Boomers Take Care

Here's some comforting family news: Nine in 10 baby boomers who expect to be caregivers say they would be willing to make significant lifestyle changes in order to care for a family member or loved one. That's according to a new study from the Bankers Life Center for a Secure Retirement.

Study participants said they would be willing to do these things to provide care for a loved one:

• Reduce spending: 66 percent
• Travel less: 41 percent
• Move to a new home: 27 percent
• Work less: 27 percent
• Stop working altogether: 19 percent

The study also found that 45 percent of boomers believed they would need long-term care at some point, up from 36 percent in 2013. Sixty-six percent reported that they had had detailed conversations about how they wanted to receive long-term care, and 55 percent had had detailed conversations about how to pay for care.

Bankruptcy Takes Its Toll

Here's a sobering economic signal: In the first seven months of the year, U.S.-based companies announced 42,937 job cuts due to bankruptcy, according to a new report from outplacement and business coaching firm Challenger, Gray & Christmas. That's up 40 percent from the same period last year and nearly 20 percent higher than all bankruptcy-related job losses last year.

That is the highest seven-month total since 2009, when 50,258 cuts due to bankruptcy were announced. In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009.

Companies cited bankruptcy as the reason for 11.6 percent of all job cuts announced from January to July. That’s compared to 11.3 percent of all cuts for the same period in 2018. Since 2007, bankruptcy has accounted for approximately 6 percent of all job cuts every year.

Investment Views of the Ultra-Wealthy

Some ultra-wealthy investors have begun trimming their stock positions a bit, according to the latest from TIGER 21. Short for The Investment Group for Enhanced Results in the 21st Century, that's a investment club of about 700 people with at least $10 million to invest.

Members of TIGER 21 reduced their stock allocation to 21 percent from 22 percent during the second quarter, according to the group’s quarterly report. These investors continue to maintain a 12 percent allocation in cash and cash equivalents.

What are they excited about? Real estate. TIGER 21 members have stepped up their investments in real estate for the first time in three quarters, with it now accounting for 28 percent of their holdings, up from 26 percent in the first quarter.

The S&P's Rout

Worries about a looming trade war with China resulted in the worst day for the markets all year yesterday. The S&P 500 finished down by nearly 3 percent on the day—the biggest one-day drop for the index this year.

All 11 of the S&P's sectors declined, led by a 4.2 percent drop for the tech sector.  The S&P 500 is now down 4.6 percent in the last five days, and is off 6 percent from its July 26 high.

The carnage was so thorough that only 11 stocks in the S&P 500 closed higher. Some of the more notable names in that group included Tyson Foods, Abiomed, and Newmont Goldcorp.

The Equifax Fallout

A while back, Equifax – the credit rating agency that was victimized by a data breach in 2017 – announced that everyone affected could get $125 as part of a settlement with the Federal Trade Commission. Let’s hope you didn’t spend that money, because last week, the FTC announced that, due to an overwhelming response, cash payments aren’t going to be anywhere near $125 each.

About 147 million people were affected by the Equifax breach, but only $31 million was set aside for payments as part of the $700 million settlement. For everyone to have gotten $125 from that pot, there would have to be only 248,000 claimants. While the FTC didn’t give a number, they said there were already “an enormous number of claims filed.”

The FTC is now recommending that you instead take four years of free credit monitoring and identity protection. This is available not only from Equifax but from its two fellow major credit bureaus, Experian and TransUnion.

July's Jobs Report

The Labor Department reported this morning that the economy added 164,000 jobs during the month of July, which is almost exactly the average monthly gain for the year. The headline unemployment rate remained unchanged at 3.7 percent.

The bad news: Job gains for the two previous months were revised downward by a total of 41,000. Over the past three months, monthly job growth has averaged about 140,000 — down from 233,000 in the final three months of 2018.

On the other hand, an influx of 370,000 new workers to the labor force brought the labor participation rate up to 63 percent, its highest since March. The total labor force of 163.4 million Americans set a new record high.

What the Rate Cut Means

As expected, the Federal Reserve yesterday cut its benchmark interest rate by a quarter percentage point. But the stock the market didn't react well, apparently because Fed chair Jerome Powell refrained from suggesting further rate cuts were on the way.

Following the announcement, the Dow Jones Industrial Average closed down 1.2 percent, marking its biggest one-day fall since May 31. The S&P 500 dropped 1.1 percent.

On the other hand, history shows the market usually responds more positively to a rate cut. Since 1990, the S&P 500 has gained on average 0.16 percent on the day of a 25-basis-point cut. One month later, the S&P is an average of 0.57 percent higher.