retirement interruptus: That Was The Week That Was

The New Presidential(proposed)Budget indicates higher taxes for those in the upper tax brackets, according to Barrons.com writer Randall W. Forsyth. The Obama budget is making muni’s more attractive (ignoring the possibility of default). Budget cuts over the next decade would only attack the deficit by one-quarter of the suggested proposal by the President’s own budget commission. Citigroup called the President’s proposal disappointing.
Monday last started off with markets mixed. A major freeze in Mexico earlier in February has resulted in a shortage of tomatoes, cukes, bell peppers and other veggies. The freeze was the worst in 50 years and consumers get hit with the double whammy of higher costs plus shrinking supplies.
For a ‘Buy and Hold’ investor Warren Buffett pulls the plug when a holding reaches fair value. In his 4th quarter report The Buffett sold stakes in Bank of America, Nike, Lowes and Nestle plus others. He increased his holdings in Wells Fargo. He now holds only 25 U.S. companies. The fewest the $53 billion portfolio has held in several years. Yes, you read right – 25.
China’s prices rise 4.9% an indication that it and other Asian countries may be losing the fight against inflation. Rising food prices blamed as prime culprit. Them tidy-whities may soon be made in some other place.
Fed-Ex cuts profit target blaming weather and increased fuel costs for fiscal 3rd quarter. Incidentally, across the street, the folks in Brown also cited bad weather as a 1st quarter headwind.
The credit wars are just beginning as providers will be rolling out smart phones with an embedded chip allowing consumers to buy things simply by waving their phone over an item. AT&T, Verizon, T-Mobile and Discover have formed a joint venture to roll this out by the end of next year. Can anyone say, B B B B Billions…? (there’s a trade here…anyone?)
Markets mixed but off their lows Tuesday last. Fund managers are more bullish on global equities at any time in the current decade, according to Myra P. Saefong of Marketwatch. This higher appetite has been accompanied by a dramatic downsizing in allocation to emerging markets. But, this respite is but a temporary moment.
Say Cheese! Kraft’s cannot keep prices to consumers up with increasing costs of food materials has seen the food giant report a 24% drop in profits. The Oracle was against the recent purchase of Cadbury by Kraft and now you know why Buffett’s the Oracle.
It’s in the Brew as Heineken profit UP 41%.
Banks are wanting bigger down payments from home buyers. Gone are the handshake and here’s the keys to the front door daze. Now the average down payment is 22% nationally. Not surprising a study by the Federal Reserve Bank of St Louis found that those who had smaller down payments had a greater chance of defaulting. (I could have told them that – you too?)
While home prices keep falling farmland keeps rising. Fueled by rising crop prices irrigated land has increased 14.8% and non-irrigated by 12.9% in the latest quarter in the farmland belt of Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico. Bankers suspicious and waiting for crop prices to fall. They may indeed have a very long wait.
Markets up mid-week. South Korea’s national pension fund- the world’s 4th largest- is planning on investing in alternative assets with $4 billion overseas. The usually conservatively managed fund is trying to ensure supporting retirees in a nation with one of the longest life spans and lowest fertility rates in the developed world.
The Detroit Pension Fund Trustees allegedly work under a different set of rules than those mandated by FINRA. The newspaper Detroit Free Press reported in 2009 that pension trustees had few ethical or financial disclosures rules and were allowed to travel the world with virtually no restriction and accept gifts, trips, tickets and expensive dinners from money managers, law firms, investment advisors and others seeking business on the board. The Feds be investigating.
N.E.S.T.L.E.S., Nestle’s spells the very best…’ and the company reported profits tripled in 2010 but it wasn’t why you’d think. Profits were helped due to the sale of its eye care business and increased emerging markets sales and nutrition division. A Swiss company with deep American roots. (The company owns Kit Kat candy and Lean Cuisine.)
Dow is getting Big in the water biz while DuPont looks to expand into the food business.
Cisco missed numbers last week and traders punished the stock. Morningstar gives it 5 stars.
Dutch navigation systems Tom Tom fell as profits crashed 29%.
AOL’s CEO buys $10 Million stock in company. AOL is reinventing itself after buying blogger Huffington Post for $315 million.
Foreign banks find loophole in Capital Rule to avoid adding more capital in order to operate in the USA. Barclay’s attorneys said that having the additional capital trapped was just not worth it. Ah, the games afoot.
Ford Motor stock falls but news it allies with Russian auto maker. Ford is #2 in Russia and sales were up 24% in January.
Stocks roared again Friday last and closed at 2 1/2 year highs. Still many small investors are sitting things out and waiting for the bottom to fall out. Some think that those that missed the rally are hoping the markets crash again in order that they can get in and rectify their mistake. ‘This is a market that just has momentum and it wants to go higher,’ said Dan Genter, CEO, CIO, of RNC Genter Capital Management.
Violence in the Middle East and oil falls. This doesn’t seem right. Buying either the Oil ETF or the refiner VLO may make some sense.
A Double-Dip is virtually off trader’s investment screen as 419 of the non-financial companies in the S&P 500 list were up 49% from three years ago. Profits were higher with $1.64 trillion, the highest in four years according to government data at the end of 2010.
Stocks up 100% from March 2009 lows and Barrons’ The Trader calls it a love fest. Already this year almost 1/3 of investment into China Index Fund and the iShares Emerging Markets has been pulled by traders to be invested in USA stocks. Earnings are still strong in emerging market stocks and China looks to have another banner year but all the attention is on domestic stocks.
So How High the S&P? According to Chief Technical Strategist Mark Arbeter another 2% from current closing….but….that’s just the resistance level based on March 2007 low. Smart money guesses 10% from this point because of a lack of sellers.
Markets were closed Monday for President’s Day.