That Was The Week That Was-5th Week May

Window Dressing is a term used to describe what some mutual funds and managers do to make their portfolio’s look more attractive. I’ve written about this before and it’s nothing new when managers sell losers and pick up winning stocks that have had huge runs in order to make their portfolio look good to their clients. Window dressing is to make one look better than one is usually happens at the end of the month, the end of a quarter and especially at the end of the year.  (Managers sometimes call this rebalancing. It’s window dressing!) Tuesday started some of that as the month wraps up. Markets were up triple digit and gave up half of that before closing still respectively positive. We also may be seeing a tug-of-war between the shorts and the longs as the shortened trading week wears on. Wow, was I right on this!

There’s a Strong Case For Bulls but We’re Still Holding Bonds. Yes, things look better today even without a bit of help from the Administration and Congress as the job market slowly improves, housing grinds upward and onward; and we’re told that the EU is improving. Although I don’t believe that for an instant. Not with an unemployment rate of 12% (and that published with a wink and crossed fingers). Spain has 25% unemployed but shhhh, no one talks about that horror. The 10-year Treasury is at or just below 2% and expected to close the year around 2.25%. CNBC talking heads think that the 10-Year can revisit 1.65%. Stay tuned.  Emerging market and foreign bond funds still pay a respectable yield over our domestic. I’m nervous enough about too much euphoria that caution is the word through the summer. Whenever ‘everyone’ is happy it’s not an indicator of good-times ahead.

 

There are some great women in this business that don’t get enough praise. Venita VanCaspal was the First Lady of Financial Planning and the author of several books starting with, ‘Money Dynamics.’ ( I used to give away her books at my financial planning classes). Venita died a few years back but she was one of the great ladies of the business. (Anything that The Suze has said or written comes long after Venita). Muriel Siebert is the first woman to buy a seat on the New York Stock Exchange. Ms Siebert recently wrote that what this country needs is a good lesson in financial literacy. She’s right but getting it through the thick heads of academia may take another generation or two. School systems refuse to get money management on the curriculum at K-12, giving all sorts of excuses. And most parents don’t care. Kids grow up learning how to bounce checks, run up charge cards and mismanage retirement plans in the back alleys of life.  

 Sallie Krawcheck, former Citigroup CFO, said, ‘ I think banks and money funds will do just fine in bad markets, in a very bad market, and in a very, very bad market. But I do worry about a very, very, very bad market. ‘ Sallie went on to say that she thinks banks are still underfunded and another whale of a mistake like what happened at JPM trading could possibly sink a major bank.

Egg-Foo-Yung with Your Easter Ham? Shiangui International Holdings, Ltd agreed to buy Smithfield, the world’s largest hog farmer for $34 a share. This is a $7 billion deal. The Chinese say this is a way to ensure their people getting plenty of fresh meat. China’s food and agriculture has been racked with scandal and recently thousands of hogs were found dead in rivers around Shanghai. Before switching bacon brands you should understand the deal still needs to be vetted although CEO of Smithfield feels there is no national security issues. Can you say Oscar Mayer?

China Has Been on An Acquisition Spree.

I don’t know about you but I don’t buy Made in China foodstuffs like canned  peaches or candies. Even Chinese mothers are concerned about baby formula made in China. While I understand Smithfield is an American company and the Chinese want it to provide, so they say, a healthy consistent pork product for their people I’m not excited about the idea of Chinese bred pigs being sent to the U.S. under the Smithfield brand.

 

When Things Just Are Not Going Your Way…

JC Penny has had serious issues this past year, losing billions, borrowing a billion, firing their Uber-Retail Guru and moving two steps back. Now A Billboard with a artsy tea-kettle being sold by JC Penny was removed because too many people thought it looked like Adolf Hitler! I’ve got a leg vein that looks a lot like Nixon’s nose…

Sideways Markets? Rates Moving Up on Bonds and Principal Falls. tick…tick… This week was strange what went down came back up the next day and fell the day after. I’ll be watching all our bond funds for signs of serious deterioration.  I suggest everyone who owns bonds review where they were last month and where their principal is this month.

Thud!! The noise you heard Friday was the Markets hitting the floor late in the day on what the WSJ described as a technical response and not anything fundamental. Technically a lot of people have thought that the markets have been over-bought for some time. Still the Month squeezed out a gain even with a 209 Friday Dow drop. Looking back to the Friday play-by-play it was sideways in the early action, finally moving up by mid-day, and then the typical slide into the closing hour with a sudden giving up most of the gains. It was almost as if the markets in their entirety were being day-traded, and then the sudden sell-off that surprised everyone. (How many times do I have to remind readers that sell-offs and extremes in the market come with no warning?). The shortened trading week had already been whipsawed. AIG fell 3% when a Chinese consortium missed a key deadline in buying an aircraft leasing unit. Krispy Kreme was up as it beat analyst expectations and gave strong forward guidance. The Fed will most certainly keep pedal to the medal as any letup will most assuredly cause the markets to give ‘er up at this stage of the economic recovery. A strong jobs report next Friday could cause another sell-off since the Fed said it would cut the stimulus when unemployment reached 6.5%.

 Finally- According to USA Today, Pete Rose earns $1 million a year selling his autograph. Talk about diluting a franchise…

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

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