You Can’t Put Lipstick On Last Week –it was what it was- The Worst Week of The Year. Stocks fell for the 6th time out of 8 sessions on Friday, capping a miserable week for equities. Stocks opened lower on news that China’s growth fell to 8.1%. Better than expected earnings from JP Morgan, Wells Fargo and Google couldn’t offset Asian and European negative news. Overall the Dow finished at 12850, Nasdaq 3,011, S&P 1370. Gold finished at 1660 and oil was under $103 a barrel, barely. News from Spain also contributed to nervous traders as concerns about Europe continue. Spanish banks have been borrowing extensively from ECB, more than expected. That disconcerting news asked whether Spain would be another project for similar financial assistance as was Greece earlier in the year. There wasn’t anything particularly serious in any one news bite, just a compilation of annoying indicators.
No Surprise 
that fund raising by the Obama campaign from the securities and investment camp, as reported by the Center for Responsive Politics went from over $8 million in his first campaign to $2.5 million now. As anyone knows you can’t keep kicking a dog and then expect him to play nice.
Most Americans pay little to no Federal income tax but Social Security/Medicare is their biggest tax.
Only in America can you ruin a company with a hundred plus years of existence, destroy shareholder value, eliminate future value, 
sell off generations of proprietary secrets and patents, file for bankruptcy and then expect to reward and keep your ‘talents’. Kodak identified 119 employees as Group 1 that they want to keep during a reorganization as valuable and pay those employees a ‘bonus’ equivalent to 35%-50% of their base salaries. The company petitioned to pay those folks plus executives a total of $13.5 million in bonuses.
Large U.S. Companies Have Emerged From The 
Depression For The Most Part Leaner, Stronger and Richer. Excluding Lehman, Anheuser-Busch, Circuit City and Boston Scientific for Big Companies life is good, according to last Monday’s WSJ. It’s the large cap global S&P-500 companies that have done exceptionally well. Here’s a healthy recap:
- Net income +22%
- Hiring +5%- most of it outside the US
- Cash +49% up more than a $trillion since 2007
- Revenue +17%
- Capital Spending +16.7%
Notice Burger King Ads With Jay Leno? No 
coincidence that BK is flooding the airwaves with new ads, new menu and new look. The company is going public ‘again’! Date has not been set but the fast food franchise is pulling out all stops to get high recognition of its brand. Thankfully the nutty king is gone…
Thursday’s Market Had The Best Day in April- &- One of The Best of The Year. General Electric stoked the overall market with a surprise earning report and the Dow posted 181 points on a day when for five sessions the markets had been losing confidence. While good earnings will carry the markets temporarily many analysts still expect a sell-off. Now for the day by day analysis and what happened…
Monday Markets Moved Lower. Dow fell 130 
points as a reaction to Friday’s poor employment numbers and no news from the Fed about QE3. Gold was up slightly at $1647 and oil off a smidge. Michael Kahn, Technical Analyst at Barrons.com wrote Tuesday that while our markets fell international stocks were in trouble as the Guggenheim BRIC ETF has been in decline since early March. This measures Brazil, Russia, India and China markets, and bears have a firm hand on emerging markets. But, informs Michael, the biggest news is from Europe. Our old friends the PIIGS, known as Portugal, Italy, Ireland, Greece and Spain have run into trouble. With a capital T! The iShares MSCI Spain Index fell below support and last week was at its lowest since March 2009, when the global crisis started. The Italian Index is also in trouble as after 3 years of work the markets are no better off than they were since March 2009. Kahn suggests that traders take some money off the table until domestic markets prove that ‘they have more left in the tank’.
Shut Your Mouth! Apple got a downgrade on doubts that it can keep selling the iPhone at $600.00. Sure, just as soon as I finally popped for a new phone the price comes a-tumbling down. I bought flat screen tv’s at the top, too! Veteran analyst Walter Piecyk at BTIG wrote a note to clients saying that while Apple’s stock was up 55% in 2012 he gave the stock a neutral from a buy. As Apple moves deeper into emerging markets, where pre-paid phones are the norm, carriers in those regions will be less likely to offer their product to customers. Piecyk finished by writing that he thinks investors can take a breather after such a rapid rise on the stock. He also doesn’t believe Apple will bring out their television in 2o12.
Tuesday was ugly. 
The Dow actually tried to rally from a triple digit deficit but in the final half hour gave it up and sank. Off for the day over 200 points on the Dow. Apple finally lost a bit of luster and the Nazdaq was down 56 points and the S&P a minus 24. Gold finished off to $1657 and oil was about the same, a bit over $101, a far cry from the lofty heights it was at a few short weeks ago. Earnings Season started with Alcoa that eked out a surprising profit and sales were up in a market where aluminum prices were at an unseasonable low due to the ‘troubles’ in Europe. Mark Hulbert wrote that the correction won’t be 10% but a much milder sort and at this writing believes that there is still some more to come. 
We could then be in for a summer of sideways as traders move markets in a narrow range, hurting no one, making no value and simply marking time.
Complaining About Investment Fees? Hedge 
Fund fees typically charge 2% on the account value and 20% of profits. And that is on multi-million dollar accounts. Bloomberg reports in their April 15th issue that some traders who left Goldman Sachs and started hedge funds are Not Making Money for their clients.
Time Magazine Reports: 
The United States is the largest exporter of sperm and is a part of a fertility industry estimated to be $4.3 billion a year. The article cites there are some 40-60 million people wanting children the world over. Now before American men get all puffy about their superior virility it’s really all about American ability for quality control.
Wednesday Markets Had Some Life as an aging Bull managed a thin gain of 89 points on 
the Dow, +25 Naz and +10 points for the S&P. Oil finished at 103 and gold was off a smidge. Ford fell under $12.00 a share, closing at $11.91 even though the automaker had predicted a banner year. Alcoa share price jumped on a surprise earnings beat. It probably had something to do with the overall market rally- thin as it was. Bears were still snuffling around and there was plenty for technical analyst’s to chime in with. Our Barrons.com analyst Michael Kahn wrote that the rally we’ve enjoyed since January is over. As a point to his argument Michael says that the advance-decline line has dipped below its March low, a warning, he writes, if not an outright bearish signal. Tomi Kilgore at Dow Jones was equally pessimistic. He pointed to the fact that the old buy on dips crowd was now doing the opposite speaking volumes about the strength of the downside momentum.
Fast Food Chains Selling Company Owned Stores…
From McDonalds to Burger King the recession has forced a new business model and chains are selling company owned stores, making the parent company more profitable. While some analysts say that unloading stores is a sign that the chain has no faith in its brand the fact that absent ownership is costly.McDonalds has reduced its company owned from 23% to a current 19% of all stores. Burger King sold 278 of its stores to one operator for $15.8 million. The new owners are Carrols Restaurant Group who now own a total of 575 locations. Wait for that BK IPO…
Natural Gas Hits New Low! Now under $2.00 a million 
British thermal units, production expanding and with the recent mild winter traders expect prices to fall to…(gasp) $1.50. Supplies are at a record 2.5 trillion cubic feet and 60% above the five year average. There is eventually a trade here - when supplies contract.
The Dollar Shave Club hawks its wares on the world wide web. It sells razors and blades for $3 to 
$9 a monthly fee. A $13 billion industry turned sideways as the upstart gained 12,000 members in 48 hours. The five employee staff send razors and blades to members such as the $9 a month plan features a 6 bladed razor and 3 cartridges a month. Gillette said it wasn’t worried since over the years shaving clubs have come and gone.
Yes, darling, you did look marvelous! Materials and energy lead the way out of the 10 sectors last Thursday. The Dow added over 180 points and every index was in the plus. Google had two surprises. The stock had lagged the markets year to date in 2012 but posted a strong 61% jump in first quarter profit on slightly higher than expected sales. Pay per click was lower and after- hour analysts verbally beat up the stock on the discounted click prices. Overall analysts were positive on Google saying the company was stabilizing after a rough 2011. The company also announced a 2-1 stock split for shareholders, labeled as a special dividend so there would be no taxable event.
Apple a short? 
According to Dr. Alexander Elder and Kerry Lovvorn investors can expect a drastic move south as the stock approaches a parabolic rally. While sparing you the definition of a parabolic technical rally, suffice to say that it ends ugly. It may not appear immediately but the charts eventually have real life catching up to them. The bad news is that stocks that stage parabolic moves almost never reach their glory day highs.
Much Has Been Said About A Summer ‘Sideways’ Market but little advice how to cope. Kevin Cook at Zacks.com has several ideas for traders and investors:
- Good Time to Play The Swings. Sideways means within a narrow range and perfect for those trading within a channel.
- Ride it Out. Most investors have dividend paying investments and with reinvestment buying more shares at a lower prices makes solid sense.
- Make a Shopping List. Buy Your Favorites and Great Stocks on The Dips.
FINALLY- NO BANK CLOSINGS TO REPORT FOR THE WEEK ENDING APRIL 13, 2012.
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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