Tuesday Musing-Third Week In May

• For the week that was -It’s going to be a bumpy ride this summer.  Michael Kahn, technical writer for Barrons, reported the trend for the domestic market is down. Fear of the euro collapsing and some countries defaulting on their debt is a real expectation.
• Seth Klarman, “There is nothing natural about this market, everything is being manipulated by the governments.’ Keeping interest rates at zero forces people to invest. His suggestion: Buy today whatever is cheap, loathed and despised.
• Monday markets worked off triple digits losses as Asian markets followed our Friday selloff. Finally  found footing at the final minutes and managed to pull out a slight gain lead by techs.
• Germany’s been a partial thorn in this EU mess. German politicians first stepped up to support the EU and then the voters cried ‘Nein!’ And so politicians had to back stroke until after the elections. Friday it seemed the Germans would help, albeit reluctantly. Geithner is rumored to do more arm twisting over the weekend.
• China doing not so hot. Hong Kong down again. On the good news front-China increased US debt holdings for the first time in six months. Europe is especially troublesome for the Asian giant as well as us.
• Gas continues to stay high while oil plunges. Gasoline retailers took a lesson from bankers on how Not to give up increases as primary product costs are lowered. Note: bankers keep rates high to customers while borrowing money at next to nothing rates.   Every penny on cost of gas removes $1 billion dollars from consumer’s wallets. One B –illion.
• From the ‘Colombo School of Detecting’, Former Chairman of mortgage giant Taylor Bean and Whitaker, Lee Farkas, has been charged with siphoning more than $50 million for personal gain from the firm. It is alleged that he was aided in the theft by Desiree Brown, a former receptionist promoted to company Treasurer. Questions anyone?
• Proposed by the SEC a ‘circuit breaker’ for each individual stock. Trading will pause if certain stocks move 10% or more in a 5 minute period. Supposed to eliminate any future ‘ flash crashes’.
• Tuesday markets moved down triple digits and the VIX, an indicator of investor fear, popped to second highest close of 2o1o. Oil fell below 70, euro off. Germany bans some short selling.
• ‘The’ Oprah who employs a full time ‘purse holding person’ (I am not making this up nor do I know how you define ‘purse holding person’ on your resume), just stole Eli Broad’s personal money manager Peter Adamson. No word from Adamson or Broad, who, by the by, is not only a billionaire and philanthropist but a local legend building half of Southfield, Michigan with his partner under the firm name of Kaufman and Broad back in the 1950s-60s.
• Follow-up from Tuesday Germany put the kibosh on short sales sinks gold as German investors run to cash.  Politicians think its the traders causing the angst – they don’t get it nor do ours. Wednesday markets off with banks moving up. Oil down, gold crushed.
• Thursday markets closed down on every sector. Technical support levels were broken including the 200 day moving average. It did not help to have a surprising increase in the jobless rate. Friday is another day and no one expects the news to get better.
• Jimmy ‘The Mouth’ Cramer finally said something I agree with – bring back the uptick rule and make it tougher for investment raiders to short – it was good for about 65 years until it was decided it was old fashioned. It means you can’t short a stock unless someone pays more for it – in other words you cannot keep banging a stock into zero without giving someone a chance to buy it.
• Thursday 497 of the S&P 500 stocks down.
• Dow Theory still bullish. It is the oldest market timing system in use today and it is still bullish on the economy.
• Senate passes Financial Overhaul Bill. This amazing piece of legislation replaces the ‘theoretical’ hand-shake and my word is my bond’ with huge government expanse and oversight to make sure that bankers and investment types don’t lie, cheat and steal; and if they do, as they have proven to do so in the past, they will be severely punished. Sigh. It also is to define ‘too big to fail’.
•  FDIC reports that 1/10th of all banks have ‘problems’. There were 702 on the ‘list’ at the end of 2009 and 775 today.
• IBM insiders sold $40 million in stock. IBM is a bellwether – does someone know something?
• Start saving for the future – a new car company is a-coming. The electric car company Tesla found a $50 million backer in Toyota, plans on opening the old GM-Toyota plant in Fremont, CA, hire 1000 workers and have their IPO in January. Geeks and Gear Heads gotta love this! Call me for more info.
•  It was down, it was up, it fell down again and then with a flurry not seen since Rocky, but with more excitement, pathos and drama, the Dow ended up 125 points on Friday, ending the week with the market off 5%.
• We’re still in Bear territory-  one day doesn’t define the markets.
• FDIC closed bank #73 in Minnesota.

If you have questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.