That Was The Week That Was –4th Week in June

•   Investors awakened Monday to a new day dawning with grumpy staid China agreeing to allow its dollar or yuan to float against the U.S. currency. This news brightened investors in Asia and Europe. The U.S., not so much. Markets closed down after spending all day in positive territory, Experts, according to MarketWatch expect the yuan to move 3-5% a year against the dollar. This news is also good for exporters as it is a positive for Chinese domestic consumption companies being prime beneficiaries. Key winners- instant noodles, tobacco and alcohol.
• Princeton Professor Paul Krugman makes a significant point in explaining why the US should wait before enacting budget cuts and tax increases. It was the same philosophy in 1937 that sent the unemployment rate soaring just as the economy started to get some footing. Great Britain has plans for just that exact painful remedy. We’ll see how well that works out.
• Middle Class Bush tax cut extension is being considered by top Dem House Majority Leader Hoyer. (See the chart below)

•  Common sense, according to CNBC Fast Money, there is no double dip recession on the horizon as companies are paying and increasing their dividends. As we well know, corporations are extremely parsimonious when it comes to sharing money with shareholders if it means pain for board members or their executives. 
• FYI -Spillback distributions – You may get a spillback from your mutual fund as it represents income or gains from 2009 that were not distributed at the end of the year. These were gains from Nov –Dec and not distributed. Tax is payable in 2010.
• The much ballyhooed yuan rally fizzled. I was going to write the Big yawn yuan rally fizzled, but that was plain silly. Tuesday markets started off even and stayed that way through most of the day, either on one side or the other. Existing home sales were off 2.2% after 2 months of gains and realtors were expecting a tough summer. The news caused markets to fall along with more concerns about the banks and oil stocks.
• The White House vowed to fight the recent reversal on their 6 month moratorium on deep water drilling.
• Citi suggested to investors that Chinese stocks are at valuations that historically provided good entry points for investors. Hong Kong’s benchmark for China shares, according to MarketWatch’s Chris Oliver, are down 10% from a year ago. 
• Bill Gross, making an appearance Wednesday afternoon on CNBC, suggested interest rates will remain at or close to current levels for two years. Two year note currently yielding .67%, take in modest inflation and taxes and savers losing money. Expert in Thursday morning’s WSJ confirmed that rates may not be increased until 2012.
• It’s no secret that I believe in the long-term value of our domestic automakers. Morningstar took a look at the auto business in their recent essay about Automakers- Dead End or Open Road. They stated that outside of a possible double dip they think it is reasonable to expect ‘strong’ sales recovery over the next two years.  
• G-20 meeting will be every country for itself. Obama has preached fiscal stimulus which is ‘in your face’ contrary to austerity measures in Canada, UK, Germany and Japan. Expect fireworks.
• Domestic markets feel Fed gloom as the Chairman reported recovery not as robust as expected. ( I knew that –You knew that too!)
• Markets were down Thursday on worries about the final bank bill. Small banks were give reprieve with smaller capital limits and Senate rejected that banks pay for the winding down of Fannie and Freddie.  Real estate woes were also in the news but some argued that sales were not as bad as being reported. Sometimes I feel like Roseanna Danna Danna, ‘It’s always something.’ The Dow was down almost 150 points. The ten year bond was up as investors dashed to quality.

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