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  • Are the robots coming for us? Ask AI.

    Are the robots coming for us? Ask AI.

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    As we enter artificial intelligence’s brave new world, humans have naturally come to fear what the future holds.  Do computers like HAL from 2001: A Space Odyssey pose an existential threat? Or in an incident not from Hollywood fiction, an Air Force official’s recent remarks implying that a drone had autonomously changed course and killed its operator, only to be later declared a hypothetical, certainly raised alarm.

    Closer to home for most of us, the release of large language models like ChatGPT have renewed worries about automation, reminiscent of earlier fears about mechanization. AI has advanced far beyond rote data-storage tasks and can even pass the bar exam, or write news, or research papers, leading to fears of massive white-collar unemployment.

    But, as new research looking at data of job churn over the past two decades finds, the impact of automation on workers and industries is, in fact, pretty hard to predict given the complexity of the labor market, requiring carefully crafted policies that take these nuances into account.

    First, changes in exposure to automation are not intuitive: they do not easily mesh with “blue-collar” and “white-collar” jobs, as typically defined. Instead, automation is more closely linked to the tasks and characteristics of each job, such as repetitiveness and face-to-face interactions. That translates to the three most automation-exposed jobs: office and administrative support, production, and business and financial operations occupations.

    Meanwhile, the three least automation-exposed jobs are in personal care; installation, maintenance and repair occupations; and teaching. In other words, even with the Internet of Things controlling your HVAC system, it cannot fix itself when it needs new refrigerant, but its smart-panel interface can help the technician diagnose the problem remotely quickly and know what equipment to bring for a repair. But back-end accountants in that company may not fare as well in the AI jobs sweepstakes.

    While automation can displace workers, history suggests that new technology also tends to boost productivity and create new jobs. Consider the automobile: while horses and buggies are outdated, we still need humans to drive (at least until autonomous vehicles come to full fruition), and the assembly line helped automate manufacturing with entire new classes of jobs created for every part of a car and all its electronic systems, with almost 1 million U.S. workers in auto manufacturing today.

    But automation has continued in the auto industry over the decades, with robots helping to make hard and heavy physical labor tasks easier, without fully displacing workers.  So there is a push-pull with automation, and the relative sizes of these countervailing effects remains an area of active scholarly debate.

    “ It is rare for an entire job class to disappear overnight; changes mainly take place over generations ”

    Second, it is rare for an entire job class to disappear overnight; changes mainly take place over generations. The research shows that newer generations of workers, perhaps deterred by the job insecurity observed in earlier generations and lured by high wages in the technology sector, are less inclined to enter automation-prone jobs than those before them. However, after embarking down those career paths, workers tend to stay in their fields, even if the prospects of automation loom large, likely because reskilling is time-consuming and expensive. It is relatively easy for recent high school graduates to opt for tech-centric college degrees like computer science, but learning new skills like coding is more difficult for mid-career professionals in automation-susceptible fields like manufacturing.

    Adjustments to automation can be slow on the business side as well. Incorporating automated technology takes time because modern production tasks tend to be so intertwined that automating one part of a business can affect all other operations. For example, when AT&T, once the country’s largest firm, began replacing telephone operators with mechanical switchboards, they found that operators had become central to the complex production system that grew around them, which is why there are fewer operators today, but some still exist.

    Third, the research found that the share of workers in highly automation-exposed occupations tends to be clustered, ranging from about 25% to 36% across commuting zones. The least-exposed areas in the U.S. are across the Mountain West, thanks to the area’s high shares of workers in management, retail sales and construction (which hasn’t had much automation or productivity improvement in decades but additive manufacturing may be a game-changer), as well as those on the East and West coasts, with their more innovative finance and tech industries.

    On the other hand, those most exposed to automation tend to be located in the Great Plains and Rust Belt, namely due to agriculture. In spite of the fact that U.S. agriculture has been exposed to automation for over a century (more efficient machines and advances in biotechnology), it has become even more technology-driven recently, making ag workers more likely to be impacted by automation.

    Read: How artificial intelligence can make hiring bias worse

    So will the robots take over your job soon?  More likely, they will make our jobs easier and more efficient. Trying to slow the adoption of technology is both futile and counterproductive: taxing or overregulating tech adoption may backfire, especially given global competitiveness and other countries who may not pause. While the advent of a new era of automation is likely to be both gradually incorporated and result in complements to human labor rather than full replacement, thoughtful policies can help disrupted workers transition to new and better opportunities, ensuring we can harness the transformative power of automation and foster a future of work that benefits all.

    Eric Carlson is associate economist at the Economic Innovation Group; DJ Nordquist is EIG’s executive vice president.

    More: AI is ready to take on menial tasks in the workplace, but don’t sweat robot replacement (just yet)

    Also read: ‘Make friends with this technology’: Yes, AI is coming for your job. Here’s how to prepare.

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  • The debt ceiling deal: This clause is bad for Social Security

    The debt ceiling deal: This clause is bad for Social Security

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    If there were no tax cheats in America, there would be no Social Security crisis. Benefits could be paid, and payroll taxes kept the same, for the next 75 years.

    That’s not me talking. That’s math. It comes from the number crunchers at the Social Security Administration and the Internal Revenue Service.

    And it explains why those of us who support Social Security should be pounding the table in outrage over one clause of the Biden-McCarthy debt ceiling deal: The part where the president has to retreat from his crackdown on tax cheats just so McCarthy and the House Republicans would agree to prevent America defaulting on its debts.

    It’s just two years since the administration got into law an extra $80 billion for the IRS to beef up enforcement. That was supposed to include hiring an estimated 87,000 IRS agents. 

    OK, so nobody likes paying taxes and nobody likes the IRS. Cue the inevitable critiques of an IRS tax “army,” and so on. But this isn’t about whether taxes should be higher or lower. It’s about whether everyone should pay the taxes that they owe.

    After all, if we’re going to cut taxes, shouldn’t they apply to those of us who obey the laws as well as those who don’t? Or do we just support the “Tax Cuts for Criminals” Act?

    Why would any voter rally around a platform of “I stand with tax cheats?”

    The Congressional Budget Office calculated that the extra funding for the IRS would have reduced the deficit, because it would more than pay for itself. But it’s now been cut by an estimated $21 billion out of $80 billion.

    If this seems abstract, consider the context and how it affects you and your retirement — and the retirements of everyone you know.

    Social Security is now running at an $80 billion annual deficit. That’s the amount benefits are expected to exceed payroll taxes this year. (So say the Social Security Administration’s trustees.)

    Next year, that deficit is expected to top $150 billion. By 2026, we’re looking at $200 billion and rising. The trust fund will run out of cash by 2034, and without extra payroll taxes will have to slash benefits by a fifth or more.

    Over the next 75 years, says the Congressional Budget Office, the entire funding gap for the program will average about 1.7% of gross domestic product per year.

    Meanwhile, how much are tax cheats stealing from the rest of us? A multiple of that.

    According to the most recent estimates from the IRS, tax cheats steal about $470 billion a year. And that figure is four years out of date, relating to 2019. That’s the figure after enforcement measures.

    Oh, and the Treasury Inspector General for Tax Administration says that’s a lowball number.

    But it still worked out at around 12% of all the taxes people were supposed to pay (including payroll taxes). And around 2.3% of GDP.

    Over the next 10 years, based on similar ratios to GDP, that would come to another $3.3 billion. 

    Sure, Social Security’s trust fund is theoretically separate from the rest of Uncle Sam’s finances. But that’s an accounting issue: A distinction without a difference.

    Social Security is America’s retirement plan. Few could retire in dignity without it. Yet it is facing a fiscal crisis. By 2034, without changes, the program will be forced to cut benefits — drastically.

    Some people want to cut benefits. Others want to raise the retirement age, which also means cutting benefits. Others want to raise taxes on benefits — which also means cutting benefits. Others want to hike payroll taxes, either on all of us or (initially) only on very high earners.

    At last — just 40 or so years out of date — some are starting to talk about investing some of the trust fund like nearly every other pension plan in the world, in high-returning stocks instead of just low-returning Treasury bonds. 

    (It is hard for me to believe that it’s now almost 16 years since I first wrote about this ridiculously obvious fix And, yes, I’ve been boring readers on the subject ever since, including here and most recently here, and, no, I have no plans to stop.)

    But if investing some of the trust fund in stocks is a no-brainer, so, too, is insisting everyone obey the law and pay the taxes they actually owe each year. I mean, shouldn’t we do that before we think about raising taxes even further on those who abide by the law?

    How could anyone object? Any party that believes in law and order would support enforcing, er, law and order on tax evasion. And any party of fiscal conservatism would support measures, like tax enforcement, to narrow the deficit.

    And, actually, any party that truly supported lower taxes for all would be tough on tax evasion: It is precisely this $500 billion in evasion by a small, scofflaw minority that forces the rest of us to pay more. We have, quite literally, a tax on obeying the law.

    One of the many arguments in favor of taxing assets or wealth, instead of just income, is that enforcement would be easier and evasion much harder. 

    Washington, D.C., seems to be a place where people come up with complex proposals just so they can avoid the simple, fair ones.

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  • 3 changes to Social Security benefits we could see in the future

    3 changes to Social Security benefits we could see in the future

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    Social Security has been a vital safety net for retirees, disabled individuals, and surviving family members for decades. However, the program is facing financial challenges that may necessitate changes in the coming years. Let’s explore three potential ways Social Security benefits could change in the future.

    Adjustments to the full retirement age

    One possible change could involve adjusting the full retirement age (FRA), which is the age at which individuals can receive full Social Security benefits. Currently set at 67 for those born in 1960 or later, some experts argue that increasing the full retirement age could help address the program’s funding shortfall. However, this change could mean longer working lives for future retirees and careful consideration of how it impacts individuals with physically demanding jobs or limited job opportunities later in life.

    Read: Does it matter if Social Security checks are delayed?

    This change would also result in a smaller benefit for the earliest filers at age 62, since the reductions are based on the amount of time between your filing age and the Full Retirement Age. If the FRA is increased to 68, for example, filing at age 62 would result in a benefit that is only 65% of your Full Retirement Age benefit amount.

    In addition, unless the maximum filing age is adjusted, Delayed Retirement Credits (DRCs) would also be limited under such a scenario. Currently when your FRA is 67 you have the opportunity to increase your benefit by 24% (8% per year for DRCs), but if the FRA is 68, the increase would only be 16% at maximum.

    Means-testing benefits

    Another potential change is means-testing Social Security benefits. Means-testing would involve adjusting benefit amounts based on an individual’s income or assets. Supporters argue that this would ensure benefits are targeted to those who need them most, potentially reducing the strain on the program’s finances. However, critics express concerns about the potential impact on middle-income earners who have paid into the system throughout their working lives and rely on Social Security as a significant part of their retirement income.

    Read: What happens to Social Security payments if no debt-ceiling deal is reached?

    An interesting concept I’ve recently seen bandied about involves a trade-off between Social Security benefits and Required Minimum Distributions (RMDs) from retirement plans. Essentially an individual could forgo Social Security benefits (at least partially if not fully) in exchange for looser restrictions on RMDs – allowing for further deferral of taxation on retirement accounts.

    Benefit reductions

    In order to sustain the Social Security program, benefit reductions might be considered. This could involve various approaches such as adjusting the formula used to calculate benefits or implementing a scaling factor to reduce benefit amounts. While benefit reductions would aim to preserve the long-term viability of Social Security, they could pose challenges for retirees who rely heavily on those benefits to cover essential living expenses.

    Also see: This is what’s most likely to knock your retirement off course

    Most benefit reduction proposals in the pipeline are in concert with expanding the tax base, while at the same time limiting benefits to the upper echelons of earnings levels. In these cases the taxable wage base is either expanded or removed altogether, and the amounts above the current wage base are credited for benefits at a minuscule rate.

    It’s important to note that any changes to Social Security benefits would likely be accompanied by broader discussions and careful consideration from policy makers. The goal would be to strike a balance between ensuring the program’s financial stability and protecting the well-being of current and future retirees.

    As an individual planning for retirement, it’s crucial to stay informed about potential changes to Social Security benefits. Keeping track of legislative proposals and staying engaged in the conversation can help you adapt your retirement plans accordingly. Consider consulting with a financial adviser who specializes in retirement planning to assess the potential impact on your retirement income and explore other strategies to supplement your savings.

    Read: This lawmaker’s ‘big idea’ could fix most—but not all—of the Social Security crisis

    Social Security benefits may undergo changes in the future as policy makers grapple with the program’s financial challenges. Adjustments to the full retirement age, means-testing benefits, and benefit reductions are among the potential changes that could be considered. By staying informed and seeking professional guidance, you can navigate these potential changes and make informed decisions to secure your financial well-being during retirement.

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  • ‘Sell’ signals are flashing across the stock market now. But bulls still have one chance.

    ‘Sell’ signals are flashing across the stock market now. But bulls still have one chance.

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    The stock market, as measured by the S&P 500 Index SPX, has struggled to maintain the rally that began in mid-March, and now we are getting new sell signals from some of our internal indicators.

    SPX was turned back by resistance near 4200 for the third time since last August. That is an extremely strong resistance area now. Moreover, there is further resistance at 4300. On the downside for SPX, there is technically support at 3970, where the small gaps exist on the SPX chart. A close below 3950 would be extremely bearish and…

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  • When workers are an employer’s No. 1 priority, stockholders benefit too

    When workers are an employer’s No. 1 priority, stockholders benefit too

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    The deep uncertainty that the COVID pandemic created in the workforce hasn’t waned. U.S. workers are struggling with inflation, burnout, and fresh waves of layoffs. This comes as people expect more from employers — more leadership, more urgency, more action, and better jobs.

    The public’s perspective is clear and consistent: companies need to prioritize their employees. In today’s unstable economic climate, worker wages and treatment are more important to Americans than ever.

    When it comes to creating U.S. jobs with strong wages, good benefits, safe environments and opportunities for upward mobility, a handful of companies lead the pack.

    Bank of America
    BAC,
    NVIDIA
    NVDA
    and Microsoft
    MSFT
    are the top-three companies in JUST Capital’s 2023 rankings of America’s most JUST companies. They all share one crucial thing in common — a clear commitment to addressing worker issues and investing in employees.

    Since 2018, JUST Capital’s rankings have provided a snapshot of how U.S. companies are measuring up to the public’s priorities, as determined through an annual survey to identify issues that define principled business behavior. Companies that are just provide a clear benefit for investors. For example, If an investor purchased an index tracking the JUST 100 companies at its March 2019 inception, the index would have generated 13.3% in excess return versus the Russell 1000 as of December 2022.

    Worker issues have risen to the forefront of Americans’ vision for what is a just business. Paying a fair and living wage, supporting workforce advancement, protecting worker health and safety, and providing benefits and work-life balance are top priorities for the public. Notably, regardless of demographic differences including political affiliation, Americans agree that companies should do more to address worker needs. 

    What makes a great company?

    Bank of America demonstrates strong leadership on the top priority — paying a fair, living wage – by raising its minimum wage to $22 per hour, a key step in its pledge to offer a $25 starting wage by 2025. In addition, employees receive an extensive benefit package, including 16 weeks of paid parental leave for primary- and secondary caregivers, and career development opportunities through tuition assistance and professional training.

    NVIDIA works to ensure equal pay for equal work, performing detailed pay equity analyses, and is one of only a few companies to disclose pay-analysis results separated by racial and ethnic categories. Like Bank of America, NVIDIA is one of 10% of Russell 1000
    RUI
    companies that offer at least 12 weeks of paid parental leave for both caregivers, providing 22 weeks of paid leave to primary caregivers.

    Microsoft offers at least 12 weeks of parental leave for both caregivers, in addition many other generous paid-time-off benefits, including 15 days of paid vacation and an additional 10 days of paid sick leave for every worker — a policy still rare for many companies. Additionally, Microsoft discloses the results of its pay-equity analyses, going above and beyond other companies by disaggregating pay ratios for specific racial and ethnic categories — including Black, Asian and Latinx — all of whom are paid on par with their white counterparts.

    “ When companies ensure the economic security, advancement, equity and safety of their workforces, employees are more engaged and productive. ”

    These efforts provide tangible benefits to employees, but prioritizing workers offers much more to companies than just an assurance of moral good. When companies ensure the economic security, advancement, equity, and safety of their workforces employees are more engaged and productive, strengthening their companies’ business in turn.

    Americans expect the private sector to better support employees. Effective business leadership today puts workers at the center of an organization’s strategy. When businesses take this approach, we get much closer to an economy that works for all Americans.

    Alison Omens is chief strategy officer at JUST Capital. 

    Also read: Tech companies are hiring — a lot — despite recent wave of layoffs

    More: Unemployment rate is now 3.5%. Is this the last chance for job switchers to jump ship?

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  • Sen. Sherrod Brown: American consumers losing power over their savings and paychecks is an emergency, too.

    Sen. Sherrod Brown: American consumers losing power over their savings and paychecks is an emergency, too.

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    The collapse of Silicon Valley Bank sent shockwaves through the global economy and had the makings of another crisis. Depositors raced to withdraw money. Banks worried about the risk of contagion. I spent that weekend on the phone with small business owners in Ohio who didn’t know whether they’d be able to make payroll the next week. One woman was in tears, worried about whether she’d be able to pay her workers. 

    The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve responded quickly, took control of the bank, and contained the fallout. Consumers’ and small businesses’ money was safe. That Ohio small business was able to get paychecks out.

    The regulators were able to protect Americans’ money from incompetent bank executives because when Congress created the Federal Reserve in 1913 and the FDIC in 1933, it ensured that their funding structures would remain independent from politicians in Congress and free from political whims. 

    But now, as the U.S. Supreme Court considers the case of Community Financial Services Association v. CFPB, these independent watchdogs’ ability to keep our financial system stable faces an existential threat.

    The Consumer Financial Protection Bureau is the only agency solely dedicated to protecting the paychecks and savings of ordinary Americans, not Wall Street executives or venture capitalists. Corporate interests have armies of lobbyists fighting for every tax break, every exemption, every opportunity to be let off the hook for scamming customers and preying on families.

    “ The CFPB’s funding structure is designed to be independent, just like the Fed and the FDIC. ”

    Ordinary Americans don’t have those lobbyists. They don’t have that kind of power. The CFPB is supposed to be their voice — to fight for them. The CFPB’s funding structure is designed to be independent, just like the Fed and the FDIC. Otherwise, its ability to do the job would be subject to political whims and special interests — interests that we know are far too often at odds with what’s best for consumers.

    Since its creation, the CFPB has returned $16 billion to more than 192 million consumers. It’s held Wall Street and big banks accountable for breaking the law and wronging their customers. It’s given working families more power to fight back when banks and shady lenders scam them out of their hard-earned money. 

    The CFPB can do this good work because it’s funded independently and protected from partisan attacks, just as the Fed and the FDIC are. So why, then, does Wall Street claim that only the CFPB’s funding structure is unconstitutional?

    Make no mistake — the only reason that Wall Street, its Republican allies in Congress, and overreaching courts have singled out the CFPB is because the agency doesn’t do their bidding. The CFPB doesn’t help Wall Street executives when they fail. It doesn’t extend them credit in favorable terms or offer them deposit insurance like the other regulators do. The CFPB’s funding structure isn’t unconstitutional — it just doesn’t work in Wall Street’s favor.

    If the Supreme Court rules against the CFPB, the $16 billion returned to consumers could be clawed back. What would happen then — will America’s banks really go back to the customers they’ve wronged with a collection tin?

    “ Invalidating the CFPB and its work would also put the U.S. economy — and especially the housing market — at risk. ”

    Invalidating the CFPB and its work would also put the U.S. economy — and especially the housing market — at risk. For more than a decade, the CFPB has set rules of the road for mortgages and credit cards and so much else, and given tools to help industry follow them. If these rules and the regulator that interprets them disappear, markets will come to a standstill. 

    By attacking the CFPB’s funding structure and putting consumers’ money at risk, Wall Street is putting the other financial regulators in danger, too. 

    The Fifth Circuit’s faulty ruling against the CFPB is astounding in its absurdity — the court ruled that the authorities that other financial agencies, like the Federal Reserve and the FDIC, have over the economy do not compare to the CFPB’s authorities. In other words, the court is claiming that the CFPB supposedly has more power in the economy than the Fed.

    That’s ridiculous. Look at the extraordinary steps taken to contain the failures of Silicon Valley Bank and Signature Bank — the idea that the CFPB could take action even close to as sweeping is laughable.

    But we know why the Fifth Circuit put that absurd assertion in there — they recognize the damage this case could do to these other vital agencies, and to our whole economy.

    “ Imagine what might happen if another series of banks failed and the FDIC did not have the funds to stop the crisis from spreading.”

    The FDIC’s own Inspector General has stated that the Fifth Circuit ruling could be applied to their agency. If that happens, the FDIC and other regulators could be subject to congressional budget deliberations, which we all know are far too partisan and have resulted in shutdowns. Imagine what might happen if another series of banks failed and the FDIC did not have the funds to stop the crisis from spreading, or the Deposit Insurance Fund to protect depositors’ money. Imagine if politicians caused a shutdown, and we were without a Federal Reserve. 

    U.S. financial regulators are independently funded so that they can respond quickly when crises happen. It’s telling, though, that plenty of people in Washington don’t seem to consider the CFPB’s issues in the same category. Washington and Wall Street expect the government to spring into action when businesses’ money is put at risk. But when workers are scammed out of their paychecks, that’s not an emergency — it’s business as usual. 

    When Wall Street’s abusive practices put consumers in crisis, the CFPB must have the funding and strength it needs to carry out its mission — to protect consumers’ hard-earned money. 

    U.S. Sen. Sherrod Brown (D-OH) is chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

    More: Supreme Court to hear case that will decide the future of consumer financial protection

    Also read: Senate Banking Chair Sherrod Brown sees bipartisan support for changes to deposit insurance

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  • SVB’s failure proves the U.S. needs tighter banking regulations so that all customers’ money is safe

    SVB’s failure proves the U.S. needs tighter banking regulations so that all customers’ money is safe

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    The run on Silicon Valley Bank (SVB) SIVB— on which nearly half of all venture-backed tech start-ups in the United States depend — is in part a rerun of a familiar story, but it’s more than that. Once again, economic policy and financial regulation has proven inadequate.

    The news about the second-biggest bank failure in U.S. history came just days after Federal Reserve Chair Jerome Powell assured Congress that the financial condition of America’s banks was sound. But the timing should not be surprising. Given the large and…

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  • 6 cheap stocks that famed value-fund manager Bill Nygren says can help you beat the market

    6 cheap stocks that famed value-fund manager Bill Nygren says can help you beat the market

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    These are tricky times in the stock market, so it pays to look to the best stock-fund managers for guidance on how to behave now. Veteran value investor Bill Nygren belongs in this camp, because the Oakmark Fund OAKMX he co-manages consistently and substantially outperforms its peers. 

    That isn’t easy, considering how many fund managers fail to do so. Nygren’s fund beats its Morningstar large-cap value index and category by more than four percentage points annualized over the past three years. It also outperforms at five and…

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  • The days of IRS forgiveness for RMD mistakes may soon be over

    The days of IRS forgiveness for RMD mistakes may soon be over

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    Katie St. Ores has a 100% track record of getting her tax clients out of paying the steep penalty for missing a required minimum distribution from their retirement funds. That amounts to only two households getting forgiveness, but it represents a lot of dollars, because the fee for any sort of mistake with RMDs is 50% of what’s missing, which could be tens of thousands of dollars.   

    Now’s the time to make things right if you forgot to make your RMD payment by Dec. 31 for 2022, paid the wrong amount or realized you got it wrong in a past year. The faster you correct it, the more likely the IRS is likely to waive the fines — and your chances are good overall, despite the agency’s stern reputation. 

    Beware, though, that new rules are going into effect in 2023 that could make the IRS less accommodating. For one thing, the age to start RMDs is going to 73 this year, and then 75 in 2033, which means the government is going to be hungry for the missing revenue. Even more important, the penalty will be reduced to 25% — or 10% if you’re really quick about reporting it. 

    The IRS doesn’t publicly track how many people miss or make mistakes with their RMDs, but financial advisers and tax professionals say it happens often enough, and they consider the IRS to be quite liberal about granting waivers. 

    St. Ores, who is a financial adviser and tax preparer based in McMinnville, Ore., thinks the IRS has responded generously so far because they know the rules are complex and mistakes happen.

    “They know people are getting up there in age, and so they’ve probably said up to now, let’s just grant it,” says St. Ores. 

    But the new penalties seem worded to avoid waivers in the future, especially because of the extra reduction to 10% if you act to quickly correct mistakes. Up to now, the IRS has taken pains to point out how to ask for a forgiveness on its website, but now there will be new emphasis on the lower penalties. 

    “The 50% penalty effectively ‘scared’ taxpayers to withdraw RMDs, so reducing the penalty could reduce the fear of additional tax, leading to more taxpayers missing their RMDs,” says St. Ores. “Between more taxpayers that potentially neglect to take their RMDs because of a not-as-high penalty and confusion over the current required age, the IRS will probably collect more taxes overall.”

    What to do about past mistakes

    There are a lot of different ways to mess up your required minimum distributions. The amount you’re supposed to pay is calculated according to a formula that takes your account balance of all your qualified tax-deferred accounts and multiplies it by a factor related to your age. 

    When you get started taking the money out, it works out generally to about 4% of the account value. You keep taking RMDs every year from your designated start time until the accounts are empty (or you die). The beginning age in the past was 70½, then it moved to 72, and now it’s changing to 73. 

    “These things can get complicated,” says Isaac Bradley, director of financial planning at Homrich Berg, an investment firm based in Atlanta. He advised one couple that accidentally took the distribution from the wrong spouse. 

    Another easy mistake is taking the wrong amount because of a math error. Sometimes, the problem is just about communication, because people tend to have multiple 401(k)s at old employers or several rollover IRAs that aren’t consolidated. The adviser helping make the calculations might not know of an account held at a different custodian, and that could throw off the whole equation.

    David Haas, a financial adviser and president of Cereus Financial Advisors, based in Franklin Lakes, N.J., has had to help family members correct RMDs, mostly having to do with inherited IRA accounts. 

    “You’re supposed to take RMD for the person who died, if they didn’t already take it,” he says, but a lot of people miss those in the confusion of grief. 

    Then once you inherit the account, you have to take RMDs over a 10 year period to empty the account. 

    “With one relative, she just kept on missing it and that was her fault. She didn’t realize what she was supposed to do. People don’t know the law, and it’s very confusing,” Haas says. 

    The first step is realizing you made a mistake, and then once you know that, pay the amount that’s missing. You need to file a special form with the IRS for the tax year in question (Form 5329), which you can send in at any point — you don’t have to wait until you file your next tax return. 

    If you want to ask for a waiver, you need to attach a letter explaining the mistake. If your request is not granted, then you pay the penalty.   

    While the process isn’t excessively complicated, you might want to consult with a tax professional to make sure you’re not making more mistakes in calculating the amount that’s missing. It could turn out to be a lot of paperwork if you have missed multiple years. 

    Kenneth Waltzer, a financial planner based in Los Angeles, had a client who did not realize he had inherited an IRA and missed the RMDs on it for five years. “He ignored emails about it,” says Waltzer. “When he came to us, it added up to over $100,000.” 

    For Katie St. Ores, the message going forward is going to be: Get it right the first time. Forgiveness may not be so easy to come by in the future. “I’m trying to stay on top of my clients taking their RMDs on time,” she says.  

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  • The limit for 401(k) contributions will jump nearly 10% in 2023, but it’s not always a good idea to max out your retirement investments

    The limit for 401(k) contributions will jump nearly 10% in 2023, but it’s not always a good idea to max out your retirement investments

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    The federal government will allow you to save nearly 10% more for retirement in 2023. But it’s not likely that many will take advantage of the tax break. The simple reason: Most people don’t make enough money to save more from their paychecks. 

    The average amount that participants contribute is 7.3% of their salary, according to Vanguard’s How America Saves 2022 report. At that rate, you’d have to make more than $300,000 to hit the $22,500 maximum amount an employee can save in a workplace plan for 2023, up from $20,500 in 2022. To put it another way, to save the max, you’d have to put aside $1,875 per month, or $865 per paycheck if you’re paid biweekly.

    Only 14% of participants saved the maximum amount in 2020. 

    Few people will also likely take advantage of the increase in the catch-up contribution limit, which will allow those 50 and older to contribute an extra $7,500, up by $1,000 from 2022, for a total of $30,000. Vanguard’s report found that only 16% of those eligible participate, even though 98% of plans allow for catch-up contributions. 

    “The max numbers are very high. A lot of people don’t make that kind of money,” says Anqi Chen, assistant director of savings research at the Center for Retirement Research at Boston College. 

    You might not need to max out

    Not everyone needs that kind of money put away for retirement. The key is to save over time to eventually be able to replace your current income in the future, supplemented by Social Security. If you’re making $60,000 now, it wouldn’t make sense to try to save more than a third of your yearly income just because the government says you can.

    “You don’t want to deprive yourself today or later on. You want to balance that over time, to be able to maintain the same standard of living in retirement,” says Chen. 

    The tried-and-true method to get people to contribute to retirement savings is a monetary incentive: matching funds. That “free money” on the table is at the base of every recommendation for how much workers should contribute. Give at least up to the match, everyone says. But almost all company retirement plans offer matching funds, and it hasn’t yet solved the retirement crisis facing most Americans who haven’t saved enough. 

    Trend in deferral rate changes

    Vanguard 2022

    If there’s a takeaway from the new IRS limits, it’s that pushing up the limits every year does help. Retirement contributions have been indexed for inflation since 2001 for good reason, because legislators recognized that the amount you need in the future is constantly going up.

    Ten years ago, the maximum for 401(k) contributions was $17,000 and going back 30 years to 1992, it was $8,728. In today’s dollars, that certainly wouldn’t be enough.

    At the same time, the government has to cap it somewhere to put a limit on tax deferral, so you can’t just shelter all your income from the IRS. 

    “These annual step-ups matter over time, because saving for retirement is a multidecade thing,” says David Stinnett, head of strategic retirement consulting for Vanguard.

    His advice for those who can’t max out, particularly younger workers, is to at least contribute up to the company match and then automatically escalate your savings rate over time to something in the rage of 12% to 15%. 

    It can be helpful to think of the amounts in dollar terms, rather than percentages.

    “By starting small and thinking of it as just ‘3 pennies per dollar’ earned and then adding ‘2 pennies per dollar’ each year going forward, you’ll get on track to those recommended savings rates in no time,” says Tom Armstrong, vice president of customer analytics and insight at Voya Financial.

    Escalating over time does seem to move the needle, according to Vanguard’s study, at least if you look at the rate of people coming to the table. The voluntary participation rate was only 66%, but the participation rate for automatic enrollment was 93%. 

    “What that does is make it easy to save more,” says Stinnett. 

    Related: This easy, free iPhone hack could be the most important estate planning move you make

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  • Surprise! CDs are back in vogue with Treasurys and I-bonds as safe havens for your cash

    Surprise! CDs are back in vogue with Treasurys and I-bonds as safe havens for your cash

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    If there’s a silver lining to the current economic situation that features soaring inflation and falling stocks, it’s that savers can get more for their money.

    Even after just a few months of rising interest rates, you can find online savings accounts yielding more than 3%. But that might not be good enough anymore. 

    “Rather than being grateful for yield, that’s going to change quickly into turning your nose up at yield,” says Matt McKay, a certified financial planner and partner at Briaud Financial Advisors in College Station, Texas. 

    The Federal Reserve continued to raise rates through the end of 2022, and yields on savings products are now high enough that they look like a safe haven compared with a stock market that’s in the red this year.

    And that means certificates of deposits, or CDs, are back in the conversation — even if that comes with caveats.

    Advisers still favor Treasury bills and notes and Series I savings bonds for getting the best combination of low risk and high yield, but some are looking more seriously at CDs now. And for the everyday investor doing it on their own, CDs offer an additional boost beyond a savings account without much effort. 

    “It’s good for anyone if they have cash sitting around, if you can pick up something — CDs, T-bills, whatever — it’s good to get something,” says McKay. 

    Remember CDs? 

    If you’re under 50, you might never have invested in a CD and have no memory of how investors used to build ladders of different maturities as a cornerstone of their portfolio. 

    “With younger clients, nobody ever talks about CDs — never, never, never,” says Dennis Nolte, a certified financial planner and financial consultant at Seacoast Investment Services in Orlando, Fla.  

    For some, however, CDs never went out of style. These promissory notes from banks, which have been around in the U.S. since the 1800s, come in maturities generally from three months to five years, in exchange for interest at maturity.

    You’re locked into the time period or face surrender charges that vary, unless you choose a more flexible, lower-interest option. The laddering strategy consists of buying CDs at different maturities and then reinvesting as they each come due. 

    Over the past few years, CDs haven’t been worth it for most savers, who could get as much from a high-yield savings account without restrictions. The average five-year CD would have nabbed you nearly 12% in 1984, but now the average five-year rate is just 0.74%, according to Bankrate.com. Back in 1984, CDs were nearly 50% of deposits at FDIC-insured banks, with $1.24 trillion held in the first quarter of that year. In 2022, there’s nearly the same dollar amount, which amounts to just 6.3% of deposits.

    With rates rising, you can find better-than-average deals, closing in on 4% at some banks or brokerages. Many have a $1,000 minimum purchase, but you can find fractional offers for as little as $100. 

    CDs versus Treasurys and I-bonds

    Treasury bills and notes come in roughly the same maturities as CDs, and are yielding slightly more currently. They also have no state tax burden on gains. 

    You can buy directly at TreasuryDirect.gov, with a $100 minimum, but to sell, you have to transfer holdings to a brokerage. Or you can buy and sell through a brokerage, but your minimums may be $1,000. 

    For I-bonds, you can only buy directly at TreasuryDirect.gov, with a minimum of $25 and a maximum of $10,000 per person a year, with gifts allowed to others up to $10,000 per recipient. I-bonds are indexed for inflation, with rates that reset every six months, and today are yielding 6.89% through April 2023. The biggest caveat is that you are locked into one year, and then face a surrender penalty of three months of interest if you cash out before five years. 

    A strategy for today’s rising rates

    If you are chasing yield and have money you don’t need for a year, then I-bonds are the place for the first $10,000.

    “It makes sense to max out I-bonds before investing in CDs,” says Ken Tumin, founder of DepositAcccounts.com. 

    Just make sure you’re motivated enough to navigate a still-wonky website and keep track of the investment on your own, because it won’t align with any of your other accounts. McKay had a client who was eager to jump into I-bonds, and he was mad at first that McKay hadn’t recommended it. “But then he called to complain, saying this is terrible, it’s so difficult,” he says. 

    If you have funds beyond that for savings, consider Treasury bills or notes because the rates are higher, says Tumin. Then consider CDs. That’s what Nolte is doing with some clients, particularly older ones who have past experience with them.

    “Why not get something guaranteed? It’s maybe not keeping pace with inflation, but you’re not losing principal,” says Nolte. 

    CD rates move more slowly than other products, so even after the next rate hike, this strategy would still apply. But already Tumin sees investors ready to lock into long-term CDs, anticipating a recession and a drop in interest rates. If rates subsequently fall, and CDs lag, they would eventually end up with a price advantage over Treasury investments. Then people like McKay will be advising clients to buy in earnest.

    “That’s when CDs become most attractive — as soon as rates peak or there are cuts [in rates],” says McKay.

    Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write me at beth.pinsker@marketwatch.com. 

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  • If you think a Santa Claus rally is coming to the stock market, this is how to play it

    If you think a Santa Claus rally is coming to the stock market, this is how to play it

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    The benchmark S&P 500 Index has finally fallen below the 3900- to 4100-point trading range.

    The move prompted an immediate reaction down to 3800, the next support level. (To see my suggestion for a so-called Santa Claus rally, please see the next item, below.)

    Frankly, I would have expected more selling after the S&P 500
    SPX,
    -2.32%
    broke a support level of that magnitude (perhaps a move to 3700).

    So, 3700 is the next support level, and then there is support at the yearly lows near 3500. On the upside, there is now resistance in the 3900-3940 area.

    The larger picture is that SPX is still in a downtrend, and that the last rally failed in early December right at the downtrend line that defines this bear market. The declining 200-day moving average (MA) was also in that same area, near 4100.

    We are closing our positions in the McMillan Volatility Band (MVB) buy signal that occurred in early October, and we will now wait for a new signal to set up. If SPX were to close below the lower -4σ Band (currently at 3760 and declining), that would be the first step toward a new buy signal. That does not appear to be imminent.

    Equity-only put-call ratios continue to rise and, thus, remain on sell signals. There has been some relatively heavy put buying in stock options over the past few weeks, and that has been a major contributing factor in the rise in the put-call ratios. These ratios are rather high on their charts, so they are considered to be in oversold territory. However, “oversold” does not mean “buy.”

    After the market broke below 3900, breadth was poor for the next two days. That pushed the breadth oscillators — which were already on sell signals dating back to December 5th — into oversold territory. We are now watching to see if they can generate buy signals. In fact, the NYSE breadth oscillator did generate a buy signal as of December 21st, but the “stocks only” oscillator has not. We generally require that any signal from this indicator (which is subject to whipsaws) persist for at least two consecutive days before considering it to be an actionable signal.

    New 52-week highs on the New York Stock Exchange have lagged for some time again, and thus the “new highs vs. new lows” indicator remains on a sell signal.

    So, the above indicators are relatively negative, but that is contrasted by the CBOE Volatility Index
    VIX,
    +15.50%
    indicators, which are more bullish. The VIX “spike peak” buy signal of December 13th remains in place. Moreover, the trend of VIX buy signal, which is a more intermediate-term signal, remains in place. VIX would have to rise above 26 to cancel out these buy signals.

    The construct of volatility derivatives remains bullish. That is, the term structures of the VIX futures and of the CBOE Volatility Indices slope upward. Moreover, the VIX futures are all trading at a premium to VIX. January VIX futures are now the front month, so we are watching for a warning sign, which would come if Jan VIX futures rose above the price of Feb VIX futures. That is not in danger of happening at this time.

    The seasonal patterns that supposedly “rule” between Thanskgiving and the beginning of the new trading year have not worked out this year. The last of those patterns is yet to come, though — the Santa Claus rally — and it may still be able to salvage something for the bulls.

    In summary, we continue to maintain a “core” bearish position and will continue to do so as long as SPX is in a downtrend. We will trade confirmed signals from our other indicators around that “core” position.

    New recommendation: Santa Claus rally

    The Santa Claus rally is a term and market seasonal pattern defined by Yale Hirsch over 60 years ago. It has a strong track record. The system is simple: The market rises over the last five trading days of one year and the first two trading days of the next year — a seven-day period.

    This year the system begins at the close of trading on Thursday, December 22nd (today). However, if that period does not produce a gain by SPX, that would be a further negative for stocks going forward.

    At the close of trading on Thursday, December 22nd,

    Buy 2 SPY Jan (13th) at-the-money calls

    And Sell 2 SPY Jan (13th) calls that are 15 points out of the money.

    There is no stop for this trade, except for time. If the SPDR S&P 500 ETF Trust
    SPY,
    -2.29%
    trades at the higher strike while the position is in place, then roll the entire spread up 15 points on each side. In any case, exit your spreads at the close of trading on Wednesday, January 4th (the second trading day of the new year).

    Follow-up action

    All stops are mental closing stops unless otherwise noted.

    We are using a “standard” rolling procedure for our SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread, or roll down in the case of a bear put spread. Stay in the same expiration, and keep the distance between the strikes the same unless otherwise recommended.

    Long 2 SPY Jan (20th) 375 puts and Short 2 Jan (20th) 355 puts: this is our “core” bearish position. As long as SPX remains in a downtrend, we want to maintain a position here.

    Long 1 SPY Jan (6th) 408 call and short 1 SPY Jan (6th) 423 call: this trade is based on the MVB buy signal, which was established on October 4th. We have already rolled up a couple of times and taken some profit out of the position. Close the remaining spread now.

    Long 2 KMB Jan (20th) 135 calls: we rolled this position up last week. The closing stop remains at 135.

    Long 2 IWM Jan (20th) 185 at-the-money calls and Short 2 IWM Jan (20th) 205 calls: this is our position based on the bullish seasonality between Thanksgiving and the second trading day of the new year. We will adjust this position if IWM rallies during the holding period, but initially there is no stop for the position, so the entire debit is at risk.

    Long 2 PSX Jan (20th) 105 puts: we intended to hold these puts as long as the weighted put-call ratio remains on a sell signal. However, the put-call ratio has rolled over to a buy signal, so exit these puts now.

    Long 2 AJRD Jan (20th) 52.5 calls: AJRD received an all-cash takeover offer of $56, so exit these calls now. Do not sell them below parity.

    Long 1 SPY Jan (20th) 402 call and Short 1 SPY Jan (20th) 417 calls: this spread was bought at the close on December 13th, when the latest VIX “spike peak” buy signal was generated. Stop yourself out if VIX subsequently closes above 25.84. Otherwise, we will hold for 22 trading days.

    Long 1 SPY Jan (20th) 389 put and Short 1 SPY Jan (20th) 364 put: this was an addition to our “core” bearish position, established when SPX closed below 3900 on December 15th. Stop yourself out of this spread if SPX closes above 3940.

    Long 2 PCAR Feb (17th) 97.20 puts: these puts were bought on December 20th, when they finally traded at our buy limit. We will continue to hold these puts as long as the weighted put-call ratio is on a sell signal.

    Send questions to: lmcmillan@optionstrategist.com.

    Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of the best-selling book, Options as a Strategic Investment. www.optionstrategist.com

    Disclaimer: ©McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.

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  • This is the only stock market prediction for 2023 that you need to know

    This is the only stock market prediction for 2023 that you need to know

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    When you hear or read about an investing expert’s outlook for the year ahead, bear one thing in mind: Every forecast about 2022 was wrong.

    Not just a bit amiss, but complete, total busts.

    Oh, some strategists will claim victory for saying the stock market
    SPX,
    -1.11%
    would be down in 2022 or that Treasury bonds
    TMUBMUSD10Y,
    3.488%
    would have yields north of 3%. Or that the yield curve would invert or that inflation would be stickier than anticipated. But they don’t deserve laurels for that.

    No one said the market would peak on the first day of the calendar year and go downhill from there and, ultimately, that’s the only tale of 2022 that investors will remember.

    Expect forecasts for 2023 to be equally miscalculated.

    That doesn’t mean investors should ignore or dismiss the exercise of experts offering outlooks, but it’s why you should question the motives of the soothsayers and revisit one of the greatest market forecasts of all time that’s well on its way to becoming true no matter what the market dishes out next year.

    Face it, market strategists and economists don’t make forecasts because they want to, but rather because they have to. Keeping their jobs depends on making mostly lame predictions.

    Say something memorable, and the expert and firm might be held accountable for it; pabulum, however, gets overlooked when it’s wrong.

    Obvious observations

    Thus, forecasts lack insight, gravitating toward the middle ground, to obvious observations on the effect of economic and stock market cycles.

    “It looks bad if they don’t have an opinion, but worse when they get something wrong, so most forecasts say as little as possible,” said Jeff Rosenkranz, a fixed-income portfolio manager at Shelton Capital Management, after we finished an interview last week for my podcast, “Money Life with Chuck Jaffe.” “You’re not getting much insight — if they have really valuable insights, this isn’t where they want to tell the world — so most forecasts just aren’t worth much.”

    Adds Howard Yaruss, a New York University professor and author of the recent book “Understandable Economics”: “If you are talking about a fine-tuned forecast about stocks and asset values, I don’t see how anyone could go there; accurate predictions aren’t going to happen, or will be luck if they turn out true. Their statements are more about marketing than the market.”

    One of Wall Street’s best-known prognosticators says credibility is impossible without accountability, but he acknowledges the tightrope experts walk if they say too much.

    Bob Doll, chief investment officer at Crossmark Global Investments, started making forecasts — 10 specific prognostications covering markets, the economy, politics and more — in the 1990s while working for Oppenheimer. He carried the exercise with him during well-chronicled career stops at BlackRock
    BLK,
    +0.29%    ,
    Nuveen and elsewhere, and historically has been right on north of 70% of his calls.

    ‘Wordsmithing’

    “There’s wordsmithing going on; you word them so that you have a noticeably higher than 50% chance of getting them right, and then say a few things you truly believe in that will make you look really smart if they happen without making you look dumb for believing it,” Doll says.

    Good forecasts are not just an academic, rote exercise, Doll says, provided that they’re relevant, prompt thoughtful reactions from the audience and that the expert stands by them. Doll revisits his forecasts every quarter and doesn’t alter them in response to current events.

    “You call the beast as you see it,” he says, “and then you stand by it and live with it, and you don’t worry about getting them all right because if you haven’t gotten something wrong, you’ve only said the obvious.”

    Wildest market forecast

    Which leads to what I think is the best, wildest market forecast of all time, even if it’s more obvious than it appears: Dow
    DJIA,
    -0.85%
    116,200.

    If that sounds far-fetched with the Dow Jones Industrial Average standing at roughly 33,500 — and down about 8% since the start of the year — consider that the prognostication was made in 1995 with the index hovering around 4,500.

    Also, the call was for the benchmark to hit that level in 2040.

    Bill Berger, founder of the Berger Funds — which merged into the Janus funds in 2002 — made the call at the first Society of American Business Editors & Writers Conference on Personal Finance in Boston, giving one of the best talks I’ve ever heard, mostly railing against forecasting and the habit of making too much of market milestones.

    (If the Dow 116,200 prediction rings familiar to you, chances are you learned about it from me, as I raised it periodically while working as senior columnist for MarketWatch between 2003 and 2017. Today marks the return of my column to this site, and I’m glad to be back.)

    Berger cited what he called “the two rules of forecasting.”

    Rule 1: For each forecast, there is an equal and opposite forecast.

    Rule 2: Both of them are wrong.

    Ironically, 116,200 sounds implausible, but looks dead solid perfect.

    By 1995, Berger had worked in investments for 45 years; when he got started, the Dow was below 200. Mathematically, he saw the Dow’s future as reflecting the past; repeating the growth he’d lived through would push the benchmark to 116,200 over the next 45 years.

    A septuagenarian at the time, Berger wryly suggested that if he was proved wrong, people come find him to discuss it; sadly, he died a few years later.

    The long game

    Despite the outlandishness of the forecast, Morningstar calculates that hitting the target would have required an annualized gain of roughly 7.35% over the 45 years. When the Dow peaked on Jan. 4, 2022, the necessary gain was down to 6.33% annualized.

    As of Dec. 1, Morningstar calculates that hitting 116,200 in the fall of 2040 will take a 7.07% annualized gain, which feels like a safe bet.

    Thus, 2022’s disappointments haven’t derailed long-term investors any more than they’ve crashed the greatest-ever market forecast.

    That’s the lesson to remember when confronted with 2023 forecasts; neither the market’s issues nor experts’ ability to diagnose them will derail long-term financial plans or make lifetime goals unreachable.

     That’s a prediction worth betting on.

    Chuck Jaffe is a MarketWatch columnist and host of the “Money Life with Chuck Jaffe” podcast.

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  • This record number in Nvidia earnings is a scary sight

    This record number in Nvidia earnings is a scary sight

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    Nvidia Corp.’s financial results had a bit of a surprise for investors, and not on the good side — product inventories doubled to a record high as the chip company gears up for a questionable holiday season.

    Nvidia reported fiscal third-quarter revenue that was slightly better than analysts’ reduced expectations Wednesday, but the numbers weren’t that great. Revenue fell 17% to $5.9 billion, while earnings were cut in half thanks to a $702 million inventory charge, largely relating to slower data-center demand in China.

    Gaming revenue in the quarter fell 51% to $1.57 billion. Nvidia said it is working with its retail partners to help move the currently high-channel inventories.

    While the company was writing off the inventory for China, its own new product inventory was growing. Nvidia
    NVDA,
    -4.54%
    reported that its overall product inventory nearly doubled to $4.45 billion in the fiscal third quarter, compared with $2.23 billion a year ago and $3.89 billion in the prior quarter. Executives cited its coming product launches, designed around its new Ada and Hopper architectures, when asked about the inventory gains.

    In the semiconductor industry, high inventories can make investors nervous, especially after the industry had so many supply constraints in recent years that quickly swung to a glut of chips in 2022. With doubts about demand for gaming cards and consumers’ willingness to spend amid sky-high inflation this holiday season, having all that product on hand just amps up the nerves.

    Full earnings coverage: Nvidia profit chopped in half, but tweaked servers to China offset earlier $400 million warning

    Chief Financial Officer Colette Kress told MarketWatch in a telephone interview Wednesday that the company’s high level of inventories were commensurate with its high levels of revenue.

    “I do believe….it is our highest level of inventory,” she said. “They go hand in hand.” Kress said she was confident in the success of Nvidia’s upcoming product launches.

    Nvidia’s revenue reached a peak in the April 2022 quarter with $8.3 billion, and in the past two quarters revenue has slowed, with gaming demand sluggish amid a transition to a new cycle, and a decline in China data-center demand due to COVID-19 lockdowns and U.S. government restrictions.

    For its data-center customers, the new architectures promise major advances in computing power and artificial-intelligence features, with Nvidia planning to ship the equivalent of a supercomputer in a box with its new products over the next year. Those types of advanced products weigh on inventory totals even more, Kress said, because of the price of the total package.

    “It’s about the complexity of the system we are building, that is what drives the inventory, the pieces of that together,” Kress said.

    Bernstein Research analyst Stacy Rasgon believes that products based on Hopper will begin shipping over the next several quarters, “at materially higher price points.” He said in a recent note that he believes Nvidia’s numbers were likely hitting a bottom in this quarter.

    “We remain positive on the Hopper ramp into next year, and believe numbers have at this point likely reached close to bottom, with new cycles brewing and an attractive secular story even without China potential,” Rasgon said in an earnings preview note Tuesday.

    Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

    Nvidia Chief Executive Jensen Huang reminded investors on a conference call that the company’s inventories are “never zero,” and said everyone is enthusiastic about the upcoming launches. But it doesn’t take too long of a memory to conjure up a time when Nvidia went into a holiday with an inventory backlog that included new architecture and greatly disappointed investors: Four years ago, Huang had to cut his forecast for holiday earnings twice amid a “crypto hangover” with similar dynamics to the current moment

    Investors need faith that this holiday season will not be the same, even as demand for some videogame products declines after a pandemic boom just as the market for cryptocurrency — some of which has been mined with Nvidia products — hits a rough patch. Huang said that Nvidia’s RTX 4080 and 4090 graphics cards based on the Ada Lovelace architecture had an “exceptional launch,” and sold out.

    Nvidia shares gained more than 2% in after-hours trading Wednesday, suggesting that some are betting that this time will be different. That enthusiasm needs to translate into revenue for Nvidia so that this big gain in inventories does not end up being part of another write-down at some point in the future.

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  • Opinion: No, an indictment wouldn’t end Trump’s run for the presidency – he could even campaign or serve from a jail cell

    Opinion: No, an indictment wouldn’t end Trump’s run for the presidency – he could even campaign or serve from a jail cell

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    Donald Trump announced his 2024 run for the presidency on Nov. 15. In his address he railed against what he perceived as the “persecution” of himself and his family, but made scant mention of his legal woes.

    There is also the not-so-small matter of a Justice Department investigation into the Jan. 6 storming of the Capitol.

    The announcement has led some to speculate that Trump may be hoping that becoming a presidential candidate will in some way shield him from prosecution.

    Donald Trump has announced his bid to run in the 2024 presidential race. WSJ’s Alex Leary breaks down the challenges the former president will face on the campaign trail, including new political rivals and a waning influence among voters. Photo Composite: Adele Morgan

    So, does an indictment—or even a felony conviction—prevent a presidential candidate from running or serving in office?

    The short answer is no. Here’s why:

    The U.S. Constitution specifies in clear language the qualifications required to hold the office of the presidency. In Section 1, Clause 5 of Article II, it states: “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.”

    These three requirements—natural-born citizenship, age, and residency—are the only specifications set forth in the United States’ founding document.

    Congress has ‘no power to alter’

    Furthermore, the Supreme Court has made clear that constitutionally prescribed qualifications to hold federal office may not be altered or supplemented by either the U.S. Congress or any of the states.

    Justices clarified the court’s position in their 1969 Powell v. McCormack ruling. The case followed the adoption of a resolution by the House of Representatives barring pastor and New York politician Adam Clayton Powell Jr. from taking his seat in the 90th Congress.

    The resolution was not based on Powell’s failure to meet the age, citizenship and residency requirements for House members set forth in the Constitution. Rather, the House found that Powell had diverted Congressional funds and made false reports about certain currency transactions.

    When Powell sued to take his seat, the Supreme Court invalidated the House’s resolution on grounds that it added to the constitutionally specified qualifications for Powell to hold office. In the majority opinion, the court held that: “Congress has no power to alter the qualifications in the text of the Constitution.”

    For the same reason, no limitation could now be placed on Trump’s candidacy. Nor could he be barred from taking office if he were to be indicted or even convicted.

    But in case of insurrection…

    The Constitution includes no qualification regarding those conditions—with one significant exception. Section 3 of the 14th Amendment disqualifies any person from holding federal office “who, having previously taken an oath…to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof.”

    The reason why this matters is the Justice Department is currently investigating Trump for his activities related to the Jan. 6 insurrection at the Capitol.

    Under the provisions of the 14th Amendment, Congress is authorized to pass laws to enforce its provisions. And in February 2021, one Democratic congressman proposed House Bill 1405, providing for a “cause of action to remove and bar from holding office certain individuals who engage in insurrection or rebellion against the United States.”

    Even in the event of Trump being found to have participated “in insurrection or rebellion,” he might conceivably argue that he is exempt from Section 3 for a number of reasons. The 14th Amendment does not specifically refer to the presidency and it is not “self-executing”—that is, it needs subsequent legislation to enforce it. Trump could also point to the fact that Congress enacted an Amnesty Act in 1872 that lifted the ban on office holding for officials from many former Confederate states.

    He might also argue that his activities on and before Jan. 6 did not constitute an “insurrection” as it is understood by the wording of the amendment. There are few judicial precedents that interpret Section 3, and as such its application in modern times remains unclear. So even if House Bill 1405 were adopted, it is not clear whether it would be enough to disqualify Trump from serving as president again.

    Running from behind bars

    Even in the case of conviction and incarceration, a presidential candidate would not be prevented from continuing their campaign—even if, as a felon, they might not be able to vote for themselves.

    History is dotted with instances of candidates for federal office running—and even being elected—while in prison. As early as 1798—some 79 years before the 14th Amendment — House member Matthew Lyon was elected to Congress from a prison cell, where he was serving a sentence for sedition for speaking out against the Federalist Adams administration.

    Eugene Debs, founder of the Socialist Party of America, ran for president in 1920 while serving a prison sentence for sedition. Although he lost the election, he nevertheless won 913,693 votes. Debs promised to pardon himself if he were elected.

    And controversial politician and conspiracy theorist Lyndon LaRouche also ran for president from a jail cell in 1992.

    A prison cell as the Oval Office?

    Several provisions within the Constitution offer alternatives that could be used to disqualify a president under indictment or in prison.

    The 25th Amendment allows the vice president and a majority of the Cabinet to suspend the president from office if they conclude that the president is incapable of fulfilling his duties.

    The amendment states that the removal process may be invoked “if the President is unable to discharge the powers and duties of his office.”

    It was proposed and ratified to address what would happen should a president be incapacitated due to health issues. But the language is broad and some legal scholars believe it could be invoked if someone is deemed incapacitated or incapable for other reasons, such as incarceration.

    To be sure, a president behind bars could challenge the conclusion that he or she was incapable from discharging the duties simply because they were in prison. But ultimately the amendment leaves any such dispute to Congress to decide, and it may suspend the president from office by a two-thirds vote.

    Indeed, it is not clear that a president could not effectively execute the duties of office from prison, since the Constitution imposes no requirements that the executive appear in any specific location. The jail cell could, theoretically, serve as the new Oval Office.

    Finally, if Trump were convicted and yet prevail in his quest for the presidency in 2024, Congress might choose to impeach him and remove him from office. Article II, Section 4 of the Constitution allows impeachment for “treason, bribery, and high crimes and misdemeanors.”

    Whether that language would apply to Trump for indictments or convictions arising from his previous term or business dealings outside of office would be a question for Congress to decide. The precise meaning of “high crimes and misdemeanors” is unclear, and the courts are unlikely to second-guess the House in bringing an impeachment proceeding.

    For sure, impeachment would remain an option—but it might be an unlikely one if Republicans maintained their majority in the House in 2024 and 2026.

    Stefanie Lindquist is Foundation Professor of Law and Political Science at Arizona State University. She previously taught at Vanderbilt University, the University of Georgia and the University of Texas.

    This commentary was originally published by The Conversation—No, an indictment wouldn’t end Trump’s run for the presidency—he could even campaign or serve from a jail cell

    More on Trump’s legal problems

    Trump Organization executive says he helped colleagues dodge taxes

    Judge says he’ll appoint monitor to oversee Donald Trump’s company

    Justice Department weighs appointing special counsel if Trump runs in 2024, report says

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  • What NASA knows about soft landings that the Federal Reserve doesn’t

    What NASA knows about soft landings that the Federal Reserve doesn’t

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    The Federal Reserve still has a chance to meet both of its main goals — strong economic growth and stable prices — but time is running out to achieve a soft landing.

    The problem is that Fed officials are fixated on raising interest rates
    FF00,
    +0.00%
    several more times, including another supersize increase at their meeting Tuesday and Wednesday. They don’t seem to notice that inflation is already retreating significantly, while growth is dangerously close to stalling out.

    They have a blind spot because they are looking at the past.

    Greg Robb: Another jumbo Fed rate hike is expected this week — and then life gets difficult for Chairman Powell

    Fed officials ought to reach out to another government agency that has had remarkable success in achieving soft landings: The National Aeronautics and Space Administration.

    NASA’s scientists know something the Fed has forgotten: It takes a long time to send and receive messages from space, so they need to account for those delays when sending instructions to their spacecraft so they can land safely on Mars, or orbit Saturn or the moons of Jupiter.

    Compounding errors

    It’s the same way with the economy. The signals that the Fed receives from the economy are often delayed, sometimes by months. Unfortunately, one of the main signals the Fed is relying upon right now to decide how much to raise interest rates is delayed by a year or more.

    I’m talking about inflation in the price of putting a roof over our heads. Shelter prices are now the leading contributor to increases in the consumer price index (CPI) and the personal consumption expenditure (PCE) price index. But because of the way the CPI for shelter is constructed — for very good reasons — the inflation reported today reflects conditions as they were 12 to 18 months ago.

    The error is compounded because shelter prices are by far the largest component of the CPI, at more than 30%.

    The Fed is disappointed that inflation hasn’t declined more since it began raising interest rates in March, but how could it when the signals about shelter prices were sent last summer and fall, long before the housing market began to cool in response to higher interest rates
    TMUBMUSD10Y,
    4.049%
    and the reductions in the Fed’s holdings of mortgage-backed securities?

    According to real-time data, shelter prices are no longer rising at a near-10% annual rate as the CPI and PCE price index claim. Growth in rents and house prices has slowed since the first rate hikes in March. House prices are actually falling in most regions of the country, and private-sector measures of rents show that landlords are now dropping rents in many cities.

    Just like a radio signal from Jupiter, it takes time for that message to be received by the CPI. It will be received and incorporated into the CPI eventually, but by then it may be too late for the Fed to react. The Fed might crash the spacecraft because it mistakenly believes the messages it gets are in real time.

    Growth is slowing

    The Fed’s blind spot puts the economy in peril. Recent data show that growth is naturally slowing from the breakneck pace following the pandemic shutdowns but also from the Fed’s relentless squeeze on financial conditions.

    It’s very hard to argue that the economy is still overheating. Domestic demand has stalled out since the spring. Final sales to domestic purchasers — which covers consumer spending and business investment — has grown at a 0.3% annual pace over the past two quarters.

    Real disposable incomes are growing at less than 1% annualized. Household wealth has fallen off a cliff, with the stock market
    SPX,
    -0.41%

    DJIA,
    -0.24%
    in a bear market and home equity beginning to fall. Wage growth is beginning to slow. Supply chains are improving.

    And the CPI excluding shelter has gone from rising at a 14% annual pace in the spring when the tightening began, to falling at a 1% annual pace over the past three months. Rate hikes are working!

    This benign picture on inflation may not persist. Inflation is still worrisome, particularly for essentials such as food, health care, new vehicles and utilities.

    But the Fed should adopt a more balanced view of the economy, no matter what the signals from the past say. No one wants a hard landing.

    Just ask NASA.

    More reported analysis from Rex Nutting

    Everybody is looking at the CPI through the wrong lens. Inflation fell to the Fed’s target in the past three months, according to the best measure.

    The Federal Reserve risks driving the economy into a ditch because it’s not looking at where inflation is heading

    Americans are feeling poorer for good reason: Household wealth was shredded by inflation and soaring interest rates

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  • As subscription prices rise, here’s what’s worth streaming in November 2022: ‘The Crown,’ ‘Willow,’ ‘Mythic Quest’ and more

    As subscription prices rise, here’s what’s worth streaming in November 2022: ‘The Crown,’ ‘Willow,’ ‘Mythic Quest’ and more

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    So here’s some bad news and some, well, slightly less bad news.

    First, the bad-bad: Streaming prices are increasing almost across the board (Hulu and Apple TV+ rose in October, Disney+ will rise in December, while Netflix and Prime Video rose earlier this year), putting even more of a crunch on budget-conscious consumers.

    But now the less bad: If you can put up with commercials, there are cheaper, ad-supported versions coming your way (Netflix on Nov. 3, Disney+ in December).

    Of course, the other money-saving solution is to double down on a churn-and-return strategy and cut down on recurring subscriptions even more.

    Each month, this column offers tips on how to maximize your streaming and your budget, rating the major services as a “play,” “pause” or “stop” — similar to investment analysts’ traditional ratings of buy, hold and sell. We also pick the best content to help you make your monthly decisions.

    Consumers can take full advantage of cord-cutting by churning and returning — adding and dropping streaming services each month. All it takes is good planning. Keep in mind that a billing cycle starts when you sign up, not necessarily at the beginning of the month, and keep an eye out for lower-priced tiers, limited-time discounts, free trials and cost-saving bundles. There are a lot of offers out there, but the deals don’t last forever.

    Here’s a look at what’s coming to the various streaming services in November 2022, and what’s really worth the monthly subscription fee.

    Netflix ($6.99 a month for basic with ads starting Nov. 3, $9.99 basic without ads, $15.49 standard without ads, $19.99 premium without ads)

    Netflix has another really good month coming up.

     “The Crown” (Nov. 9), returns for its fifth season, set this time in the 1990s as scandals involving Charles and Diana plaster London’s tabloids and the role of Britain’s monarchy in modern society is thrown into question. Imelda Staunton takes over the role of Queen Elizabeth, with Dominic West as Prince Charles, Elizabeth Debicki as Princess Diana and Jonathan Pryce as Prince Philip. Controversy has already erupted over the new season, which will include Diana’s tragic death, as some have spoken out about the show’s increasingly blurry line between truth and fiction. Pryce recently told Vanity Fair, ““The vast majority of people know it’s a drama,” not a documentary. And it’s a pretty good drama.

    Netflix
    NFLX,
    -0.41%
    hasn’t had much success developing original sitcoms, but is hoping to finally break through with “Blockbuster” (Nov. 3), a workplace comedy set at the last Blockbuster video store in America, starring network sitcom veterans Randall Park (“Fresh Off the Boat”) and Melissa Fumero (“Brooklyn Nine-Nine”). There’s also “Wednesday” (Nov. 23), a horror-comedy series from Tim Burton starring Jenna Ortega as the terrifyingly snarky teen Wednesday Addams, with Catherine Zeta-Jones and Luis Guzman playing her creepy and kooky parents, Morticia and Gomez; and the third and final season of the dark comedy “Dead to Me” (Nov. 17), starring Christina Applegate and Linda Cardellini, which returns after a two-and-a-half-year layoff.

    On the drama side, there’s “1899” (Nov. 17), a mystery-horror series set aboard a transatlantic steamer ship at the turn of the last century, from the makers of the mind-bending German sci-fi series “Dark” — and if it’s even half as trippy and addictive, it’ll be terrific; Part 1 of the fourth season of the supernatural drama “Manifest” (Nov. 4), which Netflix rescued from NBC’s cancellation; and Season 6 of the soapy Spanish high-school drama “Elite” (Nov 18).

    More: Here’s everything new coming to Netflix in November 2022, and what’s leaving

    There’s also the timely documentary “FIFA Uncovered” (Nov. 9), digging into the scandal-plagued organization behind the World Cup; “Pepsi, Where’s My Jet” (Nov. 17), a documentary about a man who sued Pepsi in the 1980s to get a free Harrier fighter jet; the fifth installment of “The Great British Baking Show: Holidays” (Nov. 18); and the new standup comedy special from the outgoing “Daily Show” host, “Trevor Noah: I Wish You Would” (Nov. 22).

    On the movie front, there’s “Enola Holmes 2” (Nov. 4), a sequel to the hit 2020 movie about Sherlock Holmes’ younger sister, played by Millie Bobby Brown (“Stranger Things”), as young detective Enola sets out to investigate her first case; “Slumberland” (Nov. 18), a comedy adventure about a young girl exploring the dreamworld, starring Mallow Barkley and Jason Mamoa; and Lindsay Lohan is back with a Christmas rom-com, “Falling for Christmas” (Nov. 10).

    Who’s Netflix for? Fans of buzz-worthy original shows and movies.

    Play, pause or stop? Play. When it’s at the top of its game, as it is again this month, Netflix is a must-have, at whatever price tier.

    Disney+ ($7.99 a month)

    The TV world has been abuzz about prequels for the past few months, but it’s all about sequels in November for Disney+.

    The biggest of the bunch is “Willow” (Nov. 30), a follow-up series to the cult-favorite 1988 fantasy movie of the same name. The magical adventure is set 20 years after the events of the film, and Warwick Davis returns as farmer-turned-sorcerer Willow Ufgood, who leads an unlikely group of heroes on a quest to save their world. It should be fun for the whole family.

    Disney
    DIS,
    +1.45%
    also has “Disenchanted” (Nov. 18), a sequel to the 2007 hit movie “Enchanted.” The musical fantasy is set 10 years after the happily-ever-after ending, with Giselle (Amy Adams) questioning her happiness and inadvertently setting her two worlds askew. Patrick Dempsey, James Marsden and Maya Rudolph co-star. And then there’s “The Santa Clauses” (Nov. 16), as Tim Allen reprises his role of Santa Claus, who’s now facing retirement and looking for a replacement, in a new miniseries spinoff of the family-movie trilogy.

    Also of note: “The Guardians of the Galaxy Holiday Special” (Nov. 25), as Star-Lord and the gang kidnap Kevin Bacon; the live performance “Elton John: Live from Dodger Stadium” (Nov. 20), the pop icon’s final show in North America; and weekly episodes of “Dancing With the Stars” (season finale Nov. 21), the “Star Wars” prequel “Andor” (season finale Nov. 23) and “The Mighty Ducks: Game Changers” (season finale Nov. 30).

    And heads up: Prices for the ad-free tier will jump to $10.99 a month in December, after Disney+ launches its ad-supported tier for $7.99 a month.

    Who’s Disney+ for? Families with kids, hardcore “Star Wars” and Marvel fans. For people not in those groups, Disney’s library can be lacking.

    Play, pause or stop? Play. There’s something for everyone in the household — even grumps who aren’t “Star Wars” fans can get into “Andor,” which absolutely works as a dark, gripping, spy thriller. Meanwhile, fans are realizing it just might be the best “Star Wars” series or movie ever made.

    HBO Max ($9.99 a month with ads, or $14.99 without ads)

    HBO Max is bringing back  “The Sex Lives of College Girls” (Nov. 17) for its second season. Created by Mindy Kaling and Justin Noble (who also teamed on Netflix’s “Never Have I Ever”), the ensemble comedy about four college roommates picks up right after Thanksgiving break, with the girls organizing a “sex-positive” male strip show. It’s sharp, funny, and less cringey than its title suggests.

    Then there’s “A Christmas Story Christmas” (Nov. 17), a nostalgic sequel to the 1983 classic, starring Peter Billingsley as a grown-up Ralphie who returns to his hometown to try to give his kids a perfect Christmas. It’s risky reviving such a beloved movie, and this could either be wonderful or terrible, there’s really no middle ground.

    HBO Max also has a slew of documentaries, including “Love, Lizzo” (Nov. 24), about the pop superstar’s inspiring life story; “Shaq” (Nov. 23), a four-part docuseries chronicling the rise to superstardom of NBA Hall of Famer Shaquille O’Neal; “Low Country: The Murdaugh Dynasty” (Nov. 3), a true-crime series about a South Carolina lawyer’s scandalous fall; and “Say Hey, Willie Mays!” (Nov. 8), a film exploring the life, career and social impact of the greatest baseball player who ever played the game.

    See more: Here’s everything new coming to HBO Max in November 2022, and what’s leaving

    And every week brings new episodes of Season 2 of the very dark vacation comedy “The White Lotus,” Season 3 of “Pennyworth: The Origin of Batman’s Butler” and Season 2 of the cult documentary “The Vow.”

    Who’s HBO Max for? HBO fans and movie lovers.

    Play, pause or stop? Pause and think it over. “The White Lotus” and “The Sex Lives of College Girls” are both worth watching, but beyond that it’s kinda “meh” this month. And Max is too pricey for “meh.”

    Amazon Prime Video ($14.99 a month)

    Amazon
    AMZN,
    -6.80%
    is bringing the star power in November, starting with the Western drama series “The English” (Nov. 11), starring Emily Blunt as an aristocratic Englishwoman who teams with a Pawnee scout (Chaske Spencer) on a mission to cross the violent 1890s American frontier. It looks stylish and bloody — and promising.

    Meanwhile, James Corden and Sally Hawkins star in “Mammals” (Nov. 11), a dark comedy series about modern marriage; pop star-turned-actor Harry Styles stars in “My Policeman” (Nov. 4), a drama about forbidden romance that’s getting very “meh” reviews in its theatrical release; and Kristen Bell, Ben Platt and Allison Janney star in “The People We Hate at the Wedding” (Nov. 18), a raunchy comedy set at a dysfunctional family wedding.

    More: Here’s what’s coming to Amazon’s Prime Video in November 2022

    There’s also NFL Thursday Night Football every week, and new episodes of the intriguing sci-fi drama “The Peripheral,” which is giving very “Westworld”-but-slightly-less-confusing vibes.

    Who’s Amazon Prime Video for? Movie lovers, TV-series fans who value quality over quantity.

    Play, pause or stop? Pause. There’s good stuff here, but nothing that feels must-see.

    Paramount+ ($4.99 a month with ads but not live CBS, $9.99 without ads)

    Taylor Sheridan (“Yellowstone,” “1883,” “Mayor of Kingstown”) has another new series: “Tulsa King” (Nov. 13), starring Sylvester Stallone as a former New York mafia capo who gets freed from prison after 25 years and settles in Tulsa, Okla., to build a criminal empire of his own. Showrunner Terence Winter (“The Sopranos,” “Boardwalk Empire”) knows a thing or two about mob shows, and this one could be good.

    Paramount+ also has the spinoff series “Criminal Minds: Evolution” (Nov. 24), about an elite team of FBI profilers unraveling a network of serial killers; the family movie “Fantasy Football” (Nov. 25), about a girl who can magically control how her NFL-player dad performs on the field; and the series finale of “The Good Fight” (Nov. 10), which its creators promise will be “cataclysmic.”

    There’s also the Thanksgiving Day Parade (Nov. 24) and a ton of live sports, including college football on Saturdays, NFL football on Sundays (and Thanksgiving Day), and group-stage matches for UEFA’s Champions and Europe leagues.

    Who’s Paramount+ for? Gen X cord-cutters who miss live sports and familiar Paramount Global 
    PARA,
    +3.37%
     broadcast and cable shows.

    Play, pause or stop? Pause. Besides its solid live-sports lineup, it’s a good time to catch up and binge “The Good Fight,” and “Tulsa King” could be worth a watch too.

    Hulu ($7.99 a month with ads, or $14.99 with no ads)

    Hulu has a couple of interesting offerings in November, but nothing that screams must-see. Yet, at least.

    FX’s “Fleishman Is in Trouble” (Nov. 17) stars Jesse Eisenberg as a newly divorced dad whose promiscuous dive into app-based dating is disrupted when his ex-wife disappears and leaves him with their kids. Claire Danes, Lizzy Caplan and Adam Brody co-star in the eight-episode drama, which is based on Taffy Brodesser-Akner’s best-selling novel.

    There’s also “Welcome to Chippendales” (Nov. 22), a true-crime series starring Kumail Nanjiani as the immigrant founder of the 1980s male-stripper franchise, which chronicles his business empire’s rise and fall amid a blizzard of sex, drugs and violence.

    Meanwhile, Adam McKay (“The Big Short”) and Billy Corben (“Cocaine Cowboys”) have the documentary  “God Forbid: The Sex Scandal That Brought Down a Dynasty” (Nov. 1), about the private life of Christian televangelist and former Liberty University president Jerry Falwell Jr. and his very public downfall.

    See: Here’s everything new on Hulu in November 2022 — and what’s leaving

    There are also the final two episodes of “Atlanta” (series finale Nov. 10), whose fourth season has returned to brilliance after an underwhelming Season 3 over the summer, and new episodes every week of ABC’s “Abbott Elementary.”

    Who’s Hulu for? TV lovers. There’s a deep library for those who want older TV series and next-day streaming of many current network and cable shows.

    Play, pause or stop? Stop. While you won’t regret paying for Hulu if you already do, there’s not a lot to lure new subscribers this month.

    Apple TV+ ($6.99 a month)

    Apple TV+ is too inconsistent to be worth the $2-a-month price hike that was just announced, so it’s best to strategically plan when to stream — wait until a good series or two are completed, for example, and binge them all in a month, then cancel. Repeat as needed.

    And it actually is a decent month for Apple. Its second-best comedy, “Mythic Quest” Nov. 11), returns for its third season, with Ian (Rob McElhenny) and Poppy (Charlotte Nicdao) gearing up for war against their old videogame company. With a perfect blend of humor and heart, it’s one of the best workplace comedies on TV.

    Meanwhile, Season 2 of “The Mosquito Coast” (Nov. 4) finds the fugitive Fox family finally hiding out in Central America, after a tedious premise-pilot of a first season that wasted good actors (Justin Theroux and Melissa George) and beautiful cinematography with nonsensical plot twists, while the action series “Echo 3” (Nov. 23) stars Luke Evans and Michiel Huisman as former soldiers trying to rescue a kidnapped scientist in the jungles of South America.

    Apple
    AAPL,
    +7.56%
    also has a pair of high-profile original movies: “Causeway” (Nov. 3), starring Jennifer Lawrence as a former soldier struggling to adjust to civilian life in New Orleans, co-starring Brian Tyree Henry, and “Spirited” (Nov. 18), a musical twist on “A Christmas Carol” told from the ghosts’ point of view, starring Ryan Reynolds and Will Ferrell.

    Who’s Apple TV+ for? It offers a little something for everyone, but not necessarily enough for anyone — although it’s getting there.

    Play, pause or stop? Stop. There’s just not enough to justify a month-to-month subscription. December is a better bet, with “Mythic Quest” and a new season of “Slow Horses” running concurrently.

    Peacock (free basic level, Premium for $4.99 a month with ads, or $9.99 a month with no ads)

    The World Cup from Qatar (Nov. 20-Dec. 18) will be broadcast on Fox and FS1, so cord-cutters are out of luck, unless you subscribe to a live-streaming service like Hulu Live or YouTube TV. However, Peacock will stream every match in Spanish, which could be a decent Plan B for soccer fans.

    And that “it’ll-do-but-it’s-not-exactly-what-I’m-looking-for” description is the running theme for Peacock. November will bring a handful of originals that are unlikely to move the needle, subscriber-wise: There’s the musical-comedy spinoff series “Pitch Perfect: Bumper in Berlin” (Nov. 23), starring Adam Devine; “The Calling” (Nov. 10), a crime drama about a religious cop, from David E. Kelley and Barry Levinson; the Macy’s Thanksgiving Day Parade (Nov. 24); and the streaming debut of Jordan Poole’s sci-fi/horror hit “Nope” (Nov. 18).

    Sports-wise, Peacock has the National Dog Show (hey, it’s a competition!) on Nov. 24, NFL Sunday Night Football every weekend, a full slate of English Premier League matches through Nov. 13, and a ton of golf and winter sports.

    Who’s Peacock for? If you have a Comcast 
    CMCSA,
    -0.06%
     or Cox cable subscription, you likely have free access to the Premium tier (with ads) — though reportedly not for much longer. The free tier is almost worthless, but the recent addition of next-day streaming of NBC and Bravo shows (like “Saturday Night Live” and “Real Housewives”) bolsters the case for paying for a subscription. Still, Peacock is still not really necessary unless you need it for sports.

    Play, pause or stop? Stop. There’s not a lot that’s particularly enticing right now, even on the sports side.

    Discovery+ ($4.99 a month with ads, or $6.99 with no ads)

    More of the same in November for Discovery+, which is a feature, not a bug. Highlights include the vegan cook-and-chat show “Mary McCartney Serves It Up” (Nov. 1); “Tut’s Lost City Revealed” (Nov. 3), about a 3,000-year-old Egyptian city recently discovered by archaeologists; “Vardy vs Rooney: The Wagatha Trial” (Nov. 19), the inside story of the tabloid-fodder “Wagatha” scandal between the wives of English soccer stars; and Season 2 of the excellent CNN food series “Stanley Tucci: Searching for Italy” (Nov. 30). Full disclosure: There are also a handful of sappy holiday movies guest-starring some HGTV and Food Network stars, but they look terrible and I expect better from you, a discerning reader/viewer.

    Who’s Discovery+ for? Cord-cutters who miss their unscripted TV or who are really, really into “90 Day Fiancé.”

    Play, pause or stop?  Stop. Discovery+ is still fantastic for background TV, but it’s not worth the cost. Still, it should add value when the reconfigured Warner Bros. Discovery 
    WBD,
    +3.68%
      combines it with HBO Max next summer.

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  • Stock market bulls have a new story to sell you. Don’t believe them — they’re just in the ‘bargaining’ stage of grief

    Stock market bulls have a new story to sell you. Don’t believe them — they’re just in the ‘bargaining’ stage of grief

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    Might the bear market’s losses at its recent low have gotten so bad that it was actually good news?

    Some eager stock bulls I monitor are advancing this convoluted rationale. The outline of their argument is that when things get bad enough, good times must be just around the corner.

    But their argument tells us more about market sentiment than its prospects.

    At the market’s recent closing low, the S&P 500
    SPX,
    +1.19%
    had dropped to 25% below its early-January high. According to one version of this “so-bad-it’s-good” argument, the stock market in the past was a good buy whenever bear markets fell to that threshold. Following those prior occasions, they contend, the market was almost always higher in a year’s time.

    This is not an argument you’d normally expect to see if the recent low represented the final low of the bear market. On the contrary, it fits squarely within the third of the five-stage progression of bear market grief, about which I have written before: denial, anger, bargaining, depression and acceptance.

    With their argument, the bulls are trying to convince themselves that they can survive the bear market, rationalizing that the market will be higher in a year’s time. As Swiss-American psychiatrist Elisabeth Kübler-Ross put it when creating this five-stage scheme, the key feature of the bargaining stage is that it is a defense against feeling pain. It is far different than the depression and eventual acceptance that typically come later in a bear market.

    Though not all bear markets progress through these five stages, most do, as I’ve written before. Odds are that we have two more stages to go through. That suggests that the market’s rally over the past couple of weeks does not represent the beginning of a major new bull market.

    Numbers don’t add up

    Further support for this bearish assessment comes from the discovery that the bulls’ argument is not supported historically. Only in relatively recent decades was the market reliably higher in a year’s time following occasions in which a bear market had reached the 25% pain threshold. It’s not a good sign that the bulls are basing their optimism on such a flimsy foundation.

    Consider what I found upon analyzing the 21 bear markets since 1900 in the Ned Davis Research calendar in which the Dow Jones Industrial Average
    DJIA,
    +1.34%
    fell at least 25%. I measured the market’s one-year return subsequent to the day on which each of these 21 bear markets first fell to that loss threshold. In seven of the 21 cases, or 33%, the market was lower in a year’s time.

    That’s the identical percentage that applies to all days in the stock market over the past century, regardless of whether those days came during bull or bear markets. So, based on the magnitude of the bear market’s losses to date, there’s no reason to believe that the market’s odds of rising are any higher now than at any other time.

    This doesn’t mean that there aren’t good arguments for why the market might rise. But the 25%-loss concept isn’t one of them.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.

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  • Snap investors, do you still trust Evan Spiegel?

    Snap investors, do you still trust Evan Spiegel?

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    When Snap Inc. went public in 2017, this column boiled down the entire investment opportunity to one, simple question: Do you trust Evan Spiegel?

    As Snap
    SNAP,
    -0.64%
    stock heads toward its lowest prices since March 2020, and potentially even lower, that question is even more important, and answering “yes” should be even harder.

    Three months ago, amid the beginning of a huge slowdown in the ad business, Snap initiated a unique dividend meant to ensure that the founders maintained control of the company, even if they sold their stock — protecting themselves. Then in August, news came that Snap was laying off one in five employees. As Snap again reported disappointing results Thursday and saw the stock plunge again, the company decided now was the time to initiate a stock buyback plan, promising to spend up to $500 million to offset the dilution from employee stock plans — in the past nine months, Snap has spent $937 million on stock-based compensation.

    On the face of it, this seems like an investor-friendly approach — Barron’s pointed out earlier this year that investors were suffering while employees were faring better with the hefty stock-comp plans. But it’s also worth pointing out who the biggest investors in Snap are: Spiegel and his co-founder Bobby Murphy.

    As the company’s largest individual shareholders, Spiegel and Murphy are among the key beneficiaries of Snap’s plans to buy back stock, which usually leads to a boost in the stock price. Those two still control over 99% of the voting power of the company’s capital stock, and as the parent of Snapchat reminded investors in its annual report, “Mr. Spiegel alone can exercise voting control over a majority of our outstanding capital stock.”

    Shares of Snap tumbled an additional 25% to just under $8 in after-hours trading, putting them near the lowest prices since March 2020. On Thursday, the company ended regular trading hours with a market capitalization of around $17.91 billion, but that was headed toward $13 billion with the after-hours collapse.

    Besides protecting themselves and their investment, Snap’s executives have shown little ability to head off big issues, nor offer any worthwhile solutions to the current ad downturn. In the third quarter, its revenue grew a paltry 6%, down from the most recent second-quarter revenue growth of 13%. Snap appears to be in a steady revenue slowdown, from its peak growth of 116% in the June 2021 quarter.

    Snap has blamed both privacy changes that Apple Inc.
    AAPL,
    -0.33%
    made to the iPhone that affected ad tracking, and more recently, the macroeconomic advertising climate, while avoiding one of the biggest factors — the rise of TikTok. Top executives didn’t seem to see any of those challenges coming early enough, and did not do enough about them once they did.

    “The company was slow to react — or acknowledge — the significant headwinds faced by privacy initiatives, compounded by competition, and more recently macro headwinds,” Colin Sebastian, an analyst at Baird Equity Research, wrote in a note.

    The competition factor, mostly from China’s TikTok, was addressed briefly on the company’s call with analysts, but was not really acknowledged by Snap leaders.

    “We believe that the differentiated nature of our service is what’s contributing to the daily active-user growth, which grew 19% year-over-year to 363 million daily active users,” Spiegel said. “In terms of the content specifically, I think there’s a lot of headroom, of course, to continue to grow content engagement.”

    In the company’s shareholder letter, Spiegel acknowledged that the results were “far from our aspirations,” and that Snap would use this time of reduced demand “to pull forward and accelerate changes to our advertising platform and auction dynamics that we believe will deliver better results for our advertising partner.”

    Spiegel is known for going by his own instincts and not listening to other executives, employees or even market forces, as was noted in a Wall Street Journal report that detailed his push for an unsuccessful product redesign in 2018. While the company appeared to have snapped back from that debacle last year, it is now facing a fiercer rival for young people on social media in the form of TikTok.

    Investors who still have patience to wait and see if this stock ever recovers will also have to stick around with Spiegel — and as our IPO column noted — Snap is unapologetically founder-controlled. No change at the top can ever come unless it is initiated by Spiegel himself. Investors have to make a leap of faith that Spiegel can turn things around, but they need to remember that Spiegel usually thinks about himself first.

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  • Stocks are rallying now, but the 9 painful stages of this bear market are not even halfway done

    Stocks are rallying now, but the 9 painful stages of this bear market are not even halfway done

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    The official definition of a bear market is a 20% or greater decline from an index’s previous high. Accordingly, the three major U.S. stock-market benchmarks — the Nasdaq
    COMP,
    +0.90%    ,
    the S&P 500
    SPX,
    +1.14%
    and the Dow Jones Industrial Average
    DJIA,
    +1.12%
    — are currently all in a bear market.

    Based on my work with stock market strategist Mark D. Cook, a typical bear market goes through nine stages. Right now we are in Stage 4. Keep in mind that a bear market does not always follow these stages in the exact order. 

    1. Failed rallies: Failed rallies represent the first clue that a bear market is here. Failed rallies often appear before the market “officially” becomes a bear market. If the rally doesn’t have legs and cannot go higher for the next few days or weeks, it confirms that the bear’s claws have sunk in. Along the way, many failed rallies will fool bulls into thinking the worst is over. Watch the rallies for bear-market clues. The rally so far this week is an example. Now in its second day, a failure of this rally would confirm that stocks are not yet out of a bear market.

    2. Low-volume rallies: Another bear market clue is that stocks move higher on low volume. This is a clue the major financial institutions aren’t buying, although algos and hedge funds might be. It’s easy for the algos to push prices higher in a low-volume environment, one of the reasons for monster rallies that go nowhere the following day (i.e. a “one-day wonder”). 

    3. Terrible-looking charts: The easiest way to identify a bear market is by looking at a stock chart. It goes without saying that the charts look dreadful, both the daily and the weekly. While rallies help relieve some of the pressure, they typically don’t last long.

    4. Strong selloffs: It’s been a couple of years since markets have experienced extremely strong selloffs, but that record was broken the week of September 26 when the S&P 500 hit a new low for 2022. These strong selloffs are typical of a bear market, followed by rallies that don’t last (a roller-coaster that so far has played out during October).

    5. Mutual-fund redemptions: During this stage, after looking at their quarterly and monthly statements, horrified investors throw in the towel and sell their mutual funds (also, some investors refuse to look at those reports). As a result, mutual fund companies are forced to sell (which negatively affects the stock market). Typically, when the indexes fall more than 20%, mutual fund redemptions increase. 

    6. Complacency turns to panic: As more investor money leaves the market, many investors panic. The most bullish investors are holding on for dear life but are buying fewer stocks. The most nervous investors sell to avoid risking precious gains. 

    7. All news is bad news: As the bear market pushes stock prices lower, it seems as if most economic data and financial news is negative. Many people become skeptical of the bullish predictions from market professionals, who earlier had promised the market would keep going up. In the depths of the worst bear markets, some bullish professionals are jeered or ignored. Even die-hard bulls are increasingly nervous as the market heads lower and lower (with occasional rallies along the way). 

    8. Bulls throw in the towel: As trading volume increases on down days, and some investors experience 30% or higher losses, they give up hope and sell. The market turns into a free-for-all as even the Fed appears to have lost control. Many in the media admit that a bear market has arrived. 

    9. Capitulation: After weeks and months of selloffs (and occasional rallies), many investors are panicked. Investors realize that it may take years before their portfolios will return to breakeven, and some stocks never will. In the final stage of a bear market, trading volume is more than three times higher than normal. Even some of true believers liquidate positions, as many portfolios are down by 40% or 50% and more. Almost every financial asset has fallen, with the exception of fixed income such as CDs and T-bills. Traders or investors who trade on margin feel the most pain.

    Read: ‘Material risk’ looms over stocks as investors face bear market’s ‘second act,’ warns Morgan Stanley

    Take action

    This bear market is fairly young, but already there have been so many failed rallies that many investors are too afraid to buy. Some investors with cash are looking for bargains, but it takes nerves of steel to buy when everyone is selling.

    One of the keys to success in the market is to buy what people don’t want. Here are several ideas of what to do (and it is not too late to act): 

    1. During bear markets, a key to survival is diversification. If you are patient and are willing to hold positions for years, dollar-cost average into index funds on the way down. 

    2. In the early stages of a bear market, consider moving to the sidelines with CDs or Treasury bills. 

    3. Consider building a strong cash position, although inflation will cut into some of those gains. Nevertheless, losing to inflation is better than losing 30% in the stock market. The goal is not to lose money; in a bear market, cash is king. 

    The length and volatility of every bear market is different. No one can predict how this one will turn out, but based on previous bear markets, there’s still a long way to go before it’s over. 

    Michael Sincere (michaelsincere.com) is the author of “Understanding Options” and “Understanding Stocks.” His latest book, “How to Profit in the Stock Market” (McGraw Hill, 2022), explores bull -and bear market investing strategies. 

    More: Could there be a stock market rally? Probably. Would it be the end of the bear market? Probably not.

    Also read: Whatever you’re feeling now about stocks is normal bear-market grief — and the worst is yet to come

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