Quote of the Week

 “Teamwork is the fuel that allows common people to attain uncommon results.”  – Andrew Carnegie

Technical Corner 

Expectations for monetary easing around the world have continued to prop up the stock markets. Chairman Powell testified before Congress conveying that the case for a more accommodative policy has strengthened, further solidifying expectations for a rate cut in the coming months. The markets have assumed that a 0.25% cut this July is a 100% certainty. There is also a 25% chance for a 0.50% cut also this July. I think a 0.50% cut could spook the markets by saying that things are worse than expected. The investing public seems to think that the Fed can rescue the markets with these interest rate cuts. I am skeptical because no one will take advantage of these lower interest rates due to all the uncertainty surrounding the economy and the tariffs.

Just in the last week, some bad economic news has come out. U.S. Durable goods orders have just gone negative YoY (year over year). Railroad traffic is down 8% YoY and is headed further south. Orders to buy trucks that move the nation’s freight have disappeared. Freight rates have declined substantially. China’s GDP for the last quarter was a positive 6.2%, which is the lowest since China started keeping records in 1993. The Wall Street Journal says we are in a corporate earnings recession with earnings expected to be down double digits YoY.

Coming back to the Fed cutting interest rates, even a 0.50% cut still will not encourage businesses to borrow with all the uncertainty swirling around.

We are still positioned in a very low risk allocation.

Tom’s Thoughts

Beware of October 1, 2020

I just received an email from the Arizona Motor Vehicle Division (MVD) informing me of the Arizona requirement that drivers license holders update their photo every 12 years regardless of the license expiration date. In the same email they mentioned that effective on October 1, 2020, a REAL ID license will be the only driver’s license accepted by TSA at airport security checkpoints for domestic travel.  (Other forms of approved ID will be accepted.)  I hate to think of the mess that will happen at the nation’s airports on that day because travelers will not have the proper ID.  Anyway, even though Sue has written twice about this requirement, I thought that another reminder would not hurt.  So, the following is an article from the Huff Post by Casey Bond that provides an overview of this subject.

Don’t get caught in the lastminute stampede.  Get your license changed ASAP.

What is Real ID? Everything You Need to Know About the New TSA Requirement

“If you’ve had the pleasure of standing in line at airport security recently, you’ve probably noticed the big blue signs warning travelers of new identification requirements coming next year. If you haven’t, you may have no idea that your driver’s license or other state-issued ID could soon become obsolete for air travel.

As of Oct. 1, 2020, every adult needs to show a Real ID-compliant driver’s license (or another acceptable form of identification such as a passport) to fly within the United States. If you don’t have one, you’re not going anywhere ― even if you’re traveling domestically. You’ll also need one to enter a secured federal facility that requires ID.

But what, exactly, is a Real ID? And how do you get one? We have the answers to all your Real ID-related questions below.

What Is A Real ID?

Back in 2005, Congress passed the Real ID Act in response to the 9/11 Commission’s recommendation that identification requirements be tightened. The act establishes minimum security features and bars federal agencies from accepting any ID that doesn’t meet those specifications. However, since most of us carry state-issued IDs, states had to be given time to implement these changes. That’s why we haven’t heard much about the Real ID and its upcoming deadline until fairly recently.

Included among these new security requirements are features that make counterfeiting more difficult. Holograms are often used for this purpose. All Real IDs will also have a barcode that can be easily scanned to pull up information such as the holder’s full name, birth date, license number and more. And according to the act, all the documents presented by Real ID applicants for identity and residency verification must be scanned and stored in a database ― including birth certificates and Social Security cards ― even if those people are denied an ID.

It’s important to note that a Real ID is required only for entering airport security checkpoints and boarding aircraft, as well as entering secured federal facilities and nuclear plants. It’s not required in other instances when you might be asked to show ID, such as voting or registering to vote, applying for or receiving federal benefits, accessing health- or life-preserving services, and more. And if you’re traveling internationally, you’ll still need a valid passport.

“TSA is doing everything we can to prepare our partners and the traveling public for the REAL ID deadline next year,” David Pekoske, administrator of the Transportation Security Administration, stated in an April press release. “The security requirements of the REAL ID Act will dramatically enhance and improve commercial aviation security.”

Despite the TSA’s efforts to educate the public about this new requirement, plenty of people are still unaware or confused about the rules and deadlines. Participation is voluntary on the state level, and earlier pushback by some states over the Big Brother-like nature of the law led to the delayed rollout of some Real IDs. Most states are now in compliance, but a few have needed extensions of their deadlines to various dates throughout 2019. California is currently under review and must reach compliance by May 24, 2019.

If you live in a compliant state but still have your “regular” ID, you can keep using it until Sept. 30, 2020. But on Oct. 1 of that year, you’ll need to have one with a star in the top right corner, which signifies you’ve upgraded.

However, if your state received an extension to reach compliance, you can only keep using your old ID until that extension expires. After that, you might need an additional or alternate form of ID between the extension expiration and Sept. 30, 2020. By Oct. 1, 2020, everyone in those states will need to have the Real ID with a star symbol as well.

The bottom line is this: If you don’t have a Real ID, you should probably get one ASAP.”

Bond, Casey. “What is Real ID? Everything You Need to Know About the New TSA Requirement.” HUFFPOST, https://www.huffingtonpost.in/entry/real-id-air-travel-drivers-license_l_5cd5c330e4b0796a95dbb827.   Accessed July 16, 2019.

By the Numbers

WANT A PENSION? – 83% of full-time state and local government employees were participants in a defined benefit pension plan in 2018. Just 16% of full-time workers in the private sector were participants in a defined benefit pension plan in 2018 (source: Urban Institute). Michael A. Higley, BTN 07-15-2019

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These are the opinions of Larry Lof and Stephanie Mayoral and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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