retirement interruptus: That Was The Week That Was

Bloombergs BusinessWeek April 11-April 17 reported that oil traders are focused on a new age of uncertainty and while Libya only produces 2% of the world’s energy resource there are chances of civil unrest spreading throughout the region. Currently, according to Goran Trapp, Morgan Stanley’s chairman of oil liquid’s in London, the risk of a Saudi-Iran war are not even priced into the market. He does not see a reduction of the fear premium in oil prices to disappear any time soon. The New Yorker’s James Surowiecki, writing in The Financial Page April 18, 2011, said, ‘The price of oil has risen $30 a barrel since February and more than 40% since last summer. The fear is that the price of gas will bring back stagflation, as it did during the oil crisis of 1973 and 1979. But, Surowicki reports, ‘…not all gas-price increases put a significant dent in growth; between 2002 and 2006, for instance, oil prices rose 150%, yet the economy continued to grow briskly.’
The Japanese earthquake essentially stopped the makers of everything from Japanese fish meal to chemicals. American business has geared up to fill the void: Hallmark Fisheries supplies Black Cod at a dollar premium from last December, Smithfield Foods has seen an uptick in Japanese demand for fresh pork as did Tyson for chicken. Apache a provider of natural gas becomes more relevant as do Dow Chemical and Occidental Petroleum that provide the raw materials to make plastic bottles.
Talk to the Hand, said Icelandic voters who rejected their government’s deal to repay Britain and the Netherlands $5 billion for their citizen’s deposits in a failed on-line bank Icesave. (Iceland’s officials should take a lesson from U.S. government and just pay the deal and bill citizens with higher taxes or reduced services and benefits.) Too darn democratic those Icelanders.
Barron’s.com asks the question is the recent low investor volume a beginning to a sell-off? As usual there are answers on both sides of the fence with Jeff deGraaf of Renaissance Macro Research, who studied prior low-volume rallies, notes that the late 1998 rally came on below average volume and that volume also was unimpressive in the 2003 rebound.
Hey, buddy, wanna lose money? Currency trading firms in the highly leveraged, lightly regulated foreign currency exchange trading have 75% of their clients lose money. Ze problem, dear reader, is that once burned investors turn away to the tune of 15-25% a year. This, according to the two giant retail currency trading firms, (Gain and FXCM both public companies) is not a sustainable business model.
You don’t try to change who you are. Wal-Mart is going back to the basics. The flubbed fru-fru moment cost the firm customers and more importantly money and now a new campaign to urge old customers to come back in a very creative campaign next month called, ‘It’s Back.’ (That’s the Wal-Mart I know and love!)
The US spends more on health care than 29 other developed countries and has less to show for it. The average cost per person is over $7500 and still the average lifespan is 77.9 versus the average in the advanced nations of 79.4 (Trust me, you’re not missing much. The last few years are usually the worst anyway!)
Monday was the beginning of reporting season and Alcoa blew the doors off and promptly was punished as analyst Brian Yu at Citi say it wasn’t enough. The entire market saw losses. Oil and metals were sold as were the autos and tech.
One trader, reports Barrons.com, bet $1 million that silver ETF (SLV) would fall 37% by July!
Oil fell but according to MarketWatch.com the next hot spot may be Nigeria with elections coming this month. Expect oil to hold at or above $100. a barrel.
The Federal Reserve is downplaying inflation and sent signals that it is unlikely to follow the European Central Bank in lifting interest rates from rock bottom levels anytime soon, according to Tuesday’s WSJ. Under Chairman The Ben Bernanke rates have remained near zero since 2008.
Bloomberg reported that auto sales may top analyst’s earlier estimates. Total sales may rise to 13 million. Despite it all, people still need cars, said Jessica Caldwell an analyst at Edmonds.com. Both Ford and GM closed plants due to disruption of supplies and stocks of both companies were substantially off Monday. Toyota said it lost 140,000 units of production due to the Japanese crisis. There is a pent-up demand for newer vehicles said Robert Morris, president of several GM dealerships near Cleveland. Still auto stocks are significantly down from their 2o11 highs.
Tuesday markets stumbled as Dow, oil and metals all fell on critical Japan news and commentary by Goldman Sachs to its clients on selling commodities for a 25% uptick versus waiting for 28%. This roiled the markets as the Dow fell 117 points and got traders thinking did Goldman really know something or was this just plain profit taking and coming back at a cheaper price. The Goldman call was just one more ‘piling on’ according to The Street as the Int’l Energy Agency on Tuesday said high oil would contribute to a potential global growth roadblock; Mastercard reported the 5th consecutive week of spending decline; a IMF report that lowered growth for the US and Japan; interest rate hikes for China and the European Central Bank were announced earlier.
According to Andy Xie, China may be heading toward stagflation but what’s holding back the full blown crisis is the belief that the yuan will appreciate. Xie writes in MarketWatch, ‘China could see a devaluation-triggered financial crisis similar to what the United States has experienced. The difference is that China’s system is not robust enough to maintain stability during such a crisis.’
Cisco may have bottomed, reports Barrons.com writer Teresa Rivas. The company that eleven years ago traded over $70 a share now dwells under $18.00. Favorable comments from a plethora of analysts that say events on the horizon look to benefit Cisco.
Tata Motors owns Jaguar and Land Rover and for those of you who haven’t driven one or the other both are sweeeeet. The Jag, with automatic and standard engine, is just nasty taking off from a standing start. It’s not the granny car it once was. In a WSJ article Ratan Tata talks about how his company has been held back from growth in his home country of India by government bribery and corruption. The company also owns luxury hotels in India and abroad – the Pierre Hotel in New York- and Tetley tea.
You can’t keep a good crook down. Marc Rich, rogue oil trader and tax avoider, pardoned by President Clinton, created what will soon be one of the world’s largest mining and ag companies. In 1994 Rich sold Glencore to his lieutenants which he had formed 20 years earlier. A pending IPO will create, according to MarketWatch.com, an unrivaled integrated commodity producer and marketer by raising $9-$11 billion. Unrivaled is the appropriate word.
The stench of Goldman was in a Senate report that stated Goldman privately described the home mortgage business in less than flattering terms while selling packaged bonds and quietly shorting the same. Goldman bankers, according to April 14th WSJ, refrained from putting their real feelings into emails but other traders called the CDOs, ‘Pigs, Crap, A white elephant…’ and still it motors on….oblivious… Michigan Sen. Levin wants the head of CEO Lloyd Blankfein and other execs who lied and can now be charged with perjury ala Martha Stewart on a spike.
Oil recovered slightly on Wednesday contrary to Goldman client communication. A two day selloff stopped as stability returned to the markets.
Safest bonds in the world, according to a report by Brett Arends, could be from Norway. Only a handful of countries are really rock solid, according to the IMF. a 10-year Norwegian Bond, which can be bought in the USA, yield 3.9%. A 10-year U.S. Treasury: 3.5%,
On Wednesday investors looked to safer defensive stocks: Tobacco, food and drug companies while volatility was being shunned in tech and small caps.
Time Magazine reports on Baby Boomers 1 out of 4 have problems with retiring. The same number of Boomers have saved nothing for retirement. Nothing. As in zero.
Inflation Expectations Index rose significantly in March as consumer’s income expectations soured, according to Lynn Franco, head of consumer research for the Conference Board. Consumers were expecting inflation of 6% to 6.5% but reality core inflation was at 1.1% in February. Adding food and energy the February inflation numbers came in at a tame 2.4%. Expectations are higher due to the visible signs of inflation at the gas pump and food aisles. Still, I expect inflation to be a significant worry going forward. Expectations have nothing to do with fact. I wanted a bicycle for Christmas – that was my expectation.
Thursday markets managed 14 points on the Dow while gold was up and oil fell to close a skosh under at $107.94. Zipcar was the hottest IPO opening at $18.00 but flying high up $11 a share. Google posted huge numbers but missed by two cents analyst’s estimates and the stock closed lower. Profits were $7.04 a share in 2011 versus $6.06 a year earlier. Higher operating costs cut into profits and shares fell 5.4%. Mark Hulbert in Barrons.com expects a near term possible pullback in gold writing that;’…every other time in recent years in which gold bullishness rose as high as it is currently, bullion soon suffered a significant correction.’ Significant is the significant word, dear reader.
Several weeks back, when the world looked to be a darker place, a few investors took their money off the table. Almost instantly the markets went on a semi-tear until this past week when the Dow finally gave up 1/3 of 1% for the week. Friday the Dow was +57 points along with Oil closing over $109 (Sorry, Goldman!) and gold tacked on $14 for a huge gain. It was energy stocks that gave back the most for the week.
Inflation? We got no stinking inflation! The government reported that suggested inflation remained subdued even though in March gas rose 5.4% and food was up 1.1%. Other items were merely grazed as apparel prices fell 1.5% and cost of owning or renting a home, which makes up a third of the consumer price index, fell 0.3%.
Whispers the gold may retreat this summer. Whispers.
Feds cracked down on poker web sites – PokerStars, Full Tilt and Absolute Poker. lemme see, Washington, DC, Dah-anywhere else Nyet…
Friday markets Pharma up. Banks down. Bank of America crushed as it failed to hit number and CFO out along with a new legal chief. Profits fell by over $1 billion from a year earlier and, according to analyst Glenn Schorr, called it an ‘eyebrow raising event(s)…’. Barrons.com came right back and recommended BAC for the long term at the close of business Friday.
Six more banks were closed by the FDIC bringing the total in 2011 to 34.