For years you have been limited by the Federal Reserve to 6 electronic saving account withdrawals on most savings accounts per month. They call it rule D. That just changed. We are told there are now no withdrawal limits on these savings accounts, but that is from the Federal Reserve and not the banks. Your bank could still charge fees or have limits, so you want to check with them.

Why is this important? Several reasons and they may not really affect you. First, a savings account pays some interest and most checking accounts don't. Even if they do, by the time you buy checks if you have an account like most people where you pay for your checks, well, you are in the hole unless you have a ridiculous amount of money just sitting in a ultra-low interest checking account.

So you can actually see your balance increase if you have money in a savings account. It won't keep up with inflation, but if you can't make money or just break even, losing the least you can is still better than a poke in the eye and the other options.

Insurance companies and a growing number of other companies will draft your bill from your savings account now. That means you had a maximum of 6 bills you could pay a month directly from withdrawal from your savings account. If you used your 6 withdrawals for bills, transfers to your savings or any combination, you would have to physically go in to the bank and fill out a transfer for any withdrawals over 6. Now you don't.

Why did that have this rule in the first place? Well, without going into a lot of detail, it was supposed to make the banking system more stable and prevent the banks from having to keep more money on hand to keep from running out.

Why did they remove this rule now? The first reason is that the Federal Reserve hates checks, they even hate currency and anything they can do to get rid of checks and currency is a big thing for them. The Federal Reserve, in league with the Government in general and the IRS in particular want digital currency. Currency they can track and tax and take away and even turn off without the hardship and trouble of a court order, trial, due process or even a tax return.

The second reason is with the economy  rolling backwards and unbelievable things happening to people financially, people couldn't get to their savings money electronically and banks didn't want people coming in physically because of the virus restrictions. There are a lot of bank branches that are just plain closed now.

The Federal Reserve is trying to create enough currency and inject it into the financial system that the stock market doesn't crash (again), that banks don't close and that interest rates for the government and their friends stay low. Every dollar you can take out of your savings account and put into circulation is another dollar they don't have to "print" toward that goal.

Besides, it would look bad if people needed currency for food and their bills, but couldn't get their own currency because of a rule and the Federal Reserve doesn't like to look bad.

With there being no limit now, at least imposed by the Federal Reserve, you may start seeing debit cards for savings accounts. Many  debit cards already will work at ATM machines to access your savings.

Check with your bank for any rules, fees or restrictions they may have.

Best and be blest,
​Scott Hogue CCFC, CCA

What is Hot Money?
Hot money is a term used in financial and investing circles for money that is flowing into some area, some asset class, some investment. When money flows into some investment it makes the price go up and if you guess right you can sell for more than you paid for that investment. 

Hot Money is how we get Bubbles. Financial Bubbles are when Hot Money flows into something and inflates the price of that investment. Remember the Housing Bubble? Hot Money. Remember the Tech Bubble? Hot Money. Remember the Dutch Tulip Bulb Bubble? (Try saying that three times fast) Tulips were Hot Money too.

Hot Money investments are based on the "Greater Fool" theory. The growth in value of those investments is not really based on growth in the market, demand, innovation or increasing market share, it is based on the hope that there is a "Greater Fool or Bigger Fool" than you that will give more for the investment than you did and the sooner the better. Once a Hot Money investor gets out of the Hot Money investment, they are looking for the "Next Big Thing."

Some money is "Hotter" than other "Hot" money. A Bubble may take a decade to develop or a few years or months or in some cases a few hours in what are "Flash Bubbles." The nature of Hot Money makes a Bubble and Bubbles burst and deflate. So now you know about Hot Money.

So where is the Hot Money today? Well, there is some money going into deflated oil stocks and hard assets thinking when they turn us loose and we drive again they will go up. You have some money going into Gold, from people thinking with all of this crazy stimulus it will go up before the end of the year and keep going up for a fair ride. You actually have some people putting money into China thinking they are getting a bargain and that China will bounce back. Of course you have some money going into the stock market, some sectors more than others thinking it will bounce back. I could go on, commodities, silver, I hear there are people looking into depressed real estate and farming, but as far as I can tell, the really Hot Money is on the sidelines. When they shut down people, they shut down the economy and with it, for the first time in my lifetime, they shut down Hot Money.

Oh, Hot Money will come back, just wait, but it is hard to tell where. No one expected Tulip Bulbs to be "The Next Big Thing" until they were. If I had to guess based on some educated guessing there will be more than one "Hot Money Market" and probably several won't be so hot.

Commodities that are necessary in one way or another for basic living will have to heat up. We are going to have a lot of people living pretty basic, we already have them. Anything that has to do with a vaccine will be pretty hot and the companies creating them and licensing them and administering them will be very hot when and if we get an effective one. Don't hold your breath, we have been working on AIDS for over 40 years and still no vaccine.

Financial Services is already showing signs of life. Somebody has to cash those stimulus checks and people are going to be running them through checking accounts. Debt counseling will come back when the payments hit the fan and you have to start paying your bills again without a job. But the closest thing to Hot Money these days  is anything to do with Government Contracts. I can't say what I know or how I know it, but you don't have to be a Psychic to know the government is spending money and more today than before the virus.

Money is always flowing to some extent from government. Just yesterday the Supreme Court ruled the government has to pay the insurance companies for the losses they had with Obamacare. Investors talk about the trend to see where things are going and to be invested in rising trends. Government spending certainly is trending up and has for several lifetimes now. We are probably looking at the hockey stick part of the chart developing.

You have to figure out some way to benefit during this time. If you are not on the opportunity side of this you will be on the depression side of it. Higher taxes, higher inflation, scarce healthcare resources, increased rent and basic living expenses, failing pensions, IRA's, 401K's, you don't want to be crushed by what is coming.

If you want to talk about your financial situation, then fill out the contact form at www.eastbrookfinancialservices.com that is Eastbrook Financial Services and I will get back with you.

Best and be blest,

Scott Hogue CCFC, CCA

You may have seen it in the news, farmers plowing under their crops of potatoes, but you can't buy french fries and even potatoes in many stores. Why? It comes down to ignorance or just plain evil, you could say apathy, but with people hungry, I call that evil.

Here is the situation. Lots of people usually eat lots of meals that come from restaurants, either inside or carry out. That means a lot of our food is distributed through the restaurant food distribution system or supply chain. Now they have practically shutdown that outlet for food. Oh, I know you can still do carry out at a lot of places, but even with that, most people aren't getting out because of the stay at home orders and that means the restaurant food supply chain is down to a trickle.

So why don't we just bring that food into the stores and sell it? Because it would be against the law in most cases. Frozen french fry bags for restaurants aren't labeled for public consumer resale. You know, calories, nutrition, all of that stuff that was popular to put on everything a few years back. Eggs for restaurants often don't even say eggs on the cartons. I have seen five pound containers of sour cream that only said sour cream on them, selling them to you or me would probably be a felony.

So the farmers are having to plow their potatoes back under the ground to get rid of them or even haul them off with dump trucks, because it is time (actually a little late) to plant new crops and old potatoes rotting next to new potatoes growing would attract bugs and disease.

One state alone has planned to kill and destroy 200,000 hogs this week because the processing plants can't process them. Eggs are being dumped in huge numbers, milk is being poured out and in some areas almost half of the population is having to go to food banks to get food.

What do you call that? Ignorance or just plain Evil?
​
It doesn't matter how many government stimulus checks you get, if there is no food you will go hungry. Farmers are having second thoughts about planting this year and in many cases the government has just shut them down. No workers, no seed and fertilizer, no choice.

Flattening the curve is looking a lot like flattening the businesses and America runs on business, right down to ham and eggs and yes, those french fries you used to take for granted.

Best and be blest,

Scott Hogue CCFC, CCA

You may have noticed that the Stock Market is only down 16% now from its all time high. Isn't that interesting?

When we have 26 million people laid off, with more adding to that number every week, when we have a pandemic with lock downs and no end in sight, when they are pouring out milk, crushing  eggs, killing hogs and burying potatoes when you can't buy frozen french fries in the store, not to mention a lot of other things and did I mention that oil was so low that they were paying people to carry it off recently and I am not kidding, why is the stock market so high? If you lived through the tech boom bust or the mortgage great crash of 2008 where only a fraction of the people were directly involved in the crash, you would think with just about everyone out of work, stores either empty or shut down and even Neiman Marcus declaring bankruptcy there would be blood in the streets and even maybe a 50% drop with no upturn until things started turning up. So why not?

The answer is, wait for it, the market is rigged!

Unless you are willing to believe that Amazon shipping toilet paper has offset all of the downward forces in the market except for 16%, then you should be able to see it as clear as day, the whole thing is  rigged.

People still look at the stock market as being kind of like Walmart, that people go into the market and buy things based on the worth of those things to them. Just like items in a store, the man or woman on the street thinks companies with stock for sale in the market were priced on value, so like a television or cell phone has more value that say, a carrot, carrots are cheap and televisions are more expensive and a company that has real value, sells real products people want and has a real business model should be worth more. I have news for you, it doesn't work that way and it hasn't for a long time.

Companies that have never, ever made a profit can double in price over a year's quarter.
Companies that don't even have a product on the market can do about the same. Let me ask you a question, how would you fill in the rest of this sentence? "What goes up, must ________?" If you said "come down" you are a winner. These stocks that shoot up, often free fall down. They have no real value to hold them up, like I don't know, some sales of their products.

The government is pumping out money  so fast it would make drunken sailors blush and the Federal Reserve has actually said they would inject up to an infinite amount of money into the system, (system means the big banks and their business buddies) to support the system, (stop just a minute to think about a central bank that actually says it will print an infinite amount of money to keep things afloat when printing more money makes it more worthless) so no wonder the market isn't down more. The fed has put a put on it or in other words, promised to bail out Wall Street one way or another, if it takes flooding the planet with money and I guess Mars and Venus too.

The market has been rigged for a long time, if you have watched it, you know that, but now it is so plain that anyone should be able to see it and the usual  denials won't hold water.

Prices on the stock market have nothing to do with profitability, nothing to do with making an actual product, nothing to do with sales and revenue, it is all a Ponzi scheme. I have people ask me why I say stay out of the market unless you want to gamble since it is a big Ponzi scheme and they think they can ride the coat tails of the big guys. I tell them, remember, there are losers in these schemes that fund the winners and if you don't know the rules you will be the loser and they change the rules every day.

Here is an example, the Federal Reserve can't buy stocks by law. So what do they do? They give someone else the money and let them buy the stocks for them. So you have the law and you have the new rule. "Today we can get around the law by hiring someone to do it for us."

Did you wonder why gold and silver were down during a financial crash when commonsense would have told you they should have been up? Well, there were people betting on the market going down more and when their margin calls for these bets or market plays came in, there was a round of gold and silver selling to cover these calls. So why did they need the margin money? Because the market starting going up, even on more and more bad news and their positions weren't worth the money they had put up for collateral. So why did the market go up and not down on bad news? Because the Federal Reserve opened the doors to free money for the bankers of Wall Street.

I hoped that 2008 would have finally taught people that the stock market is no place for your retirement money, but sadly not.  We wiped out another generation of seniors. You see, just because the market goes down and then back up doesn't mean you won't lose and that is a bit more complicated than I can cover here, but I may do that soon. There are a lot of situations where you don't make as much going back up as you lost going down and from the 2008 crash it took a lot of people a decade to recover the losses and you can never get back the lost time.

With so many safe investments and so many guaranteed income vehicles, why do we still blindly "play the markets?" Hundreds of millions of dollars of advertising, advertising that simply buys the opinions of the television financial advisors on the networks that receive this money and then there are the brokers that make their living off of the game and your money  whether you win or lose.

Medicare already looked like a third world program, this crash is speeding up the bankruptcy of Social Security and Medicare, pension funds that were already under water are hitting the bottom of the deep blue sea, states are begging the federal government to bail them out since the states can't print money and that means their pension funds are broke and they can't fix them, a lot of stock market based retirement funds are down so much the owners can't get enough out to retire or to live in retirement...I keep warning people, but my megaphone is not as big as Wall Street and their partners in crime in the big casino and remember, the house always wins in time.

If you want out of this rigged casino, then give me a call and we can discuss what is right for you. You know it isn't over on Wall Street, there will be more rounds of losses just like all the times before.

Best and Be Blest,
Scott Hogue CCFC, CCA

So what is going on with the Personal Financial side of the Coronavirus?

Here is just an update...Credit Card companies are tightening credit. This means if you have credit you aren't using, your limit may be lowered. If you apply for a new card, you will probably get less available credit than just a few months ago. We are hearing industry insiders say interest rates will be going up where increases are legal.

Several Mortgage Banks  have raised their minimum favored rate credit score to 700. You can also expect lower home appraisals going forward in some areas of the market. This comes together as higher down payments and tougher closing experiences, not to mention, people that were borderline qualified for best rates will now be paying higher rates where these changes take effect.

It is going to be harder in areas of the market to buy a house going forward, but house payments for many people will still be less than renting. There are hidden reasons to buy a house. The Bureau of Labor Statistics does a study on home renters vs home owners and the net worth of the owner runs from the high 20's to the low 40's in times they have more net worth. In other words, a buyer on average can have 30 times the net worth of a renter, income and other factors being equal. Why? They are still trying to figure it out, but I say it is the difference in mindset that comes with owning a home.

Gasoline prices are not following oil prices down yet. There is still a huge disconnect between negative oil prices and what we are seeing at the pump. At the pump prices are pretty stable over the last week and the last wholesale price of 12 cents a gallon was not reflected at the pump. Refiners and jobbers are trying hard to hold the line, but it will be more of when people start driving again than what they do that affects the price over the next months.

Staying with a personal note, five major meat processing plants have shut down over the last few weeks and there is no set time for them to reopen. Expect higher meat prices and area shortages going forward.

Silver is still holding about the same range in the last week with it being down about a quarter an ounce and now back up about the same. Gold went down about a week ago and is back up. The truth is you can't buy silver or gold at spot prices. There is a premium for real silver and gold vs the paper prices. The last I saw was a ten dollar or so premium over spot for real silver and about two hundred for gold.

That is probably enough for now...

Remember, when the outlook isn't good, the up look is always good!

Be Blest,
​Scott Hogue CCFC, CCA

It looks like everyone is afraid of the Coronavirus and for good reason, but let's not over do it and stop to look at the other things we should be afraid of...

Let's start with the economy.
A report by restaurant industry insiders says that 28% of restaurants will not reopen and another report says that 17%-24% won't make it 90 days after they open back up.  That is a lot of jobs. We could lose half or more of the restaurants and since they are leaning the staff even now, we could lose over half of the restaurant jobs.

States can't print money and they don't have much coming in. Most states are in trouble with their pension funds and all kinds of debt, municipal bonds and such. The Federal Government doesn't want to bail them out, so they are talking about  legalizing state bankruptcies. Who doesn't believe that would be a revolving door it they open it? So expect states to put their hand into your pocket anyway they can. Property taxes, fees, car licenses, car tags, sales taxes, inheritance tax, just about everything.

They are using the virus to advance digital currency, that is currency they can tax every time you buy something, track you with and even shut down if they don't like what you are doing or your opinions about the government and I don't know, say vaccines, shut downs, gun laws, church attendance and just about any other popular topic today. This one really concerns me. You should see the documents that are public. It is a dictator's dream and they are already using a social score in China to oppress people.

Social Security and Medicare, you didn't forget them did you? Both were heading toward bankruptcy and if you spend more than you take in Social Security qualifies now. The strain on both of these systems will only make the problems worse. Medicaid was a disaster before and it is looking like a third world disaster now.

Retirement, or what we used to call Retirement. There are a lot of people that lost something like a third of their retirement funds. I don't know why people do this, they just stay in the stock market no matter how many times it crashes and burns people's retirement plans. Of course the "Experts" say stay in the market and this time will be different, but it never is. These means everyone moves down a level in the game. If you were about to retire well off, you won't retire so well off. If you were about to retire so-so, you will retire with big cuts in lifestyle or have to keep working. If you couldn't work due to health issues and were going to scrape by, you will be below water. And the worst...people that weren't making it before, well, probably suffering and an earlier death.

Inflation, remember Jimmy Carter and the Stagflation years? You will eventually see inflation for everything a poor person has to have to live. There will be some deflation on things the middle class used to buy, but now can't afford. You could easily argue there is no middle class now. Rent will go up and "shelter houses" will go up in price. What is a "Shelter House?" A house that is plain and basic with no frills. Food will go up in price. Things we used to get from China will go up. A lot of medicines will go up. Healthcare will go up. Insurance will go up. You don't expect the insurance companies to take a haircut over this do you? They have already lost a lot of money they had already planned on spending.

Then there is oil. People were paying companies to haul off the oil they owned. They couldn't sell it and they couldn't store it. So, instead of paying for oil, they paid you to come get it. We are looking at about a third of the oil companies going bankrupt by the end of the year, with the first filing now. These aren't the big companies you have heard about, these are the smaller companies that employee a lot of people. Mom and Pop's, midsize investment companies and regional oil development and supply companies. It could add up to maybe half of all oil jobs and then affect maybe four jobs for each  person that supplied things to those now unemployed people.

And there is War. When you have all of these international issues and governments deep in debt with popular opinion turning against them, it isn't a stable time. It was already that way before the virus. Add the virus and the fact that many governments base their economy on oil sales and oil sales have backed up like a UPS Delivery Truck and you are sowing the seeds of War. I expect more armed conflict with new start ups over the next 18 months.


And at least for this article, last but not least, food shortages...

They are killing chickens and burying them. They are pouring out milk. They are sending milk cows to slaughter. They are killing and burying hogs. We already had the African Swine fever taking out entire country's hog populations overseas. They are behind on planting this year. They have shutdown a number of food processing plants indefinitely and with weather problems this year and the last few years, companies cutting back and closing processing plants last year, we already were headed into a food crunch. Now call it a shortage, even a hunger/starvation event in some countries.

Not exactly an economic issue is civil unrest. They say if we miss 7 meals we are going to see rioting. We already see people that have lost their minds over this virus. Then there is the power grab and those fighting against it. Stimulus checks won't keep people in check if they can't buy food. 

I expect more than the normal protests and riots this election season.

So is it all doom and gloom? No, there are a lot of opportunities and most of us will make it through all of this one way or another, but think twice before you say we should extend the lock downs.  Already the virus response will kill more than the virus over a period of time. We should focus not on shutdowns, but on how do we open up safely?

Best and be blest,
Scott Hogue CCFC, CCA