this earlier based on some key details it’s not doing a whole lot better than it was two years ago.  But the animal spirits keep howling, louder than ever since the Trump election. And the result is what we call froth. Froth on the market an impressive head of form on top of a glass that was already full to overflowing, in other words, overvalue. Another term for it is Market blow off and a blow off can last a surprising long time especially in the era of post quantitative easing. And that’s why I based my market forecast on double-digit movement in either direction, if there is enough continued economic progress and again, don’t need records but just enough positive progress to keep that Froth building and the bloth going. I believe we could see double-digit growth again in two thousand and eighteen. In fact, I definitely believe that the momentum will continue in the beginning of the next year, possibly through med year. Whether it continues the entire year is a whole other question. The more important question for investors near retirement though is, is it worth the risk when the potential for a double-digit loss is equally possible this year, as the double-digit gain? If you’re still not sure, consider one more thing which is this. The market is pretty clearly over-valued during the blow-off period, but to a large extent it’s always over valued for every day investors. Think about it for a moment, you know big investors like Warren Buffett, for example, don’t invest the same way that you and I invest. They typically buy enough stock in a company to have a controlling interest, perhaps they buy a seat on the board, in any case, they have some control over whether that company succeeds or fails. Average investors on the other hand, have no such control, we’re buying minority shares and crossing our fingers and toes in hopes that the company does well. Basically, we’re gambling. That controlling interest is so valuable in fact, that investors like Warren Buffett will pay nearly twice as much to buy fifty-one percent of a company compared to buying forty-nine percent of a company. Why? Because fifty-one percent is the amount that gives them control. For two percent more they’re willing to pay almost double. So, why is it then that when one company buys out another public trading company the stock price they pay for the purchase is never doubled? It’s often only ten or twenty percent higher. Is it because the board of directors of the selling company is being generous by accepting a lower price to give up control or is it because we the average buyer, the average investors are been forced to overpay every single day when we buy minority shares of a particular company? You can make a decision for yourself but personally, I believe it’s the latter not the former. I also think it’s an important consideration for investors over the age of fifty, members of the Income Generation whose top priority I believe should be financial defense. Protecting the money that you’ll need to generate enough retirement income to achieve your financial goals. Overpaying for a share of stock that gives you no insurance against loss, and no control over the success or failure of the company in which you are investing, to me, that’s the opposite of good financial defense. Again it’s gambling. And it’s always risky where the stock market is concerned, it always has been risky but it may be even more so in two thousand and eighteen if this blow-off should finally get well, blown off. Now let’s bring back our friend and Economist Peter Morici. Peter Morici is an economist and professor at the Smith School of business at the University of Maryland. His views are published weekly by Fox News and Newsmax and frequently in the Washington Times, Baltimore Sun and other leading newspapers. He has been with us a few times on the Income Generation and we are always delighted to have him back. Peter welcome back to the show.

Peter Morici: Nice to be with you.

David Scranton: You published an article recently in the Washington Times entitled Innovate or Vegetate and you shared some thoughts in there about the debate of the tax plan and now that’s become the law of the land. What are your thoughts as to the actual effects that it can have in two thousand and eighteen?

Peter Morici:  Well, I think the effects will be positive, and they won’t be like anybody has predicted. You know if you listen to the Republicans they have invented the equivalent of a cure to cancer. And if you listen to the Democrats, you know they are basically teaching people how to smoke. In reality, the tax cut will boost growth a bit, it won’t boast it quickly but it will because the nature of the cut is so focused on investment it takes time for the wheels to turn. So I think we can look forward to another year of good growth and I think that will continue. By the way, most economists are skeptical of that. They think that two thousand and eighteen will give us another year of good growth and then the economy will tail off, that it’ll be a classy (unclear 19:18) and Jolt.  But that the notion that investment behavior can be permanently changed it seems to be lost on the profession. I don’t agree.

David Scranton: So you think that we will get a little bit of growth in two thousand and eighteen from the tax plan and then that will increase into two thousand and nineteen and maybe even two thousand and twenty? Do you think that is sustainable?

Peter Morici: Yes I do. But basically I think that investment will be lifted upward and stay upward and that will have self-reinforcing effects.

David Scranton:  Of course. I don’t want to spend too much time on this because I know the biggest benefit to the tax plan is really what they have been able to do for businesses. But to be able to stimulate the economy, purchase Capital Equipment, hire more people Etc. But on the individual side, which sector of individuals do you believe personally are going to be most benefited by this versus those that are going to benefit the least?

Peter Morici: The thing is that we have one of the most progressive tax structures in the world and so more of the benefits are going to be at the top than at the bottom. Simply because the top pays more income tax. But the top has been overtaxed and that has discouraged investment and entrepreneurship by individuals and this should help a bit. The business of the pass-through tax break that is so focused on smaller businesses, you know those with incomes with less than three to four hundred thousand dollars. If you are married and if you’re single much less than that. That I really think that that was more a pacifier for Senator Johnson than having any real positive effect.

David Scranton:  But you think it benefits the big business of course is clear, that’s obvious it’s just the small businesses you think is more of a plasibo.

Peter Morici: To corporate entities. The people that pay corporate taxes it will have positive effects. The people that pay individual taxes, the tax cuts as a whole are not that large and so we’re not going to get a mighty jolt out of it.

David Scranton: But now I know of course you are with family over the holidays, and I know you have at least one liberal in the family, so when the arguments come up over holiday dinner about things such as the deficit. We might have a trillion dollar deficit in the next year due to this. We can’t keep spending money that we don’t have, how do you respond to that?

Peter Morici: Well I knew you were going to ask me about it and I want to be clear. But my feeling is that the tax (unclear 21:42) about five hundred billion dollars to the deficit as things are written now over ten years. That’s fifty billion a year, that’s hardly Mega dollars. The bigger problem with the deficit is they keep increasing what they spend on both sides of the aisle. You know for example, the Republicans are in there and they want to spend more on the military and they will. Then when the Democrats are in they dramatically increase entitlements, entitlements that shouldn’t be given out for example, to people that refuse to work but whenever you talk about curving say Medicaid you know Chuck Schumer rolls out stories of crippled women in wheelchairs. Who take special buses to work, no one’s talking and he did that literally, he tells us terrible heartbreaking stories of this paraplegic who you know… Mitch Mcco wanted to basically to push her out in the cold, cut off her rent and everything else, in reality, the Republicans weren’t talking about that. What they were talking about is the adult who is thirty-two years of age, a guy, refuses to work, has no family responsibilities, lives in Bangor Maine and is being protected from the World by Senator Collins. That’s where the problem is. But you know when we can’t have an intelligent discussion because the Democrats are convinced that if they just stonewall Trump and stonewall Ryan they be rid of them in four years. And let’s face it Chuck Schumer and company are not interested in the welfare of the nation, they are interested in holding on to power and for that, they need to run the cash machine not do things that are constructive to growth.

David Scranton: But Peter we need to leave it there and take a commercial break, right now. Will you stay with us?

Peter Morici: You bet.

David Scranton: You stay with us also and we’ll be right back with more from Economist Peter Morici.

Welcome back, we’re here with economist and financial expert Peter Morici. Peter, you know we kind of dance around this right before the break about the deficit and what the Democrats believe versus what the Republicans believe. But, one big question though always bothers me. Can we go into greater and greater debt perpetually?

Peter Morici: I don’t know that we ever have to pay it off but we need do need to have it under control, my feeling is that it’s growing too rapidly and the spending needs to be curved and we certainly can’t afford any more tax cuts after the one we have. Until we get the economy growing at well more than three percent. The right way to deal with that is to look at how we spend and to cut what we spend.

David Scranton: Now the five hundred billion that you talked about after ten years, does not include extra infrastructure spending by President Trump. Is that correct?

Peter Morici: That’s right and they’re going to have to find a way to pay for it because there were two schemes that they had in mind. One was encouraging people to repatriate profits pro-act overseas well, they’ve done that in the tax bill but they’ve also used that to pay for the tax bill. So you know that was partially how they came up with the revenue to cut corporate taxes in two thousand and one, so that’s not available. And the second thing is this notion of sort of privatizing infrastructure, I don’t know many people that want to have parking meters on residential streets or have to pay to drive out their front door. And so roads are going to have to be paid for and the only way they are going to pay for that is two things. One is a higher gas tax and the other is doing something about Davis Bacon. You can’t do anything about Davis Bacon without sixty votes in the Senate so that’s not going to get done so we’re going to have to have some road taxes. Other things they talk about privatizing are you know like sewers, and water companies and what have you. That has generally worked out badly where it’s been done. Somebody from private Equity gets a hold of it, piles it up with debt, pays himself really well and maybe will run for president next year. But he leaves behind basically a lousy ambulance service or a broken water system. I mean private equity cannot be trusted with public utilities.

David Scranton: Let me ask you this then, you know GDP, we had terrible GDP right through the first quarter of this year, last two quarters it’s stepped up you know can it sustain? It’s been sticking its nose right over that three percent mark for the last couple of quarters. Can it sustain, can we reasonably hit a four percent that president Trump’s hoping for? What are your thoughts?

Peter Morici: You’re going to have a four percent quarter at any time but my feeling is the best we can do right now is somewhere between two point five and three percent. What’s going on right now, we could have three percent from the fourth quarter as well, it’s hard to say but it’s in that range. But I don’t think you can keep getting three percent quarter after quarter, for one thing consumers are ahead of themselves and they are going to take a breather. That’s one of the reasons we have weak first quarter every year, these days. Now some economists have the weak quarter in the second quarter instead of the first one. Either way, there’s going to be a bit of a swoon at some point. My feeling is growth will rebound to three percent again and that the average for the year, next year will be about to two-sixths.

David Scranton: Which to me seems more practical, reasonable than what many others are talking about. You know, one of my concerns that I…

Peter Morici: (Unclear 27:00) spoken priority in the White House. At least where Hassett sits you know they are pumping it in you know. I mean if you listen to him these days, he never…whoever gave him a degree ought to revoke it.

David Scranton: One of the things that concern me is the fact we haven’t had enough wage growth. It seems to me as though if people don’t have extra money in their hands and they’re getting older, they’re realizing they need to save and invest and they’re not having enough income to save and invest and spend. Then hopefully they’re going to be prudent enough not to spend. Are you concerned about that factor at all this lack of wage growth and how do we overcome that?

Peter Morici: Well, I’m concerned about the lack of wage growth but you know the markets are saying something. A lot of people are doing quite well and a lot of people are doing poorly. And the people that are doing poorly, this is a very unpopular thing to say in a lot of ways they deserved it. In the sense that they are not terribly productive. You know forty percent of college graduates these days cannot engage in critical reasoning, critical thinking. That’s the whole mark of a college educated person. They basically got big student loans from President Obama, went to secondary colleges, took courses in the humanities, where they learn you know sort of feminist thinking about novels and what have you. And don’t have much useful to say or do, they work in Starbucks and that’s about all they’re good for.  I mean you know, there are the sorts of people that think if you double the minimum wage that magically McDonald’s will be able to give you the same hamburger at the same price. My feeling is a lot of people are stuck in these kinds jobs because that’s how productive they are and there is not much we can do to boost their wages.

David Scranton: You know I see that and there are certain positions where you have the ability to really reach your own destiny. A lot of positions though are really…it’s a situation where it’s supply and demand in the job market, it seems like you know that should push wages up just general supply and demand but it not happening. Why is that?

Peter Morici: Well take the clerk at McDonald’s, the lady or the man that hands you a hamburger if you substantially increase their wage with labor cost in the restaurant industry being somewhere between twenty-five to thirty-five percent of cost. You are talking about increasing the cost of a Happy Meal or what have you or a basic plate in a low-cost restaurant by you know fifteen percent to twenty percent. What we have seen in places like San Francisco where that has been mandated is that those restaurants end up closing. They have thin margins and basically, they can’t push along higher prices.

David Scranton: You know I want to spend a few minutes talking about something that really has me up in arms a bit. And it’s the fact that the Federal Reserve has raised short-term interest rates significantly… not significantly but you know a handful of times over the last two years but yet the thirty year treasury year-to-date has actually come down. And my question is what’s going to happen first? You know is the Federal Reserve going to have to stop raising short-term rate at risk of flattening out the yield curve, giving banks a huge disincentive to lend or is the bond mark finally going to corporate and release the pressure and allow long-term rates to come up?

Peter Morici: No, I think the yield curve is the symptom of what’s going not a cause, okay. Something that we observed that’s coincident with or a curves before resection. First of all, the yield curve has given out false positives in the past, the first thing. The second thing is the yield curve among economist to predict resections is the ten-year verse thirty-day treasury rates. That’s (unclear 30:43) one, it’s not inverting okay. Finally…

David Scranton: But you have admit its flattening, it’s getting narrower.

Peter Morici: Oh yes, of course, I admit. That’s simply data. You’re not talking to the White House and you’re not talking to you know the Clinton Administration in exile. I do believe in data. But we have to ask ourselves why is the long end of the yield curve coming on hinge from short rates?  And the answer is whenever US long rates go up a lot of foreign money comes in and pushes it back down. That’s the first thing. The second thing is capital has become inherently cheaper in Western Societies because of artificial intelligence, the improminence of intellectual property and investments and so forth. And we don’t have time for that right now but what that means is the world has too much capital. So much as wages has become unhinged from the unemployment rate and the Phillips Curve you know doesn’t exist anymore, the way we thought it existed. And the FED needs a new model likewise investors need a new model when they look at the yield curve.  My feeling is we shouldn’t see a yield curve that’s severely inverted but the yield curve getting flattered doesn’t particularly trouble me. I look at other indicators with regard to the stock market and I’m very encouraged.

David Scranton: But Peter, I would ask you one question though in the thirty seconds or so we have left. How are banks going to be able to lend with a flat yield curve should that happen?

Peter Morici: Well, the reality you have to ask is the banks don’t get their money from the Federal Reserve. They get their money from depositors, they’re simply going to pay rates that are lower than the federal funds rate. And they’ll make their money on that kind of spread but if banks…if people don’t get money from banks they’ll do what they did right after the financial crisis. They’ll get it in the secondary lending market. And that’ll be available because there are people out there with great pools of cash lying around. I mean have you known any unworthy cooperation’s who have C-rated bonds that haven’t been able to find buyers?

David Scranton: Well, yes of course. But you feel…

Peter Morici:  I mean basically people are selling all kinds of trash paper out there. What bothers me more is the fact that investors have been willing to buy that stuff rather than that they’ve been willing to lend.

David Scranton: Do you feel that our banking system could very well change and adjust that we could be looking at a new norm now with flatter interest rates. And that’s okay because the capitalist society when there is a need that arises, capitalist come into the fray and figure out how to fill that need.

Peter Morici: Banks will have to change to survive. Just as other companies won’t be making cars that use gasoline anymore in twenty years.

David Scranton: I appreciate you being on the show today Peter, it’s been wonderful as usual. And thank you so much for being here.

Peter Morici: Take care.

David Scranton: After a brief message we’ll be right back with Rick Blackwell, he’ll break down some of this week’s most important financial headlines. So stay tuned you are watching the Income Generation.

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Male voice 6: Also, for the small business people leasing is considered the best option. But always keep in mind the lease restrictions, especially the mileage. In a lease the more mileage you want the more you will have to pay each month. And you need to carry higher insurance limits. Also keep an eye on your credit score. If you don’t have good credit, expect to pay a lot more interest.

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Jeff Rose: A consumer access study recently reveal that twenty-seven percent of Americans have never checked their credit report. But it is estimated that seventy-nine percent of all consumers have some sort of error. Here are three things that every consumer needs to watch out for. The first thing that you need to check is your personal information because guess what? It could be wrong. This could be your name, your home address, where you’ve worked in the past or even your social security number. This is especially true if you’ve worked with multiple employers or if you’ve moved around a lot. The second thing that you need to check is if you have old credit cards especially ones that you aren’t using. Having those outstanding limits could be hurting your credit. If you have old cards, my suggestion would be to close them the third sticky thing that might be hurting your credit score could be outstanding or delinquent bills.  Once I had a gym membership when I lived out of State. Now I cancelled that gym membership years ago but it wasn’t until I checked my credit report that I found out that they had marked me as being delinquent and guess what? It was killing my credit. All these could be avoided by checking your credit on a consistent basis. You can get your free credit report once per year at annual credit report dot com. You can also get your credit score there but keep in mind you are going to have to pay a small fee. Stop letting these three sticky things hurt your credit today. This is Jeff Rose for max2money on News Max TV.

Rick Blackwell: Hello, I’m Rick Blackwell. Let’s take a look at some of the big stories that move the markets this week. The rich got a little richer this year to the tune of about one trillion dollars. That’s four times last year’s gain according to the Bloomberg Billionaire’s Index. Amazon founder Jeff Bezos added the most money in two thousand and seventeen, it gained over more than thirty-four billion dollars. That knocked Bill Gates out of the top spot as the world’s richest person. Bezos’s net-worth tops a hundred billion dollars as opposed to Gates who’s worth more than ninety-one billion. He had held the top spot since May of two thousand and thirteen but he has donated a lot of his money to charity. Financial advisor Patrick Watson warns the crypto currency bit coin could crash financial markets. He says bit coin is currently in a price bubble but asset bubbles usually only hurt buyers who overpay. Watson says that all changes when you add leverage meaning buying with borrowed money. He warns that an increasing number of lenders and buyers are using leverage which could lead to the market crash. The Electric car maker Tesla is likely to deliver about five thousand model threes in the fourth quarter. Far below the estimated fifteen thousand. That’s according to an analyst who bases their projections after conversations with salespeople across eighteen stores in the United States. Tesla shares fell a half per cent to more than three hundred and fifteen dollars in pre-market trading on Wednesday. And retiring from work early just might kill you according to a new study from researchers at Cornell University and at the University of Melbourne. There is a direct correlation between mortality rates and people who claim social security early. About a third of all Americans retire and claim benefits when they become eligible at sixty-two years old but the researchers say it may have a negative impact on their health and men are at the most risk of dying early. For more on the stories visit News max.com /finance. The Income Generation with David Scranton continues now.

David Scranton: Going once, going twice back by popular demand is our year in review.

Donald Trump: One by one the factory shutter and left our shores. With not even a thought about the millions and millions of American workers that were left behind. But that is the past, and now we are looking only to the future.

David Scranton: If you are a regular viewer of the Income Generation then just by looking at how I’m dress today you will know for sure who our special guest is. In fact, can I get the camera crew to just do a quick close up on my tie here? I’d like to show the tie, please. There you go perfectly.

Steve Forbes: The real scandal of the current tax code, put aside GDP and after-tax income and all that stuff. The real scandal is moral, the IRS estimates we spend six billion hours a year filling out tax forms. Imagine if all those resources had gone to new products, new services, new cures for diseases how much better off all of us would be.

David Scranton: You know exactly how much can he cut taxes and still maintain some semblance of a balanced budget?

Peter Morici: Well, you can cut personal taxes modestly and still have some semblance of a balanced budget because you will then get some additional growth from people consuming more. But we shouldn’t overestimate that. No amount of dynamic scoring is going to make a tax cut equal and unchanged budget deficit.

Donald Trump: A few days ago I called the fake news the enemy of the people and they are. But I am only against the fake news media or press

Dan Gainor: There is no illusion now for anybody who’s got half a brain that the media are bias on pretty much every major issue of the day. And since he started his campaign and now that he is President they have been working aggressively and undoing absolutely everything he wants to do.

David Scranton: What’s up everyone? Well, of course, the answer is the stock market.

Jon Najarian: I think the regulation role back and the likelihood that we’re going to see taxes decreased as well for individuals and corporate staff. I think those are pretty powerful drivers and the fact that we’ve got housing starts at the highest level since 2007 today. I think that also is a significant increase in optimism for the market.

David Scranton: The media doesn’t talk about bonds that much. If I just don’t talk about bonds, Wall Street doesn’t talk about bonds, why do you personally believe that is?

Joseph Hogue: Well bonds aren’t sexy. They are there, the safety investment, they are the income investment.  They don’t draw our viewers, they don’t draw a lot of page views for the web. And those page views end up being advertising account. So most analyst, most programmes focus on what draws the most viewers.

David Scranton: So right now let’s welcome back a man who has been brutally honest about his own experience with financial loss. NBA superstar Kenny Anderson. One of your best attributes as a player to get that good, that early had to be coach-ability. So why do you think it was that you weren’t as coach-able when it came to things outside the sports such as managing your money?

Kenny Anderson: I think when you get a lot of money then you become you know powerful. So some of your friends and some of the people that deal with you don’t know how to treat you.

David Scranton: I’d like to take this opportunity to thank all my guest for joining us for another episode of The Income Generation. I’d also like to thank you our new and returning viewers, you know in the days before quantitative easing before short sited artificial stimulus became the norm. Things were indeed different, in fact, when I first forecasted the last two major market corrections, the first in the late nineteen ninety-nine. And the second in late two thousand and six, they occurred almost on schedule according to the lessons of market history. But today things are different because of the unprecedented levels of economic manipulation since two thousand and eight. It’s harder than ever before to forecast the timing around changes in direction in the stock market. But ultimately the markets have to make fundamental sense again and the outcomes have to be the same. And that likely means at some point a double-digit pull back in the market, question becomes will it happen in two thousand and eighteen? Or will we see the froth continue to rise by double digits throughout next year? I think it’ll be one or the other but again, absolutely nothing in between. Again forecasting is indeed tricky but think of it this way, if I were a weather man telling you to tomorrow we’ll either have sunshine or a blizzard. Would you just hope and pray for the sun and do nothing or would you actually prepare for the storm? If you’re close to retirement and really want to know how to protect and maximize your money and protect yourself from a storm, it’s essential that you stay informed and up to date and right here is where you can do it. On the Income Generation, I’m David Scranton and thanks again we’ll see you next week. If you’re not using someone who is well trained in fixed income and you’re born before nineteen sixty-six. It may just be time for you to break up with that advisor and move on. I would suggest someone who will care for you through these important years of your life. If you need help finding someone call or write us, I’d also like to remind you of this special report entitled the Income Generation. This is available free to you our loyal viewers online, if you haven’t downloaded your report, pick it up after the show. I’m David Scranton and you’ve been watching the Income Generation. We’ll see you all next Sunday.