1.
Repo purchases by The Fed continue. We Americans, are still not getting straight answers on their reasoning and purpose. All we know is that The Fed maintains their view that this is not a QE event, even though the current purchases are at a faster pace than QE3 took place. Here is my very simple opinion on this subject: I believe world central banks are not purchasing treasuries. Treasuries are at a huge surplus and the world continues to be flooded by the weekly treasury auctions. So what happens month after month of limited purchases when hundreds of billions comes to market every month? There’s a feeling that recently The Fed purchased treasuries directly from auctions, which is considered an illegal event. Monetizing debt may be right around the corner…
2.
Do you want to add more value to your senior clients? I love the single-pay, simplfied-issue policies. Clients receive a money-back guarantee, get a modest tax-free death benefit, and the paperwork is easier than fixed annuities. All it takes is about 15 minutes for the complete underwriting process. It’s the best “parking space” for senior nest eggs. So in two years, if markets have drammatically corrected, or if interest rates are much higher, clients can take their funds to another product of choice. It’s a nest egg parking space!
3.
I love Buffalo Wild Wings for its wings, but more so for the feeling of having the world of sports surrounding me. The strange item BWW offers is the boneless wing. For the record, there is no such thing as a boneless wing. It’s just a lump of chicken. My daughter always points out the person who orders “boneless” wings and then eats these lumps with a fork. It’s a very weird sight. The world needs to jettison these chicken lumps and we Americans need to go back to only eating wings with our fingers. Enough said.
4.
U.S. markets are up over 24% this year. Don’t be a hog, it’s a great time to start moving funds to guarantees. Are markets going up because companies are making more money/fundamentals, or are they going up due to an event that counters free markets? The Bull market may continue to run, but risk will not go away. Make some calls to your senior clients and allocate more funds to guarantees.
5.
Close to 3% yields are now available in NY: SBLI, which is an A- NY-based company, now yields 2.90% for 7 years. As you know, the risk is high that rates could drop to zero or below zero, if the economy falls apart. If rates drop, where will seniors get yield for their nest egg? It’s a legitimate risk, which is why funds should flow to current fixed annuities. We also have yields over 3% in NY, but you are dealing with the B+ company risk. Weigh the risk/reward behind not moving funds to a decent multi-year guarantee.
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