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Now that Minimum Wage is Rising, Is America Truly Doing Better?

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Bankrate conducted a survey and discovered that over 60% of people in the US do not have enough funds to handle even $500 worth in a financial setback. Nearly 50% of those that were part of the study, and make a minimum of $75,000 each year said they had inadequate funds if they were ever to experience a financial emergency. About 20% of those who completed the study stated they believe they would have to cut back on what they are spending if they want money for an emergency fund. 15% of people said that if they were in that situation, they would simply use their credit card to pay for the expenses.

Lauren Berg, a spokeswoman for Simple Finance, says that those who turn to credit may find that it can also become a setback, even if it’s just minor. She added that just a minor setback can still be all it takes to form a serious long-term financial crisis. Berg continued to say that her company strongly discourages people to transfer unexpected expenses to credit cards.

Continuing this type of financial behavior will only make it worse, as people accrue credit card interest. Another 15% of those said if a negative financial situation were to occur, they believe they would be ok because they would find a friend or a family member to borrow it. Sheyna Steiner, reporter and senior investing analyst at Bankrate, said that of you choose to borrow the money to get past a tough bind, it also means you may not have the credit during the times you do need it. She says that if a situation were to arise when you need a line of credit, it is possible it will not be there in the event there are any changes to your report.

Steiner mentioned that one thing that occurred during the great recession was people discovering that their credit lines had significantly lowered. Therefore, if you depend on it to be extended to you when you need it, the answer may not be what you want. Experts say that going the payday loan route during your times of trouble is just as bad as a credit card. Their interest rates are ridiculously high, as much as 400%, and can easily lead someone to a downward spiral.

The same survey conducted by Bankrate found they about 57% of people successfully made it through the year without using any source of financial help. Nearly 40% of people said that they, or someone they knew, experienced a major financial setback in the last year. Steiner says that unexpected expenses can arise often enough that people should prepare for it. Of course, saving money even when you know you need it is not as simple as it sounds for many. There are people, namely young adults, that are still working on paying their student loans back or are finding a job where they can make an adequate income.

Without a proper job that pays enough, it difficult to save anything when someone is living paycheck to paycheck. These adults typically make just enough to pay their bills, and any financial setback would be extremely detrimental to them. Berg, who says she understands and recognizes this, says that saving money can typically feel like a thankless ordeal when someone is faced with that of extreme debt. She recommends that even the smallest effort can make a big difference. The main thing you want to have is to focus on gaining more confidence in money management. She states that it is the foundation of her company philosophy, which is that all consumers should feel completely confident with their cash. Berg adds that that if you can put away even $5.50 away each paycheck, that can amount to $2,000 in emergency savings you can use after a year.

Steiner even says that she advises people to ease a little on their debt payments so they can prioritize saving for an emergency first. She believes it the key is putting saving first and reducing money where you know you can reduce it, even if it is temporary. Steiner says that if you truly want to be fully equipped and prepared for the inevitable, you have to start treating it as if it will happen. Most people are bound to need car repairs sometime down the road or will need to call the plumber. She believes if it’s debt that is the main reason you’re having financial setbacks, then remember to deal with it as best as you can. That alone will save you $500-$1000 in a year that you can use when you need it. Most importantly, it will be money that is now owed. She believes that after you get all that set up, then you can go back to tackling any debt you have.

Economy

The Next Generation of Sin Stocks to Ride Out a Bear Market

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The Next Generation of Sin Stocks to Ride Out a Bear Market

While the recent stock market rally has technically pushed the Dow Jones Industrial Average out of a bear market, many investors aren’t convinced it will last.

They expect that once the euphoria surrounding the $2 trillion stimulus plan wears off, the market will resume its slide downward as the economic impact of the coronavirus takes hold in the next few quarters.

Sin stocks, so named because they are things that we should go without but can’t seem to part ways with, are historically a great investment during downturns.

The added stress and uncertainty means an uptick in business for the companies producing these sinful indulgences.

Things like alcohol, cigarettes, weapons and gambling all fall under the umbrella of sin stocks, so companies like Altria (NYSE:MO), Diageo (NYSE:DEO), Sturm Ruger (NYSE:RGR) and MGM Resorts (NYSE:MGM) are all widely considered to be sin stocks.

And while they can make great investments during times of uncertainty, there’s a new breed of sin stocks that could generate even larger returns over the coming months as Americans turn to their (new) favorite vices.

Here’s a short list of “next gen” sin stocks that we expect to do very well.

Marijuana stocks

While this is by no means a “new” vice, it is only in the last few years that it’s been possible to directly invest in companies that produce and sell marijuana. That wasn’t possible during the 2008 financial crisis, so it will be interesting to see how the major players do during their first economic downturn.

Just like smoking, we expect demand to hold up very well, if not increase, during times of turmoil.

Consider the larger companies like Canopy Growth (NYSE:CGC), GW Pharmaceuticals (Nasdaq:GWPH) and Cronos Group (Nasdaq:CRON).

Video Games

Being a “gamer” is a lifestyle now, with livestreaming on YouTube and Twitch and professional Esports leagues formed around the most popular titles like Call of Duty and Overwatch.

Video games are big money now, and the larger production studios will continue to generate massive revenues as the culture grows in the years ahead.

Look at the big studios with strong franchises like Activision Blizzard (Nasdaq:ATVI) which has the Call of Duty and Overwatch franchises and Electronic Arts (Nasdaq:EA) which has the Madden, Battlefield and FIFA franchises.

Social Media Platforms

If you have a child or grandchild under the age of 30, you are probably very aware of the effort it takes to get their attention away from their phones and all the social media apps or platforms that they are using.

Tik-Tok, Twitter, Facebook, and Instagram are all designed to keep users engaged and spending as much time as possible on their platforms. The publicly traded ones are Twitter (NYSE:TWTR) and Facebook, which also owns Instagram (Nasdaq:FB)

While there are no guarantees when it comes to investing, as the coronavirus causes more people to spend time at home, they’ll be spending more time using the products and services of these next generation sin stocks, and that should translate to more revenues and higher profits for the companies.

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Economy

Dow and S&P Post First Back-to-Back Gains Since February

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Dow and S&P Post First Back-to-Back Gains Since February

While it may be a small victory, the Dow Jones Industrial Average and the S&P 500 managed to post their first back-to-back positive days since February.

The Dow closed 2.39% higher, gaining 495 points to close at 21,200. The S&P was up 1.15%, closing 28 points higher at 2,475.

The Dow was helped by a massive 24% rally in Boeing shares and a 9.2% gain for Nike stock.

The Nasdaq slid 0.5% yesterday as the tech-heavy index saw Facebook, Amazon, Apple, Netflix and Alphabet all close in negative territory.

Stock gave back part of their gains right before the market closed when Presidential hopeful Bernie Sanders said he was ready to “put a hold” on the $2 trillion stimulus bill currently working its way through the Senate.

Sanders is looking for tighter restrictions on companies receiving aid from a taxpayer pool of $500 billion.

While the market has used the likely passage of the stimulus bill as a catalyst for the massive rally over the last two days, at least one investor says the stimulus is reassuring Wall Street, not Main Street.

“What the fiscal and monetary stimulus has done is to allow the market to recover,” said Justin Hoogendoorn, head of fixed income strategy at Piper Jaffray in Chicago. “It’s not because the main street community is coming back. It’s the institutional crowd being able to say, ‘the world isn’t falling apart’.”

Others are worried that the euphoria over the stimulus bill is driving the market higher in the same way it originally drove the market down.

Adam Crisafulli, founder of Vital Knowledge, said in a note:

“The stimulus measures will continue acting as equity tailwinds as they seep into corners of the credit market presently locked.”

But he added that the market “is clearly moving much faster than underlying fundamentals and just as sharp declines on prior sessions exaggerated economic conditions, the rebounds will too.”

On Wednesday, former Federal Reserve Chairman Ben Bernanke said that he expects the U.S. economy will have a quick rebound after a “very sharp” recession.

“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” Bernanke said while appearing on CNBC’s Squawk Box.

He added “This is a very different animal from the Great Depression” which he said “came from human problems, monetary and financial shocks. This has some of the same feel, some of the feel of panic, some of the feel of volatility that you’re talking about. It’s much closer to a major snowstorm or a natural disaster than a classic 1930′s-style depression.”

In order for the markets to avoid a “snowstorm” turning into a recession, Peter Oppenheimer, chief global equity strategist at Goldman Sachs, said there are four “components” needed for stabilization:

″(i) A sign that the policy intervention is sufficient to prevent severe second- and third-round economic shocks; (ii) A sign that the infection rate is reaching a peak; (iii) A sign that the economic downturn may be slowing; and (iv) Cheap valuations,” Oppenheimer wrote in a note to clients. “In reality, we believe it will be a combination of these, and in some cases there are already signs these are in place.”

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government

Stimulus Checks: How Many Months Until Payments Go Out, and What Could You Receive?

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Stimulus Checks

Millions of Americans will receive direct payments from the federal government thanks to a $2 trillion federal funding package that was agreed to early Wednesday morning.

The bill, which could be signed by President Donald Trump later Wednesday, is in response to the coronavirus pandemic, which has shuttered non-life sustaining businesses nationwide and led to thousands if not hundreds of thousands of new unemployment claims.

Here are the details you need to know about when, and how much, you might receive.

When will the money go out?

According to CNN, relief may still be a couple of months away, as the outlet reports that checks or direct deposits might not go out until May.

“First, the IRS will have to calculate each person’s payment amount,’ CNN writes. “Then, it will need the correct direct deposit information or mailing addresses.

“To get the money to people who don’t usually file tax returns, it might have to request that information from the Social Security Administration or Veterans Affairs. In 2008, those people were required to file a return anyway in order to get their rebate.”

That, of course, will take time, and keep in mind that the IRS is still receiving tax filings, as well, even if the federal government and also Pennsylvania, among many other states, have pushed back the deadline to file.

For those looking for an optimistic timeline, mid-April seems to be the absolute earliest that checks could go out.

More: Pa. unemployment claims skyrocket to 540,000 since statewide coronavirus shutdown, shattering records

How much will I get?

Here is what the New York Times says:

“A $1,200 payment for each adult — and $500 per child — in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.”

CNN has more details on what the phase-out threshold might look like.

“The payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all,” CNN writes. “The thresholds are doubled for couples.

“Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns.”

What happened the last time this happened?

This package marks the third time since 2000 that the federal government has approved payments to citizens based on special circumstances.

As CNN notes, it took six weeks for checks to go out under a 2001 plan for tax rebates that were authorized by then-president George W. Bush. Checks during the ‘Great Recession’ of 2008 didn’t go out for three months, however.

Experts believe that an increase in electronic tax filing and the use of direct deposit for refunds could lead to expedited payments this time around, and those who have that set up are likely to receive their money faster than those who will be waiting on a check.

More: These central Pa. businesses are still open during the coronavirus pandemic

Where is the money coming from?

Syracuse.com has details:

“Taxes, essentially,” its Geoff Herbert writes.

“CNBC reports it’s unclear whether the money will be considered a loan or a gift, in which case some of it may have to be paid back.”

Why only one check?

Previous proposals that were discussed as the spread of COVID-19 continued to hurt the economy mentioned the possibility of two checks being sent out, but the agreement reached Wednesday calls for just one. It’s possible that a second round could go out, however, if schools and businesses must remain closed into the summer.

How will businesses be helped?

This part of the package is still being finalized, but Yahoo reports that the Small Business Administration will handle some requests while a new, still-to-be-named agency will handle others, likely for larger businesses and corporations. It was referred to as ‘a big credit facility’ by Pennsylvania senator Pat Toomey over the weekend.

“The facility will have two components: One will be administered by the Treasury Secretary with direct loans for a short list of “seriously distressed and absolutely essential companies,” likely including airlines,” Yahoo writes.

“The second component will be much bigger and be “a broad-based credit facility that will be available across categories, across sectors and industries.” Toomey said this program will give loans that will have to be repaid. “None of this is grant money,” he said.”

More of PennLive’s coronavirus coverage:

Why social distancing works, as demonstrated with Skittles

Pa. school districts prepare for possibility of students not returning to classrooms

Governors, still trying to flatten the coronavirus curve, balk at Trump’s Easter Sunday timeline

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(c)2020 The Patriot-News (Harrisburg, Pa.)

Visit The Patriot-News (Harrisburg, Pa.) at www.pennlive.com

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