retirement interruptus: That Was The Week That Was

Portugal, the land of Vasco de Gama and Emeril Lagasse (does The Emeril appear a bit too prosperous around the jowls?), was the latest European country to fall victim to investor worries about possible default. Portuguese sovereign bonds soared Monday last with 10-year over 7%. The European woes coupled with telecom’s musical chairs as Verizon gets to carry the new Apple iPhone caused domestic markets to stutter and stumble January 10th.
Apple may sell in 2011 10 million Verizon iphones, so sayeth Hot Research Department from Barrons.com.
According to WSJ of 1-11-2011 (Play the number, Finster.) solving the Portuguese problem doesn’t solve the EU problem.
Notice that the Commodity index took a break last week? Barrons’ Technical guru Michael Kahn writes last Tuesday that Commodities are not done yet. In fact expect higher prices going forward for at least several months.
Old Hef not only got his mojo but also his Playboy back by beating out a bid by Penthouse and shares in Playboy got an unexpected lift (No pun intended).
How many times did I tell folks I like the auto industry going forward? Now GM wants to buy some or all of old GMAC back. The problem is that GMAC is now Ally Financial and an independent bank. The good thing is that Ally is 74% owned by the U.S. Government and a deal could be done.
What a difference a year makes. Alcoa lost money one year ago and made a complete turnaround to a profit in 4th quarter 2010. Orders tripled for aluminum from 2009 to 2010. This on top of price increase for aluminum of 11% in the fourth quarter up from the 7% increase in the third quarter of 2010. (Musing on both a commodity and stock play?) Morningstar analysts poo-poo the continuum pointing out several Chinese aluminum smelters are down and a reversal is in the cards when they go back on line. Alcoa promptly gave up gains on Tuesday.
Overheard and printed at the Detroit Auto Show, Chrysler will go public sometime in 2o11 after paying back the government. Sales of the Jeep Cherokee up 68% over 2009.
Snow Day expected on Wednesday as traders headed for the burbs and didn’t plan on coming in to the office as snow storms ripped through the northeast Tuesday night. Lots of traders closed positions before leaving Tuesday.
Oil prices may chill the economic recovery. As The Bernanke attempts to revive the economy with QE2 and inspire trade by reducing the value of the dollar oil soars. Gas is at $3 and oil is at $90. Without wage inflation (and it ain’t there, dear reader), consumers have less to spend on other things. It’s the school of unintended consequences.
Everybody was digging deep to help the EU on Tuesday last. Japan announced it would buy more of the securities issued by the European Financial Stability Facility. China also announced it would buy 4-5 billion Euros of Portuguese debt. And folks accuse the United States as being the only one to play Kick the Can Economic Policies.
Snow Day- No Way as markets caught fire and went on an unexpected Wednesday last rally lead by financials and energy. Citi closed over $5 which makes it available to margin (ya’ll can’t margin a stock trading less than five dollars).
Copper, oil, gold soared as U.S Ag Department cut estimates of key crops globally. There is concern about food supplies as strain is causing many policy makers nervous. Michael Swanson, an agricultural economist at Wells Fargo & Co., said in WSJ, he expects retail food prices in the U.S. to rise between 3.5% and 4% this year compared to 1.5% in 2010.
Bigger used to be best but today’s investor thinks small and have grown disenchanted with the way execs have managed the behemoth conglomerates. We’ve seen Motorola split and Sara Lee divest to get to core business. Now ITT announces it’ll split into three publically traded companies by year-end. The reasons, explained by company execs, it would unlock investor value and make the management of the three more nimble. ITT was founded to provide phone service in Cuba and Puerto Rico. In the 1970s it went on a buying binge that included the New York Knicks, at one point, and anything connected with hotels, defense and electronics.
Economists still see recovery in the USA accelerating while the ‘boys’, S&P and Moody’s, toss cold water and remind investors that we have debt problems just like, or similar to, or maybe something like, that of EU sovereign nations. The ‘boys’ have a way to go to get back their credibility so they keep repeating the obvious. Fitch reports that some municipalities are experiencing troubles as borrowing costs are up, a recent New Jersey bond issue was forced to cut its size by forty percent. Vanguard put the kibosh on creating three new muni-funds. Letters of credit that are backstopping a lot of muni-debt are coming due and banks are shying away because of rules that allow how much of that kind of debt they can hold. In addition some pension plans have backstopped some muni-debt and the spillover may be disastrous.
Hey, Picasso, Ze art world is going on-line. Art.sy is a new site set to launch this spring which the promoters say will appeal to the tech-savvy generation that is beginning to invest in art. The savings alone on cheap Chardonnay and Cheese-Whiz should pay for the start-up.
J.P. Morgan soared as banks lead the markets on Friday. But the big news was that banks were back in the lending- folks- money- business. Chairman Dimon said that the consumer is getting stronger. Many analysts expect this bullishness to pour over into the auto, home builder and retail markets.
Friday metals off as silver dumped and talking heads on CNBC dumped on gold. Markets up for the day and week.