retirement interruptus: That Was The Week That Was-4th Week May

RSVP Gang of Six. The bi-partisan problem solvers on how the U.S. was to reduce debt and spending are fini, done, over and kaput. Tom Coburn of Oklahoma walked away saying they were getting nowhere and his colleagues were thinking too small. The game of chicken has officially begun! On August 8th, unless something is done, the United States officially losses the right to borrow and an economic Armageddon is possible, according to many economists. (The inmates have the keys to the asylum with little obvious understanding on the harm that they can do.)
From the Department of Shame on You: The Disney Company applied for a trademark on the name SEAL Team 6, the elite Navy SEALs commandos.
Entrepreneur Magazine founded by a bank thief. Now the company sues anyone who attempts to use the word Entrepreneur or any variation of the word in advertising or business. This from BusinessWeek.
The gamble – I’ve seen it happen at General Motors and K-Mart, people buying stock in a company that was in bankruptcy or bankrupt. Seems some hardened investors, according to Bloomberg's BusinessWeek, think there is some value in a company worth nothing. Shares in the old Blockbuster have floated around from 4 cents to 23 cents with volume an astonishing 5.46 million shares a day.
Nepotism is alive and well in Russian controlled state businesses. According to BusienssWeek: The Kremlin is packing board seats with the sons and close relatives of Putin allies making Russia an even bleaker place to do business in.
Monday last Dow sank 130 points while Nasdaq dropped 44. This is the 3rd week of losing since last August. It was due to Greece and fear of contagion that now Greece and down the road Spain, which has a much larger economy. We’ve been down this road before. The dollar, still king of currencies whenever a crisis, strengthened. Oil still under $100 and Gold up at the close. Still the trade of the day was the dollar. It was the simplest and most riskless way to make money.
Interest rates may not get a hike as soon as some of us may think, according to a James Bullard, a top official at the Federal Reserve. My opinion has always been that The Ben Bernanke wants to keep rates as low as possible for as long as possible to eliminate the interest rate drain on new Treasuries.
AIG considered by Morningstar a value at $37 and a buy at $18. The Re-IPO on Tuesday had a small gain as AIG and the U.S. Treasury sold $8.7 billion. The government gained $54 million on the leg of the first sale. The shares of AIG have fallen from their 2011 highs. Jimmy Cramer said he likes the company but wouldn’t be a buyer here. Shares continued to fall Wednesday.
McDonald’s upgrading 90% of U.S. stores. This upgrade, almost all borne by the franchise owner, will most certainly allow them to weather any future economic problems on the domestic front. Out of the 14,000 store some 6,000 will be upgraded over the next few years. Shares MCD trading at $82 with fair value given by Morningstar at $85.
Remember when Krispy Kreme was the hot stock du jour? It’s alive and well as shares boosted by earnings. The problem is that shares do swing wildly in either direction depending on what the company declares. This time it was up 25% last Monday.
WaMu, or Washington Mutual, Inc (WAMUQ) emerging from bankruptcy with shares trading under a nickel for the last several months up to 11 cents a share on huge volume.
Even during Monday’s sell-off stalwart Apple held steady. You just gotta love this company.
The Greek crisis continues its saga Tuesday, acting as an anchor to markets as Europeans decide what to do. The problem also concerns other countries and the one currency they all bet their combined future on – the Euro. Greece cannot devalue its currency, limiting its options.
Goldman Sachs readjusted (ahem) their forecast for commodities saying oil at $108, copper should be attractive opportunity at current prices. They did warn on corn to decrease and live cattle. We’ll be here all week…
It’s been ugly and the summer hasn’t even begun. Mark Hulbert puts a smiley face on the current correction. He writes for MarketWatch that corporate insiders are more confident than worried. Just so you’d know…
Bill Gross of PIMCO and bond king extraordinaire and said that he was misunderstood when he was quoted as saying he sold all his U.S. Treasuries explaining he was ‘underweight’ Treasuries and not shorting them. He did say that…’at the end of QE2…what is clear is that a 1.79% yield 5-year offers a negative real yield after inflation.’ Yup, figured that out, too. Take the one, carry the two and divide by four…
New Home sales rise. I’ve been hearing this. From the WSJ on May 25th this is interesting: New Home median prices in 2010 was $208,300 and in 2011 price $217,900. Sales, although up for the month to month, are down from last year. This may be the bottom.
Citi fell below $40 Tuesday last but closed above the magic number of support. Oppenheimer analyst Chris Kotowski listed Citi as one of the bank stocks worth buying. He also recommended Goldman, JP Morgan, Morgan Stanley, U.S. Bankcorp and Wells. Notice he didn’t mention Bank of America that has a huge problem with mortgages from their acquisition of Countrywide and is killing the stock.
Irish Banks unloaded some of their commercial real estate worth $1 billion to Wells and Blackstone Group. The banks and hedge fund paid between eighty to ninety cents a dollar for prime properties located in the United States. The WSJ article said the banks were under pressure to sell but how much pressure it did not say. The government and EU surely had a lot to do with the sale.
Three day skid came to a halt as commodities, energy, materials and industrials became favs du jour on Wednesday. Weakness at IBM falling off $170 but Apple Up. There is the Holiday Weekend and off to the Hamptons, or wherever for Wall Streeters as they desert NY for polo fields afar. Expect low volume starting Thursday and anything can happen.
Oversold territory, said Keith Springer of Springer Financial Advisors. Defensive stocks fell on Wednesday – utilities, telecom and consumer staples.
New ETF (exchange traded fund) specifically for the auto sector, coming soon.
Thursday last markets edged up. The dollar fell as Asian investors sold the greenback and U.S. Treasuries popped to their lowest yield since last December. Prices of bonds react inversely to yield.
Do you know what your pension is investing in? More pensions are getting back to their early love fest with hedge funds as managers are struggling to find returns. Real estate is one sector hedge funds have done remarkably well with.
Goldman Sachs, ah dear Goldman.The Street announced that Goldman’s Conviction List of stocks is not so for their own portfolio. In fact, the bank has sold exactly what they promoted. The stocks include Apple, Philip Morris, Qualcomm, Wells Fargo and Mylan, among a few. At the race track this is called touting.
Big disconnect between the very rich and the working class. Tiffany 1st Q earnings up 25% and the jeweler increase 2011 outlook. Oh, my.
4th Week down. Getting to be a habit as Dow off for the entire month of May. Up Friday last but longest losing streak since February 2010. Lay the blame on non-existent volume. Dollar fell against the dollar, oil over $100, gold up and personal incomes rose 0.04%.
Wells Fargo announced they plan on growing into an insurance powerhouse buying agencies and companies to strengthen their casualty and project a Billion dollar life unit.
Finally, Chrysler is paying off their double digit interest loans for several single digit. Expect huge hype as auto maker borrows about $9 billion and will repay the $7.5 billion to government. New loans expected to save the company $300 million a year in interest.