Best Rates for CDs

"Highest CD Rate Survey + Current US Treasury Rates"

Current Table at => Very Best CD Rates

Term as of 7/10/10	Highest Rate (APY)	Where? (Click link for Full Rate Sheets)
Vanguard Daily	0.09%	Vanguard Prime Money Market Fund
6 Month CD	1.23%	Aurora Bank
1 Year CD	1.55%	Sallie Mae Bank & 1.50%@ Discover Bank
1 Yr US Treasury	0.29%	US Treasury Rate Quote
18 - Month CD	1.71%	Aurora Bank
2 Year CD	2.00%	Stonebridge Bank & Bank of Internet USA
3 Year CD	2.50%	newDominionDIRECT
4 Year CD	2.92%	Bank of Internet USA
5 Year CD	3.06%	Astoria Federal Savings Bank
5 Yr US Treasury	1.83%	US Treasury Rate Quote
7 Year CD	3.51%	Pentagon Federal CU aka PenFed
10 Year CD	3.50%	Discover Bank
10 Yr US Treasury	3.04%	US Treasury Rate Quote

Vanguard Money Market Rates shown for Reference 

Full CD Rate Table at  Very Best CD Rates

How many of you remember getting double digit interest rates on money market funds and CD accounts in the 1980s?

Currently, year-over-year CPI inflation is at 2.0% yet the top 2-YR CD term of the five largest banks is only 1.50% at Chase Bank! We are losing money, when adjusted for inflation, by holding it in safe CDs, savings accounts and especially US Treasuries!!

I heard on CNBC-TV that banks have over one trillion US dollars above what they need to be "well capitalized" yet they don't lend it out because they are afraid they won't get it paid back. I suspect there is more to it such as they still have bad mortgages on their books that will require that capital if we get a double dip recession so they are being safe. Since they have all this money, they have no incentive to pay high interest rates to attract more deposits.

Bank	CD Rates - APY in % as of 7/9/10 for $10,001
	6- Mo	12 Mo	2-Yrs	3-Yrs	5-Yrs
Bank of America (BAC)	0.35	0.80 promo	1.10	1.75	2.50
JP Morgan Chase (JPM) Bought WaMu	0.50 7-mo	1.01 13-mo	1.50	2.00	2.50
Citibank (C)	0.35	0.75	1.01	1.50	2.25
Wells Fargo Bank (WFC) Bought Wachovia	0.15	0.30	1.40 27 Mo	1.90 35 Mo	2.65% 58 Mo
HSBC Bank North America - Branch Rates	0.10	1.01	0.75	0.75	1.70
HSBC Online Rates	0.10	1.01	0.75	NA	NA
US Treasury Rates	0.19	0.28	0.62	1.01	1.84

See the full survey at CD Rates at Largest US Banks

It is amazing to me how CD rates have worked their way down to nearly nothing since I graduated UC Berkeley in 1979.

Check out these historical CD rate graphs

1-Month CD Daily Chart Click charts to see full size images

6-Month CD Daily Chart

Related information:

• US Treasury Rates at a Glance
  
• World Stock Markets at a Glance

With rates so low, banks will try to sell you their annuity products. Make sure you read my article: Beware of Annuities

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 152% (a double plus another 52%!!) vs. the S&P500 UP a tiny 1.4% vs. NASDAQ  down 3.8%!!!   (All through 6/30/10)

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Bernie Madoff Vs Social Security

Al W posted this observation on our facebook "Investing for the Long Term" forum:

Under the guise of "Stuff you can't make up", kirk posted a parody about ObamaCare.

There is more to financial burden that just health care. How about Social Security?

Subject: Bernie Madoff Vs Social Security

Why did Bernie Madoff go to prison? To make it simple, he talked people into investing with him. Trouble was, he didn't invest their money. As time rolled on, he simply took the money from the new investors to pay off the old investors. Finally there were too many old investors and not enough money from new investors coming in to keep the payments going. Next thing you know, Madoff is one of the most hated men in America and he is off to jail.

Some of you know this… but not enough of you do. Madoff did to his investors what the government has been doing to us for over 60 years with Social Security. There is no meaningful difference between the two schemes… except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.

Do you need a comparison? Well here's a nifty little Table.

BERNIE MADOFF:Takes money from investors with the promise that the money will be invested and made available to them later.
.
SOCIAL SECURITY: Takes money from wage earners with the promise that the money will be invested in a "Trust Fund" and made available later.
-----
BERNIE MADOFF: Instead of investing the money, Madoff spends it on nice homes in the Hamptons and yachts.
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SOCIAL SECURITY: Instead of depositing money in a Trust Fund, the politicians use it for general spending and vote buying.
------
BERNIE MADOFF: When the time comes to pay the investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.
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SOCIAL SECURITY: When benefits for older investors become due, the politicians pay the old geezers with money taken from younger and newer wage earners.
------
BERNIE MADOFF: When Madoff's scheme is discovered, all hell breaks loose. New investors won't give him any more cash.
.
SOCIAL SECURITY: When Social Security runs out of money, they simply force the taxpayers to send them more.
------
Bernie Madoff is in jail.
The politicians remain in Washington .
------

'The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service examination.' - Ronald Reagan

Best CD Rates, Treasury Auction Schedule & Unemployment Rate

Best CD Rates - Survey of Largest US Banks

Bank	CD Rates - APY in % as of 11/04/09 for $10,000
	6- Mo	11-13 Mo	18-Mo	2-Yrs	3-Yrs	5-Yrs
Bank of America	0.50	1.25 Promo	1.00	2.01	2.30	3.01
JP Morgan Chase	0.75	1.25	1.50	2.00	NA	4yrs 3.00%
Citibank	0.65	1.30	1.35	2.00	2.15	3.00
Wells Fargo Bank	0.35	0.90 16 Mo	1.40 21 Mo	1.90 28 Mo	NA	NA
HSBC Bank North America	0.25	0.55	0.55 15-mo	0.75	0.75	1.01
HSBC Online Rates	1.10	1.50	1.50 15-mo	1.30	NA	NA
US Treasury Rates	0.16	0.36	NA	0.94	1.46	2.38

To see the table in full size with the current rates, click the

• Best CD Rate Survey of the Top US Banks

US Treasury Auction Schedule - Upcoming Offerings

In every issue of The Retirement Advisor Newsletter we cover upcoming US Treasury Auctions with a more complete auction calendar. We also give our estimate for rates for 3 month bills to 30-year bonds plus 5-, 10- and 20-year TIPS.

US Unemployment Rate

" Historical Chart 1948 to October 2009"

Click chart to see article and full size image

Financial Weapons of Mass Destruction

James Kenney (Fort Lauderdale, FL) wrote on our facebook "Investing for the Long Term" forum:

I'm sure it is all very confusing so that the middle class can taken yet again by the very-rcih and their political lackeys. As far as I can understand it things will spiral down as long as real estate prices continue to decline. The toxic assets include the collateralized debt obligations (CDOs) which the Wall Street geniuses put together. Many CDOs are loaded with lot's of mortgages for properties that have negative equity. Since large numbers of people with negative equity and/or decreased ability to pay due to job loss and a slowing economy are no longer paying their mortgages the banks/investors are geting shafted. Even worse, these geniuses sold thinly disguised "insurance" (credit default swaps - CDS) to investors/financial institutions around the world. These CDS were often highly leveraged to get big returns. Problem is that when the underlying assets (CDOs mostly) started to default this leverage is magnifying the losses as financial institutions have to make good on their "insurance". Of course, thanks to the Democrats and Republicans and their lobbyists buddies these "insurance" derivatives were not regulated as if they were insurance so the "insurers" didn't have sufficient assets to cover their bad bets. Now they want taxpayers to bail them out and that is what they are trying in DC now.

Because banks are required to have some "reserves" (money/liquid assets) as a modest percentage of their loans as real estate continues to tumble down they have less and less reserves despite all the money the FED and US Treasury are giving them. Until their reserves are adequate they are not supposed to lend out (the leveraged) money they don't technically have. If/when real estate prices bottom then the downward spiral stops because banks will have sufficient money to lend out again (liquidity). In the interim lot's of businesses are forced to cut back growth becausethey cannot get money to grow. Indeed, as growth has turned to shrinkage and consumers are now spending less demand for goods and services is falling and with it corporate income.

The big question is is this downward spiral going to continue to the point where we are in a Depression or will it turn around before the economy sinks that low. I saw a chart showing that corporate earnings are now lower (in inflation adjusted dollars) than they were back in the mid-1960s. Unless investors believe this decline is transient and will soon reverse I think we will likely see continued downward pressure on most stock prices.

Desert Home Prices Falling Fast

Case-Shiller is out with their home price index again today and I thought I'd take a look at the desert cities of Phoenix and Las Vegas.

Prices generally fell faster in July than in previous months with only 6 of the 20 cities reporting home price gains. New home sales data indicates that the higher-priced homes were harder hit. Jumbo mortgages are proving to be hard to get at reasonable rates. Going from a $400,000 mortgage to a $425,000 jumbo mortgage will push your payment up by $500 per month for a 30-year fixed rate. That's hit home prices in the more expensive coastal areas, but the desert has a different set of problems.

Arizona and Nevada saw tremendous population growth in recent years. That helped fuel a housing boom. But the torrent of people headed to the desert, has dried up in recent months. Phoenix area schools show no increase in enrollment this year compared with last. Tucson school enrollment is down by 2%. So is enrollment in Flagstaff schools. Phoenix, in particular, has thousands of foreclosed and vacant homes. The following graph shows the historical price pattern and my expectation through August of 2009.

Bear Market Statistics

This graph shows the DJIA and the S&P500 are currently at bear market levels less then 2% above their July 2008 lows. Us asset allocators have our fingers crossed that the S&P500 does not make a fifth lower low in a ongoing bear market.


The NASDAQ is showing relative strength at 4% above its bear market low set in March 2008. The worry with the NASDAQ is it broke the potentially bullish trend of higher lows by making low Friday that was lower then its July and August lows.

It was refreshing to hear bond guru, Bill Gross of PIMCO, tell his readers and people on CNBC last week that he was too early buying troubled bonds which has resulted in losses.

From Bill Gross's September 2008 Investment Outlook

Too bad for us and for everyone else who bought too soon. There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.”

Bear Market Statistics:

S&P500 Chart

Last Market High 10/11/07 at 1,576.09
Last Market low 07/11/08 at 1,200.44
Current S&P500 Price 1,242.31
Decline in Points = 333.78
Decline in percent = 21.2%
Max Decline = 23.8%

=>This means the decline from intraday high to intraday low is 23.8% and we are currently 21.2% off the peak.

=>The decline in the S&P500 from the closing high to the closing low was 22.4%

DJIA Charts

Last Market High 10/11/07 at 14,279.96
Last Market Low 07/15/08 at 10,827.71
Current DJIA Price 11,220.96
Decline in Points = 3,059.00
Decline in percent = 21.4%
Max Decline = 24.2%

=>This means the decline from high to low has been 24.2% and we are currently 21.4% off the peak.

=>The decline in the DOW off the closing high to the closing low was 22.6%

NASDAQ Charts

Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,255.88
Decline in Points = 605.63
Decline in percent = 21.2%
Max Decline = 24.7%

=>This means the decline from intraday high to intraday low is 24.7% and we are currently 0.211646998 21.2% off the peak.

=>The decline in the NASDAQ off the closing high to the closing low was 24.1%

CAL (2-0) won 66 to 3, GO BEARS!

==>Sept 6: Charlie Maxwell Says $300 Oil Inevitable <==

==> More Oil Price Charts <==

==> Very Best CD Rates with FDIC <==

Denver and Minneapolis Home Prices

S&P is out with the new Case-Schiller Home Price Index for June. In May, 7 of the 20 cities in the index showed an increase in average sales price from April. In June, 9 of the 20 cities showed a price increase. Some of this is a result of normal seasonal patterns, but I believe it provides further proof that the worst of the home price declines are behind us.

Two of the cities that show an increase for both May and June are hosts to the Democratic and Republican National Conventions. So I thought that this month I'd focus on Denver and Minneapolis.

Both cities have more severe climate swings than the California and Florida markets I looked at last month. In the past two years the seasonal effects on home prices there have been even more pronounced than usual. The following graph shows the historical price pattern and my expectation through August of 2009.

















The price swings upward in both cities is likely to last only for the summer, followed by a new, but more subdued price decline. Neither Denver nor Minneapolis have had prices run up as fast as the national averages, so they are not likely to fall much further.

Home Price Forecast

The Case-Shiller home price index fell again for the month of May. Home prices nationwide are down about 16% in the past 12 months. For most Americans, their home is their biggest investment. For them, a 16% decline in 12 months is brutal. An estimated 3 million homes will be foreclosed in 2008. That is flooding a real estate resale market that is now running at about 4.5 million homes per year. As a result, almost 2 out of 3 homes sold in the next 12 months will be foreclosures.

When foreclosures are a small fraction of the total real estate market, they don't affect the average home price. In a normal market Realtors won't even show a prospective homebuyer foreclosed homes. They either want to a) fix them up and flip them themselves for a quick profit or b) show the buyer something more expensive in order to earn a bigger commission. But the number of foreclosed homes has long passed the critical mass necessary to impact the average home price. One indication of this is the Realtors that are organizing bus tours of foreclosed homes.

At this time, every new foreclosure on the market lowers the average sales price. Every time a bank initiates a foreclosure, they are lowering the market price on the homes they are already trying to sell. It would make sense for the banks to tell borrowers that have missed a couple of payments, "Just pay us something. If you make at least half of your required payment we'll forestall initiating the foreclosure proceedings." Then they could focus on the serious deadbeats while they try to trim their inventory of homes that they already own. The result would be a higher average home price and reduced losses.

Unfortunately, the system is set up so that the company servicing the mortgage is not the same as the one that gets the partial payout when the home is foreclosed. The servicer is losing money with each missed payment, so the servicer has an incentive to foreclose as quickly as possible. But the servicer is not responsible for the value of the property when it is sold. To the servicer, what matters is cash flow, not loss mitigation. So as property values drop, homeowners have less incentive to make their monthly payments and foreclosure filings accelerate. The whole thing creates a negative feedback loop that floods the market with empty homes and reduces the value for all homeowners.

The drop in home prices has been long enough and hard enough that pessimism in the real estate and homebuilding industry is at an all time high. The prevailing wisdom is that this will continue for a long time to come. Yet the latest home price data offers a reason for hope. While home prices continue to drop, the veocity of the drop seemed to hit its peak in the first quarter of 2008. The rate at which home prices are decreasing slowed in April and May.

Some of this can be explained by seasonal patterns. Home prices tend to rise faster in April through August than during the rest of the year. But that seasonality explains only a small part of the flattening prices. It's dangerous to make long term projections based on just a few months of data flattening the curve, but it's now beginning to appear that home prices in general will continue to drop for the next 12 months or so, but are starting to stabilize.

Since California and Florida are two states of high interest, I've prepared two graphs that show the direction of home prices indicated by the current data. The graphs show forecast results up through August 2009.




























If you are interested in other cities, please reply to this post and let me know where your real estate interest is.

The data right now is pointing to a return to prices that represent a 4% to 5% annual return since 2000. Four percent is a sustainable level of return. The curves shown are simply a reversion to the mean. The data right now is not pointing to an overcorrection which would give us a 10-year annual return significantly less than 4%. If the economy were to go into a significant recession, an overcorrection would be not only possible, but likely.

Qout

S & P Earnings Estimates Update

S&P operating earnings estimates as posted by S&P for ‘08 and ’09. 

Operating earnings estimates continued their downward slide, accelerating this past week as reports poured in.  The 2009 estimates, IMO are not to be believed.  They project a 193.1% earnings growth in financials.  Want to buy land in Florida?

 

Report Dt 2008 2009

08/07/2007 106.59                 <-------2008 high

…

01/14/2008 100.32

01/22/2008 99.21

01/29.2008 99.00

02/05/2008 99.86

02/12/2008 99.51

02/19/2008 98.99

02/26/2008 98.63

03/04/2008 96.55

03/11/2008 96.71

03/18/2008 96.42

03/25/2008 96.26

03/31/2008 96.74

04/10/2008 96.79 115.42

04/16/2008 93.62 113.30

04/22/2008 92.31 112.17

04/28/2008 91.69 111.81

05/06/2008 90.91 110.29

05/13/2008 89.43 110.44

05/20/2008 89.29 109.53

05/27/2008 89.07 108.98

06/03/2008 89.27 109.04

06/10/2008 89.38 110.19

06/16/2008 89.03 109.94

06/24/2008 88.04 108.98

06/30/2008 87.83 108.77

07/08/2008 87.83 108.24

07/15/2008 86.73 108.22

07/22/2008 83.84 108.60

.

At Brinkers 16 to 17 times operating earnings, applying it to the S&P 7/22 estimate places the value for 2008 now at 1341 to 1425, and 2009 at 1738 to 1846. (FYI, the 2006 actual earnings were 87.72 and 2007 actual earnings were 82.54)

.

Bob last projected 1600 near the end of ’08 or into ’09.  On 4/6/08, he stated on the show that he expected record highs near the end of ’08, which means 1565.15 on a closing basis, as Bob mentioned this number on his show.  On the 7/26/08 show he stated “Would the market get to new all-time-highs within your time-frame of 1 to 3 years? Yeah. For me, my opinion on that would be -- without question."

.

Brinker said on Saturday April 5, 2008: “My number for the S&P 500 for 2008 is way below, way below the Wall Street number for 2008.”  LOL, see Kirks comment

.

Bob Norton's Evergreen was last reported July 1, …an average recessionary profit pullback indicates that earnings could be as low as $77.50 next year. Low interest rates and 4% inflation suggest to us that the market will likely trade within a volatile range of 1225-1350 during the next twelve months.”

And also,

“In our last Quarterly Market Outlook, we projected that the market (S&P 500) would likely trade within a range of 1250-1450 for the remainder of 2008. After climbing to 1425 in mid-May, stocks have since backed-off to the lower end of our trading range and are unlikely to once again push through the upper end as consensus profit expectations for 2008 and 2009 are too high, in our opinion, and are expected to plunge in the months and quarters ahead. Since the S&P 500 is approaching bear market territory (1250 represents a 20% drop from last October's high of 1550) it appears the market is already discounting the prospects for recession in early 2009. Huge sums of cash on the sidelines, low sentiment levels, and stimulus-fueled economic gains may help set the stage for a second half rebound to the 1350 area. Downside support is in the 1225 range.”

 

John Mauldin commented in  "Outside the Box" that :  "As if this wasn't bad enough, in the past we have shown that analysts tend to be around about 10% too optimistic in their year-ahead forecasts of the earnings level. However, in recession years this jumps to 30% too optimistic. "

 

See Normxxx’s interesting posting “The Real P/E Ratio” here