We have no idea what we’re doing…

By PRIYA ANAND
CONSUMER FRAUD REPORTER

MW-DD618_invest_20150116125541_ZHOver the last four decades, the 401(k) plan has replaced the pension as the main form of retirement plan. About 31% of workers had so-called defined contribution retirement plans in 2008, up from just 8% in 1980, according to the Social Security Administration. That means many Americans are now managing investments on which their financial well-being depends—and doing it in their spare time.

Unfortunately, many lack the basic financial literacy to be any good at investing. In a 2012 study by the educational foundation of the Financial Industry Regulatory Authority (Finra), the brokerage industry’s self-regulatory body, the average U.S. adult correctly answered only 2.9 out of 5 basic financial questions about topics like risk, inflation, interest rates and mortgages. (Only 14% answered all five questions correctly.)

The average American doesn’t follow market news that closely, either—and when you don’t know what’s going on, it’s harder to make good decisions about your money. In 2013, the S&P 500 index rose 30%. When asked in a Gallup poll a few months later how the market had performed that year, however, only 7% of respondents recalled that it had done that well; 30% thought stock prices had either been flat or gone down.

Source: Market Watch

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US businesses are doing just fine – Goldman

There’s much talk on Wall Street about US corporations struggling in the present global economic environment. But broadening the lens beyond public firms reveals a different picture.

Pre-tax profits at non-financial firms jumped at a 10.6 per cent year-over-year pace in the second quarter, according to a Goldman Sachs analysis of Federal Reserve data, which takes in more small businesses.

That compares to a drop of 11 per cent among companies listed on the S&P 500, led by energy firms.

The S&P 500 is made up of large American companies — those with a market value of at least $4 billion. For a sense of perspective, the US Census Bureau estimates there existed 5.7 million American firms with paid employees in 2012, of which only a little more than 18,000 employed more than 500 people.

Earnings growth is critically important for investors, as many economic models base a company’s value on its profits.

The New York-based investment bank reckons the divergence in the earnings picture is at least partially due to public firms’ greater exposure to moves in the US dollar and global economic demand.

The greenback has risen about 7 per cent against a basket of major world currencies this year. A rising dollar makes American goods more expensive to global markets. Oftentimes, larger multi-national firms, which often trade on public markets, are particularly impacted by such currency moves.

Meanwhile, economic growth in emerging markets has taken a hit this year. China, the world’s No. 2 economy, may see growth slow from 7.3 per cent last year to 6.8 per cent this year, according to an estimate from the International Monetary Fund. That could ricochet across the world.

Goldman said companies are still benefiting broadly from low interest rates, which have “helped release cash flow.” Indeed, net interest expenses continue falling on year-to-year basis, albeit at a substantially slower pace than even a year ago. That could be the result of firm’s taking on more interest-bearing debt.

Businesses are also making capital expenditures beyond the pace in which their current equipment is depreciating. Goldman estimates that on an adjusted basis, fixed capital expenditures net of depreciation and amortization equated to roughly 13.5 cents of every dollar of earnings before interest, taxes, depreciation and amortization (EBITDA).

“To put this figure into perspective, this is a similar pace of capital expenditure to that last seen during the second half of the previous business cycle, i.e., around 2005-06,” Goldman said in a note to clients.

Goldman also notes companies are generating “abundant” free cashflow – a key indicator of corporate profitability – to the tune of about 22 cents for every dollar of EBITDA.

We note that the trend in free cash flow generation is down from the earlier part of the recovery; for instance, we calculate that free cash flow stood as high as 35 cents in the second half of 2009 and into 2010. That said, the latest figures remain very respectable. Average free cash flow in the 2001-07 cycle was 17 cents, and corporates have been clearing that mark consistently since 2009, while maintaining high levels of net capital spending.

Nasdaq plunges 3%, Dow loses 313 points

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Stocks tumbled Monday to kick off the new week in the red, as Wall Street reacted to fresh data showingChina’s economy is in slowdown mode, overshadowing a big deal in the hard-hit energy patch.

The Dow Jones industrial average ended down 313 points, or 1.9%. The Standard & Poor’s 500 index fell 2.6% and the Nasdaq composite index plunged more than 143 points, or 3%.

Blue chips comprising the Dow temporarily ducked below 16,000 at one point, the first time the index has fallen below that mark since Aug. 25.

The U.S. stock market is still coping with its first market correction, or drop of 10% or more, since 2011.

The latest hit to investor sentiment was a continued drop in Chinese Industrial Profits, which fell 8.8% in August vs. the same period a year ago. This is just the latest data point out of the world’s second- biggest economy that suggests economic softening. Another headline putting investors in a risk-off mode are reports that Volkswagen’s ex-CEO is being investigated for criminal charges by German authorities as part of the investigation into the emissions-cheating scandal that has engulfed the carmaker in recent weeks.

Also adding to the market’s angst is a 20% plunge in shares of global commodity giantGlencore. In addition, CNBC reported that hedge fund manager and billionaire investorCarl Icahn is set to release a video tomorrow warning of danger ahead for markets, aruging that the Federal Reserve’s low interest rate policy has led to bubbles in art, real estate and high-yield bonds and that the fallout could be severe.

The Fed, of course, opted not to hike interest rates at its meeting earlier this month, but Fed chair Janet Yellen reiterated in a speech Thursday that the U.S. central bank is still on track to hike rates sometime in 2015. Those comments were echoed earlier today by New York Federal Reserve president William Dudley. Dudley is just one of four Fed speakers slated to comment on monetary policy today.

That negative news overweighed news that aluminum giant Alcoa will split into two separate companies as a way to spur growth and a deal in the energy sector, whereEnergy Transfer Equity (ETE) is acquiring Williams Cos. for nearly $33 billion.

Alcoa (AA) shares ended up 5.7%, but its shares closed last night down nearly 50% from its 52-week high. Williams Cos. (WMB) shares were off 12.1% and Energy Transfer fell 12.7%.

U.S. investors also got some good news on the economic data front, with Augustconsumer spending rising 0.4% and personal income up 0.3%.

Shares were down again in Europe, hurt by China’s dour economic news and the continued crisis engulfing VW. The FTSE 100 in London was off 2.5%, the DAX in Germany was down 2.1% and the CAC 40 in Paris was 2.8% lower.

The Nikkei 225 in Japan fell 1.3%.

Source: USA Today

European Stocks Drop …

The optimism that sent European stocks rallying on Friday was short-lived.

The Stoxx Europe 600 Index lost 2.2 percent today as growth concerns resurfaced after Chinese industrial companies reported profits fell the most in at least four years. Commodity producers slumped to their lowest levels since 2009, with a record plunge by Glencore Plc. Automakers, which had their worst week since 2011, fell a further 3.6 percent.

“The economic recovery is turning out to be a bit lackluster,” said Rosamunde Price, who helps oversee about $14 billion as chief investment strategist at Seven Investment Management in London. “People are worrying that global growth may have already passed its peak, plateaued, and is possibly turning down. Markets have just been so volatile, I’d recommend investors to shut up shop — the best thing now would be a moment of dullness.”

Bullishness swept through European markets on Friday, with the Stoxx 600 rallying 2.8 percent, the most in almost a month, after comments by Federal Reserve Chair Janet Yellen signaled recent market turmoil won’t derail the U.S. recovery. Yet the gains weren’t enough to erase a second consecutive weekly decline. Europe’s benchmark measure has lost 18 percent from this year’s record in April and reached an eight-month low on Thursday.

Concerns over global growth have hit forecasts for corporate profits. Cuts to earnings estimates outnumber increases by the most in three years, and the pessimism could reach levels last seen during the financial crisis, based on an index tracking the changes compiled by Citigroup Inc.

In Spain, where equities entered a bear market last week, the IBEX 35 Index dropped 1.3 percent after earlier rising 0.8 percent. Catalan voters narrowly rejected the regional president’s plan to build an independent state and left him needing a deal with an anti-capitalist party that rejects the rule of law if he wants to govern.

Almost 550 of the Stoxx 600 shares fell. Glencore sank 29 percent and as much as 31 percent as Investec Plc warned that there was little value for shareholders should low commodity prices persist. Volkswagen AG plunged 7.5 percent to its lowest price since 2011, and Porsche Automobil Holding SE, which owns the majority of Volkswagen’s common stock, declined 6.9 percent.

Vodafone Group Plc fell 4.8 percent after saying talks with Liberty Global Plc about a possible exchange of assets have ended.

SBM Offshore NV surged 14 percent after being invited to participate in Brazil’s Petroleo Brasileiro SA tenders. SABMiller Plc gained 1.3 percent on speculation that Anheuser-Busch InBev NV is close to submitting a bid.

Source:   – Bloomberg

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Why Warren Buffett wore football pads

Buffett was on the field — just off the sidelines — wearing pads and a #93 jersey, rooting for Ndamukong Suh, a 6-foot, 4-inch defensive tackle for the Dolphins.

150927175047-warren-buffett-dolphins-jersey-780x439The two met nearly seven years ago during Suh’s senior year at the University of Nebraska when Buffett came to one of his games. According to an interview with CNBC that aired in May, Suh is deeply interested in finance. “It’s always been something that’s fascinated me,” Suh said. “I’ve always loved numbers.”

Suh, 28, added that he wants to be prepared for life after football and doesn’t want to join the one in six NFL players that go bankrupt after retiring.

And since meeting Buffett, the investing expert has helped mentor him in finance.
Buffett previously wore Suh’s number to a Detroit Lions game. The defensive tackle signed with the Dolphins this year — on a six-year contract worth $114 million, according to Spotrac.com — and Buffett’s fandom followed.

Source–CNNMoney’s Paul R. La Monica contributed to this report.

CMBS Conduit Lending Update – 9.28.15

Indicative CMBS Conduit Loan Rates – $2 million-$100 million
9/28/15 (Indicative Only – Each Deal Individually Priced)
10-Year Fixed-Rate Loan Term (25/30 Yr. Amortization)
LTV/DSCR/DY Spread Range (1) Swap Rate Range (2)
Multifamily 75/1.25/8.5 250 275 2.11% 4.61% 4.86%
Commercial (3) 75/1.25/8.5 250 275 2.11% 4.61% 4.86%
Hospitality 70/1.40/11.0 270 300 2.11% 4.81% 5.11%
Self-Storage 70/1.35/9.0 250 275 2.11% 4.61% 4.86%
9/28/2015 10-Yr Swap Rate: 2.11%
http://ycharts.com/indicators/10_year_swap_rate
(1) Spread and Rate Lower for Low Leverage (50%) Loans > $10 million (approx. 25 bps)
(2) Rate Locked at Closing, Fixed for 10-Yrs (Early Rate Lock Available)
(3) Retail/Office/Industrial
7-Year Fixed-Rate Loan Term (25/30 Yr. Amortization)
LTV/DSCR/DY Spread Range (1) Swap (2) Rate Range (3)
Multifamily 75/1.25/8.5 285 340 1.79% 4.64% 5.19%
Commercial (4) 75/1.25/8.5 285 340 1.79% 4.64% 5.19%
Hospitality 70/1.40/11.0 310 360 1.79% 4.89% 5.39%
Self-Storage 70/1.35/9.0 285 340 1.79% 4.64% 5.19%
9/28/2015 7-Yr Swap Rate: 1.79%
(1) Spread and Rate Lower for Low Leverage (50%) Loans > $10 million (approx. 25 bps)
(2) 7-Yr Swap Rate is Interpolated
(3) Rate Locked at Closing, Fixed for 7-Yrs (Early Rate Lock Available)
(4) Retail/Office/Industrial
5-Year Fixed-Rate Loan Term (25/30 Yr. Amortization)
LTV/DSCR/DY Spread Range (1) Swap Rate Range (2)
Multifamily 75/1.25/8.5 320 400 1.49% 4.69% 5.49%
Commercial (3) 75/1.25/8.5 320 400 1.49% 4.69% 5.49%
Hospitality 70/1.40/11.0 345 425 1.49% 4.94% 5.74%
Self-Storage 70/1.35/9.0 320 400 1.49% 4.69% 5.49%
9/28/2015 5-Yr Swap Rate: 1.49%
http://ycharts.com/indicators/5_year_swap_rate
(1) Spread and Rate Lower for Low Leverage (50%) Loans > $10 million (approx. 25 bps)
(2) Rate Locked at Closing, Fixed for 5-Yrs (Early Rate Lock Available)
(3) Retail/Office/Industrial
LTV: Loan Amount Divided by Appraised Value.  A full-narrative MAI appraisal ordered by
a CMBS conduit lender from a nationally recognized firm (i.e. CB Richard-Ellis)
DSCR: Annual Underwritten Net Cash Flow (w/vacancy & reserves) divided by annual
mortgage payment based on estimated interest rate and amortization schedule
Debt Yield: Underwritten Net Cash Flow (w/vacancy & reserves) divided by Loan Amount

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Asset Based Finance

Asset Based Finance provides businesses with immediate cash flow, based on a percentage of value of the company’s assets such as AR, inventory, and equipment. Microplus Capital, LLC can then offer a revolving line of credit based on the percentage of a company’s assets.

Why use Asset Based Financing?

Our Asset based lending is quick to provide the funding business owners need, when they need it. Capital from asset based finance can support companies through growth, acquisitions, and reconstructions.

Asset based financing is generally more flexible than traditional financing because the borrower only pay interest on the amount of funding they draw, which can make it more cost effective than traditional loans as well.

Asset based lending is ideal for companies looking for a quick and flexible financing option, when a traditional loan is difficult to obtain.

Call Us Today Toll Free: 888-321-4440 or Simply Contact Us For More Details Below …