One thing we have learned is that markets are not hard-wired like nature to do what we expect them to do. We expect Monarch butterflies to fly up to 3,000 miles in its fall migration to Mexico, salmon to swim upstream where they spawn on gravel beds, and the great migration of the vast numbers of wildebeest and zebra to run through the Serengeti’s plains.

For years, investment pros have told us to brace for the great bond rotation and it has not happened yet. In fact, it appears to be the exact opposite. It is puzzling that this has been a winning trade for so long yet we were told the ‘Great Rotation’ would be a migration from bonds to stocks, and not the other way around.

#FREECOMMUNITYCOLLEGE

President Obama posted a video in a social media network from Air Force One, touting a new program to make community colleges free for the first two years.

The federal government (75%) and state governments (25%) would cover tuition.

I have and will continue to cover the topic of education in my commentaries, because it is the first step to making money, and changing one’s life to a kind of economic freedom that is sweet and worthwhile.

Numbers do not lie: look at how dramatically one’s average lifetime earnings can increase based on education levels:

Education Level	Average  Lifetime Earnings
Professional degree	$4.2 million
Doctoral degree	$3.5 million
Master's degree	$2.8 million
Bachelor's degree	$2.4 million
Associate's degree	$1.8 million
Some college	$1.6 million
High school graduate	$1.4 million
Non-high school graduate	$1 million

Here’s the rub.  The community college route could be ten times less expensive than the private school route, yet arduous in other ways.

Not only does it take longer to attain a four- year degree, there is a sizable attrition rate.

Higher Education	4 Year Degree	% Dropout
Community College	71 months	39%
Public	55 months	17%
Private	50 months	16%

Organizations that actually work with underprivileged youth for higher education actually frown upon the community college route.

“If the intention is to change the economic trajectory of Breakthrough students (i.e., end the cycle of poverty), then having Breakthrough students begin their post�-secondary educations at four�-year colleges is the best way to ensure they complete their bachelor’s degrees.”

-Breakthrough Collaborative

Buying Votes?

These kinds of proposals always seem to come around just ahead of the state of the union or election time. Is President Obama just buying votes? Under President Bush, student loans climbed 76%; under Obama, 463%; close to a trillion dollars… is this just a political gimmick for the youth vote?

Earnings Season

Earnings season began last night with the release of results from Alcoa (AA), which posted a strong number that beat the street and offered encouraging guidance. However, the last 3 months have seen a dramatic decline in expectations for every sector in the market.

How could gas drop, the gross domestic product (GDP) surge, and hundreds of thousands of jobs be created, and earnings estimates collapse?

Yesterday, UBS lowered its earnings estimates on the banks, yet still considers Bank of America (BAC), Citigroup, and Morgan Stanley a Buy... how can you cut estimates in the case of Citibank to $0.04 from $0.18, and still say it's cool?

The earnings game is fickle and curious, but it is the best chance we get to delve into the health of publicly traded companies. I wish these were only twice a year, nevertheless, hold onto your hat.

Today’s Session

The markets opened higher this morning despite worries of falling crude oil prices. They were helped by positive economic data releases from overseas. For the month of December, China’s trade surplus decreased to $49.60 billion from $54.47 billion (slightly lower than the consensus estimate for $49.85 billion) due to higher exports. Japan also witnessed its trade surplus narrowing. Domestically, we have a couple economic data reports today, including the Department of Labor’s Job Opening and Labor Turnover Survey (JOLTS).

Comments

At what point will Americans realize that Obama's spending their money and not his own? And, at what point will they realize this country is being driven by a personalized ideology? My guess is never, as long as the "free" money continues to flow. greg on 1/13/2015 2:28:52 PM

He won't even spend anyone's money. He will propose the plan, the low info voters will cheer and the Repubs will turn it down. He is the Great Manipulator In Chief. Get a clue Repubs! Dick Nicholson on 1/13/2015 3:18:34 PM

the average American voter is apathetic and uninformed -- they don't know/don't realize they are being deceived -- what a shame but also a sad commentary on where we are Dick Denecker on 1/13/2015 3:20:36 PM

Hasn't everyone heard? It's not the TAXPAYER who pays for all this, it's the GOVERNMENT! Keep your hand tight on your wallet. George Stelzenmuller on 1/13/2015 9:05:19 PM

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