We had summer for two days last week and now back to normal. - Where should investors invest right now? According to Greg Zuckerman, who writes for the WSJ, investors should have taken profits from growth companies while shifting into safer companies, especially those with foreign market exposure.
James Paulson, chief investment strategist at Wells Capital Management, recommends emerging market stocks and tech. He notes technology companies sitting on piles of cash. Kenneth Hackel, president of CT Capital is a fan of Google. Some experts now agree that the Fed rate hikes may not come before March 2012. Paulson’s hedge fund lost 6% in May primarily due to his holdings in Citi and Bank of America. - What we can expect this week: Wednesday the May CPI numbers
will come out along with manufacturing in the New York area. Thursday brings housing starts and new permits. Friday will bring consumer sentiment numbers. You can bet those and all numbers this week will be scrutinized like they came from a crime scene. - Up and Down Wall Street essayist Randall W. Forsyth reports that the housing market will continue to decline even though it has reached the economies of the year 2000. So far home prices have effectively unwound the entire credit boom gains. Compared to equities, silver and gold houses are fantastically cheap. Buyers can make some sweet deals. However there is such a huge glut on the market that it will still take years to clear the inventory.
The question is what will clear out all the empty homes on the market? The answer Forsyth gives is neglect and rot. Mother Nature herself will provide enough deterioration that cities will eventually bulldoze and destroy them. - Poor growth translates into turning the U.S. into a Greek tragedy.
Economists once excited about the U.S. turning the corner now sourly wish they’d kept their mouth’s shut. The U.S. would do rather well, explains Rana Foroohar, in her Curious Capitalist column, if the economy grows over 3% a year. Growth under 2% creates a nightmare debt increasing to 144% of GDP over the next 10 years. Growth at 3.9% creates reduction in debt and no major overhaul of our entitlement programs. it’s all about jobs… - Food prices on basic staples may rise 120% to 180% by 2030. This includes paddy rice, wheat, maize and processed rice. This from the London based charity Oxfam.
- George Soros- billionaire crackpot leftist- sold $800 million of gold in the first quarter. He thought he timed the sale at the top of the bubble but
Matthew Lyons writing for London Eye reported he got it wrong and the bubble is at least a year away. The blow-out phase, we saw it with silver- where it suddenly spikes through the roof- just isn’t there yet. - Selling Medicare reform to old poops is tough when old poops have their fingers in their ears and refuse to listen to change.
Republicans did a survey and found 33% of those 65+ support change, 27% oppose and 40% don’t know. One GOP Hill insider said what the GOP needs is a salesman like Betty White or Andy Griffith. While change, if it happened, wouldn’t impact those that are currently 65+, the poopsters carry a lot of political weight. 
Weiner and stupid gets its own reward…. anyone remember Teddy Kennedy? - Steve Jobs shows up to announce new cloud music service and Apple stock falls 1.6% on his appearance of losing more weight. Jobs has been ill, taken a leave of absence, and rumors are that this is not something he will recover from.
- Quick…who owns Volvo? Ford? No. Sweden? No. Why its Geely Holding Group of China. Get ready for new more luxurious Volvos as Chinese owner
Li Shufu states that he plans on going head to head against other luxury brands because that’s what the rich Chinese buyer wants. - Stocks continue their fall last Monday. Even Jimmy (The Mouth) Cramer has had enough and ranted against the President, coming within a syllable of calling him inept and a socialist brigand. Please understand, dear reader, Jimmy C is right only about half the time…
- According to news published Barrons.com hedge funds lost on average 1% in May and are continuing to buy Gold and Silver. (2) Emerging Market Funds see Inflows Return (good news for emerging market investors) (3) Citi cuts Legg Mason (see last week’s blog) (4) FaithShares to close 4 ETFs and plan on keeping only Christian Value open. (I wrote and laughed about this idiocy a year earlier) (5) Silver has fallen some 25% since April. Andrew Horowitz suggests that investors wait until Silver breaks above $40.25 an ounce before reentering. (remember this is a trade!)
- Starbucks is upgraded
to Outperform from Market Perform by BMO Capital. - Analysts are bullish on copper. The iPath DJ-UBS Copper ETN is up only 0.3% (contrary to those who have been falling down about the high cost of the metal).
- Another bet on the dollar strengthening by Mark Arbeter who thinks an upside of 12% in the dollar and a drop of 45% from current levels on silver.
- Ford said that they expect to increase sales by 50% by 2015.
This means increasing from almost nothing sales in China and India. Ford stock barely budged on the news as the company also reduced more debt. - Commercial real estate office owners rush to sell their buildings before the corporate market softens. Lenders, so far have been accommodating, but now with what is considered fair value some owners are now putting their properties up for sale. Seems banks and lenders will still provide financing at exceptionally low rates.
- Stealing by a broker from a client usually is a man’s game. But according to Financial Advisor magazine a former Wachovia female broker swiped $14 million
from clients and used the money to support a lavish life style including a helicopter and two zebras. Customers should always double check and confirm purchases. One zebra would’ve been enough, you’d think? - PBS Radio reports Congress shocked at billions in United States Afgan aid misspent. Really? No, really!?
- High gas prices have caused the economy to stumble, according to The Ben Bernanke, in his speech Tuesday.
Forgetting to mention that his QE2 was all about lowering the value of the dollar, keeping interest rates low while buying Treasuries. Oil, as you know, is traded in dollars…. This the head of the Federal Reserve. There are days you just wish you hadn’t gotten out of bed… - Laugh of the Year – Jamie Dimon, CEO of JP Morgan Chase,
told the Fed Chairman that he (Dimon) fears that new banking regulations and oversight are harming the banking industry and economy. Like all of a sudden we got amnesia about banks involvement in the mortgage mess, the depression, jobs, et al. Bernanke and Dimon the new Martin and Lewis. - The Ben Bernanke really knows how to put a
stinker into a party punchbowl. The rally the other day to break a five week losing streak was just getting going when he-The Bernanke-opened his mouth. Fear increased and any momentum was lost. This has been the longest losing streak since February 2009. Investors want to know which way the economy is heading and Wednesday’s Beige Book, the report on 12 Fed districts, shed little light reporting that there was slower manufacturing growth (albeit still growth) along with higher goods and energy prices. In a WSJ article the report was …generally optimistic about looking forward but less so than the last report… more on the chairman later…. - Exxon discovered two major deep water oil wells and a natural gas find in the Gulf of Mexico. The
energy giant has been criticized by many saying it is a mere bank and its days of exploration are long over. Think Jimmy (The Mouth) when you read this. - Speaking of Oil…Taking a line from Kojak,
‘Who loves you, baby?’ At the recent OPEC meeting the Saudi’s may not be BFF but at least they’re willing to crank out more production to keep prices reasonable. The Libyans and Venezuelans who don’t care and have their own agenda of sticking it to the U.S. are demanding less production and higher prices. - IPO LinkedIn- from $122 to $73 close on Friday….going…going… somebody been a-selling…
- From the Tycoon Report: Ben Bernanke: Evil Genius or Bumbling Buffoon? Boiled down Teeka Tiwari reports, ‘Without question, we are making every mistake that Japan made when it went through its housing led banking crisis that started in 1989. …it lasted for 20 years…without a massive tax hike the only other thing that can save us a massive global war (think WW2)…there has not been the large cathartic wash-out that is required to set the next stage for a large scale, sustainable growth.’
- Banks- as new debit card rules limiting how much banks could charge is days/weeks away.
A vain attempt to get the matter pushed forward six months was quashed. The current rule is expected to cost banks about $15 billion a year. Expect higher bank charges to make up the difference. Master Card and Visa both fell on the news even though they have nothing to do with fees and collection which is left to the individual banks. - Bankrate.com gussying up for its second IPO experience. Bankrate.com has been a solid resource to search for most competitive fixed income rates and credit cards.
- Bloomberg- More than half the fund managers including BlackRock, Fidelity and Franklin have turned bullish on Japanese equities.
Barton Biggs, former Global Strategist with Morgan Stanley, and now hedge fund manager, said about older tech companies you can buy them now at incredible cheap valuations. He is not buying LinkedIn or any of that ilk nor does he like the financials; and the reason he was quoted, ‘I’m concerned we’re going to be looking at write downs.’ 
Markets up last Thursday! A day does not allow me to celebrate too much. - So why are U.S bonds rallying at these low rates? The five year bond yields just 1.5% and with Core inflation running 1.5-2.0%, why are investors putting their money at risk? The U.S. relies on 50% of sale of bonds to foreign investors and given time foreign buyers just won’t put up with these numbers. But, right now, according to MarketWatch, the odd circumstance of the winding down of QE2, weakening global economy and continued issues with European sovereign debt all contribute. (see next piece)
A 1.5 billion Euro bond sale failed after concerns about whether Spanish cities and regions have more debt than they have acknowledged. Usually a bond offering fails when 5-10% of the offering goes unsold –this time over half stayed on the shelf- even with a rating of triple-A from Moody’s. - With all the talk about staying away from energy and financials – Thursday’s big movers were financials and energy. Citi up almost a dollar even with bad news of hackers stealing credit card information. Crude closed $101.93. I told you…
- ING, the Dutch financial services company, is getting ready to sell its on-line bank and offer up an IPO in 2012. This part of the bailout imposed by the European Commission. The insurance division heavily into mortgage mess and was ordered to shrink its balance sheet by 45% by 2013. This underscores that saving with an insurance company does not guarantee safety.
- Sob- before I get to the end of the week a few comments after reading Barrons’ Alan Abelson who writes, ‘Beware of Scarecasts’, that while there may be a double dip and even with the vast financial sentiment is bearish…
None of that is exactly a secret. ‘For bull markets rarely go kaput when just about everyone pays at least lip service to the need for caution.’ The Barrons cover story for Saturday was about the Mid-Year Roundtable entitled, ‘Buy Low Stay Nimble’. The usual panel of experts were asked what they thought of the coming year: Abby Joseph Cohen was upbeat given she thought things would slow down; Mark Faber was bearish and thought folks should own more gold; Scott Black liked certain stocks but was less than thrilled with the economy as a whole going forward; Mario Gabelli was ebullient and stayed the course with stocks he liked at the beginning of the year; Archie MacAllister who is a big fan of financials isn’t changing his mind and likes the Hartford, a lot; Bill Gross is down on Treasuries; and Meryl Witmer offers up some investment opportunities and thinks that the markets will end up higher because stocks are cheap. Almost everyone thought markets would be lower for the summer. - The dollar traded higher Friday against the Euro. The Greek problem persisted and the European Political and Monetary officials are trying to kick the problem down the road, said Dean Popplewell, chief currency strategist at Oanda Corporation. German lawmakers have insisted that not only will the sovereign debt holders take some responsibility but also private investors, with one possibility being to swap existing bonds for other securities that are worth less. (There is no way that they can devalue Greece currency which is the Euro, as they did or could in the days before the EU.)
- The President just doesn’t get it, according to Jim McTague in this past weekend’s Barrons.com. He
hasn’t a clue, nor does anyone else in the White House on sound economic policy, namely jobs. ‘Winning the future,’ is the President’s mantra in the face of high gasoline prices, natural disasters and anemic job numbers. It’s simple- Jobs now will solve a lot, if not all, our ills. Voters are squarely blaming the President on the economy and no longer can he hide and blame the depression on George Bush. The future is now and the President and his cadre have no clue what to do. Even Wall Street, the whispers are, have turned against the President.
Finally- 
The Dow was off 172 points on Friday (this from a few days earlier when the news was that the markets were oversold) and even Gold and Oil were off their feed. This makes six solid weeks of losses. It is not the summer of 2o10 anymore.
Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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