Cicero was a brilliant politician, statesman, philosopher and orator. He also had many enemies that were responsible for his death at the age of 63. When he first ran for political office he asked his brother, Quintus for help. And, as Phillip Freeman, recounts in his WSJ article, Quintus set the stage for all future politicians with his words of wisdom on running a winning political campaign. Here, is the election plan ala Quintus that got Cicero elected:
- Promise Everything to Everyone.
- Know Your Opponents Weakness & Exploit Them.
- Flatter Voters Shamelessly.
- Give People Hope.
sound familiar?
Our domestic Markets gave up a little last week. Not enough to cry over but enough to pull out the beads and say a quiet ‘Hail Mary’, or two. The good news, looking forward, comes from Avi Gilburt of Dow Jones, writing technical analysis in MarketWatch.com.on Monday morning. He discusses patterns, Fibonacci and bullish sentiment. His conclusion is that the market may not see a top until the end of May, and possibly as late as June. Not to say that we couldn’t be surprised before then, but probably not.
Thursday Precious Metals Fell! 
From Palladium to Silver the metals fell – palladium down 5.5%, silver off 2.7% and gold lost $7.70 an ounce. Bad news from China and whispers about Indian consumers slowing their gold purchases as news that the government may tax gold holdings. The country is the biggest per capita buyer of gold in the world. In 2011 over 900 metric tons of gold was purchased.
Insurance Agent Glenn Neasham of Lake County, California was sent to the pokey last week for selling an 83-year old woman an annuity. The State’s Insurance 
Commissioner charged Glenn with taking advantage of a ‘confused’ woman and selling her a product with a 12 1/2% first year redemption charge and a 14% commission. The annuity in question is a fixed product that goes by the unlikely name of Equity-Indexed Annuity and protects principal and earns interest depending on what stocks and bonds do in the marketplace. Regulators have not liked these heavy commission products, and especially agents who sell them. When the ‘client’ went to the bank to withdraw her $175,000 to buy the annuity the bank manager called adult protection services, saying the 83-year old woman appeared to be confused. Eventually the insurance company un-wound the policy and made the client whole, returning the entire $175,000 to the client. Regulators still took Glenn to trial where he was found guilty and sentenced to prison for felony theft. 
You can bet your bippy that the bank manager when he saw $175,000 walking out the door was more concerned with his loss of commission than the mental well being of his customer. On Tuesday a judge released Glenn on bail while he appealed his conviction.
Monday All About Apple!
Things got just a bit better at Apple. The company announced a $10 billion stock buy-back plus an annual dividend of $10.60 a share. Shares are up 50% since the first of the year and some folks like them even more. The new dividend will be a hefty $9.9 billion distribution or a 1.2% of total dividend income. Imagine!? Our friends at Barrons.com put pencil to paper and calculated that if the entire amount would be taxed at 15% the government would get $1.48 billion! Create a few more Apple-like companies and you can see where the U.S. debt can be significantly reduced.
Ze Problem 
With Apple’s Success…As goes Apple so goes the Nasdaq and herein lies the problem. The Fed has pretty much decided not to provide any additional stimulus, i.e. QE3. The stock market has had such an incredible run so far in 2012 that the Central Bank is less likely to provide any help. Barclays has said that in order for stocks and other risky assets to continue to rise stocks need to fall in order to elicit Fed help. In other words the market has gotten used to the Fed’s helping hand and is in fact counting on it…stay tuned this may yet turn into a roller coaster…
Tuesday China Worries Caused Stocks to Pullback Modestly. 
Apple kept on running, with the Naz down 4 points and the Dow off 69. The broader index down 4 also. Oil was about even and gold off t0 $1647. an ounce. Importantly the Dow held above 13,000, giving credence to support at that level.
Meena Krishnamsetty @ the Dow Jones reported on the most owned stocks by billionaires. 
For those interested the top holdings by the most billionaire portfolios are: Google, El Paso Corp., New Corp., Medco Health, Microsoft and Wells Fargo.
Glencore International, a commodity powerhouse in oil, coal and sugar just added grain. This another step to control vast amounts of commodities across a wide spectrum. The 
company announced it was planning on buying Canadian grain company Viterra, Inc. If the deal passes Canadian official’s muster some 40% of the world’s wheat, barley and canola crops will pass through Glencore’s hands. Glencore recently formed an IPO, but not in the U.S. The firm was originally created by Marc Rich, international commodities trader and fugitive. He was pardoned for his crimes by Bill Clinton. Share in Glencore trade in the U.S, under GLCNF. Rich is no longer associated with the company.
It’s Getting Serious & No One Is Listening!
The Ben Bernanke spoke Wednesday and warned folks that the European Crisis isn’t over….and no one seemed to be listening, or else, as the WSJ pithily put it, ‘The collapse of the Euro is so widely expected that Bernanke’s comments are blinding obvious.’ Our domestic markets moved down slightly Wednesday- still holding at support levels. Meantime millions of Investors are fleeing stocks. Ma and Pa, according to the Investment Institute, have pulled $2.84 billion out of mutual funds the last week and some $30 billion out of bond funds. Analysts are suggesting that as earning season arrives that companies will not meet estimates and disappointed investors will claw their way to the exits. Already, according to the Prudent Speculator, are we seeing sector rotation. Asian Markets have softened as news from China is mostly not positive. Manufacturing has fallen and new orders have fallen to a four month low. Credit Agricole, senior economist and strategist for Asia, Dariusz Kowalczyk, called the data ‘pretty bad’.
Goldman Sachs made a major call to buy global equities in a report to clients last Wednesday. The banking giant called this ‘a once-in-a-lifetime’ opportunity to buy stocks after a 20-year period of relative underperformance versus bonds. The report went on to state that their projections show the next decade to be a peak period of global growth.
Bullishness exists at Schwab. 51% of investors who make regular trades are now Bullish. Bank of America analyst said that now the smaller investor is getting back into the market, and that was good news. Still, mutual fund outflows are continuing. But, a recent poll found that a majority of Schwab’s customers planned on investing more in April when they got their tax refund. I’m trying to make sense of all this, just the same as you and for every negative story there’s one for the other side.
The Hartford Getting Out of The Annuity Biz. 
In a move to appease major shareholder John Paulson The Hartford is leaving annuities and life insurance to others. No word who they’ll sell that side of the biz off to but they’ll concentrate on the most effective, aka profitable, side of the business.
Krispy Kreme Donuts getting into the coffee biz…a tad late…
India Taxing Gold? Stories coming out that Indian regulators mulling ways to have gold stored in banks, interest paid to clients. Gold sales have stalled. Thoughts also on installing special vending machines to dispense gold. Jim Rogers said he’d be a buyer of gold at $1600, more at $1500 and load up the truck at $1000. He said that on Friday’s CNBC.
Thursday Markets Fell. Gold to $1612, Oil closed at $106. S&P 500 Index couldn’t hold 1400 and closed at 1393. According to Mark Hukbert @ MarketWatch a correction has begun and he 
blames too much bullishness and complacency.
Most of our oil comes from Canada. About 16% we import from the Middle-East. That may all 
be a-changing as reports surface that the U.S. may double its production of oil, natural gas and biofuels. A Citi report labeled, ‘North America The New Middle East,’ said that the pipe dream may be a reality by the year 2020-2o22. What makes this an even grander reality is that energy will create an additional 500,000 jobs and put the U.S. on a firmer footing of economic growth going forward.
Bagel King Murray Lender Dies. Back in the 60s I was living in Texas and no one in that 
country knew what a bagel was (do what?). It wasn’t until Murray Lender took frozen bagels and made them a part of everyone’s breakfast that you could live in Texas or Macomb and get a supermarket bagel. For folks in this part of the world, back in the 60s, bagels were special- only for the weekends….remember?
Friday Markets Higher. Mark Hulbert repeats his warning that a correction is due. The Dow 
hovers slightly over 13000 while the broader market indicator couldn’t keep 1400, and fell three points. Oil is a quarter of $107 a barrel and gold rallied to $1661. Hulbert argues that there is too much complacency and bullishness to go forward without first going lower. He state that indeed we may be higher by the end of the year than we are today but first that path would take us lower.
Expect Bad News on Earnings. But, says Cody Willard, the news may already be priced into stocks.
Treasury Sale 10-year TIPS with a negative yield were snapped up Thursday as investors 
accepted negative return for the first time ever. This was a statement of confidence of the U.S, economy. The negative yield also said that investors expect an inflation rate of 2.38% going forward.
Mary Ann and Pamela Aden, publishers of The Aden Forecast, 
for 30 years these Costa Rican dwellers have kept a pretty steady pulse on what’s happening economically in the world. Rarely wrong their latest bit of advice is that as long as the Dow and Nasdaq hold above 12050 and 2700 they recommend staying in the market.
Bad News Couldn’t DeRail A Higher Market 
Close Friday…KB Homes reported a bigger than expected loss and the stock was pummeled, falling 8 1/2%. This caused concern about the vital spring home buying season. KB said that their financing from Met Life was pulled from under them as the company left the mortgage biz.Also difficulties getting mortgages from other sources caused a greater number of applicants to cancel their order.
Matt Nesto in Yahoo Breakout reports that the rally continues and the past week was a modest pullback on China worries and means little going forward. The argument that while Europe is in a recession and China slows the U.S. economic engine is alive and well.
John Buckingham at Prudent Speculator Offers the following choices for investors:
- Buy Dividend Producing Stocks
- Go Against The Grain-Europe is something a US investor should be considering.
- Embrace Emerging Markets
- Tap Large Cap Technology
- Follow The Laggards
The 2012 Barrons List of Bestest CEOs Published Over The Weekend. Here’s The Old, The New and Those That Didn’t Make The Cut…
Shopping For Stocks- Good Leadership Goes A Long Way…
Finally, FDIC Closed 2 Smallish Banks 
Friday, bringing the total to 15 year-to-date. Last year FDIC had closed 25 at the same time of year.
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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