retirement interruptus: That Was The Week That Was

The Dollar edged up against the Euro took commodities and stocks lower for the week. And, as long as the dollar continues to climb higher you can expect lower metals and oils along with other commodities. Stocks will also suffer. But fear not, experts such as Jon Najarian of CNBC and options trading fame, expects, at some point, the dollar to continue its slide. The chart above shows the dollar versus the Euro for the past 30 days. The last week, shown as a straight line to the far right above, indicates how quickly the dollar moved up while all other indices lost ground. Remember oil is traded in dollars and a weak dollar always makes crude more expensive. It does the same with other commodities. In other news….
The week started with a unflattering picture of Donald Trump on the cover of BusinessWeek and ditto editorial about the Donald in the New Yorker. Businesses and the self-proclaimed intelligentsia are making him a punch line. As Marketwatch noted, alls okay as the Donald got what he wanted which was the publicity.
A few thousands miles west the Berkshire-Hathaway annual stock meeting was underway that weekend and both Charley Munger and the Oracle put the coup de grace on the reputation of David Sokol, the resigned and disgraced former heir apparent to Buffett. Buffett added some other insights: (1) The U.S. is not going to have a debt crisis of any kind if as long as we keep issuing our notes in own currency. (2) Any institution that requires society to come in and bail it out for society’s sake should have a system in place that leaves its CEO and his spouse dead broke. It’s board of directors should also be held responsible. I like this guy. Who knew he had this medieval streak?
On the Ben Bernanke speech a week ago Wednesday, Randall W. Forsyth in Barrons.com wrote ‘Up and Down Wall Street’, according to longtime Fed watcher Lacy Hunt at Hoisington Investment Management in Austin, Texas, ‘If the objectives of QE2 were to raise rates, slow economic growth, encourage speculation and eviscerate the standard of living of the average American family, then it has been enormously successful.’ (ouch!)
Any truth to Sell in May and come back in November? Seems at one time there was. However, dear reader, if you remember this last Bull market started in September of 2010 and has kept on rolling. This year you may want be careful of June when the Fed stop their easing.
Swiss watchmakers allow 49% of their components to be made elsewhere and still be called Swiss. New law would make it 40% manufactured elsewhere.
In Technology this past BusinessWeek section raves to Alcatel-Lucent and a most impressive turnaround with the stock up 117%. Morningstar writes that the debt is too much for what the stock has done. Stock being pummeled this week. -like a rented SUV.
Russia has attracted less private equity money than other emerging markets- $1.4 billion over the past 3 years, compared with $28.6 billion for China, $15 billion for India and $5 billion for Brazil. Killing, kidnapping and extortion all in the Russian business handbook. Ah, those Moscow nights, huh, Boris?
Bank stocks continue to disappoint. Six of the big U.S. lenders see a combined 13% drop in revenue. Investors are ignoring banks, for the moment.
Pssssst, want to buy a Bear Market mutual fund? Save your dough. Morningstar reports that Bear funds have been losing on average 10% a year for the last decade. These funds benefited from two crashes and then…nothing.
Found a few lira in the ye old sofa cushions? Valle Piola, a deserted medieval village in the Appennine Mountains is for sale. The asking price for this fixer-upper, according to the folks at Bid & Ask BusinessWeek a mere $782,000.
How You Doing? Monthly numbers for April were happy-happy and back in the day we’d settle the year- but not yet at the half-way point and lots more to go through. Great numbers YTD.
Last week met with a client and discussed what I thought were the 2 best bond trades for the coming Years. We know The Ben Bernanke is eventually going to start raising rates and when he does investors would benefit by buying TBF the ETF that shorts Treasuries. When rates reach what can be assumed the peak investors simply sell the TBF and buy the long 20-Treasury ETF -TLT. It doesn’t get any simpler than that. Seriously, it doesn’t.
Monday’s market was off, as if it had a bad clam in its chowder, oil and gold down slightly, as well as Dow and Nasdaq, but no reason to call EMS. But, someone may know something.
Starbucks is close to its stock price all time high. With rising coffee prices customers have been ‘sensitive’ to total check size when visiting cafes. This with the majority of customers earning more than $75,000 a year may be causing an unhealthy backlash to any attempt to raise prices in the near future.
Markets took a hit on Monday. India raised rates. Gold, silver and oil all down.
Inflationary signs: Jeff Reeves of InvestorPlace.com writes that inflation is far from under control and offers these specifics: Beef expected in increase 6-7% 2o11; Pork should also increase over 2010 by 7.5%; Corn has doubled; Paper towels and T-paper up 5%; Diapers up 7% over 2010. Wages and salaries are not keeping pace. There you have it.
Facebook- probably the most anticipated IPO. One group of investors is looking to sell $1 billion on the secondary market.
Silver crushed as CME Group Inc raised its margin requirements and speculators plain ran out of money to play. This caused the price of silver to fall. The higher margin (the ability to borrow) is higher for silver than gold. The high margin is great for the average investor reducing the speculation and rapid rise of price. Down 20% the experts (a-hrumph) are not giving up on the shiny stuff. Sean Broderick, writing from Jupiter, Florida not the planet, reports he’d be a buyer as soon as the silver correction runs its course. The metal, along with gold, he believes is a strong bullish trade. (Read what billionaire Soros and Rogers are doing further down the page.)
The world’s largest single commodity empire soon will be a public company. Glencore prepares its IPO. The company trades in commodities and also owns energy, agricultural, mining and metals. For example the company controls 45% of the world’s lead market.
Wednesday was strike three as the markets fell. Oil still over $100 and the Dow off 83 points. Mitch Rubin, CIO at RiverPark Advisors, said, ‘There’s a general malaise around what the next order of economic activity will be.’ (Someone needs a vacation). Traders seemed to be in a mood to either punish or reward. Las Vegas Sands missed numbers and was hit for 7%. Varian Semiconductor soared after it agreed to be bought by Applied Materials.
ConAgra, the food giant, wants to get into the generic food biz and bid for Ralcorp who makes private label food for grocery chains and others. Either this will be a great bet or if the economy improves a bad one as consumers buy private label when the economy is bad. I love Kroger private label chocolate chip with nuts cookies.
Flash crashes caused by computerized high speed trading have curtailed activities as volume in 2011 is down 15%. Regulators stepped in to propose trading halts for individual stocks that make outsized moves. The proposal known as a limit-up limit down mechanism, would prevent trades from happening outside of specific price bands. The there was Pan Alpha’s Mechem who said, ‘Returning retail investors would help…’, meaning curb volatility. In 2010 a Flash Crash brought the Dow down 600 points in a nano-second.

George Soros, Hungarian born hedge fund investor billionaire, and Far Left crackpot, reportedly had been selling off gold and especially silver. This heard on Thursday a day after Jim Rogers, a one time associate and fellow hedge fund billionaire who made his money in commodities, said that silver’s rise was not sustainable and not good for the markets. Investors agree that with a weak dollar and dovish stance at the Fed metals will continue to retreat.
Are you sitting down? Brace yourself. UBS gave Citi a Buy rating!! Trading under $5 and with a reverse stock split on the horizon UBS likes Citi although it did offer a caveat that Citi had challenges and investors would require greater patience and a longer term view to reap the benefits of the franchise.
Huge plunge on Thursday as silver crashed. Don’t expect to be buying anytime soon. Oil also broke $100 and got the gadflies yakking, explaining the root cause of it all. Dan Dicker, independent oil trader, said, crude’s reaction to the …drop was ‘great proof of just how much speculative money there was in the oil market.’ With the large volume of margin selling, he added, ‘just how much stupid money there is in the oil game.’ Plus, with I think the whole world has been short dollars for a few years…then once silver started to crash it was time to get out of everything else.’
Sanity (explained) extended to the Thomson Reuters/Jefferies CRB Index, which tracks global commodities prices, is ‘actually marginally below levels of five years ago, so it’s hard to argue that commodity prices are headed for a massive decline given that global (GDP) is above the level of five years ago.’ According to researchers quoted Thursday in MarketWatch.com. As markets shake out remember global economies now compete for same commodities –
GM hit numbers but nitpickers said numbers misleading and stock punished. Or, maybe investors were just in the mood to kick more tires because of an overall bad day. There does seem to be some difficulties with core N.A, operations and…oh, shucks, who’s kidding who, folks over in the towers got some issues globally.
WSJ report help is needed on the factory floor. Expert workers are now in demand and U.S. manufacturing companies are now scrambling to find talent here at home. File this under real good news, dear reader.
Friday the jobs report came out better than expected and the markets roared and then came to their senses and finished up 54 points on the Dow. Silver isn’t coming back soon. Andy Smith, senior metals strategist at Bache Commodities said, ‘If gold is the Monte Carol casino , silver is a slot machine in Las Vegas.’
Another ‘expert’ Donna Baldach, a 55 year old retiree. said, ‘Silver will hit $100 before the end of the year.’ Ms. Baldach who lives in Hillsboro, Florida, concluded, ‘I’ve never felt so sure in my life about something.’ I am soo biting my tongue.
Finally, oil down but….Goldman Sachs analysts had this to say, Consequently, it is important to emphasize that even as oil prices are pulling back from their recent highs, we expect them to return to or surpass the recent highs by next year.