Stocks Seasonal Performance

[flow5]

Stock's Seasonal Performance:

S&P 500 monthly average performance*
(Jan. 1970 - Feb. 2010)

January.......1.0%
February...-0.08
March.........0.99
April............1.3
May.............0.76
June............0.29
July.............0.28
August.......0.35
September.-0.89
October.......0.44
November....1.3
December....1.69

The "seasonals" (the holidays), are the result of the FED furnishing an "elastic currency". The FED through their "open market power" has the capability of either adding or subtracting to the volume of money in circulation. Typically the FED begins to add bank liquidity in Oct. and begins to drain bank liquidity in Feb. And when money flows (MVt) peak late, money velocity spikes later & faster.

Furnishing an “elastic currency” functions like the "real-bills" doctrine. Seasonal loans are not considered inflationary because the banks are financing real things, the value added to a product being the result of extending temporary credit.

Note: the demand for loan-funds by businesses & consumers, & the increase in the volume of currency held by the non-bank public during the holiday season (Thanksgiving, Xmas, & New Years) is always higher than other times of the year. E.g., retailers "can make between 25 and 40 percent of their annual sales in the last two months of the year."

That said, any downswing in the 1st qtr should be short-lived.

Without countervailing intervention, stocks should fall during the May-June period (with the biggest percentage of the drop taking place in June).

[usaone]

Great to see you here Flow5.

[Aman A.K.A. Ahamburger]

You can say that again! K4U flow5, then some for usawon!

[flow5]

A revision to money flows presages a somewhat stronger economy, & a stronger stock market --but with higher rates of inflation. --

[usaone]

Feb 16, 2012 18:39:08 GMT -5 flow5 said:

A revision to money flows presages a somewhat stronger economy, & a stronger stock market --but with higher rates of inflation. --

I agree.

$5 gas
15k Dow

[usaone]

Ben should be starting to tighten. Fed Fund Rate should be about 2%.

[Aman A.K.A. Ahamburger]

They key with the FED announcements is always, we will change our forecast, if there is a change in the economy. It's slowly getting better...

[tyfighter3]

At $5 gas, you wont see DOW 15000 for quite sometime. Remember what happened at $4.

[Aman A.K.A. Ahamburger]

I agree, I don't think gas will hit $5... There is a HUGE glut of oil production that can come on line. Iran moved to strike already, they know the EU is waiting until July because they can secure enough supply that it won't matter if they cut production.

[bimetalaupt]

Feb 16, 2012 19:15:39 GMT -5 usaone said:

Ben should be starting to tighten. Fed Fund Rate should be about 2%.

USA WON,
We now have a problem with the lack of 30 year T-Bond do the fact there is no income for short term notes. This is killing the future income of defined benefit retirement plans..Firms will have to anti-up more then $500 billion extra money over the next few years to cover the deficient in income!! on the S&P alone!!!

I do not hold short term in my 403B but it shows zero income.. But then they have an 0.35% expense so they do not even pay the 0.11% quoted overnight rate for Friday.

Just a thought,
Bruce
An Example of the deficient amount of money in the trust is AA.. They trust fund for retired is only 75% funded.. They will have a 25% shortfall to make up over the next 3 years.. That will kill the P&L statement.. I know they will call it a none-recurring expense rather then an underpayment.

[flow5]

Treasury's in SOMA (FED's asset), total $1,657,911,753.00T (T-Bills, Notes, Bonds, & TIPs)

The Treasury shortage is in SOMA.

IOeRs (FED's liability), total $1,535,735T

[bimetalaupt]

Feb 20, 2012 15:57:18 GMT -5 flow5 said:

Treasury's in SOMA (FED's asset), total $1,657,911,753.00T (T-Bills, Notes, Bonds, & TIPs)

The Treasury shortage is in SOMA.

IOeRs (FED's liability), total $1,535,735T

Flow,
The largest holder of T-Bonds in the world is the Social Safety Network of Trusts. Some 4.3 Trillion Dollars.

Any idea how much interest they earn?? Maturity???

Thank-you in advance,
Bruce

[flow5]

Taking securities off the market has increased the supply of loan funds. Interest rates fall when there is an increase in the supply of, and a decrease in the demand for, loan funds. If inflation expectations diminish, supply (in the schedule sense) will increase. Lenders will be willing to lend the same amount at lower rates, etc.

[Driftr]

Feb 20, 2012 20:56:24 GMT -5 bimetalaupt said:

Feb 20, 2012 15:57:18 GMT -5 flow5 said:

Treasury's in SOMA (FED's asset), total $1,657,911,753.00T (T-Bills, Notes, Bonds, & TIPs)

The Treasury shortage is in SOMA.

IOeRs (FED's liability), total $1,535,735T

Flow,
The largest holder of T-Bonds in the world is the SS Trust. Some 4.7 Trillion Dollars.

Any idea how much interest they earn?? Maturity???

Thank-you in advance,
Bruce

It looks like those holdings are down to 2.7 trillion as of January 2012. Average rate is 4.187%. Tough to figure the maturities because of the way they're presented on the report linked below.

www.ssa.gov/cgi-bin/investheld.cgi

That 2.7 trillion figure jives with the January Treasury Direct report. Just add the two SSA values from page two.

www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_jan12.pdf

I haven't been able to find a specific listing of what TD direct says is held by SSA to be able to come up with a weighted average maturity. I bet it's there, but I just can't find it.

[Driftr]

Looks like the 4.7T is total inter-governmental debt. All the details of it are on the second page of that pdf from TD.

[bimetalaupt]

Feb 24, 2012 10:31:45 GMT -5 Driftr said:

Looks like the 4.7T is total inter-governmental debt. All the details of it are on the second page of that pdf from TD.

Yes, there is five or six funds that are money collected for retirement from future benefits.. Post office, civil servants,SSA, OPM retirement health care and DOD Retirement Health care trust funds.and SSA disability Trust Fund. I did not see RRR.

All of these would be classed as the first leg of retirement funds under the German system. Most of the funds are for the "Basic Retirement Funds" Not all like Nuclear Waste or Hospital insurance. When I first ran into this .. 30 Year T-Bonds were about 18-20% for the public and only about 3% for the Trust Funds.

PS: The point also Do were have a Social Safety Net or don't we.. Why should the events of today be directed at lowing the quality of the net???IE First Leg of your three Leg retirement funding?

[Driftr]

Feb 24, 2012 13:26:20 GMT -5 bimetalaupt said:

PS: The point also Do were have a Social Safety Net or don't we.. Why should the events of today be directed at lowing the quality of the net???IE First Leg of your three Leg retirement funding?

I think we still have a safety net, but the holes in it are getting larger.

What events today do you think are lowering the quality of the net? More importantly, what do you think should be done to improve the quality?

I do not plan on receiving social security benefits when I hit 67 (in about 20-25 years). If it's still around, that'll be a nice bonus in my plan. Maybe get court side seats when we travel to see the Australian, French and Wimbledon after the kids are moved out.

Figures below taken from the SS website and interest for the year calculated assuming rate and value of fund stayed flat for the year. Figures in billions. Year/treasury balance/avg rate/int earned.

Jan'07 2,067 5.206% 108
Jan'08 2,259 5.111% 115
Jan'09 2,436 4.873% 119
Jan'10 2,555 4.679% 120
Jan'11 2,619 4.448% 116
Jan'12 2,690 4.187% 113

Nice to see the balance increasing (from a safety net point of view). Disappointing to see the interest earned decreasing. And just eyeballing it, the rate of increase in the total balance sure seems to be headed down.

I was under the impression that we were supposed to start seeing the gross balance start to decrease soon. I'm surprised that hasn't happened yet given the PR tax breaks in place.

[bimetalaupt]

Feb 24, 2012 13:56:09 GMT -5 Driftr said:

Feb 24, 2012 13:26:20 GMT -5 bimetalaupt said:

PS: The point also Do were have a Social Safety Net or don't we.. Why should the events of today be directed at lowing the quality of the net???IE First Leg of your three Leg retirement funding?

I think we still have a safety net, but the holes in it are getting larger.

What events today do you think are lowering the quality of the net? More importantly, what do you think should be done to improve the quality?

I do not plan on receiving social security benefits when I hit 67 (in about 20-25 years). If it's still around, that'll be a nice bonus in my plan. Maybe get court side seats when we travel to see the Australian, French and Wimbledon after the kids are moved out.

Figures below taken from the SS website and interest for the year calculated assuming rate and value of fund stayed flat for the year. Figures in billions. Year/treasury balance/avg rate/int earned.

Jan'07 2,067 5.206% 108
Jan'08 2,259 5.111% 115
Jan'09 2,436 4.873% 119
Jan'10 2,555 4.679% 120
Jan'11 2,619 4.448% 116
Jan'12 2,690 4.187% 113

Nice to see the balance increasing (from a safety net point of view). Disappointing to see the interest earned decreasing. And just eyeballing it, the rate of increase in the total balance sure seems to be headed down.

I was under the impression that we were supposed to start seeing the gross balance start to decrease soon. I'm surprised that hasn't happened yet given the PR tax breaks in place.

Driftr
The decline in birth rate vs 1935 and the decline in SS current payments both will hurt the Balance of income vs out go. The interest will make up the net effect until 2025 ( per SS administrator ).. The statement Oboma made about not paying retirement benefits to SS, DOE and Civil servants( like Post office) was uncalled for ( per SS administration)...
Also the Great Recession hit the SS income hard and for the first time we had more out go then in income in the SS system. With the recovery and return of full income this would re reversed.. very interesting to see the SS system was established in 1935 at the bottom of the depression. The first real payment started in 10 years( 1945) at the end of the war.

On the plus side our average age in the USA is 36.8 vs 44.3 for Germany or 44.6 years old for Japan ( 2009 ).. The total number of American over 65 (2009) was 12.8% vs 20.3% for Germany and 22.2% for Japan. The thinking is the new target date for most/many Americans is now moving to 70.5 years old.

I do not know about you but I started a new renewed me at 62 doing other thing with my investments.. I am working on a new business plan now .

The lower return on the investment has also caught the S&P 500 firms defined benefit plans. The est is they are some $500 billion total short of funding and like Ford have started making up the shortage with huge bond purchases. They plan to go to a BARBELL system. 80% bonds and 20% high risk investment like stocks and future contracts.

Just a few thoughts,
BiMetalAuPt

[Driftr]

Also the Great Recession hit the SS income hard and for the first time we had more out go then in income in the SS system.

The year over year balances above do not support that statement. Granted, I had heard the same thing, but the numbers above don't show that as having happened.

[bimetalaupt]

Feb 24, 2012 16:44:29 GMT -5 Driftr said:

Also the Great Recession hit the SS income hard and for the first time we had more out go then in income in the SS system.

The year over year balances above do not support that statement. Granted, I had heard the same thing, but the numbers above don't show that as having happened.

That Came off the SS site but I an not post a chart on MSNR. This number does not include interest.. I should have made that clear.. It is like the PayGo system the income in question is about a 14 day supply of money for France. This does NOT include interest from the TRU$T fund. WITH interest from the Trust: the trust should keep growing until 2025 per the SS administrator.

THE TRUST FUND MONEY IS NOT THE SAME AS CURRENT ACCOUNTS.. INTERE$T....THE ADMINISTRATOR BUYS OR SELL BONDS TO KEEP THINGS IN BALANCE.

THANK-YOU,
BiMetalAuPt
PS: Trying to read this chart.. It look like two quarters were in the red.. One in 2009 and one in 2010..This chart only goes to first quarter of 2011 which was positive. The last of the two quarters was out go about $175 Billion and income of about $165 Billion. With three quarters in 2008 to 2010 of about $250 Billion income and the range of out go was from $150 to $175 billion for that quarter...

SS reported IncomeOutgo.gif

[Driftr]

Gotcha. Well then at least we have until 2025 before we need to start selling that extra debt held by SS onto the open market.

[bimetalaupt]

Feb 24, 2012 17:14:40 GMT -5 Driftr said:

Gotcha. Well then at least we have until 2025 before we need to start selling that extra debt held by SS onto the open market.

driftr,
The trend is to start retirement later by chose or law.. Look at Strikes by the French over this but in the long run later retirement laws were passed. That was last year when I started reading about this and effect it had on the credit ratings of the European Countries.. This is Greek main problem they can not get the population to Understand. With a 20% unemployment rate their social network/security system is not solvent.

The trend has been to go to about retirement of 70 by 2025.. Time will tell!! This will have a huge effect on stock prices are older working people buy more stocks in the 60-70 year cycle ..IE save more money as SS is looked on as less and less as a replacement income to maintain standard of living .. as in the 1960 for Germany!!

Just a thought,
Bruce

[flow5]

The predominant impact of the European Union's (flight-to-safety) crisis is scheduled to fade away at April's month-end. U.S. over-regulation, the additional requisite tax increases as a consequence of our tax revenue receipt short-fall, expiration of the Bush-era tax cuts, Obama-care, the end of the payroll tax cuts, etc., are setting up to simultaneously decrease the supply of loan funds, & increase the demand for loan funds, and thus send interest rates higher. & that doesn't count my expectation that the rate of inflation will increase this year (even if the price of oil doesn't). We are not "safe" from inflation.

Money flows (MVt) fall from +24 -> +17 in May. Money flows then crash -- fall from +17 to +6 in June. Barring countervailing intervention, gDp & stocks will fall in that time frame. At that juncture we should sell short T-bond interest rate futures.