That Was The week That Was-2nd Week January

  Record GM sales in China in 2011! Bloomberg reports last Monday that car sales for domestic autos were up across the board with GM +8.3% and Ford increased 7%. This in the worlds largest auto market! Even Toyota, hurt badly by the tsunami in 2011 was up 4%. Luxury models added to the sales records. World’s largest market….

• Stocks ended last week slightly up. The Dow up 0.5%, S&P up 0.9% and the Nasdaq moved up 1.4%.

Tips For Your Flex-Spending Account.

• Review receipts including over the counter health care.
• Call for documents –if you need to do so.
• Restock your home (and cottage) 1st aid kit.
• Buy extra glasses, hearing aids, batteries.
• Stock up allergy meds.
• See dentist.
• Get flu shot.
• Alt medicine may qualify- check and see.
• Don’t forget mileage.

time to double- check your HSA investment allocation!

2011 S&P 500 Performance:

Year-end reports coming out to all clients and if you have questions why you are where you are after August 2011  here’s the chart you can see why.

 

Investors Fled Long-Term Equity Mutual Funds in Record Numbers: Morningstar reported that in 2011 almost $100 billion left equity mutual funds for bank checking and savings accounts. It was the largest outflow of money since 2008. In December, 2011 Equity Funds had the second consecutive month in a row of net redemptions.

Investors poured almost $900 billion into checking and savings accounts, according to TrimTabs for 11 months of 2011. The numbers according to TrimTab Executive Vice President David Santschi was because of fear of a weak economy and government manipulation.

Bullish sentiment remains! According to American Association of Individual Investors bullish sentiment measured in at 49.1% as compared to long-term sentiment of 39%.

Rolls & Bentley Sales Jumped in 2011. Asia-Pacific sales surged 47% and North American sales up 17%.

Royal Bank of Scotland Cuts Metals Forecast:

• Copper cut 15%
• Aluminum cut 12%
• Gold forecast average $1750 troy ounce
• Silver $33 oz
• Platinum $1700 oz
• Palladium $800oz

Hostess Brands Maker of Twinkies Filing for Bankruptcy- Again: High food and labor costs along with huge debt and unfunded pension liabilities have contributed to the American Bakery of Treats icon underwater for decades. Hostess also bakes Wonder Bread. The company had been in bankruptcy in 2004 but has struggled ever since emerging in 2009.

Morningstar fairly gushes over…Disney! The ratings firm calls it undervalued, a wide moat stock and has a dominant position and pricing power. (How about that?) And it all boils down to the long-term contract that ESPN has with Monday Night Football.  Competitors are all playing catch-up, according to Morningstar’s analyst Michael Corty. He calls the stock dirt cheap where it is at a bit over $38.00 and believes shares are conservatively worth $45.00.

Oil prices could pop 80% if Iran blocks Hormuz Strait. Michael Wittner reported to clients that Iran could keep straits closed for at least 2 weeks. Brent could trade $125-$150. David Greenberg added on CNBC that no way would he be shorting oil in 2012. Toyota’s Lenz added gasoline could be above $4.00 in 2012.

Morningstar Likes International Game Technology for Online Poker Gaming. IGT is best positioned to take advantage eventual online gaming providing infrastructure and also a new casino floor management system. IGT is major producer of slot machines. Shares closed Monday down to $16.92 with buy recommended by Morningstar at $12.60 and Fair Value  $21.00. Not without risks this.

Big Volume on Gaming Stocks Wednesday- For the same reason that Morningstar likes IGT traders have determined that the U.S. could bring in up to $6 billion annually with online poker and have booted up shares in Las Vegas Sands, Wynn Resorts, MGM, Melco Crown & Boyd Gaming.

Cramer on CNBC said, sectors he likes for 2012 include China, Tech and Banking. They were the three biggest losers in 2011.

USA News Reports that Flat results in 2011 could mean positive for stocks in 2012. S&P 500 index moved up an average of 13% and 8 out of 10 times whenever the index was flat the year before, based on historical results measured from 1930 to the present.

CNBC reported the S&P 500 closed above its technical high price of last October. This can only mean- - that the markets have impetuous to move higher. The Powershares QQ, which tracks the tech heavy NASDAQ-100 is about 1% from breaking out to a new high.  The S&P 500 index closed Tuesday at 1292.

Jeff White at Marketwatch provides the magic number for you technical aficionados. The number 1294 is a support level and the number on everyone’s (maybe) list. See the chart above.  If the this level of support is broken on the high side investors can look for a test of the 1345-1350 level- which were reached twice last year – in Feb and July.

OJ futures spike on fears of a fungicide found in Brazilian concentrate. Futures up 26% on news.

Ford sees strong profit for 2011. Asia – Pacific will report a loss due to the tsunami but overall Ford sees good strength in 4th quarter. Weather also hurt Toyota, Honda and other manufacturers in the region.

Netflix downgraded – Bank of America Merrill Lynch analysts said investors may have been too over enthusiastic over shares and recent streaming service data. Shares fell 5% on news. Still shares up over 3% ytd.

Wow! Vizio Connects! The American based television manufacturer, known for inexpensive flat screens, bangs a home run in its first attempt at the Laptop and Desktop market. Watch for their products coming due this summer.Company also come out with a dandy tablet. All this from the LV electronics show. Vizio is a privately owned company and no shares are available to the public. Products sold at Costco among other retailers.

Michael Kahn- technical writer from Barrons: Cycle analysis is foreign to most investors but folks at Bank of America Merrill Lynch suggest a serious decline in the markets for the first six months and then BOOM- a huge buying opportunity as the markets take off. Kahn says to save your money for the coming opportunity and the best way to remember this is the old ‘sell in May and go away’ adage.  Bank of America analysts call this a decennial cycle – meaning the 9th year of the cycle. It’s a drop and then a Big Pop.

If Bombs start falling on Iran expect the markets to fall back significantly with oil, the dollar and gold to trade higher. This from Teeka Tiwari of The Tycoon Report. He also says to be careful of gold if the dollar strengthens. I’ll have those ETFs for when it happens.

Food Prices Higher in China as Inflation Ebbs to 4%.

Fertilizer stocks in the news: Jeff White at Dow Jones likes the following in the sector: Mosaic (MOS), Intrepid Potash (IPI) and Potash (POT). If you like the food or Ag sector this may be where you look first.

 

TopStockAnalysts suggest SILVER is ready to run. Shares were trading 50% above their 200 day moving average before the correction of 2011 and now about 30% below the 200 day. According to Jeff Clark the metal could get cheap but he’d be dipping a toe in the market right about here. SLV ETF closed Wednesday $29.50.

2013 Ford Fusion is…Hot!

Goldman Sachs Group bids for multibillion dollar bundle of bad mortgages from the NY Fed. The bank bid on about $20 billion with an average fair value of 47 cents. WSJ Friday suggested the bank would have been a buyer for about $3 billion. The NY Fed went on to quietly ask others bid on the same bonds and then publicly say they would be a seller only if they could get a ‘fair value.’ Goldman, hoping to get the bonds with little publicity, had no comment. Experts contend that the NY Fed would probably be better off selling the bonds to other dealers who could move the bonds at their discretion. The bonds originally came from AIG.

Good News for Apple – a supplier caught in the Asian floods now says their problems of distribution for the iPhone have been solved. Any production problems have also been solved. The death of Apple stock has been greatly exaggerated. iPhone is a huge money maker for the firm.

Another Bond Battle Emerges- A rally in Italian and Spanish Bonds is quietly being ignored by mainstream media in the US. Rates have tumbled on the short-end in Italy & Spain, as confidence or the extra-liquidity being pumped into the system by the European Central Bank. This is great news…The Spanish 2 year is 2.808% or the lowest seen since 2010. Italy’s 2 year has fallen below 4% not experienced since November.

Markets moved up Thursday. Gold stumbled.

From ‘Business Insider’ Five Million Retailers are suing Visa and Mastercard and major banks for billions. Retailers want about $40 billion a year from 2004 to present.  According to the suit retailers state that the going public of Mastercard and Visa was a disingenuous effort to avoid looking like a monopoly. Retailers seek compensation for alleged overcharges.The basic message is that banks and credit cards have screwed them with overcharges.

Even with the Troubles- Visa & MasterCard are still strong picks, along with merchant processors Total System Services and Heartland Payment Systems. This from Sterne, Agee & Leech.

Fidelity Fund Manager Shake-up- again. Seems every other year Fidelity fires, re-hires or switches managers from fund to fund. 2012 is no exception. Fidelity Overseas Manager given boot, Jeff Feingold stripped of all responsibility except Magellan. And Joel Tillinghast returns from Sabbatical to re-run Low Priced Stock Fund. While Fidelity is a huge fund factory with more funds than needed this is always an interesting dance. 

JP Morgan Chase misses! Profit loss in 4th quarter falls 23%. The stock is down 17% the last 12 months. The investment banking arm showed a loss of 52% in profits and revenue fell 30%.

CNBC Friday Morn…Analysts said ‘Watch the Euro.’ Friday morning euro stood at 1.27 and expected to fall further. No one talked about the better than expected European bond auction. Euro should act as health barometer to let investors know when to start buying. 

Finally – Friday the 13th did the deed and U.S. stocks closed down across the board. Standard & Poor’s put the cherry on the sundae and closed the week downgrading the credit ratings of 8 European countries.

ACCORDING TO ZACKS.COM OUR DOMESTIC MARKET SELL-OFF FRIDAY WAS UNDERWHELMING SINCE BOND TRADERS HAD LONG ANTICIPATED THIS DOWNGRADE. THIS WAS NOT, IN ZACKS VIEW, A WORLD SHAKING EVENT.

  Need more information about a stock, bond, fund or have a Question on anything contained in this blog- call Paul @ 877 783 7080 or email him at the address below.

QUESTIONS, CALL PAUL @ 877 783 7080 OR WRITE HIM @ PSTANLEY@WESTMINSTERFINANCIAL.COM. SHARE THIS BLOG WITH SOMEONE WHO CARES ABOUT THEIR MONEY.