Quote of the Week

“Tell me and I forget, teach me and I may remember, involve me and I learn.” ― Benjamin Franklin

Technical Corner 

The markets dropped again last week for the fifth consecutive week. The markets are also down this week through Wednesday.

Last week we got a sell signal on our energy position which was timely by not letting a small loss turn into a big loss. With the sale of our energy position, we have almost entirely de-risked everyone’s portfolios. For those of you who own our two short positions, it has been a good five weeks.

It appears that there won’t be a resolution on the tariff issue anytime soon as both China and the U.S. are digging in their heels. Mr. Trump is now threatening to impose a 25% tariff on autos from Europe and Japan if they don’t come around to his demands. The problem with all this tariff talk is that businesses stop making plans for the future because they don’t know what the future will bring. Also, it is estimated that this year the tariffs will cost the average American consumer approximately $800 which means that is $800 that will not be spent on goods and services which will lead to the slowing of the U.S. Economy.

To add to all this, the yield curve has been inverted for three straight days. When the yield curve is inverted, the interest on the 3 month Treasury Note is higher than the interest on the 10 year Treasury Bill. If the yield curve stays inverted for more than six days, it has a perfect record of predicting 9 out of the last 9 recessions. We are three days into the inversion and today (Wednesday) looks like the inversion is getting worse. I will keep you posted next week.

Congratulations to our Ladycats softball team for qualifying for the Woman’s College World Series. They are really fun to watch. Go Cats!

Name Wkly %Chg YTD %Chg
Dow Jones Industrials  -0.69 +09.68
Nasdaq Composite -2.29 +15.10
S&P 500 – 1.17 +12.73
MSCI EAFE* -1.41 +6.96
10-yr Treasury Yield -0.07 -0.37
*5-day performance ending Friday

Larry’s Thoughts

Choosing a Credit Card

Like dandelions in a spring lawn, credit card offers pop up everywhere–stuffing your mailbox, flashing on the Internet, even falling from the magazines in your doctor’s waiting room. And they all sound so attractive. “0% APR until next year!” “No fee if you transfer a balance now!” “Low fixed rate!” You’re thinking of applying for a card, but how do you decide which offer is best for you?

Learn the lingo

In order to evaluate credit card offers, you’ll need to learn the language they use. Here are some of the more important terms.

  • Annual percentage rate (APR): the cost of credit as indicated by a yearly (fixed or variable) interest rate. This rate and the periodic rate (the APR expressed as a daily or monthly factor) must be disclosed to you before you become obligated on the card.
  • Balance computation method: the formula used to determine the outstanding balance on which you’re charged interest for the billing period.
  • Finance charge: the cost of credit for the billing cycle, expressed as a dollar amount and determined by multiplying the outstanding balance by the periodic rate.
  • Fees: charges (other than the finance charge) that may be levied against your account. Common examples include an annual fee, cash advance fees, balance transfer fees, late payment fees, and over-the-limit fees.
  • Grace period: the length of time prior to your payment due date during which you may pay off your account without incurring any finance charge.

Once you can talk the talk, ask questions

Any credit card will cost you something, but depending on the terms and conditions, some are more costly than others. When evaluating a credit card offer, here are some points to consider:

  • What’s the interest rate? Is it fixed or variable? If variable, how is it calculated?
  • Will you be charged different interest rates for purchases, balance transfers, and cash advances?
  • What method determines the outstanding balance used to calculate the finance charge?
  • Is there an annual fee, and what other fees may be charged?
  • What’s the length of the grace period (if any)?

What you should look for depends in part on how you’ll use the card. If you intend to pay off the balance each month and won’t incur any finance charges, obtaining a low interest rate is less important than finding a card with no annual fee, minimal transaction fees, and a long grace period. If you’ll carry a balance from month to month, you’ll want a low interest rate and a balance calculation method that minimizes your finance charges.

A word about balance transfers

Perhaps you’re not currently using your credit card, but you want to minimize the finance charge on your existing balance. One way to do so is to transfer your balance periodically to a new card with a low introductory “teaser” rate of interest. If you choose to “surf” in this fashion, be cautious. Watch out for:

  • A low interest rate on new purchases, but a higher interest rate on balance transfers
  • A low introductory interest rate that applies only for a very short period of time
  • Balance transfer fees, particularly uncapped amounts calculated as a percentage of the balance transferred
  • Termination fees and retroactive interest charges levied if you decide to surf the next wave and close the account or transfer the balance to another card before a specified time period has elapsed

When you transfer a balance from an existing card to a new one, it’s a good idea to close the account you’re leaving. By doing so, you won’t be tempted to use the card again (at a higher rate of interest once the introductory offer period has expired), and you’ll minimize the potential for fraudulent use or identity theft. What’s more, if you don’t close such accounts and later try to transfer your balance again, a new card issuer might turn down your application, afraid you’ll incur too much debt by running up new balances on dormant, but open, credit card accounts.

Voice your concern if you’re turned down

If you’re turned down for a credit card, the issuer must inform you specifically why you were turned down or tell you how to get this information. When the rejection is based even in part on information contained in your credit report, you’re entitled to a free copy of the report from the credit bureau that issued it. Get the report and review it; if you discover incorrect notations on it, dispute them. Then contact the card issuer to plead your case, informing the issuer of any corrections made to your credit report. With persistence, you may be able to convince the issuer to approve your credit application.

Speak up for your rights

Your consumer rights related to credit cards are protected by various federal laws.  If you feel that your rights have been violated and you can’t resolve the issue with the creditor, you can file a complaint with the Consumer Financial Protection Bureau. Visit www.consumerfinance.gov for more information.

Copyright 2019 Broadridge Investor Communication Solutions, Inc

By the Numbers

OUT OF BUSINESS – YTD through Friday 5/17/19, approximately 6,400 retail stores have gone out of business and closed across the USA, more than the 5,864 stores that closed nationwide during all of 2018. This year’s closures are on pace to exceed the all-time record of 8,139 store closures in 2017 (source: Coresight Research). Michael A. Higley, BTN 05-27-2019

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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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