Wow! What a Week.
The Markets:
Some indexes were up, some indexes were down; volatility has returned along with a lot of noise, so we’ll leave it at that. Now for the things that should impact markets.
Jobs
Every week a new unemployment claims report is released. This week it was at 189,000. It is staying consistently below average, with the average between 200,000 and 220,000 per week. This is good news.
Layoffs are staying low.
Continuing claims – people who are still claiming unemployment – continue to rise.
While you may not be losing your job, if you do, it’ll take longer to find one.
Then, there was the jobs report.
New jobs were 165,000, with expectations of 59,000.
In a performance review, that would be a Far Exceeds.
August and September jobs report were revised upward by 84,000 jobs.
That brings the three-month total to 411,000 new jobs.
Some more tidbits:
The unemployment rate dropped from 4.2% to 4.1%.
Average hourly earnings were up 3.1% year over year. It was 3.0% last month, with expectations of 2.9%. That is rated an Exceeds.
Q3 employment productivity was up 3.6%.
Finally, the Purchasing Managers' Index (PMI) and the initial Michigan Consumer Survey.
The PMI for Services came in at 54.5, down slightly from last month's 54.9 and expectations of 54.8, but still over 50, and that’s a good thing.
The PMI for manufacturing came in at 55.5, up from last month and expectations of 54.5. Also, a good thing.
And the preliminary Michigan Consumer Survey came in at 51, which was up from 46.3 and expectations of 47.5.
What is a Merchant Cash Advance?
The short answer: it’s a loan from Guido that does not involve breaking kneecaps.
But given the cost of funds, it just as well may be.
It’s also known as a Merchant Card Advance or Put-You-Out-of-Business Advance.
Oh, and technically, it’s not a loan. It’s a factoring mechanism. Which means the company providing the funds will provide cash at a factor rate.
If the rate is 1.35, that means they will give you, for example, $100,000 today for $135,000 of your receivables tomorrow. Or throughout the year.
Assuming you do pay it back, er, satisfy the obligation in exactly 12 months, that would be a 35% loan.
But it’s not a loan; it’s a purchase of your receivables.
Many times, the lender, or factoring lender, aka the factor, will pay themselves back by taking a portion of your future sales on a daily basis.
And sometimes, that will come from the deposits you get from your credit card sales. And if the “payment” is high enough, the cash staying in your account may not be enough.
On payday, that will send you into a panic and you’ll apply for another MCA loan.
And the dominoes begin to fall.
So, here’s the point. Finally…
If you are a business owner and you get a text, call, email, or letter that contains the letters MCA in that order, you need to delete said solicitation and apply for a line of credit the hard way. Like, with a bank.
And if you don’t qualify, start doing the work so that you can.
I can help you do that.
If you are a professional who works with business owners, and said business owner somehow randomly mentions the letters MCA in that order, you need to counsel them about things that are easy to get.
And then refer them to me.
Sometimes the easy way isn’t the best way. Actually, most of the time the easy way isn’t the best way, but that’s a different life lesson.
Elections…
The incoming class of United States Senators will have a term that goes from 2027 through 2032.
Hmm. Why does 2032 sound familiar… oh, yes, I remember.
The Old-Age and Survivors Insurance (OASI) Trust Fund, aka Social Security, is projected to exhaust its reserves in the fourth quarter of 2032.
That’s six years from now.
If Congress did nothing, incoming payroll taxes will only cover about 78% of scheduled retirement benefits.
Boomers will not tolerate a 22% reduction in their monthly check, and the Silent Generation, while diminished in numbers, will NOT be silent.
And some Gen Xers may have jumped in the pool and could be screaming the loudest.
I mention this because in the 2018 midterm election cycle, 140 political ads mentioned the national debt or deficit.
This last cycle? Only 30.
While one can argue that this is a political issue, it is first and foremost a money issue. A 22% drop in income on roughly 20% of the population will have an impact on the economy, and it won’t be good.
Of course, an equal increase in taxes will have a similar effect.
We just don’t know the severity.
As I always say, demographics drive the economy, so you may want to have your 10-year plan take this into account.
And yes, you should have a ten-year plan.
Wednesday is Veterans Day – November 11
On the 11th hour of the 11th day of the 11th month in 1918, World War I ended with the signing of the Armistice.
In theory, it was The War to End All Wars.
In 1938, November 11 became a national holiday known as Armistice Day.
In 1954, Congress formally changed the name to Veterans Day.
Click here to access the U.S. Department of Veterans Affairs page for Veterans Day.
For those of you who have served in the Armed Forces of the United States of America, thank you.
As the Department of Veterans Affairs notes, Veterans Day does not have an apostrophe because it is not a day that ‘belongs’ to veterans; it is a day for honoring all veterans. I encourage you to read about it or watch a documentary on The War to End All Wars.
“They Shall Not Grow Old” by Peter Jackson is very well done – 5 Stars from me.
Today, poll your employees to find out which are veterans. Then, have an office lunch Wednesday to show them the respect they have earned; then give them the rest of the day off.
On Wednesday, please remember that Veterans are the reason we are the land of the free and home of the brave. Here is a quote to think about…
“A Veteran is someone who, at one point in their life, wrote a blank check made payable to 'The United States of America,' for an amount up to and including their life.” — Unknown
