retirement interruptus: That Was The Week That Was

Happy Valentine’s Day!
Whispers at CNBC say that corporate execs would prefer to buy-back corporate shares rather than hire people this year. It’s the ugly secret and a beneficiary of QE2. The bond buy-back by the Fed has made the stock market recover nicely and folks just don’t want The Ben Bernanke to stop. Chief Market Strategist Nicolas Colas at BNY ConvergEx said, ‘The power cord for the stock market runs right to the Federal Reserve.’ If employment doesn’t improve by summer expect The Ben Bernanke to implement QE3. Good for investors, bad for America.
Back to Fundamentals This Week-As Egyptian Crisis cools traders focusing on what’s happening here.
Michael Kahn, technical analyst, and writing for Getting Technical a column in Barrons.com reported that no matter what low rates The Ben Bernanke wants if the Street wants higher rates, rates will go higher. And, according to Kahn, prices started moving up last November and continue to do so. ‘We cannot call it the end of the 30-year trend towards lower interest rates, but it is the necessary first step in making that change.’ Consensus is that the Fed will raise rates by December. Mark that.
Cash buyers are lifting housing. In some markets, according to the WSJ, buyers are snapping up homes in all-cash deals. In the Miami-Fort Lauderdale area last year half of all deals were cash. In Phoenix paying cash hit 42% of all purchases. This activity helped contribute to the markets jump of 69 points on the Dow Monday last.
Lady Analyst Meredith Whitney who correctly called the fall of the Big Banks is being verbally pummeled for her latest prediction of 50-100 municipal bond defaults in the coming years. The ‘Boy’s’ say it ain’t so that Whitney is only looking for publicity but a glance at the chart of states in trouble with tax revenue shortfalls and revenue gaps have to give the sista some credence.
Apple sold 16 million iPhones last quarter and analyst pumped up their valuations. The company is considered the most valuable on earth. Brett Arends writes that shareholders should watch for ‘rumors’ of Steve Job’s demise which would cause the stock to fall and rumormongers would scoop up shares at discount.
Fund manager Charles de Vauil was asked what assets he liked and said it would be better if he answered what he didn’t. ‘Avoid emerging markets, all commodities except oil and gas, small cap stocks and most European stocks are no bargain either.’ He is even ‘edgy’ about gold and said it wasn’t acting like gold but rising like everything else.
Inflation worries are spreading: Brazil is expected to increase its overnight rate which is already at 11.25% because of inflation. China is raising rates by 1/4 of 1%, this is the 3rd time in 4 months. Some expect Chinese inflation to hit 6% in 2011. In the USA still under 2% even with rising food and energy.
Risky Business: Last year Congress ordered bank regulators to calculate which financial companies are the riskiest and turn the list over to the Federal Reserve so they can be supervised more closely. The names of these banks will be named later in 2011. However, Bloomberg Businessweek reported that in event of a 40% market meltdown that currently the riskiest of the big banks is (drum roll): Bank of America.
One of my favorite snacks – apple crisp- is on my no-no list as the apples used in the recipe are grown in China. I emailed the company and asked if the USA had run out of apple orchards and still waiting for a reply. Food products from China and other Asian countries are on my ‘Don’t Buy List.’ Most fish we buy is harvested overseas and grocery chains and Big Lot stores buy and sell because the product is cheap and loaded with profit. Until other countries get the concept of ‘safe food’, I’ll do my dining with products grown and raised in U.S.A.
Wednesday markets down until the last few minutes and then managed a slight gain.Cotton futures highest since the Civil War. Sugar is also up.
After 219 years the NYSE is looking to be acquired by Deutsche Borse AG in a deal that WOULD create the world’s largest financial exchange. Alan Abelson calls it the Schnitzel Takeover. Tongue firmly in cheek he writes in Barrons.com that it’d be plain silly to see the floor traders prancing around in lederhosen. Combined value of the company would be $25billion-or 7 x’s the value of Twitter. One veteran Wall Street trader said, ‘I hope these guys know what they’re doing.’
Speaking of Twitter tech is starting to resemble the 1990s. Talks with execs at Facebook and Google are exploring alliances and how to unlock advertising value. Twitter value has increased exponentially.
Blockbuster puts itself on the block. Emerging from bankruptcy the firm is looking for a buyer who understands brick and mortar and late fees do not make a business plan. (has anyone been in a Blockbuster lately?) Speaking of bankruptcy say bye to Borders as the Ann Arbor firm is shuttering stores, laying off employees and allowing itself to be reorganized in bankruptcy.
Dow broke its string of 8 winning sessions Thursday last. Cisco stubbed its toe and Dow followed. Oil and gold up…a smidge.
Detroit ranked #6 nationally in foreclosures. (In case you didn’t know.)
Troubled Finnish telecom hooking up with Microsoft. The NOK has long struggled although it is the #1 handset maker. A Microsoft exec compared Nokia to a man standing on a burning oil platform who jumps into icy waters to escape the flames. NOK shares fell 9.7% on the news of the alliance.
You read it here: U.S. corn stocks will be down this year 70 million bushels, a decline of 1.8 million metric tons. Corn futures have nearly doubled from late last June. According to Morgan Stanley analysts prices of corn need to move higher to ration demand. (Corn the caviar of vegetables)
Morningstar analysts like in the year 2011 natural gas, materials and some tech. According to a recent report current natural gas prices are unsustainable and look for them to pop.
The World’s Most Respected List of Companies has Apple numero uno with Amazon next followed by Berkshire Hathaway. You don’t want to know where Toyota was listed. No, seriously, you don’t want to know.
Friday markets meandered, or if you’re from out west, moseyed close to even with no direction until the news that legendry Egyptian strong-man Mubarak had packed his bags and family and skedaddled to his beach house while taking the hint and retiring. Markets moved up and closed that way for the week with gold and oil down. Oil way off its highs.
Ford stock up Friday last when it announced another $3 billion bond buy-back.
This coming week see what the U.S does diplomatically and more from the retail sector.
Finally blogger and wag Al Lewis describes USA inflation as biflation. This is where everything you own goes down in value and everything you need is going up. Biflation happens when the Fed creates trillions of new dollars out of apparently nothing, but mostly just gives it to the banks.