That Was The Week That Was-2nd Week February

Some Investors are still afraid of a possible Total Market Collapse. Trying to explain to some investors that the year is 2012 and not 2008 doesn’t seem to get traction. Talking cable & radio heads have created a unexplainable fear of a global disaster by some ubiquities global and domestic event. (Even Soros cries of a Euro-zone meltdown while investing money backing European sovereign debt.) There are ulterior motives from all these fear mongers to get people fearful, from selling  product such as insurance or metals to pumping program ratings. Talking common sense doesn’t work when minds and fears are made up so the good folks at Bespoke Investment Group provided Barrons.com a list of S&P 500 stocks with the smallest spread between their 10-year high and low. These are stocks that move within a short historical range during good times or bad. Without getting into detail here are the 10 stocks plus, on an equal weighting scale, provide holders of all the  shares a most respectful yield of 3.6%.

• Wal-Mart
• Kimberly-Clark
• Progress Energy
• Johnson & Johnson
• Scana
• Coca-Cola
• Consolidated Edison
• H.J. Heinz
• Kraft Foods
• Waste Management 

Worst Week of 2012 But S&P 500 Is Still Up 6 1/2%. Monday Greece Passed Sweeping Changes & Wage Cuts as tens of thousands rioted in the streets around the capital. This is, according to WSJ, the fifth year of a ‘grinding recession’ the Greeks have suffered.

Now for News & Market Recap of Last Week…

Top Fund Changes 2011

Barrons/Lipper study of best performing fund families showed that the perfect fund manager would have stayed in Treasuries until October 1st and then jumped into high yield bonds for the rest of the year. Lots of luck trying that without the benefit of hindsight…

Remember this was ONE year only.

Fearful no- Cautious yes. U.S. Trust reported to clients in December that markets will finally pressure policymakers to move past temporary measures. The years of kicking the can down the road are over and U.S. Trust feels that the ‘Can’ can and will kick back in 2o12. What they are recommending for their clients is U.S. equities, underweight international but they like emerging markets. In fixed income they are also suggesting corporates over Treasuries. The report also predicted a strong start to the year with headwinds emerging later in the year.

News From Las Vegas: Domestic Auto Dealers are selling cars at historically high prices. Consumers are paying 11% more on average for a new car $28,341 up from $25,505 from 2008 to 2011. Dealers expect to sell 13.9 million new cars and say 2012 should see cars sell closer to an average of $30,000. Toyota expects record sales in 2012. Domestically Toyota expects to sell 2.32 million cars and trucks and globally they predict 7.26 million. They are gunning to regain #1 car manufacture status in 2012.

G.M targets $10 billion earnings in 2012. This from a company that was bankrupt in 2008.

Thomas Huges writing for ‘Seeking Alpha’ predicts that Ford & GM are ready to break out. GM should trade for around $30.00 this summer, Huges writes. He warns that the higher shares go the more tempted Uncle Sam, who holds a substantial amount, will be tempted to sell. He does not give a price on Ford shares – sadly.

What is Amazing is Las Vegas Sands Chairman & CEO Sheldon Adelson losing 95% of his wealth in 2008, a hair breadths from filing for bankruptcy, investing his personal income and today worth billions. Las Vegas Sands was trading at $1.99 in March, 2008 and today over $50.00 a share. Source WSJ February, 2012.

No Time to Change Asset Allocation: Expect market slowdown-CNBC reporting Friday that this would be as good a time as any for the markets to regroup. While many investors are convinced the markets are heading higher the problems that were with us at the beginning of the October rally are still here. Investors are now overly optimistic; Greek problems remain and the U.S. economy is only a little bit better. Hedge Fund manager Uri Landsman said the S&P 500 could test 1100 before rebounding and ending the year higher. Friday the S&P 500 closed at 1342. Federal Reserve still committed to low interest until mid-2014. He said could not would….

Bob Dylan sings of social justice but has never attended a rally or march. Joan Baez-

Monday Profit Taking Coupled With No-Deal in Greece took the markets lower. Gold fell and the dollar rose.

Charles Schwab wrote an opinion for WSJ’s Monday readers & Bloomberg offered comments in last week’s BusinessWeek Bloomberg Magazine both on: Low Interest Rates their time has come and gone! Scathing can best described the verbiage as both assailed the Fed Policy of ‘No Confidence’ by keeping rates as low as zero. Bank profits shrink as insurers and pension funds face dwindling returns. For a lot of banks, Jason Goldberg at Barclays Capital said, the majority of their profits comes from net interest income. Charles Schwab wrote that the Fed policy is destroying the confidence of businesses and individuals to invest and the willingness of banks to loan to anyone but those whose credit is so strong that they don’t need loans.

 

Starbucks has 500 stores in China. It plans on opening 50 coffee stores in 2o12 in tea-drinking India. Room to grow, dear friends, lots of room to grow.

 

Fred Goodwin will for evermore be only known as Freddy rather than Sir Fred. The former CEO of Royal Bank of Scotland had his knighthood removed after he led the 285 year old bank into the world’s largest bailout. I didn’t know they could do that … sounds painful …

Private Industry Created The Money Market. Now regulators want to fix what they think is broke. The SEC wants to set up a 2-pronged plan to shore up money markets and they are to boost returns from corporate coffers, issuing stock or debt or  collecting more money from investors. Also the SEC would like to see MM float and not be $1.00. The SEC would like to see a 30-day period where investors could not get their money. The industry is howling mad. Client’s are buying, selling, sweeping funds into their money markets and would be penalized during a crisis, say those who manage funds.

Caesars Entertainment is breathing life back into an old IPO idea. The ticker is CZR and its a small deal, less than 2 million shares at a price of $9 a share. Caesars owns the rights to The World Series of Poker. While the brick and mortar of Caesars is in the toilet the next big thing is on-line poker. The on-line biz is separate from the other and could be extremely valuable if on-line gambling is passed this year. Shares went public Wednesday and opened to the public at $9.05 and quickly ran to $16.00 in the morning and closed at $13.91. Watch Paulson and others to sell shares now and possibly get shares cheap later. Barrons write that Paulson and others need shares to reach $40. before getting whole. Sucker bet, says experts.

Michigan is U.S. #1 Pickle Producer! 178,000 tons of the cute cukes for pickles. Ohio does 1/10th that amount and ranks 5th nationally.

Canadian Auction of U.S. dollar bond- a paltry $3 billion  was snapped up last Tuesday, with demand outpacing product three to one. The five-year bonds pay 0.08%. One of the few gilt edged sovereign nations the Canadian financial global footprint is so small that China and Middle-East money cannot effectively buy Canadian debt and or stocks.

Markets up modestly Tuesday anticipating a satisfactory conclusion to the Greek problem.

The End of the era of the Star Manager at Fidelity. Morningstar reported Tuesday that Fidelity is moving more toward committee type portfolio management style much like that at Capital Bank and Trust and Vanguard. Morningstar concludes that what made certain funds at Fidelity standouts was that their manager could ‘roam’ and do what he or she liked with no constraints. That freedom would be over in the new culture. The conclusion is that Morningstar would stay away from multiple manager funds until they had proven themselves in the marketplace. Those funds with multiple managers will be so indicated in Morningstar reports.

Doomsday Capitalism –Obsessed with the Mayan Calendar? Loading up on canned goods every time you hear North Korea struts its war games? Petrified of Iranian nuclear missals being targeted to your home address? Maybe you can profit by establishing a portfolio designed for a global Armageddon. Barton Biggs, former Global strategist at Morgan Stanley and now hedge fund manager and author of, ‘Wealth, War and Wisdom’, has ideas to share. He writes, ‘Think Mad Max and Swiss Family Robinson and buy stocks accordingly:’

• Food – think Monsanto
• Forests – think Kimberly-Clark
• Chemicals – think DuPont
• Energy –think ExxonMobil
• Population growth bubble – think Wal-Mart, McDonalds and/or Budweiser.

Facebook IPO- Jimmy Cramer on CNBC Wednesday morning called it the Holy Grail of Demographic Marketing. Critics say the price tag may be too expensive and early investors could get burned.

Nissan on track to gross more than Toyota,

Not Invested but think the markets going to run away? It may be a little too late to chase it, according to Teeka Tiwari. He doesn’t think stocks will continue to move straight up but thinks a correction is due. ‘That’s the time to buy,’says Tiwari. ‘Even in the greatest of bull markets pullbacks occur. The 20, 50 and 200 day moving averages were invaluable trade entry tools.’

China Inflation is Ugly. Food up 10% and the January CPI +4.5% from a year ago. Careful…

Cisco’s Profit Up Amid Restructuring. Tech Giant revamped decision making process, making it simpler, sold off Flip video cameras and lowered long-term financial targets.This from MarketWatch. Things paying off for Cisco as stock slowly climbs and the company gets to be more relevant.

Diamond Foods – The Nut Company- fired their CEO & CFO, announced the WSJ, because of accounting irregularities. The company had a cockamamie system of paying growers. First the amount paid was in secret and secondly they were paid quarterly and the last few years some growers were getting paid for not providing product while some were wondering what year the payment was for. The whole shebang blew up the opportunity of buying Pringles – or temporarily shelving it. 

Visa new buyback plan and shares beat estimates. Stock on a tear. Over $110 at the close Wednesday.

 

In Honor of Valentine’s Day             On-Line Dating Web Sites have gotten specific. From Veggie Date to horsey lover’s Equestrian Styles web site dating has tried to zero in on specific likes of people looking for other people. Here’s a few:

• Apple Fanboy or Girl (for folks who would die before they bought anything but a Mac)
• GK2GK (it’s geek to me)
• Booklovers (honest)
• Petlovers
• IvyDate (go Crimson)
• Farmers Only
• Treklovers ( I’m from Iowa, I only work in outer space, Captain Kirk)

From the Department of ‘Gee, I’m (not) Surprised.’ Talented actor Gary Busey, 67, filed for bankruptcy listing debts of $500,000 with $50,000 of assets. And you thought everyone in screwywood was rich as Croesus?

George Soros interviewed by Robert Johnson, director of the Institute for New Economic Thinking. Soros a billionaire hedge fund manager, leftist and semi-crackpot had closed his investments to outside investors last year saying the markets were too difficult. He publicly believes that in the Eurozone crisis there is no political will, that one or more countries will leave the union. He also doesn’t believe the Chinese economy will fall. (The Soros Family privately bought over $2 billion of European debt last year on the bet that the union wouldn’t crumble!) He believes there is rioting in U.S. cities as he speaks but the media is not giving it much attention. He also said that there would be a good chance of an outside attack on Iran but he cautioned the current regime wouldn’t last a year. On gold he believes it will reach $2,000 an ounce; but warns it can go in either direction.

Kodak closes camera biz. How does a company with an iconic monopoly on a sector lose it? Ask the ex-members of the board of K-Mart.Or, more recently the good folks at Blockbuster! Elvis called it, Taking Care of Business. Kodak and the others did not. Blame lack of leadership and especially the board for not being prudent stewards and 'taking care of business.’ you’d think someone would go to jail…

Markets closed mixed Thursday. Gold off $18.00 and oil closed off a $100 barrel just a smidge.

Worst week of the Year ended Friday with all indices off. Gold down.

The Ben Bernanke wants  to rent foreclosed homes. This would entail investors buying homes bulk, hiring managers and overseers. There are another million homes coming on the market this year and next. Regulators for Fannie Mae and Freddie Mac may employ government financing to attract investors to buy and rehab properties in bulk.

The Headline at WSJ screams missing $1.6 billion at MF! In reality regulators know where $700 million of investor money is parked so it’s only a $900 million shortfall. The bankrupt commodity firm MF Global Holdings is missing substantial client money. The funds missing are from farmers and middle-class investors who hedged their bets in commodities and were unaware their money was used by MF for betting on debt that went sour. Still, a lot of money is just plain missing that bad trades cannot explain.  You’d think someone would go to jail.

Two Banks Closed Friday bringing the total to nine in 2012. 

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.