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Mercedes Incentives

An October 2 memo sent to dealers of the Mercedes vehicles revealed that the company has started a 2012 program that includes potential customers' special lease agreements and cash offers, according to Bloomberg. The carmaker also wrote an email to dealers on October 5 announcing a promotion that permits certain owners of the vehicles to skip up to five payments.

For the first nine months of the year, Mercedes has sold 5,221 more vehicles in the United States than rival BMW, the media outlet reports. The carmaker is suffering from headwinds in various foreign markets, with September sales in China dropping for the first time in eight months and Germany starting to suffer from the lackluster demand experienced by many other nations in Europe. These ailing economies are putting downward pressure on both BMW and Daimler, which owns Mercedes.

"It isn’t just about being No. 1,"Greg Goodwin, chief executive officer of Vancouver, Washington-based Kuni Automotive, which operates 14 dealerships, including those that sell BMW vehicles, told the news source. "What BMW and Mercedes also are dealing with is global competition and the ebbs and flows of global demand."

German Deals 

Mercedes recently began offering incentives on vehicles sold in Germany, such as a 3,000-euro trade in incentive for its vehicles, according to Bloomberg News. Data provided by trade publication Autohaus PulsSchlag revealed that in the discount levels offered for new vehicles in Germany rose to an average of 12.2 percent in September, which was the highest level since 2010.

Seeing as how car sales in the European nation have fallen 11 percent in September, these incentives are not having the desired effect, the media outlet reports. Since Germany contributes more to regional auto sales than any other nation, this drop may result in European sales of these vehicles dropping to their lowest level since 1993.

"There’s no point buying a new car at the moment," Frankfurt nurse Jiri Macan, who had recently bought a used VW Golf, told the news source. "A used car keeps its value much better." 

Near-Record Bond Issues 

Data compiled by Bloomberg reveals that earlier in October, global conglomerate General Electric Co. sold $7 billion worth of these financial instruments derived from corporate debt. Business application provider Oracle Corp. issued $5 billion worth of these corporate bonds.

These major issuances brought October's total bond sales to $347 billion, which represented a new record for this month, according to the news source. The monthly sales figures left the 2012 corporate bond sales total within $116 billion of the record $3.4 trillion issued during the first 10 months of 2009.

Emerging Market Bonds 

Data provided by Benzinga reveals that the market for emerging market (EM) corporate debt has been growing this year, as the sovereign debt of these economies is experiencing strong demand and dwindling supply.

Investment firm Pacific Investment Management Company, LLC (PIMCO) recently wrote that "the supply of U.S. dollar-denominated EM sovereign debt is decreasing and yields are near historical lows," according to the news source. As a result of this, the investment firm is encouraging market participants to explore the corporate debt offered by companies in these regions.

In a recent PIMCO note, Ignacio Sosa and Anton Dombrovsky stated that "the dollar-denominated EM corporate market has been growing steadily, and many corporates can offer higher yields and lower durations than sovereigns."

Surging Bond Markets 

Exchange traded fund provider WisdomTree recently said that the market for corporate bonds in these developing economies has increased roughly 100 percent in size since 2008, the media outlet reports. In a note written earlier in the year, WisdomTree wrote that "since 2003, EM U.S. dollar-denominated corporate bond issuance has outpaced sovereign issuance in a trend we believe will make EM corporate debt an increasingly larger allocation to emerging market fixed income."

Bonds and Monetary Easing 

In the week of the financial crisis, governments have injected record amounts of money into the economy and keeping interest rates at very low levels, according to Bloomberg. Many market participants have also sought bonds amid strong risk aversion. These factors have helped push the yields on sovereign debt to 0 percent or even lower, which has motivated investors to put their funds into corporate debt.

"There's a lot of money out there looking for a home," Elisabeth Afseth, an analyst at London-based Investec Bank Plc., who suggests investors refrain from putting money into debt issued by euro zone nations including Spain, Italy and Portugal, told the news source. "Government bonds give you almost nothing, so you’re left with corporate bonds, which give you a little bit more than nothing." 

According to an ICBA statement released on October 29, nearly 15,000 bankers signed a document asserting that these smaller lending institutions should be exempted from the Basel III requirements.

Mortgages and Commercial Loans

If these community banks have to adopt the regulations, the new rules could disproportionately impact lending activities related to the issuance of mortgages and also commercial loans. If implementing Basel III reduces the ability of these smaller lending institutions, it could hamper their efforts to both lend and invest in local communities. This constrained activity could help to further decelerate the current economic expansion.

Basel III Origins  

The document notes that the Basel III capital requirements were originally created by the Basel Committee in order to reduce the risk that major lending institutions presented to the entire banking system.

These large financial entities were implicated in the financial crisis and were labeled as systemic risks by many market experts due to the potential threats involved with their failure. It was noted that if one of these major banks became insolvent, such an event could spread to a wide range of other financial entities.

Community Banks

However, the petition noted that community banks were not implicated in the financial crisis. It also stated that these lending institutions have higher capital reserves than other types of banks. The ICBA document implores U.S. federal regulators to allow these smaller lending institutions to continue complying with the Basel I requirements, which are better-suited to the assets held by these banks.

The petition voices the opinion of the community banking industry as a whole, which states that the Basel III capital requirements will hinder the activities of these smaller lending institutions, ICBA president and chief executive officer Camden R. Fine said in the statement.

He added that "these proposed capital standards were designed to reduce the risks posed by the large and complex financial institutions that contributed to the worst financial crisis since the Great Depression," and that providing community banks with a regulatory regime that is too intricate will spur consolidation of these institutions and therefore limit the options that consumers and businesses have. 

Survey Results

Only one-third of the participants in the survey indicated that after being advised on what to do with their finances, they actually take action. However, almost one-half of these respondents specified that they are worried about their financial futures. 

Personal Advice Crucial 

These findings were not surprising to James Nichols, senior managing director of advice and planning services at TIAA-CREF, who stated that these Americans are facing a constant supply of information on what they should do to reduce their expenses, streamline their budgets, save more and invest effectively for their retirements. 

He added that the best way to go about doing so is different for every individual, and that personalized advice can be very helpful. Individuals who are provided with recommendations that are specifically tailored to their financial situations are more than 60 percent more likely to utilize the advice than people who receive generalized guidance, according to analysis conducted by TIAA-CREF using data on its clients. 

The research conducted by the major financial services provider revealed that people who received financial advice from the company may have as much as $200,000 more saved for their retirement as the result of a 30-year career. 

"We've seen personalized objective advice help drive positive outcomes for our participants. Last year, two-thirds of those participants who took advantage of TIAA-CREF's advice took action – choosing to save more, review their retirement plan portfolio allocation or rebalance their portfolio – and nearly half have increased their contributions to their retirement funds," Nichols said in a statement. 

Challenges in Finding Advice 

One-fifth of the survey participants specified that they are encountering challenges in finding the financial advice they need, with 51 percent specifying that they don’t know where to seek this information and 74 percent are not sure which sources of financial advice are reliable.

The need that individuals have expressed for personalized financial advice is supported by the general trends displayed by asset markets both during and after the recession, as the various asset classes have moved together in tandem to a higher degree than before. This phenomenon makes it evident that people can benefit from designing an investment portfolio that is specifically tailored to their objectives, risk tolerance and investment horizon.

Improving Sentiment  

Data provided by the survey reveals that 38 percent of American participants think they are in better shape than one year ago, compared to 34 percent who think their situation has deteriorated. The fraction of people who believe things have improved is at its highest since October 2007. Comparatively, 26 percent state they their situation is unchanged.

"Right now it's a more or less a dead heat," Greg McBride, senior financial analyst at personal finance information website Bankrate.com, told U.S. News and World Report. "We've seen some improvement given stronger stock market performance, the turn in the housing market, and better news on the job front."

The recent Gallup poll figures represent a substantial improvement from 2008, when 54 percent of participants said that their situation had deteriorated from the prior year. The following year also created a majority of respondents who felt worse off.

Gallup provided the same survey in May 2012, when 37 percent said their situation was better.

The media outlet reports that two-thirds of consumers predict that they will be in a better place financially one year in the future than they are currently. The fraction of people with this expectation has previously declined to as low as 52 percent during the summer of 2008, as market participants were impacted by the financial crisis and widespread economic challenges.

Economic Predictions  

The U.S. economy will increase its rate of expansion to grow 2.3 percent in 2013, according to the median estimate of economists participating in a USA Today poll. A total of 48 of these market experts contributed to the survey. Their forecast for next year's growth is higher than the 1.5 percent that was experienced during the first half of 2012.

In addition, close to two-thirds of those economists expect that the fiscal cliff will be resolved without providing the economy with significant headwinds.

The economic confidence of many market observers has been bolstered in recent weeks as central banks across the world announced plans to provide further stimulus to the global economy through monetary easing. 

Accurate Forecaster

Having studied the inflection points for the movements of asset prices and provided consulting to hedge funds such as George Soros’s Soros Fund Management LLC, DeMark provided an accurate prediction when he stated that the S&P would stop depreciating at 1,076 and the group of stocks started moving upward again once it reached 1,074.77 on Oct. 4, the news source reports.

‘Unfinished Business’

Demark wrote in an emailed statement that the index’s rally will fade out before it falls between 12 and 17 percent, the media outlet reports. He said that "there is still some unfinished business upside that will totally surprise and shock most market followers," and that the recent "rally is a solo move in a sense that the overall market trend has been down since September 14."

The S&P 500 has spiked as much as 15 percent after falling to its recent low on June 1, as markets were bolstered by news that central banks around the world will stimulate the economy through monetary easing, according to the news source. After reaching 1,474.51, its highest value of 2012, the index has since fallen 3.9 percent as markets have been roiled by worries that corporate earnings will not be in line with the expectations of analysts.

No Indicator for End of Rally

DeMark said that the S&P 500 has not exhibited behavior that would indicate that its rally is over, the media outlet reports. He said that other indices such as the Nasdaq have already reached their top value since September and have subsequently declined.

He said that the current inability of the index to complete a 'top countdown' is similar to its behavior in August and September of 2011, when the group of stocks did not indicate that it had reached a valley, according to the news source.

Bloomberg reported on October 22 that the blue-chip S&P 500 Index had surged 14 percent year-to-date, and as a result had displayed better performance than any other major asset class. 

Saving Is Important 

Building a cushion of savings is important so that people have a safety net, and they also need these funds if they want to invest. By using some straightforward tips to save, they will hopefully have some added motivation to put more way.

Spend More Effectively

One way to increase the fraction of your income that goes into savings is to spend more effectively. People can make improvements by reviewing their expenses and identifying alternatives that are cheaper and are not substantially different. Once these items have been identified, people can use the extra funds generated to pay for things that are more important to them.

If an individual has more than one brokerage account, he can consolidate these accounts so that the higher level of assets provides them with services that are either cheaper or better.

Don’t Wait for the Perfect Plan 

Many individuals fail to take action because they are holding out for the perfect plan. The drawback to this is that the longer they wait to improve their habits for spending and saving, the more money they will end up throwing away.

This principle also applies to investment plans, in that people fail to invest simply because they do not feel they have the perfect plan established. A lot of individuals do not invest because they are worried about making mistakes, but a plan is needed for retirement to be realized.

Continuous Refinement Is Key

Even if an individual has worked out a plan that he considers to be ideal for his situation, assets, goals and tolerance for risk, this plan can become outdated. Technological advancements provide individuals with more options over time, and new investment vehicles are always being created.

When possible, people who are saving for retirement should review their plans in order to see where improvement can be made. There are many investment mistakes that can be made, and people need discipline to ensure that their investment plans do not fall off track.

Savings are important, especially in the face of dwindling pensions and widespread concerns about the prospects for retiring. The doubts that many individuals have about their ability to retire were reflected in a recent Wells Fargo poll, in which 75 percent of respondents predicted that they would still be working during years that people usually use for retirement and an additional 25 percent said that they planned to retire no earlier than 80. 

Sharp Appreciation 

Index data provided by Bank of America Merrill Lynch indicates that debt-based financial instruments issued by major financial services firms JPMorgan Chase & Co. to HSBC Holdings Plc. are currently on track to reach an annual return of 15.4 percent, according to Bloomberg.

If these bonds perform this effectively, they will surpass the robust return of 15.2 percent that bonds generated in 2009, the media outlet reports. The aforementioned financial bonds are currently outperforming industrial notes by 4.3 percent in 2012, which is the largest spread between the two groups of assets on record.

Global Economic Threats 

Although these bonds are generating substantial returns this year, speculation has been mounting that yields have been reduced to a point where investors might be prohibited from buying the debt-based instrument, considering the risks that are currently present in the global economy, according to the news source.

Any deterioration in the euro zone fiscal crisis could aggravate the existing interconnected nature of the global banking system. Pimco is currently in the process of selling some of its financial bonds, after speculating 15 months ago that these debt-based instruments could appreciate further.

The International Monetary Fund recently lowered its economic growth predictions for emerging markets, predicting that they will expand at an average rate of 5.8 percent during the five-year period through 2016. This figure is almost 2 percent lower than the rate of growth they had during the five years before the 2009 global economic downturn.

Bond Market Future

"It’s difficult to see the catalyst for further tightening in bank spreads," Bonnie Baha, head of global developed credit at Los Angeles-based DoubleLine, which has more than $45 billion under management, told the news source. "They’ve had a terrific run this year."

While the bonds issued by major financial services firms have experienced robust appreciation so far in 2012, Pimco founder Bill gross has predicted that the economy will produce many years of low bond returns, estimating that the debt-based instruments will return an average of between 2 and 3 percent annually. 

S&P surges

Data provided by Bloomberg reveals that the benchmark S&P 500 Index has surged 14 percent in 2012, which means that the group of stocks has outperformed commodities, Treasuries, corporate bonds and equities in Asia and Europe.

The S&P has not displayed performance this robust since 1995, when it was enjoying its largest gain in the last 50 years. The benchmark index went on to surge another 93 percent in the following two-and-one-half years.

Investor wariness

Regardless of the risk aversion that many investors are experiencing, some of the best assets are still U.S. companies, according to the news source. Market participants are afflicted with concerns about widespread joblessness and lackluster growth, but these firms have been experiencing strong appreciation.

Market optimists have been encouraged by a recent Federal Reserve announcement that the central bank will both engage in further quantitative easing and also wait until some point in 2015 before raising key interest rates, the media outlet reports.

"We see good earnings growth and improving economic outlook, we see good equity valuations and easy monetary policy, we see skeptical investors and low positioning in equity assets," Max King, a multi-asset strategist at Investec Asset Management in London, which manages $100 billion, told the news source. "This is a major green light for equities and the fact that people don't see it, is great."

Strong future performance 

Equities will continue to enjoy a bull market for another year as market participants become less wary of risk and put their money back into stocks after withdrawing funds from these assets since 2007, Laszlo Birinyi, the president of Westport, Connecticut-based Birinyi Associates Inc., told the media outlet.

The statement of this market expert is supported by Investment Company Institute revealing that global market participants have withdrawn $100 billion from U.S. stock funds in 2012 while putting $250 billion into bond funds, according to the news source.

Birinyi, who was involved in equity trading at Salomon Brothers Inc. in the 1980s, told the media outlet in an October 17 phone interview that the aversion that investors have for the stock market is declining.

Bloomberg data indicates that the S&P 500 finished the week ending October 19 with a price-to-earnings ratio of 14.5, which is still relatively low compared to its 50-year average of 16.2.