July 2014

Website

We’ve spent the last 6 months revising the website, making it more user friendly and adding content that is useful for our clients and prospective clients. Over the weekend, it was turned on and is now live. There is a link at the bottom of the next column that will take you there. Please take a minute and explore some of the new information and links.

We will be adding lots of information on a regular basis, so bookmark the site and check back on a regular basis.

If there are things you’d like to see on the site, please email me. We’ll keep track of the more frequent requests and try to accommodate them.

New Islamic State

As I discussed last month, the crisis in Iraq and Syria has resulted in a new Islamic State, rather swiftly, I might add. This problem is certainly getting some, but not enough, attention. The media is so consumed with the influx of illegal immigrants coming into the U.S. through Texas, California and Arizona, that there is minimal coverage on the middle east.

Last week the self proclaimed leader, Abu Bakr al-Baghdadi addressed Muslims and encouraged “jihad” or holy war on the west and its idealism. Additionally, he laid out a 5 year plan to control the Arabian Peninsula, all of the Middle East, North Africa, large areas of Asia, Spain, Romania and Austria. This new Islamic State is the richest terrorist group in the world according to the BBC. Certainly, much of the public discussion on the taking of land and country in Europe and Asia is propaganda and what is deemed as “saber rattling”. We do however need to pay attention to what is happening in the middle east. al-Baghdadi was once a detainee and held in an Iraqi prison. He was released and during the release process, he stated that he “would see you in New York”, a material threat that was made to the Americans that released him. He is also considered a battlefield commander and has demonstrated considerable skill in the taking of several Syrian cities, beginning in 2013 and most recently the north eastern portion of Iraq. It is my opinion that we are underestimating this guy and his ability to not only lead and take over geographical areas, but recruit radical Islamist’s into his ranks.

Here in the U.S., security measures have already begun to expand and if you are traveling abroad, coming back to the U.S. will result in more security and hassle from Homeland Security, including more emphasis on electronic devices, as you pass through the security check points.

If you are traveling abroad, you need to make sure your electronic devices can actually be powered up, during the security check. If they will not power up, you will be required to leave the device behind….I can’t imagine having to leave my laptop or phone. To say the events in the Middle East is not affecting us, is ludicrous.

Economy & Employment

Last week our first quarter economy results were revised. Originally, our first quarter showed a contraction or negative 1%. The real figures were actually negative 2.9%. Don’t panic…this is a result of a number of things, including; longer and colder than normal winter, the elimination of extended long term unemployment benefits, (which cuts consumer spending) and some general cuts to the food stamp program, (which also impacts consumer spending). We’ve been adding 200,000 jobs per month for the last three months, though that number is VERY skewed. Most of the jobs have been in the services industry and a great deal of those are part time.

The markets don’t seem to care; on Thursday, July 3rd, the DOW hit 17,000. Everyone seems to have forgotten about the 2008-09 Great Recession and if you look at the banking industry, it is back to pre-recession “business as usual”. For me, that is somewhat of a concern as the markets streak to new records in questionable economic conditions. As I’ve stated in the past, the U-6 unemployment figure, which includes people that are actively looking for employment, those marginally attached to the workforce and part time people looking for work for economic reasons, is 12.1%. During normal economic conditions, from 2003 through half way of 2008, the average U-6 rate was more like 9%. It hit a high of 17.1% in December of 2009 and has been slowly declining. The real issue I’ve always had with that figure is that it does not include people who have essentially stopped looking for work and are not in any way connected to the labor force. The figure looks good, but its not a true representation of the facts.

My concern is the ever increasing gap between what the markets are doing and the reality of the economy. It’s that simple. We’ve lost sight of the market crash of 08/09 and are back to business as usual with the “we are invincible” state of mind again.

Here’s some advice…

Stick to your objectives, don’t “compete” with the markets and you will be fine. If you have an income plan, make sure you are keeping up with your projections. If you don’t have a customized income plan, you need to get one done. (we do that) A definitive plan with specific courses of action is the best way to be successful and mitigate unwanted and unneeded risk. By the way, “hope” is not a plan….

Independence Day

I personally value my liberties and freedoms. I’m thankful to the veterans who have fought to provide them to me for the last 238 years. I believe that our capitalistic philosophy and practice is one of the many things that makes this country the greatest in the world. So I have some questions and encourage you to consider them in your everyday life.

Do you take your liberties and freedoms for granted and assume “they will always be there”?
Do you believe that those freedoms and liberties are being watered down, over time?
Do you think your vote and voice count and are you willing to voice your opinion by voting?
I was reading an article over the weekend and these were some of the questions that were asked of me. It made me stop and really think. There is an alarming trend of a “one-man rule” in recent years. That philosophy is called “crown government” or what Founding Father George Mason called an “elective monarchy”, meaning that a monarchy is actually elected into position instead of through blood relations. We are on a slippery path and allowing decisions to be made without the use of the process our Founding Fathers designed, and that is dangerous.

The 4th of July is a recognition of the publication of the “Declaration of Independence” and the recognition of the sacrifices our forefathers were willing to endure to achieve freedom and create a republic. Our nation was created “under God” and “In God We Trust”, yet we see the removal of these and other things, like Christmas, throughout our great nation for the sake of “not offending anyone” in our schools and public buildings. How do you think our forefathers would react to such activities?

I’m an old school kind of guy. I grew up, as most of you did, with a foundational system that did not preclude me from exercising all of my freedoms, liberties and beliefs and I did not have to make excuses for expressing them. It was not a bad way to grow up and we need to get back to things that worked for the last 238 years. Our system of freedom and liberty is not broken, so lets not fix it.

Happy 4th of July….

That’s all for this month…

As always, my very best to you and your families.

Kevin