Musing on Tuesday Modest Gains Week 2 February

• Tuesday last saw the promise of a rescue for Greece and stocks moved up in a broad based rally. The EU meeting Tuesday February 8Th was to aid embattled Greece, which assured world markets that they were being proactive by increasing retirement age, fuel taxes and began reforms to cut debt. Investors are also concerned about sovereign debt 'spillover' to Italy, Ireland, Spain and Portugal (PIIG), but for the day will take the triple digit return. Wednesday the markets were down after Bernanke speech and reports of higher than expected imports. Thursday saw markets rebound on EU bailout.
• AT&T making news on keeping iPhone users happy. So far, not. Ugly article about problems at the carrier in last week's Businessweek. Verizon hard at work to take away all or some of the iPhone business. Will battle cause one or both to reduce dividend? Can AT&T afford to lose even a part of the iPhone franchise? Stay tuned.
• MetLife is on a roll and whispers that it may be a buyer if AIG unit American Life Insurance Company. Now only if it could speed up its toll free customer service.
• Fannie & Freddie like spoiled nephews of a rich uncle are sucking up the cash with no clean plan in sight. Investors are ignoring them. Government honchos don't seem to know what to do except keep pouring in money, so far $111 billion. With more mortgage defaults on the horizon this summer it seems the government will burn a total of $175 billion between the two quasi-private organizations with no chance of recouping a single penny. At best Fannie & Freddie will be poster children for politicians on both sides of the aisle.
• Dr. Irwin Keller enthusiastically encourages the return of inflation and higher interest rates in Wednesday's Market Watch. Having the Fed increase rates will save the Silent investor, meaning those social security yield hunters. Zero interest helps the banks. Higher rates help the individual saver. The doctor forgets that increasing rates will increase inflation and while social security checks will increase so will food, utilities and fuel, the three amigos not part of the COLA calculation.
• Market up or market down? According to technical analyst Michael Kahn in last week's Barron's on-line the magic numbers according to him are: Nasdaq 2200, Standard & Poor's 500 1100 and Dow 10,300. If all three indicators move above those numbers it's a bull confirmed market. Dip below and the bears will have at it.
• Investors nervous about credit card firms. New rules aimed to help consumers soon to be implemented. Visa, Mastercard, American Express and Discover off highs.
• Citi and Chinese company ink deal to begin trading carbon credits. How does it work? In a previous blog 2009 I reported investors buy credits from energy efficient companies and sell them to companies not so efficient. China determined to reduce energy use by 20% from 2005 levels. There is no legal basis for trading carbon credits now but watch as this market gets legs and moves in a hurry to become a legitimate powerhouse.
• 9 trillion investor dollars sitting on sidelines earning next to nothing.
• Chicago Mercantile Exchange buys Dow Jones indices.
• Markets closed Monday.

  If you have questions about this blog call Paul Stanley @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Send Paul your email address to keep updated on news.