That Was The Week That Was-4th Week March

 

The EU tax on Cyprus Bank Depositors That Was Supposed to Ignite A Second Scary Recession Didn’t Faze US Markets Last Monday. It was supposed to be frightening news coming from Europe that translated to a US market meltdown, which didn’t happen. What did happen was just the opposite with several dyed in the wool Bears coming out for the US economy, and especially the stock markets. Meridith Whitney said on CNBC that she’s never been this bullish in her career on US equities. Adam Parker, from Morgan Stanley, tossed his two cents into the Bull Ring. A Bear from way back, Parker, a recent Bull convert, said, markets are fairly values but sees more room to run in 2013. I’m hearing too many happy feet to be comfortable with any run longer term  before a predictable pause.

On Thursday the Cyprus Situation Continued to Fester. Global Markets fell on worries of contagion. Our DJIA was off 91 points. On Friday the Cypriot PM left Russia, empty handed, saying there was no bailout from the Russians but felt certain that a 2011 euro loan of $2.5 billion that the Russians carved would be restructured. The Russians were asked for an additional $5 billion euros but the Cypriots were turned down by the Russians saying they were not interested in loaning but could be an investor in the Cypriot energy industry. The country is a huge natural gas supplier to the region. 

Friday Markets Bounced Back with the S&P closing at 1567 as news of the Cyprus Legislatures Passing a Bill to Secure an EU Bail-Out. Gold down but closed above $1600 and oil just a tad shy of $94. a barrel.

But…as of Sunday things were still uncertain. According to Bloomberg the EU has had an entire year to avoid problems in Cyprus and only now addressing them with a cockamamie idea of having bank depositors pay for a bailout. The Russians are expected to bail the Cypriots out but dragging their feet. The five billion would ensure them of rights to explore Cyprus waters for additional energy reserves. If the banks in Cyprus fail Russia could lose about $60 billion.

Monday all is well as a deal with EU and international lenders was announced along with a restructuring of the country’s banking system. Alas, we don’t care about the details including the break-up immediately of one of its banks. The cost of the deal was reported this morning to be in the neighborhood of $13 billion.

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The U.S. Economy, so far this year, Has Ignored higher taxes, a lousy winter, a Sequester, Cypriot and EU troubles and rather fragile payroll numbers. Growth is percolating at an average of 2.2% up from an estimate 1.7% in January. This really goes to show that we could fire every elected official in Washington, DC  and do just fine, thank you.

Our Friends at Talmer Bank & Trust, Timothy A. Bassett, CFP, writes, ‘ US equities still remain attractively priced whereas European equities have been less so collectively.’

Next Week is relatively quiet with consumer sentiment being released Friday. Most markets will be closed Friday. The following week will have more macro data and employment numbers.

 

Something is seriously wrong the way most financial planners coach retirees to view retirement income on their savings. There was an article in Reuters, by a financial planner, that advocated that most retirees would be better off taking 4% of their savings as income to start and increase that amount each year by the amount of that year’s inflation. (Yes, he wrote Most so that means more than just a few or a couple. It means more than a consensus. It could mean a 2/3rd’s majority.) So the second year with 2% inflation the retiree would withdraw 4.08%, and if the same numbers repeated the following year they’d take 4.16%, and so on and so on.  In this way there was almost a 100% sure success rate of the retiree dying with principal intact. They based this on someone being able to save $500,000 and using $20,000 the first year for income. The assumption, mad as it is, is that someone could save $500,000 and secondly, wanted only to live on, or only needed to live on $20,000. What if, I wondered, if you didn’t or couldn’t save a half-a million and needed more than $20k to live on. For example, about 20-years back Joe Flak called me and his aged father was in a rest home and needed $20,000 a year to pay the bills, only the father had saved a grand total of $90,000. The then stock broker had suggested investing the money in a bond fund paying about 2%. Doing simple math I figured that the broker’s plan would end up getting the aged father kicked out of the rest home and into the kid’s care in about 4  years. I suggested to get aggressive with the investment monies and earn as much as we could as prudently and smartly as possible. The family agreed and we managed that fund for 10-years before Dad passed and the family still had $50,000 left in the account. Over the years the cost of care increased but the family never had to reach into their pocket for a penny. The morale is that most planners are wrong because they view retirement income and preservation of principal as two sides to the same solution. It’s been my experience you can do one but not both with any  degree of success. Income Plan Design needs to be fitted to the individual and specific need. No one size fits all here, and that’s the problem for those preachers. The other thing is who’s saving principal for whom?

Slow Growth BRICs being abandon as investments by locals. According to Bloomberg the confidence of investors who live in BRIC countries are tossing in the towel in their local stock markets in droves. This is happening in India, Russia and some U.S. experts are forecasting the same soon to happen in China and Brazil. The four country MSCI gauge fell 1% so far in 2013. This while our markets are enjoying double digit returns. Investors in BRIC nations explain ‘they’re scared.’ In Brazil some investors complain about government intervention causing their investments to tank. In valuations some 59% of the companies in the MSCI BRIC index earnings trailed expectations. Today BRIC shares trade at their cheapest levels versus global equities since July, 2009. Some analysts expect that now is the time for a rebound.

Not Enough Savings In US Workers Retirement Accounts.

The bad news is that 57% of the workers have less than $25,000 in their total household savings and investments, not counting their homes. In 2009 49% of all workers were so inclined. There appears to be a crisis of confidence in the markets, and the ability to save. Life span’s have increased both for men and women, which doesn’t bode well for the amount of money saved. The percentage of workers who are saving for retirement has plunged to 66% from 75% in 2009. Much of this stems from workers not getting equal or better jobs. Many have either stopped looking, taken early retirement, fallen off the grid, for lack of a better word. These are people no-longer being counted on any survey.

Confused? That simply means you’ve been paying too close attention to what’s been happening in the markets. For every Yea there’s a Nyet. Good news begets bad and vice versa. Bloomberg reported Monday that the S&P 500 index is at its lowest valuation since 1980. Still the average investor is not having it with only $20 billion in additional in-flows this year that’s only 3.5% of the total withdrawals since 2007. Institutions have been the main beneficiary of a market resurgence. In 1980 the index traded for 9 times earnings. Cyprus woes weigh. It’s not so much Cyprus but the banking institution on trust and confidence that’s at stake. Cody Willard has concerns over the financials and asks readers to do the same over the next several weeks. Oliver Pursche believes the S&P 500 will reach 1600 this year (closing at 1548 Tuesday). That almost certainly guarantees some sort of a pullback before moving higher. He believes the markets are ahead of themselves and there is some sort of short-term period of volatility.

Clients who could not/did not attend the Client Inflation Breakfast Meeting will be getting a workbook after as part of my 2013 Client review.

New Phone Number- Please note and I’ll be sending business cards in the next week or so. The new phone is listed on my web site, on my e-mails and now here it is- 586 295 0430.

 

I hate Rumors and won’t answer Qs that have to do with anything unsubstantiated. In other words don’t ask me, ‘What if…?’ That’s something that involves guesswork and serves no significant purpose. (Whew!) Now – Apple is rumored to not only raise its dividend but to increase it by 50% to shareholders. I’ve always poo-pooed a raise in the dividend as a savior but fifty percent?! Holy iWatch, shareholders! That could well boost current share price from where it’s at all by itself. The cool thing is that the increase probably won’t cause any extra lifting or selling one more iPhone since Apple has about $140 billion in cash and investments and just the earnings on that pile could sustain it.

Are The Financial Stocks Toast? Last week a load of investors ran to the Exchange Traded Fund that shorts the financials as some think the party is over with banks, insurance companies, credit cards, et al. Besides the shorts where to? Eric St Cyr writes that the rotation is into the Techs. That’s that wonderful place where you have Google, Apple, Linkedin, Cisco and other wonderful companies that probably have more money in their coffers than do the financials. Just kidding, no one has more money than the financials.

The Federal Reserve Did Not Change Language or its Perspective of the US Economy from a few months back. In fact, the Fed was slipping a horse apple into the economic punchbowl by stating, ‘…thanks to the sequester fiscal policy has become more restrictive and continues to see downside risks to the economic outlook.’ Still the markets ignored and continued their climb although the Dow did slip for the week, according to the WSJ.

Health Insurers Are Not So Privately Whispering Higher Premiums are Coming… The problems arising from the complications of the government law coming into effect in 2014 and the role of government subsidies. Yes, dear friends, the middle-class will be supporting lower income families or other wise un-insured’s premiums. While there is a caution that some carriers could lower premiums for certain insured’s (not certain who), most agree that the scenario calls for higher rates for small business and individuals. How high? United Healthcare offered up increases that could go up as much as 116% of current premium. A spokesman for United said that number represented the high-end and not an average. Aetna said that its premiums could go up on average 55%. On both inflation was factored in at 10% of premium. 

If you have not received your 1099’s or Year-end Tax Documents make sure you call me. A client who was supposed to receive a tax statement did not. It was posted on my client view but for some reason she did not get the paperwork.  

Finally, Enjoy.

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER FINANCIAL SECURITIES, INC. MEMBER FINRA/SIPC

That Was The Week That Was-3rd Week March

 

Monday Brings the Euro Zone Problems to US Markets. An unprecedented bank-deposit levy on Cyprus savers sent European markets lower as investors ran for the safety of the dollar, and out of oil, Asia stocks and the Euro. Chris Weston, chief market strategist at IG Markets, said that we should look for traders to begin to position themselves more aggressively for the expected pullback. The US markets will be ugly at the open. The EuroZone has been relatively quiet until the recent levy on bank deposits. This is the first time that citizens have been taxed to pay for the European bailout. It may be a possible policy mistake, said Morgan Stanley strategists in this morning’s WSJ.Gold was up in overnight trading while the Euro was down against the dollar. Here we go, again. About the same time last year we saw something similar.

Bruce Feinberg, CPA, sent me his firm’s recent newsletter and in it there was an article on Charitable Gift Annuities, and how families can use them to provide good works after they are gone and income for themselves while they are here. The implementation of a CGA is fairly straightforward and should be considered only if the individuals (1) Understand that once established the CGA is engraved in stone (2) Have other assets in which income is derived (3) Families and heirs are all on the same page with the gifting arrangement. Advantages to the family by establishing a CGA are a higher than expected return on their savings than current bank or certificate of deposit rates since part of the income received would be principal and then earnings. The charity benefits by forgoing large upfront donation in return they can expect a fairly substantial gift upon the donors passing.

The mechanics begin when a family, or an individual, buys an annuity and uses the income during their lifetime and after their passing the monies in the account are bequeathed to the named charity. Usually these accounts are established with the help of a financial planner. Before  establishing a CGA the family should do some homework on the charity and most importantly on the financial health of the insurance company issuing the annuity. It would be a shame to invest in a poorly rated insurance company that could not comply with the long-term aspirations of the family and charity. A tip of the hat to our friends at Plotnik, Feinberg & Associates, PC.   Individuals and families interested in more information on Charitable Gift Annuities please call me.

What’s Driving Markets Higher? According to Mitch Zacks there are 3 reasons:

1. U.S. jobs numbers keep getting better.
2. Hugo Chavez Oil Prices. On his passing oil fell 10% signaling the new political risk in Venezuela may be passing. Also U.S. production has ramped up and our foreign dependence has decreased.
3. Mario Draghi, head of the European Central Bank, is serious about keeping rates low and also signaling cross-border flows of capital. As the EU crisis has slackened our markets have boomed.

On the flip side…

 

‘Mish” Shedlock, writing for Dow Jones publications, penned, ‘the jobs picture is far worse than they look.’  The economy saw a huge increase in part-time workers- some 446,000-what that means is between the full time hires –170,000- and the part-time there was a loss of 275,000 jobs! Almost 11% of those that took part-time work wanted full time. The reason is, according to Shedlock, Obamacare. A full time job is now described as working 30 hours. The survey’s show that more people are working multiple jobs. Which translates to the jobs report showing the same people working, only working two or more jobs. ‘Wait for the numbers to be recalculated,’ writes the Shed.

Don’t Fight The Fed! Remember Alan Greenspan and when Fed Chief he raised interest rates every time he changed his socks, or so it seemed. Indeed, he was a busy boy in 1994 and large money managers have long memories. That means several, probably more, large money managers, are buying investments now that will pay off well when rates rise. Some managers believe that there could be a fifty basis point jump before they get all their assets out of the fire. That’s a big loss. As rates rise principal falls. BlackRock, Pimco and TCW, are just a few of the big names getting set for the day. So what are they buying? Floating rate bank loans and TIPs are two of their favs.

Markets Up Monday. The Dow climbed 50 points and all indices chimed in. Whispers of a correction around S&P 500 numbers of 1560-64. Monday S&P 500 index closed at 1556. The state of Illinois, sez the SEC, hid pension troubles and mislead investors. The SEC charged the state with security fraud, marking only the second time in its history that it filed against a state! Illinois has one of the most underfunded pension systems in the U.S., according to the WSJ. In an independent report to the state of Illinois actuaries, hired by the state, warned that the system was so underfunded that it would likely never be able to afford the level of contributions to reach 90% funded. Those concerns were never disclosed to investors in bond offerings, noted the SEC. The SEC is concerned only with investors and securities fraud. Those looking forward to pension income from the state, that may or may not be there, is an entirely different story. Those folks are on their own.

Tuesday Markets Off-Across the Board. John Nyaradi writes for Dow Jones and reports that the ‘panic’ buying he is seeing is signaling a market top. Overall experts agree that the current rally has been due to the Fed keeping rates near zero while continuing to provide liquidity by buying plenty mortgages and bonds at the long-end. Nevertheless, according to Nyaradi, the charts suggest that a sell-off is in the cards no matter the power of the Fed. Lemme ask, ya’ll want to invest with a hedge fund? Seems that the private equity folks have run out of cats to skin and have opened their doors to allow in us regular folks. Now Carlyle Group has opened its arms and for $50,000 you can, if you have a $1 million net worth, buy into their new fund. Due to the uncertain future of pension funds, in the past a huge source of moola for private equity, now hedge-fund eyes have been cast to the masses. The WSJ, almost touting for the house wrote, ‘while risky, have the potential to be more lucrative than stocks and bonds.’ This is true and I don’t want to dash cold water on the possibility of riches, but certainly not an investment for those of conservative bent. Or, one could simply buy shares in several public private equity firms and share the wealth…or not.

So How Much is Left in The Tank for Bonds? Here are some eye-popping facts I dug up while looking for other stuff:

• Interest rates peaked in 1981
• Not since 1871 have rates been this low. Ever.
• Since 1790 the U.S. has never been able to borrow this cheaply (the long-30-year).
• The gain left in the long-bond from here to ZERO is 17%.
• Since principal reacts inversely to rates imagine what would happen to long bonds if a repeat of 1994 where rates hiked 240 basis points in 9 months? You’d lose about 25% of your principal.
• There is more risk than return left in bonds and translates that it is not an investors market but a traders market.

 

In Case You Forgot- The Markets Tend to Disappoint The Greatest Number of People at The Most Inappropriate Time.

And Wednesday Markets barely eked out a gain. It was a slow day and gold finished off a bit and oil up. JP Morgan raised Q1 economic growth forecast and I think a lot of that had to do with oil and imports. Our oil imports are expected to fall to just 32% of consumption  reported the Department of Energy. Just in 2005 it was 60%. With natural gas at $3.70 btu, a third of the European price and a fifth of the price paid in Asia, our energy production looks fine. So nice that it has kept inflation subdued and may cut the energy-import dependency and add 2 points to our future GDP. The other beneficiary of our stronger domestic energy business is a stronger dollar. While hurting exports it’ll help you, me and the candlestick maker by allowing our dollars to buy more.

Apple Goes On Defensive… Phil Schiller, marketing chief Apple, said the Android software is inferior to Apple’s and as such Samsung’s phone is inferior to the Apple iPhone. He gives an example saying that with Android you need nine accounts with different vendors that don’t all work together to get the same experience as with an iPhone. The reason for the bigger display is that the Android phone needs a bigger battery to keep the same life as does the iPhone. On the other side someone wrote about the new Chrome notebook from Google, which is basically a Samsung product, saying at $250.00 it’ll take biz from the tablets. Go get ‘em, Phil.

But….Apple lost its bid to quash Mexican name ifone, saying the name expired. A judge in Mexico said, ‘No.’

I have a Kindle and an iPad. The iPad loads faster, has lots more battery life, outstanding array of both free and for sale apps. Plus if I’m reading a book on my Kindle and the battery runs down I can pick up my iPad and pick up reading the same book where I left off on my Kindle. Since when is cheaper better?

The S&P 500 Index Topped @ 1563 Thursday. Some analysts believe that 1565+ the markets may stall. This would coincide with reaching an all-time high for the index. In any case a better jobs report boosted the Dow 83 points, Oil Up and Gold even.

JP Morgan & Goldman Sachs show weakness in their capital plans. In other words too big to fail have flaws- too big for the government regulators to ignore. Banks want to start buying back shares, hike dividends and this puts a kibosh in their plans. Regulators noted that JP Morgan’s CEO Dimon intentionally withheld investment bank profit and loss data from federal regulators. He knew of large losses, manipulated data and ignored warnings from traders. This came after examining 90,000 documents, 50 interviews and listening to 200 phone conversations. Hubris, Jamie, never got you anywhere. Wondering at Markets whether the banking Sun God will get his comeuppance.  Shares in Amazon fell as JP Morgan cut rating and new price at $300.

Jimmy Cramer said that even if the Fed throws a ‘Monkey wrench’, into the markets he thinks stock values from this point are too attractive. Hedge Funds have been buying stocks even as the average investor, this past week, has been selling and moving into less ‘troubled waters’. Still Cramer is long stocks and believes ‘shrewd’ investors are long stocks. Friday saw markets give up a bit. They ended off their lows, which says maybe this rally since last year ain’t over yet. Bank of America Merrill Lynch analysts said that last year markets were up 11% at the same time of year before giving it up. But things may be different this year. Cramer said that it may all end badly but while it lasts you’d be nuts not to try and benefit from it. Timothy Bassett CFP at Talmer Bank, reported that interest rates on the 10-year are at 2% and he reports that he doesn’t see rates making a dramatic run even if equities correct.

Natural Gas is Cheap …

However a surprise demand and tighter supply has seen prices climb 9% in March, reports Myra P. Saefong. Supplies are getting tighter while demand is increasing, said Kevin Kerr, president and chief executive officer of Kerr trading. There are 40% less drilling wells for gas in 2013 than there were in 2012. As housing grows and business demand grows there is concern over the lower levels of gas storage in over three years and bigger than usual declines in gas production. The price of NG can be seen in the above Yahoo.com charts with the natural gas ETF UNG. Investors who own the energy funds will also benefit from this coming price increase.

Concerned Which Way The Markets? You could watch the banks by having the financial ETF on your computer screen and keeping tab as the financials have lead the rally in 2013. There are 40 Financial ETFs but one that has all the big boys in the top 10 of their holdings is the SPDR Financial Select Sector ETF –XLF. The XLF closed up 9 cents Friday.

Questions call Paul at 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER FINANCIAL SERVICES, INC. MEMBER FINRA/SIPC

That Was The Week That Was-2nd Week March

The World Looks A Little Different From Here Then It Did in 2008. The DJIA hit an all time high last Tuesday and even the Bears had to admit that the Technical Indicators support a higher Dow. But before we get too carried away only five stocks really contributed to the Dow’s rally: IBM, Caterpillar, 3M, Chevron and United Technologies. All indices were up with the Dow tacking on 126 points, the Naz 42 with gold and oil flat for the session.

 Still if anyone’s calculating where we are by including an inflation factor the folks at MarketWatch reported the Dow needs to be about 10% higher than where it closed to truly reflect a ‘brand-new’ high. Nonetheless the emotional factor provides some with relief that maybe this time the economy is starting to percolate. Thomas H. Kee, Jr., wrote that while ‘technically’ the markets broke out to the upside that there are risks that have escalated in a big way lately only ‘ the markets don’t care that right now.’ In other words, be careful out there. 

 Better Than Expected Jobs Report Spurred The Markets Higher Friday. Still CBS News reports that the total number of unemployed that include those that have dropped off the jobs rolls, those that have quit looking and those that have been so discouraged that they’ve opted for retirement number 14 million.

Last Friday Morning Randy Frederick, managing director at Charles Schwab took the five year chart of the S&P 500 Index from Jan 2, 2003 through Dec 31, 2007 and compared it to the S&P 500 since Jan 2, 2009.

The Week Ended Up but Howard Gold Cautioned That A Short-Term Correction May Be Soon Here. If you haven’t stepped in to the market the next few months may give you an entry point. If you missed on your favorite stock and the price just ran away, here, again, is another opportunity. Craig Johnson, technical analyst for Piper Jaffray, declared the market has entered what he calls, ‘ a hop, a drop, and a pop.’, and a key indicator just gave the sell signal. If you’re trading take profits on additional price strength, said Mark Arbeter. The sell-off could take the S&P to around 1400.

Clients- if you have not received your Tax Forms Please Call. It is important for you to know that neither Westminster Financial Services, Inc. nor I are involved in the calculation or sending of these forms. We also have no control over the timing of when these forms are being sent. This is done by Pershing, LLC. and the various fund families. I have noticed certain mistakes including missed cost basis on a client’s account and I have to remind you that it is the client’s responsibility to make sure that the information is correct. The other thing is the time frame. Investment firms such as Pershing, LLC were not required to provide cost basis for any stocks before 2011 and for mutual funds prior to 2012. That means that anything bought prior to 2011 and 12 will not have their cost basis automatically calculated. I will help clients get the numbers but remember it may take time and possibly not before the April 15th deadline.

 

  When I taught basic financial management one thing I talked about in the estate planning section was that each person should create a book to leave to heirs on things they wanted them to know and to do when they died. I haven’t given it much thought until a recent blog got me thinking about that class and since my client’s are all getting a bit more mature this may be a good review.

Over the past few years I’ve had several clients pass away and in just about every instance it has taken the family a great amount of time and effort to organize the estate assets. Surprisingly it was not because the deceased was disorganized but because their affairs were scattered about in a variety of funds and investments with different insurance agents and stockbrokers. These were people of means who had more than a home, check-book and social security income.  Over time, and just by living, a great amount of different assets had been accumulated. Some accounts were registered in only one name and had to be taken to probate, others needed updating. The single biggest problem in almost every case was the rounding-up of assets and finding out what was owned, how it was owned and who were the new owners.

No one expects to die. Preparation in contemplation of death is something you just do and not when you think you have time.  It wouldn’t hurt to give heirs an idea of where all your stuff is. Here are some things you should write down and keep in a book that anyone in the family can find or know what to do once they see it:

1. A list of your advisors, attorney, accountant, insurance and investment professional, with phone numbers.
2. Investment account numbers.
3. Insurance policies including annuities.
4. Bank accounts and numbers.
5. Safe Deposits, keys and instructions.
6. Funeral instructions.
7. Wills-Trust Doc locations
8. List who gets some of the stuff you accumulated and anything of value they should be aware of. Joey gets the Porsche and Fred the VW. Stop the family arguments before they start.
9. Any notes, last words, pictures, mementos that will be appreciated long after your gone.

 

Back When Social Security Was Established A Lot of People Didn’t Make it To Age 65. Franklin Delano Roosevelt died at age 63. To fix today’s entitlements the age of entitlement has to be raised. The average lifespan for an American male today is 78.8 years. According to experts who study this sort of thing if you live to 75 your chances of seeing 87 are pretty darn good. And if you make it to 87, well, you get a few more years tacked on. The point is that if age 65 was the end back in the day now folks reaching 65 have another 22 years ahead of them. And social security can be easily fixed by hiking the age requirement to the current full benefit.

Another issue is inflation… Too much is being falsely preached by people that should know better that seniors need to get their money into fixed investments and preserve principal. Fixed investments don’t match inflation expectations and seniors, more than ever, need to keep their money on pace to keep pace with inflation’s increases.

This is an investment that doesn’t get much respect… In Arizona, parts of Texas, California, Nevada, Florida and the list goes on these states and peoples are running out of potable water. According to resource consultants by 2025 2/3rds of the world population will experience water stress- still we see population drifts to Az and due south. Matt Sheldon, portfolio manager who runs the Calvert Global Water Fund, said that two years ago he would have said utilities presented the best opportunity but now its infrastructure. Forget the stress in the U.S.A. what is happening in Asia, Latin America, Middle East and Africa is downright scary. The World Economic Forum in Davos recently had water risk high on their list. The wake-up call for strategic action is as old as the Great Depression, writes Rachel Koning Beals. Getting investors to understand that opportunities abound is yet another problem. Average investors get the scarcity concept with oil, gold and housing but for some reason, maybe because it comes out of the tap with no immediate price-tag, there doesn’t seem to be a concern or desire to explore opportunities. Call me if you do.

Who is After Sheldon Adelson and Las Vegas Sands? The WSJ and the New York Times cited a Las Vegas Sands, Corp. 10-K filing that it found likely violations of the books and records and internal controls provisions…aw shucks, here’s the deal…The news was that an unidentified individual with ties to certain ‘bad’ people made a huge transfer from Las Vegas to Macau. The Times article was headlined, ‘Casino says it Likely Cheated.’ Less than 24 hours later Sands management disputed all and said it would defend itself against that type of uniformed and misleading reporting. In the meantime LVS shares down and the world ‘probably, bribery and investigation plastered all over financial web sites.’

Some Investors Chasing Yields into a Sink-Hole. Student loan securities are the du-jour hot income stock. SLM, Corp. sold $1.1 billion of securities backed by (chuckle) student loans. Through February, 2013, dealers have sold $5.6 billion of student-load backed securities, more than triple for the same period in 2012. The numbers show that 31% of all student loans are late. This is going to eventually really hurt….someone.

Thomas H. Kee, Jr. writes that the smart money is shifting to ‘risk-off’.  Warren Buffett said to Cook, CEO of Apple, should ignore hedge fund manager Einhorn and concentrate on building long-term investor value. Others see Apple’s 2 1/2% dividend that is in excess of the 10-Year Treasury as an entry point to get paid while waiting for the stock to recover. Whispers on an Apple iWatch are numerous with no proof. Estimates that an iWatch would be a $60 billion product have nothing to base this on-especially price. Yeah, I’d buy one…

Allan H. Meltzer has taught economics for 56 years. He is America’s foremost expert in monetary policy and author of the three volume book, ‘ A History of the Federal Reserve’. He said, ‘We’re in the biggest mess we’ve been in since the 1930s. We’ve never had a more problematic future.’ He went on to say that former Treasury Secretary was one to take care of today’s problems today and letting tomorrow take care of itself. The Fed, he said, suffers from the same myopia. He blamed the president for refusing to compromise and many business people convinced the President is hostile to business. So what would Meltzer do? He would reduce tax rates, put the Fed’s mortgage debt into a lockbox, to preserve its balance sheet, and then gradually start raising rates. Just too sensible for the present administration and desire to spend and tax.

  The most tricky of maneuvers is the current high wire act using fixed income as the primary portfolio allocation that many investors have carved out for themselves. Pssst, there ain’t no net.  

Markets Wednesday Mixed. Gold and Oil up a bit but a lackluster day across the board as traders digested recent gains. Jimmy Cramer on the Today Show, Wednesday morning, smiled as he said he wouldn’t be a buyer at these levels and said that there would be better entry points. (Someone muzzle The Mouth, or what?)  Cody Willard in his blog wrote that many of his kinspeople have missed the recent 400 point run-up in the market. Remember the economic world was supposed to run to ruin January 1st. Businesses are in no hurry to hire as they’ve learned how to maximize profits with less people. Still a big surprise as the jobs picture brightened to average over 200,000 a month. Did you know Campbell Soup does not advertise its Baked Beans? They make them just don’t advertise. Genworth will stop selling long-term care insurance policies in California. Both Met and Prudential have stopped nationally the sale of these products due to higher than expected claim costs. Shares of Genworth up on the news.

Bottarelli Research Predicted The Sequester Will Drastically Hurt the Military First. The folks at Bottarelli provided a chart illustrating how Lockheed-Martin stock has already been discounted by 11.1% so far in 2013. Military contractors will get hurt to the tune of an estimated $45 billion. LMT may indeed get hurt harder with shares already weakened. The research suggests that investors may benefit by buying put options on select defense contractors.

Thursday Markets Repeated Action. Gold and Oil up a Touch. Bank Stress Tests by the Fed 17 Banks Passed and Only Ally Fell Short. The WSJ predicted that this would lead the way for banks to begin to shore up investment value through stock buybacks and increased dividends to shareholders. But the Fed is paying especial attention to those banks with large trading operations: Goldman Sachs, Morgan Stanley and JP Morgan.

This is all about the Fed’s concern about too Big to Fail. Those big banks which also included Citi, Wells and Bank of America along with the previously mentioned generally ranked lower than many regional banks. See the following:

 

Finally- One Bank Closed in Georgia Bringing the Total for 2013 to 4.

Questions call Paul @ 586 783 700 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Securities Offered Through Westminster Financial Securities, Inc. Member FINRA/SIPC.