The Week That Was –Second Week In June

• Monday following the huge Friday sell-off found the markets like a New Years Eve hangover that had everyone tip toeing and avoiding loud noises or surprises. The lack of long-term investors allowed traders to do their thing and by the final 60 minutes the DJIA shed over 100 points toute de suite.
• ‘It ain’t a double dip!’ Weakness brings out the worst and while domestic fundamentals grow slightly better with each passing day investors fret a double dip depression. Fed Reserve board chairman Bernanke said that consumer spending and business investment seem strong enough to keep the economy growing, albeit at a relatively subdued pace.
• Free cash flow. Companies with cash that they can use to pay dividends, buy back their stock or use for acquisition are growing. In troubled times free cash flow is a beautiful thing.
• From the Financial Advisor News, nearly every hedge fund strategy in May lost money.
• Tuesday markets moved higher at the open, lost ground and then finished with a triple digit flurry not seen in weeks. All this as advisors and talking heads worried investors to take money off the table in the final 60 minutes of trading. Just what the markets needed was a little less confidence. CNBC with Marie Bart…reported oil going to $78 a barrel by year’s end.
• It  was ‘Ladies Night’, on Tuesday last as the ‘New’ political Supremes reigned in campaign 2010. Carly, Nikki, Meg and Sharron came, saw and conquered in  races for governor and U.S. Senate.
• Morningstar reports the proliferation of Long-Short mutual funds. They’ve been around for years, haven’t really been impressing but took in over $10 billion in 2009. So far there have been 22 long-short fund launches in the past 12 months. The problem, according to Morningstar, is the fund companies are chasing flows, which are in turn chasing performance. It’s a compelling ‘ my-broker- tells- me’ story but no cigar.
• Wednesday markets opened higher. CNBC reports short upside before falling back. Fed Chairman Bernanke told Congress the recovery is on track despite head winds. He also urged Congress and the White House to come up with a plan to whittle down record federal budget deficits. ‘At some point,’ he said, ‘(if nothing is done) things will come apart,’
• Here we went again. Wednesday saw a strong market unhinge in the final hour of trading. It’s a traders dee-light. Money doesn’t sit overnight as investors move on before the closing bell.
• Bargain? BP collapsed from $60 to close under $30 a share.  (Moved off lows by end of week)
• Pimco versus BlackRock- both bond mega-mega goliaths, Pimco warned of Treasury ownership, BR said nay. BR right. Pimco added more U.S. Treasuries changing its philosophy and moving markets.
• Gold is no longer for the faint of heart. Huge moves to either side make this an extremely volatile trade. Eventually it is possible to get caught on the really wrong side. Silver is not moving in tandem.
• Triple digits held Thursday best since May 27th. Don't get excited because too much uncertainty for long term investors who are still not convinced to participate.
• Huge positive, that should put smiles on investors, is corporate CEOs holding massive amounts of corporate cash. With two major recessions in a decade corporations have learned their lesson. According to CNBC the minute confidence comes back there is something sitting there that the markets have never seen. Piles of cash for M&A, stock buy-backs, acquisition and increased dividend. Whoa, Nelly! 
• Friday weak retail sales numbers started the trading day on a sour note. Still a positive week for the first time in a month. Small gain eked , naturally it happened at closing, as markets mixed most of the day. According to Morningstar railroad service ‘rebounding’ at record clip. May’s 15.8% year-over-year monthly carload growth was the second greatest gain in the U.S. since tracking volume began in 1990.
• TARP repayments surpass loans! $194 billion collected on $190 billion debt. However, there may be losses ahead. (Can you say AIG? Anyone?)
• Lyrics your great grandchildren will never hear, ‘Find me a Mercury and cruise it up and down the road.’ Sigh.
• Marc Pado, US market strategist for Cantor Fitzgerald, said in Sunday’s MarketWatch, ‘Technically, fundamentally, geopolitically, and globally, there is a huge wall of worry that has been build since the April high.’ He finished by saying that the good news was there are companies that have been anticipating worse economic conditions and now sitting on a pile of cash, keeping inventories tight and a lid on new hires.
• Red flags in muni-market. Buffett trims holdings. Investors finding it tough to weed out possible defaults, according to Monday’s WSJ. Gaps between revenue and expenditures are unsustainable, say some market specialists.
• NYTs Sunday report $1 trillion in mining metals in Afghanistan,  Could be the Saudi Arabia of lithium.  MarketWatch report poo-poos wealth for the common Afgan. Look at Africa.
• #82 year to date bank closed by FDIC.

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