That Was The Week That Was-4th Week October

 

For us old poop- investors October has a history of being a real scary month. The great depression started October 29, 1929 and that day the Dow lost 12 1/2%. October 1987 was worse, percentage-wise, and fell over 500 points and 22% off its average- equivalent to about a 3,000 drop today. Adding 2008 October to the trio is easy since the markets were down all year and at one point that October the Dow was off 27%. October may only  be a mental challenge but investors are cautioned that more work is needed economically and politically before markets may enjoy a semi-worry free work environment. All investors should have some cash sitting on the sidelines to snatch bargains. A wish list of companies and at prices that you agree to buy should also be kept.  It’s difficult to make money when a market is running away. The inclination is to charge ahead and buy something- anything- unfortunately by the time you make up your mind its either lost momentum or started a decline. Since most of us are adults it’s time we did what smart investor do and that is buy when others are selling and the markets are falling. The following is from The Street and suggestions from Jimmy Cramer.

Cramer’s Top Moe-mentum Stocks In the spirit of Halloween

1. Amazon
2. Google
3. Visa
4. Mastercard
5. Ulta Salon
6. Tractor Supply
7. Sherwin-Williams
8. Diageo
9. Alexion Pharmaceuticals
10. Gilead Sciences These are not offers to buy or sell. Please do your homework prior to purchasing any securities.

Nature is all about balance. Something we can take a lesson from. Ever notice how symmetrical a healthy tree grows? Investors can take a lesson. Trees balance themselves against wind and elements by having their branches pretty much equal on all sides. Give a tree too much artificial fertilizer and water and you’ll get a tree that has shallow roots. Allow a tree to work for its food and roots will grow deep and stabilize the tree against storms and powerful winds. Develop an investment plan that does that and you’ll be just fine for the long haul. Think energy, retail, manufacturing, finance, cash, debt, foreign and domestic. And, remember, just like a tree you have to keep replacing branches in your investment plan. Too many investors think that if they leave things alone they’ll be better off.

The movie- Hotel Transylvania was #1 in the box office in …Romania –Birthplace of Vlad the Impaler.

Not much news from the US press that Canada was the only G7 nation that didn’t have a financial banking crisis that needed a bailout. Yes, our frosty neighbors ignored their big bank pleas that they needed to get bigger and in the end, by ignoring banking pressures, they were a nation of winners. Canadian officials said to their big banks about mergers, ‘No way, eh.’ Tighter regulation, better oversight and ignoring pleas for merger has made Canadian banks the best in the world. The banks are also required to do more rigorous loan underwriting and have larger reserves than US banks. Our banks lobby for less regulation, usually get it, They also understand that our government will never let one of the majors fail. As long as that sword hangs over Washington our financial incompetence will continue. In Canada regulations rule and in the U.S. banks lobby and get what they want.

Didja know my web site updates  each month new financial articles on a variety of subjects from estate planning to buying homes. There is a huge library of information in compact form that’ll help you understand a financial concept without having a sales talk linked to it. I also have calculators on bill paying, home refinancing and retirement planning, to name just a few. I use these same calculators everyday. I am one of the first financial professionals to offer clients an independent web site. Also one of the very few working financial professionals to write a client blog each and every week for clients and their friends. Take a tour of www.primaryplanner.com and see if there is something you can use. Tell a friend ‘cause its free, no registration, no cookie tracking. Almost every broker uses a company website and/or blog or a cookie cutter newsletter and claim its theirs.

Scare Mongers Have Rumored That There is No Gold in Fort Knox or Anywhere in The United States. Saying that the U.S. either sold or never had large reserves of gold talk-show scare artists have convinced a percentage of Americans into investing in olive oil or some other commodity they say will replace precious metals as a currency when the world goes poof. I have a list of countries with the largest holdings of gold. Low borrowing costs and the support of financial markets spur gold accumulation. Gold is no longer an inflation hedge -it’s also a currency hedge against devaluation of paper money. Counting down from 10 the countries with the largest reserves:

• India
• Netherlands
• Japan
• Russia
• Switzerland
• China
• France
• Italy
• Germany
• United States- has 74% of total foreign reserves, more than double that of #2 Germany.

BYE-BYE P.C.’s….Microsoft is testing software for the mobile devise era. The company is also offering a tablet, like Apple, Google and Amazon. Consumers are shifting their attention to smart-phones and tablets.

CNBC ‘After the Bell’, interviewed Bloomberg’s Tom Demark  who correctly predicted the China market bottom and also said that U.S. stocks may have one more gasp in 2012 to 1478 on the S&P 500 before a pretty ugly swan dive (that’s according to Tom D).  U.S. stocks have topped all other assets for the first time since 1995. Numero dos is emerging markets. But domestic stocks have beat out bonds, commodities and even (gasp) the dollar. Credit can be given to the Federal Reserve that supported U.S. growth. Wall Street strategists tracked by Bloomberg predict the S&P 500 may surpass its all-time high next year. The consensus is that they think it’ll be 1.7% higher than October, 2007. The Emerging Markets MSCI index is up 9.8% year to date, on tracking 21 developing countries such as China, Brazil and Russia.

 Markets tumbled Tuesday- Dupont and 3M global earning concerns sent stocks skidding over 240 points.  Commodities also joined. We may see gasoline prices fall at the pump sooner than later- probably just in time for the Holidays. Apple brought out its mini-iPad but what the Street and critics were wowed by was the new MacBook, which is as thin and sleek as a fashion model. The Federal Reserve Bank in Richmond added to the angst with a mixed report on factory activity- saying activity contracted in September but less than the month before. Facebook made Mobile Gains. Seven months ago the company had nothing-zip-nada income from mobile ads and last week reported $153 million in revenue. Zuckerberg said mobile ad sales were the most misunderstood by critics of the Facebook business. Shares were up 12% in after hour trading last Tuesday.  Wednesday shares moved even higher- 20% pop as analysts mumbled their revisions saying that they didn’t expect the company to turnaround mobile ads this quick.

$8 billion Americans Are expected to spend on Halloween. It’s become the #2 Holiday with 71.5% who celebrate Halloween.

 Mark this down- Autos, health care and housing a pent-up demand, according to portfolio analyst Chris Buchbinder. With an older generation using more healthcare going forward there is a growing demand. Also a huge pent-up demand for cars and housing as we grow our way out of the recession…er depression. Certainly healthcare spending is going to increase.

Slip, sliding away…hovering near even throughout the trading day Wednesday markets went sour in the afternoon- slightly. Gold up and oil up but in pennies and still under $90. The slip slide began when the Federal Reserve provided an upbeat view of the economy but said it would not scale back an aggressive stimulus started a month earlier. Thirty year mortgage rates have fallen to 3.37% from 3.55%. The Fed continued to voice that they would keep rates at extreme lows through mid-2015.

Jack Bogle, of Vanguard Funds, tossed another 2 cents into the financial management swamp by saying in a Morningstar interview that this (right now) was the most difficult investment condition he has ever seen. Jack, being in his 80s, has certainly seen a goodly number of stressful times but I wonder if he was being over the top. He does say that investors should think less- about half of what Jeremy Siegel said – as a goal of the market’s historical norm. The Bogle said investors should think 7% return on equities and 2.25% on bonds. He also said investors shouldn’t take increased risk to get higher returns but the opposite. Going a bit longer on the maturity risk, which he explains is not a credit risk but a volatility risk and mixing corporates and Treasuries maybe 70/30 maximum. That being said he finished an interview by reminding people that with taxes and inflation the returns on equities should run about 4.5% and 2% on bonds.

Blackrock Investment Institute prepared a complete analysis on what would happen to the economy and to the markets specifically if one or the other of the candidates were elected in the next few weeks. Certainly the writers do not know what would happen with certainty but there seems to be a consistent theme in the report that political types in Washington would be at fault in either case to allow bad things to happen. There is a small light that mulled the possibility of both parties may grow-up and do what they were elected to do- but according to the BII a very small and narrow possibility. If you didn’t get this report by email call or e me and I’ll resend. I spoke with several fund companies  (see below) and I’ll have more on this next week.

Sun Life of Canada- selling its U.S. annuitity business. Interested parties include hedge funds. If you own a SunLife annuity call me or watch for changes in benefits, saving menu or allocation.

Tropical Storm Sandy forces closing of vital Gulf refineries. Gas prices will rise after experts called a gas price drop.

Friday last I spoke with people at JP Morgan, SunAmerica and Franklin-Templeton to see what their analysts were predicting for 2013. They said the U.S. would still be in a slow-growth mode, no matter who was elected. They did repeat that dividends made sense, strategic bond funds and emerging markets. No one saw a catastrophic economic meltdown. On the Fiscal Cliff all expected politicians to do something more for self-preservation than anything else. Yes, there could be a large correction but not permanent.

Surprise! Friday news that U.S. economy grew at 2% rate in the third quarter- fueled by consumer spending (Bless you!), defense outlays and homebuilding. Consumer confidence rose to a 5 year high- highest since September, 2007. Mortgage rates- or the lowest ever rates- are stoking home buying demand.  Demand was up 27% up from One Year Ago. Business is sitting on its hands doing nothing- so business investment is pathetically weak. International companies are also cutting forecasts on slowing Europe and Asia. Conservative planning is in place, said Honeywell CEO David Cole, ‘ there is nothing out there to suggest anything but continued conservative planning at best.’

Markets closed Monday and will await news if they open on Tuesday due to storm.

Finally- Zacks.com commented on Apple’s miss and the expectation of the S&P dipping below 1400 along with Apple testing its 200 day at $585- both, Kevin Cook at Zacks wrote, are big buying opportunities.

Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-3rd Week October

  When I went to high school there was an apple machine in the cafeteria. It  cost me a nickel to buy an apple. Today you can’t buy an apple seed for a nickel.    The cost of apples has far eclipsed the national annualized inflation rate. Apples have even blown through 7% compound numbers. Food and energy are two sectors not included when the government calculates inflation. A 1960s dollar has a purchasing power of about $8.00 to today’s 2012 dollar!  Just because you make more money than you ever thought you’d ever make in your life it doesn’t mean you’re getting paid your true value, or any closer to getting rich. The combination of inflation and taxes has robbed the middle class of purchasing power for this and future generations.

In many cases the inflation costs have been hidden. Some manufacturers have packaged less for the same price. Candy bars and bags of salty snacks come to mind. There are other consumer products that have been downsized  and I can think of bath and laundry soap as two items that have increased in cost because of raw manufacturing ingredients and shipping. Today we are at the edges of an inflationary cycle that may stay with us for a decade or more. We are getting serious about our national debt and becoming a more prudent nation. With that will come higher taxes and a slow but steady increase in the Federal Fund rate which will make borrowing more expensive and increase the costs of most if not all goods and services.

To see how inflation has robbed you of purchasing power over the years here is a list of 1980s products:

• New Home: $76,500
• New Car: $7,200
• Gallon of gas: $1.25
• First class stamp: 15 cents
• Median Household Income: $17,710.

Today’s worry has to be inflation and not deflation. Deflation is when prices for goods and services fall and so does the demand. The spiral of less demand causes manufacturing to slow, forcing a layoff of employees and continued moribund slog that is almost impossible to control or change direction.

Investors are well advised to begin to prepare their portfolios to take advantage of future inflationary pressures.

Consumer Sentiment from Thomson-Reuters/University of Michigan report that we feel better than we’ve felt since July 2007. Inflation expectations fell from 3.3% to 3.1%. Feeling better results in more spending by consumers and I think they’re a bit conservative when predicting inflationary pressure. The cost of food, especially beef and pork, will be high going forward.

THE WSJ wished the winner of the presidential election a ‘good luck’. Here are what the winner faces:

• The Fiscal Cliff
• Jobs
• Retirement- Social Security-Medicare and the average saving for a retiree is $25,000.
• Debt
• China – this may be the last president the oversees a domestic economy that is the largest in the world. China is expected to overtake and pass the U.S. by the end of this election cycle.

  Taxes on Dividends is Expected to top from a current 15% to either 18.8% or 43.4% if Congress does nothing about the Fiscal Cliff.  Increasing dividend payout has been a systematic march the last few years. Even companies that traditionally did not have a dividend saw the wisdom to pay some profits to shareholders in 2012. Other companies had increased their dividend payout. Still dividend payouts are near an all time low according Jason Zweig. The good news is that the lower tax rate since 2009 has put about $350 billion extra into investors pockets.

I’m reading two financial articles- one moaning about the immediate poor numbers Facebook ‘may’ declare and another considering whether the same company is a ‘bargain’. There was too much bad baggage and mistakes (using the rear view mirror) made with the Facebook IPO but one thing remains true that there are 1 billion people who log in each month. It has enormous brand equity and has a reputation as being ‘sticky’-in other words imagine trying to move everything from Facebook to another social platform. Both the I-Like-Facebook camp and the others across the lake are at odds for their own personal economic benefit. Right now the I-Don’t Like-Facebook folk are winning.

We wait for bargains and sales on everything from canned tuna fish to bed sheets, and when prices do drop we snap them up by the carload. Stock bargains are another story. For some reason we think that when a stock dips, or falls out of favor, misses estimates or has a bad quarter the company is going out of business. It is precisely at these times that seasoned investors pounce. Weakness, blood on the street, whatever you call it those that know a bargain buy as long as the stock is cheap, gets cheaper and even as others get scared and run away. But…the trick is to do your homework and understand the difference between a bad stock that will keep on  getting worse and one that has simply stumbled.

Here’s an idea to keep tabs on what stock you’d like to buy at a price you’d pay. Make a list of your favorites and either list them on your computer or set them up on my web site (there’s a place for that sort of thing)- you can check daily for those stocks that move down to your price.

 

Stocks Moved Up Monday! They closed lower than their highs but still a pretty nice 95 points. It was a reverse from a week ago and nicely done across all sectors. Whispers that conversations on Spanish debt were being held helped but the Big stimulant was the strong gain in retail for September. This may be signaling that the consumer is revving up to spend. Banks profited even as a WSJ article Heard on The Street column parsed the low interest climate and the fact that the big banks are awash in cash. A situation that wasn’t there four years back. This poses a serious problem since banks have little room to slice costs and far less places to earn money. With the Fed promising low rates for an extended period of time the gloom pervades the industry. Bank stocks did enjoy a mild bounce Monday.

Surprise Earnings-Of the 32 S&P 500 companies reporting earnings through October 12th 63% beat Wall Steet estimates, which is down from the 70% average over the past four quarters.  Here are some that popped expectations:

• Lennar
• Constellation Brands
• ConAgra Foods
• Discover Financial
• Walgreen

Tom Noonan of Capital Markets Insights adds his wisdom into the swamp of retirement planning academia by preaching a four pronged approach for advisors to assist people in retirement planning. His pearls include such homilies that people would rather clean toilets than plan for retirement is rather over the top. Tommy means well even though he is as wrong as an anchovy pizza. The fact is that retirement and investment long-term planning doesn’t work and won’t work simply because of the nature of man and economies. Retirement Planners have the audacity to believe that their concepts take precedence over savings for a home, college education or simply creating an emergency fund.  Invest your money for retirement and worry about your other obligations as they come up, they seem to say. Planners  ignore that people have other priorities and/or obstacles that need their attention.

The answer- Pay Yourself First, should be the keystone to any savings plan. It’s something everyone can do no matter the age. Do that and everything else falls into place. When I started in the biz I met a guy retiring as middle manager from Michigan Bell- he was a multi-millionaire- back then! When I asked how he did it he answered he always paid himself first. Before he paid rent or utilities he would write a check to his savings/investment account. It obviously worked.

Bill Minor Shares His Monthly Real Estate Newsletter with me and its appreciated as it keeps me informed on what’s important in home sales and mortgages. I’m sure he’d put you on his mailing list if you’d pop him an email to www.billminor.kwrealty.com  Right now 30-year mortgages are 3.49%. These are record lows and may get lower given the Fed’s QE3 to buy the long-end of mortgages.

Housing starts, see above US Commerce Dept Chart, surge 15%. The highest level in 4 years. With extremely low interest, artificially induced values, homes appear to be a true value.  Home builders are still a viable sector. Call or e for more information and if this fits your portfolio.

Everyone in the Pool! Two days in a row markets posted strong results across the board. This was the best 2 day advance in about a month. Goldman Sachs beat estimates and doubled revenue, although the bank earned less from customer trading. Intel and IBM swung lower after the bell on lower earnings. Coca Cola fell slightly missing expectations but with strong earnings. The big news is that manufacturing seems to be getting some momentum. Retail sales were strong. Inflation concerns are muted, if not altogether invisible. Consumer spending remains relatively strong. Housing also showed signs of showing more gains going forward. Dow up 127 points along with the rest of the indices.

Mitch Tuchman in his column for MarketWatch agreed with PIMCO CEO Mohamed El-Erian that investors have been lulled into a false sense of security. Raising awareness that the Federal Reserve’s rate setting committee could undue low rates through 2015 in an hour, day or week. He goes on to write that the Fed won’t do much about rates until they see a solid recovery. They also want to avoid inflation by cutting the flow of cheap money. El-Erian, Tuchman explains, writes of responsive management of overall risk that reflects more durable global themes. Basically he more than strong suggests to reallocate into more than just stocks.  Hard assets, global assets, cash and bonds added to stocks is just where you want to be. Clients who are desiring to reduce their equities or risk positions should call for an analysis of their portfolios. 

Gold is thought to be a hedge against inflation and yet with little inflation the sparkly metal has moved up substantially in price since 2007…primarily as the monetary policies of the world have changed. Interestingly gold has also moved up in step with the stock market.  (If you noticed last Friday as the Dow and other indices sold off so did gold). Bob Kirtly in his Seeking Alpha blog gives ammunition to the thinking of being long gold for one reason only and that is the uncertainty of currencies. While there is a direct correlation between governments printing money and the price of gold it is the lack of faith of the actual currency that moves gold prices. Given that- investors should understand as the U.S. printed money to buy bonds back in QE1 the actual value of our dollar compared to a basket of world currencies fell eight percent in value. Sovereign banks have also filled coffers with the metal for the very reason of lack of faith in ‘who-do-you-trust’ currencies. You can buy gold in coins or ETFs or even options on the gold ETFs. Want to know more call or email me.

Google missed and was punished Thursday. Microsoft ditto.             ( Microsoft missed numbers as businesses and individuals held off buying until new operating system was introduced in October). IBM also hit with missed earning numbers. Apple continues to be hit. Thursday markets fell across the board. Zacks says tech is a mess with the aforementioned behemoths offering up lackluster news. Zacks is lightening long positions till early November and hopes for a Santa Claus rally. 

A Rotation out of Tech and Small Caps and into large cap financial and health-care stocks, sez Keven Marder. The action this past week, he continues, is nothing more than a short-term oversold pop.  China’s equity market starts to outperform and the U.S. and this is a good thing and says that the Chinese economy may have already troughed. The best thing the markets and the ECONOMY have going for it is the ‘smart’ rebound in the housing sector. Housing has always lead the economy out of previous recessions and the absence has been notable. Housing supports a multiple pronged market rally that includes furniture, appliances, raw materials, financial services and heavy equipment makers.  Get Bill Minor’s newsletter- it’s free and it’ll keep you up to date on real estate and mortgage rates. (see above)

Finally- The Dow dropped 205 points on Friday as traders worried over lower than expected earnings. Historically October has always been a month filled with caution. I still have a framed front page of the Detroit Free Press from October 20th announcing the market meltdown of 22%!

  

Happy Birthday 1987 October 19th!

 

Don’t see 1987 on worst list-?  It didn’t last and while a huge fall, no market breakers in 1987, those who invested in January, 1987 were able to either break-even, find a small gain or minimize losses, depending on what they owned by year-end.

 

Investors got their ears pinned as U.S. stocks had their worst day since June. It’s spooky out there as investors are taking profits and waiting for better news. Even stalwart McDonalds fell 4.5% as it announced it missed consensus for the third quarter. GE fell 3.4% after it also came up short. Three weeks ago the company expected revenue growth for 2012 of five percent and Friday cut it to 3 percent. (It’s not like we didn’t know this was coming. Most numbers were created on a whistle and a hope). This week 140 companies announce their earnings. The WSJ called the fall a ‘ding’ but Nasdaq was really burned as tech came to be the true villain of the week. (Anytime you see and hear optimism as we did in the beginning of the week you better bet some bad news is also lurking). Ingersoll Rand CEO Michael Lamach said China’s persistent weakness has disrupted many companies growth expectations for 2013, forcing them to rework their strategies. Timothy Basset @ Talmer Bank & Trust  wrote to remind us that stocks were still positive for the week and GDP numbers would be released this coming Friday. He also wrote that he would be advising against adding, at this time, to equity positions or long-bonds.

Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-2nd Week October

It’s funny when Scooby-Do acts like he’s scared of his own shadow but not so funny when investors bail from the stock markets without pausing to allow common sense to analyze their fears. The sad part is that those investors invariably bail at the lowest level of the market and only return when the markets have rebounded and achieved their highest next level. Back in 2000  during the flame- out of the dot coms folks simply ignored their investment statements and tossed them in a drawer or the garbage. I knew people like that and you probably did, too. There was no way anyone could reason with them when they were in their fear mode. Those investors wouldn’t sell, cull their portfolios of tech or reallocate or listen to anyone who reached out. Today there are people that would rather sit and do nothing or lose money by holding money markets than invest in utilities or any Blue Chip stock  even for a portion of their portfolio. On the flip side…there are investors who know more than the Street and are willing to lose everything to make their point.  Some amateur investors need a plan. It can be a simple plan such as owning a Bogle-styled allocation or a widely diversified stock portfolio. No matter here are a few ideas:

• Understand there are few places that can provide the return of the stock markets long-term. Not real estate, cash saving accounts or the next door neighbor with the perpetual money machine.
• Today’s investor has more choices than ever before from real estate to commodities. Knowing what to own and when to own is key.
• It is virtually impossible to time the market.
• There is nothing wrong with building a retirement plan using 100% cash as long as you understand you have to save three to four times more to get to the same place as bond and or equity investors.
• Know what you buy.
• Conservative to moderate investors use dividends to buy additional shares in both up and down markets. Historically dividends have accounted for approximately 30% of a fund’s total long term return. 
• Understand basic fundamentals. If you have no interest or your brain doesn’t wrap around financial concepts than hire someone who you can trust. PS: Don’t expect to pay someone to manage your money less than you’d pay the newspaper delivery person. If you wouldn’t work for what you expect to pay someone that should be your clue.
• Understand what kind of an investor you are: Conservative, Moderate or Aggressive. Don’t chase or change when and if the markets change.
• Understand the basic premise that what goes up comes down and what goes down comes up. Nothing is forever but equity markets historically soldier on higher the longer you hold them.

No Matter Your Situation There is A Place For Your Money to Work.

 

On this past Saturday MarketWatch reported that China reported its trade surplus widened in September, easing worries about global consumer demand. Exports rose almost 10% to a record monthly high. Those that predicted China’s economy to collapse were a bit hasty. By any stretch China’s growth is extraordinary for any country except China. The GDP numbers coming out this week are expected to show a small slowdown to 7.4% growth rate. Owning share in funds that specialize in China as part of an overall allocation call my office for prospectus and fact sheets.

Charles Scwab’s Liz Ann Sonders discussed an optimistic attitude for 2013. Liz Ann talked at the Morningstar ETF Invest Conference of a week back and stressed that investors should not be pessimistic about 2013. She sees housing as a bright spot as mortgages come down even more. Stocks, also, should be attractive as idle sidelined cash needs to find a home.

MarketWatch.com published list of Romney and Obama stocks for 2013.

• 

• Excelon
• Deere and Company
• Alcoa
• HCA Holdings
• Facebook
• 
• Cisco
• Cenovous Energy
• General Motors
• Lockheed Martin
• JP Morgan Chase

Picks and analysis were completed by Russ Brit at MarketWatch and not me or anyone at Westminster Financial Services. Before buying anything always do your homework!

Gas Price in 1962 28 cents per gallon. Average Annual Income in ‘62’ $5,556.00.

When Social Security was initiated the starting age to receive benefits was 65. The average mortality was 61. Now that’s how you fix Social Security.

Columbus Day Started and Ended Badly as Markets were down across the board. Oil fell under $90 a barrel as investors contemplated a soft earnings season to coincide with the recession in Europe.

Cheap Money is for now and for…the next 30 years. Corporations are loading up on borrowing. There have been more 30-year investment grade bonds sold in 2012 than in any full year since 1995. Almost $92 billion from 166 offerings as issuers are being drawn to low interest rates. Longer maturities are better for investors as they lock in higher rates and the investment grade negates worries about default. Mike Gray at Moody’s said, ‘No CEO or CFO wants to be the one that didn’t get cheap long-term money when it was available.’

General Motors is doing just fine, thank you. A $10 billion line of credit is being put together, a larger line than that of Ford. GM’s expected rate will be 2.25%. Investment maverick and Hedge Fund Manager David Einhorn said of GM last week, ‘fixed costs are down, the balance sheet is clean up and pension risk is overblown.’ Share of the company are still below the $33 IPO price and the company is labeled a tad under investment grade, although that can change soon. Zacks rates shares a hold.

‘I should have had a V-8! You say To- mato and I say…lycopene. Its an antioxidant found in  tomatoes and other fruit like watermelon and said to reduce strokes in men up to 55%. Highest concentrations are found in cooked tomatoes. Cooked have more lycopene than raw. A cup of marina sauce has more than 31,000 micrograms of lycopene while a ran tomato has 3,165. Interestingly one tablespoon of ketchup has 2,146 micrograms.

Markets Fell Tuesday as more bad news from overseas and worries over less than stellar earnings caused investors to pull money off the table. The Dow was off over 100, Naz off 47 while Gold and Oil were basically even for the session. Japanese stocks continued their slide.  In ETF news investors were dumping shares of TIPS. This, according to the editors at ETF Trends, suggests that either investors are locking in profits or see deflation as a bigger threat.

‘ ‘About Face!’ Goldman Sachs retreats on its 1500 target on the S&P instead predicting 1250 before year-end. Citing the fiscal cliff and slow earnings along with recession in Europe GS makes prudent prediction. Zacks suggests not so much actual earnings but forward expectations will make more of a impact.

Bond worries…

This is not a misprint. Yields on stock are neither historically high or low but bond interest is 1/3 of what it is compared to stocks.  We are at or close to the end of the bond cycle. Still investors have little confidence in stocks and the inherent risks associated with equities.

Explaining his Tweet…where he accused the administration of putting up false employment numbers, Jack Welch writes an op-ed piece for the WSJ…’The 7.8% unemployment number released by the Bureau of Labor Statistics last week is downright implausible. And that’s why I made a stink about it.’ Welch goes on to state that in his day-to-day work day he is privy to meeting with and interacting with business leaders from all sectors. He sits on dozens of business reviews and not one report, he writes, reported better results in the 3rd quarter compared to the second. ‘The economy is not in a free fall. Oil and gas are strong, automotive is doing well and we seem to see the beginning of a housing comeback. But for unemployment to drop to 7.8% from 8.3% over 12 months the economy has to be growing at breakneck speed.’ Expect the numbers to be revised AFTER the election. There was some pencil whipping.

Remember when I wrote about Transports lagging Manufacturing?  You got to ship what you make according to Dow Theory. On Wednesday 26 out of the Dow 30 stocks were lower.

As part of my job I get to watch television. Only sometimes the television I get to watch is not for fun… Last week on CNBC Jimmy Cramer was on the morning Squawk and said that Dell and HP don’t get how close to extinction they really are. The PC business, according to Cramer and also WSJ on Thursday last, is doomed. PC shipments fell 8% from a year earlier. This is the first decline in 11 years. The next big thing is the iPads and their cousins. According to experts core PC market is expected to stay flat through 2015….at which point they may be extinct except for office/business use.

 Foreclosure activity drops to 5-year low. Florida has the highest foreclosure rate in the country. It’s not all peachy keen but a start.

Those Looking For Tax Free Income/Yield Pay Attention to This:

Tax Free Municipal Income Bonds are risky to own if you have only enough money for one or two individual bonds. Rising interest rates will crush principal if savers own longer maturities in search of higher yields. Bond mutual funds are also exceptionally vulnerable but overall less risky. Now there are products that combine the best features of fund diversification plus defined maturity in tax free muni bond funds. I’ll talk more about this Tuesday at my breakfast meeting but clients and friends interested in more info call me now for prospectus and fact sheets.

The Markets Continued Their Slog Down. Thursday was a mini-recap of events of the week. The Dow was off 19 while oil inched up to $92. S&P 6000? According to Justin Lahart in the WSJ ‘Heard on The Street’, the Fed Model states that the index should be following the yield on the S&P and at a P/E of 60/ it currently stands at 13.7/times. This makes stocks relatively cheap.

Sprint has had a good run and shares closed under $6.00 but the company has experienced, according to experts and the WSJ, significant losses and carries a huge debt load. The company lost an opportunity earlier with MetroPCS and now a Japanese company is looking to buy around 70% of Sprint for a maximum $6.50 a share. Softbank, a telecommunication firm in Japan, isn’t looking to buy Sprint outright but get a toe hold into U.S, wireless market. 

Al Lewis at Dow Jones reports on Joe Coors (the beer Baron) running for Congress… ‘touting his common-sense business sense and stating that the president couldn’t run a lemonade stand.’ But what the  minions from the Coors’ camp don’t talk about is that Joe was the victim of a con that promised him and a partner 75% return per week!  The two millionaires opened an account at Merrill Lynch, dumped in $10 million and gave the con artists access to the account. After $4 million was removed and spent on the con’s high-life Merrill (not Joe) grew suspicious and closed the account and notified the authorities. The two thieves are in federal prison and Joe is running for Congress praising his business acumen. …Joe may have been sampling the suds…?

Finally…U.S. stocks end worst week in four months. ‘nuf said.

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