That Was The Week That Was – 3rd Week November

•   Monday last started off great guns, ignoring European and Asian modest losses, and perched to break a triple digit upside on better than expected retail news, especially positive results from the autos, when the sell-off shredded any gains for the day. Fears of a China slowdown  and European bank worries may have been to blame or simply investor wariness.
• ‘Take the bailout!’ and Irish banks resist and there lays the European mess. Possibly Spain and Portugal may need assistance but first the Irish who say they need no new money. In the meantime markets labor under lack of clear guidance and information.
• Both WSJ and Barrons.com reported on how billionaire investors are modifying their portfolio holdings. Warren Buffett sold all shares in Home Depot, Car Max and reduced stake in Nike, Ingersoll- Rand and Fiserv. Buyout specialist Bill Ackman sold off Yum Brands and reduced stakes in Kraft and Target. David Einhorn of Greenlight Capital bought more shares in Apple, Ingram Micro and Verigy.
• Buy and Hold Forever for Warren Buffett- don’t you ever believe that!
• Hedge Fund billionaire Paulson, as reported in same publications, reduced stake in Citigroup, Inc., Bank of America and J.P. Morgan Chase with no investment in Goldman Sachs Group. Telling?
• Awful Tuesday as a global wave of selling hit markets. The Dow off some 200 points settled around 175 points down along with every major index including metals. Investors everywhere wondering if the markets had ended their run with worries over China’s inflation woes and Irish banks.
• WSJ last Wednesday reported EU preparing more money to stabilize Irish banks and Christian Thwaites, chief executive of Sentinel Investments in Montpellier, Vt said, ‘…the markets have over- reacted…China is strong enough to grow through any anti-inflation steps.’
• ‘China may have surprised people, but I think the markets have overreacted,’ said Christian Thwaites of the recent global sell-off.
• If this doesn’t boil your turnips I don’t know what will. If you headed, or were an exec, at a failed U.S. bank the FDIC is conducting a criminal investigation and this means jail, fines, sayonara to lattes and long walks on the beach. The pressure is on to identify and prosecute bankers that contributed to the largest number of failures in 20 years. But – the hundreds of bankers bailed out including: Wells, State Street, Bank of America, Citi, JP Morgan –and the rest, get to skate! Again, it’s the small bank, usually community bank CEO, caught in the crosshairs of a meltdown and unable to get bailout funds who’ll end up in jail and probably spending all their savings on legal fees.  Not that I’ll lose sleep, a crooks a crook, but the big banks are different from everyone.
•  From the Department of: It Ain’t Supposed to Work That Way- Bond Yields have been expected to fall with the buying of Treasury debt but the opposite has been happening.  (see chart above) Last Monday the yield on a 7-year rose to 2.14%, a 2 month high, despite the Fed’s buying $7,2 billion of same that ayem. Quantitative Easing 2-so far phooey.
• Am I the only boomer who is embarrassed by conservative Palin while she says she’s considering a run for the presidency with such founding father homilies as, ‘I just tweet, that’s just the way I roll…’ from the recent NY Times interview… (Take me now, Lord!)
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• Wednesday last markets ended mixed with the Dow off 15 and all other indices up. Barry Diller added to his Coke shares as a strong buy on the stock was issued by Esther Kwon analyst at S&P’s Equity Research. Diller has been a director at Coca-Cola since 2002.
• Banks were chop-blocked on Wednesday’s trade as the Federal Reserve said they had to go through another stress test before paying dividends to shareholders.
• What the Street took away Tuesday it gave back Thursday on the IPO of General Motors. GM stock opened to us lesser mortals at $36 and promptly fell to close at $34.  While Street talk was about how well the shares did if you bought in the morning  the fact is you were a loser by dinner.
• The good news was all indices did well and the markets swallowed the GM story and motored on like brave soldiers. (Ya’ll wait for the Chrysler IPO a-coming next year, maybe.) Fiat bringing Italian styling to the House in Auburn Hills.
• Speaking of…Housing still stuck at depression levels and Gabriel Stein of Lombard Street Research in London isn’t surprised. Most Americans are underwater on their mortgages and have high levels of debt. Moving or selling is not in the cards and Gabriel estimates that it won’t be until 2o16 before this inventory is cleared and people move on.
• The Ben Bernanke talked back to critics on Friday and told them not to call quantitative easing quantitative easing but rather ‘securities purchases’. I only wish The Ben Bernanke would have told the world that a long time ago that and it would have saved this writer from explaining over and over again what exactly the Ben Bernanke was doing.
• Markets ended the week UP a skosh, which this writer would like to explain is the technical term for not very much or a smidgen.
• Finally, have a safe and relaxing Thanksgiving!

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