That Was The Week That Was-4th Week July

 

Robert C. Doll, CFA, Chief Equity Strategist Senior Portfolio Manager at Nuveen Investments in his July 22nd Newsletter wrote:

‘We want to watch top-line revenue carefully.’ The top themes going forward:

• The Fed is repeating the same message.
• The recent rise in oil prices should not be a significant drag on global growth.
• U.S. retail sales missed consensus expectations but were ahead of last year’s numbers.
• The federal deficit is  running $400 billion less than last year.

WHAT TO LOOK FORWARD TO THIS WEEK:

Monday Morning’s MarketWatch.com reports on what to look forward to this week. Jobs could get a bit stronger while GDP is expected to report growth at a stingy 0.1% in the second quarter.

 Bespoke Investment Group on July 22nd reported that: Microsoft, Intel and McDonalds oversold. Overbought stocks include Bank of America, GE and United Health Care.

Zacks Reports on July 22nd- ‘Earnings stink and no one cares…yet.’

‘When stocks get fully valued and estimates are coming down then stocks will either stagnate of retreat.’ Zacks contends that we are not there yet but will notify when to get more defensive.

Avi Gilbert @ MarketWatch.com warned on July 23rd, ‘ All roads lead to 1500 on the S&P 500 Index.’ This when the S&P 500 closed at 1696. Of course he didn’t say when but his calculations when markets retreat they’ll move to that level.

ART CASHIN on CNBC explains, maybe, why the markets keep ‘on-trucking’.  In a live interview on CNBC on July 23rd Cashin explains that the markets are overbought but the theory on the street is that the Hedge Funds don’t want to miss any part of a rally and keep the money flowing into equities. Bob Pisani added that the retail investor is holding and not selling as the markets move higher. Everyone knows this and  investors are like a long-tailed cat living in a room of a hundred rocking chairs nervously watching the action.

‘’Good Times…good times…’ Apple reported better iPhone sales and hit numbers exceeding analysts expectations Tuesday last. Shares were up Wednesday. Morningstar, same day, reiterated $600.00 share price fair value. Facebook reported earnings last Wednesday after market closed and numbers far exceeded analysts expectations as the company’s mobile ad revenue (which was virtually zip one year earlier) and up 76% from the previous quarter. The news was that no company has had to react to expanding its computing infrastructure as fast as Facebook has (Bloomberg Thursday July 25).  Shares up huge in after-hours trade. Even Cramer on CNBC was gushing about how Facebook was doing a Google better than Google.

MarketWatch Headlines: As Facebook Shares Leap 30% Wall Street eats crow. July 25th

‘All those snide remarks and snarls about Facebook may be history, at least for awhile.’

WSJ reports Thursday July 25th Bond investors running to money markets. Money eventually will come to equities, the Journal reported.

Where are Interest Rates Headed? Remember the Fed promised not to raise rates but why are 10-Year yields approaching 2 week highs? Investors can go to Google finance and check out yields daily on the main page. The 10-year closed last Wednesday at 2.49%.

WSJ reported Friday July 26th Investors have pulled $78 billion from bond funds  in the 7 weeks ending July 17th.  ‘Investors,’ the article goes on, ‘love affair with bonds is going through a rough patch.’ Not only individual investors but institutional investors are also rethinking their allocation into bonds. Bond funds have been the investment of choice for conservative income investors. Now investors are moving from bonds to money markets, even though MM pay nothing. At some point these same investors will rotate to equity-income funds.

Hate this Market? Zacks sez he doesn’t blame you.In his July 25th blog Mitch Zacks opinions bad news makes us feel bad but bad news keeps the Fed in the game. Without the Fed the markets may pull back substantially. But, Zacks, writes, even though there is a wall of worry, the markets are recovering. Maybe slower than we’d like but overall recovering.

The week ended with the markets barely up. But with more than half the S&P 500 companies reporting this will be the second least surprising earnings season in the last four years according to Factset. The biggest misses have been found in utilities, materials and tech industries. Here’s the Factset chart:

My Good Friend Bill Minor sent me this list of home improvements and how they returned $$s to homeowners when the property was sold. You can reach Bill at billminor@billminorsellshomes.com

Finally- Amazon posted a (not so) surprising loss after pouring more money into infrastructure. Jeff Bezos is betting that a massive delivery system and  cloud computing will delivery down the line. The company has been called one of those ‘never sell’ stocks. Amazon is also betting on grocery home delivery. Even with the one penny miss the shares surged over $8.00 Friday July 26th to close over $312.00. Story time, I was at Bed, Bath and Beyond shopping for this special pan that was on super sale. The store sold out of it but had it in the warehouse and could ship it…for a fee. I said forgetaboutit I’ll order it from Amazon. Bed Bath management huddled and I got the pan, the discount and no charge on shipping. That’s how big Amazon is and has changed the face of retail for the small shopper. 

Please get your client update forms in. Call me with questions or problems.

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

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

That Was The Week That Was-3rd Week July

 

 Plan Your Strategy: Are you an income or a growth and income investor? Are you looking to minimize taxes as a priority or do you value liquidity? Before the Great Recession -2 I had a husband and wife who drove me nuts. They changed their investment strategies almost every quarter from income to growth to tax managed. They even got their accountant into the game who suggested I minimize taxes without selling current assets. The fact is they didn’t have a strategy and just wanted whatever struck their fancy at the moment without selling or buying anything. When they left to return to their previous broker I breathed a sigh of relief. Investors should have a plan more than just making more money than they did the year before.

Ask yourself the question- What’s important to you? Dividend income? Liquidity? Speculation? Minimum taxes? Preservation of principal. Once you know what you want stick with the plan. Don’t fixate on preservation of principal and then get bent out of shape when the markets roar ahead. But if you do change your plan make sure you follow through. And if you don’t really have a plan there is always the default non-spoken, unwritten plan that is to perform as well as the broader markets. You’ll always have that.

Sunday’s July 21st WSJ reported that the long awaited ‘acceleration’ in the U.S. economy has once again been stalled. Previous forecasts were particularly optimistic, said Tara Sinclair, a George Washington University economist. Both the retail and restaurant industries have seen signs of weakness in growth and hiring. 

 Some One’s Got to Do It. 2013 Best and worst investments year to date according to Bloomberg posted Saturday July 13th.

• Best Large Cap Stock- Tesla Motors
• Best International Stock-Tokyo Electric Power Company Yes, that power company!
• Worst International is Spanish Bank Bankin SA.
• The worst US stock is Newmont Mining Company.

It’s Back to Growth & Income Funds for The Foreseeable Future.

The Summer of The Non-Consumer!

U.S. retail sales rose 0.4% in June and just 0.1% excluding autos. According to Aaaron Task in The Daily Ticker, July 15th, the report raises questions about the strength of the consumer, the US economy and the timing of any Federal Reserve tapering. Jeff Macke notes that the death of the US consumer are always premature. In a same day video report Macke wouldn’t give up on the U.S. consumer just yet. With both Wal-Mart and Target not providing same store sales data the governments data is the best indicator and that’s probably flawed, Macke said.

The Ben Bernanke Soothed Markets by Saying Nothing. The Fed Chief testified to Congress this past week and stressed that rates would stay low for a long time. But as previous Administrations learned the Fed may have very little to do with interest rates. The Federal Reserve may have an official line in the sand but that doesn’t mean investors cannot and indeed have caused rates to rise and fall.

Bob Pisani at CNBC Friday the 19th of July reported that the Stock Market reached new highs despite some big earning misses.

Google, E-Bay, Intuitive Surgical, Microsoft, Honeywell, General Electric and Intel all missed. Financials hit the ball out of the park with low rates assisting banks bottom line.

But, as Pisani reported, earnings were not great overall (up 3.6% this past quarter). Revenue was flat. The Federal Reserve tailwind isn’t what it used to be. And global economic data, and to some degree, U.S. economic data was and is not robust enough to instill confidence (going forward).

 

Finally- Earnings may get bumpy this week, according to Marketwatch.com on July 21st. McDonald, Ford, Starbucks, GM, Netflix, Apple, Dupont, Dow Chemical, Boeing, United Technologies, Corp., Caterpillar and 3M to name a few will be reporting. The key will be consumer based, wrote Wallace Witkowski.

Last week multi-nationals had a rough go while more domestic earning companies beat expectations.

Attention- have you completed the client update form? Call or email me if you need help. Yes, it needs to be done and updated every 3 years. It’s an S.E.C. requirement.

QUESTIONS, CALL PAUL@586 295 0430 or WRITE HIM @ pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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That Was The Week That Was-2nd Week July

Talk Radio probably causes more grief than good. The first radio station I ever stepped into was back in the mid-60s in Montgomery, Alabama. At the time I was stationed at Gunter Air Force Base and Montgomery was the home of an ex-truck driver by the name of George Wallace and the North-South Football Classic. Both the football field and the governor were small and viewed close up almost insignificant. Montgomery was also the home to the Hank Williams, Sr. museum. The radio station operated pretty much out of a broom closet where my friend played rock and roll from noon to five. You couldn’t get three people standing in the same room my friend broadcast from. But, I was impressed. Decades late I did my talk radio on several Detroit area radio stations and hung up my earphones before the second recession of 2008. When I did my show I talked about concepts, allocations and economic events. I even ran a quiz, ‘Is it U.S. or is it Foreign?’ Today’s Radio Money Mouths talk about specific funds and stocks that you should be buying and selling. This causes lots of problems simply because some people don’t know what they own. These On-Air Motor Mouths are doing nothing more than using scare tactics designed to frighten listeners. They mask it through subterfuge of being the ‘helping hand.’  That’s how  Radio Mouths get new customers- by scaring the bejesus out of listeners. My point being that now your Quarterly statements should be in your mailbox and I urge everyone to take a look at them. Don’t just toss them into a drawer. Open the envelope and read what you own, what it did and where you are. If there are holdings you see that you don’t know what they are than either call or email me. You should also know where your account closed at the end of last year (2012) and where you are today. If you don’t than look up your year-end or tax statement and compare it. Or, pick up the phone and call me.  You should know what you own, what it does and why you bought it. If not, ask questions. Never assume…

The Perfect Financial Storm struck all investors in June. The only way to hide from what is being called ‘The Great Rotation’ is by ducking under a cover of cash. It was that ugly. From May to June markets in equities fell and bonds were crushed as interest rates rose. Even those funds that were disconnected to the bond market were impacted. Thomas H. Kee, Jr. wrote in MarketWatch.com on July 8th that it was surprising the suddenness of the investor stampede from bonds. The 20-Year ETF Treasury is down 12% year to date because of it. Banks are promoting equities as having value and moving clients from bonds to equity funds, he writes. But, Kee warns, this is not yet a Buy and Hold market.

China Reported  second quarter gross domestic product Monday July 8th and it showed that the economy slowed from 7.7% growth in the first quarter to 7.5% growth in the second. The country is attempting to become less reliant on construction and heavy industry and more on consumer spending.

 

The WSJ reported That China’s Problems Are Not Our Problems. US markets are shrugging off the latest bad news from China as their growth slows. Barclays predicts 3% growth for China in the next few years- off from high single digits. To be sure the report goes on that China woes can hurt domestic companies such as Yum!Brands, Wynn Resorts and Broadcom that count on 50% of their revenue.

Markets Up For Four Straight Trading Days at the End of Tuesday July 9th.

NetFlix CEO Reed Hastings said on Monday July 8th he will discuss second quarter results from the company’s website and from pre-arranged questions. Michael Pachter, an analyst with Wedbush Securities fumed, ‘I’m not going to submit my questions ahead of time and let them screen them to determine if they should be aired.’ Pachter has a sell rating on the stock. This remind me of the same argument David Einhorn made in his new book, ‘Fool some of the People All of the Time.’ Allied Capital was a ‘short’ by Einhorn who hired a private detective and forensic accountant to dig up shenanigans at the company. He was 99% sure of his information and was locked out of earnings conference calls by Allied who were well aware of Einhorn’s stock position. They also began using only prescreened questions. Netflix said it was modeling its conference call on Warren Buffett’s annual meetings. Netflix argued their ‘format’ provides ‘very forward thinking’. … and I got a bridge you may want to buy…

The Economy Isn’t Doing So Hot! Fed Chairman Bernanke said as much in his after the market close Q&A  that was reported in the WSJ on Wednesday the 10th of July, in which he said that it was too early to see of the economy had weathered fiscal policy headwinds, the unemployment rate probably understates the weak condition of the job market and the Fed was concerned about the very low real rate of inflation (currently pegged around 1%). That being said he stressed that rates were to stay low for a long time. He also laid out and defended his potential timetable to  wind down asset purchases. Many believe will start this September. The after-hour markets rallied on his answer. Still The Bernanke is a lame duck Fed Chair and he can say and do anything and everything and it means nothing past February, 2014. Wednesday markets mixed.

Last One Into The Pool Is … The Chairman’s words were heard and understood. Tapering doesn’t mean stopping and it doesn’t mean it happens tomorrow. Bernanke’s remarks soothed markets Thursday and opened the door to perhaps another Bull market run that was experienced in 1982 and ran to 2000. Bank of America Merrill Lynch analyst Mary Ann Bartels suggested just as much. Leading the way are the financials. Humiliated stocks and sectors the last few months have included gold, Apple, bonds, emerging markets. ‘We’re out of the trading range we’ve been since 2000.’ Bartels said in a Bloomberg interview on July 12th.  ‘Leading the way up will be the financials, energy, industrials and technology,’ she said. Since the market’s taper tantrum the market has finally realized that stocks are the place to be and the rotation from bonds has begun.

Hang On Just a Pea-Picken Minute! Not everything is all sweetness and sunshine. Jim Russell, senior equity strategist at US Bank Wealth Management said Friday the 12th of July, ‘Investors aren’t expecting good news as second quarter earnings start rolling in. This rally could be relatively muted and brief,’ he said. ‘Earning news will be bumpy and mixed, thanks in part to business conditions outside the U.S.’ And some investors said the Fed Chairman’s words shouldn’t have been taken quite as bullish as the market seems to have believed. Milton Ezarati, market analyst at asset manager Lord Abbett and Co., reminded us in a Bloomberg article published Friday the 12th, ‘Bernanke really hasn’t said anything new.’

So the summer rally is either on or off and we won’t know until we reach the end.

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A very good week for markets…Banks JPMorgan and Wells reported better than expected earnings but warned caution if rates stayed elevated! The biggest banks, the WSJ reported Saturday July 13th, were struggling with lackluster loan demand, a sluggish economy and a slew of new regulations that are crimping profits. Interest rates are still under the average during the Civil War.

Twinkies made by a New  Bakery Now at Wal-Mart.

Blackberry Smart Phones Now Being Discounted to $50.00 as Lack of Consumer Interest Hits Firm. It’s an Apple – Samsung world.

AT&T Buys LEAP Wireless! And then there were two.AT&T stores bandwidth with new acquisition. Looking ahead.

 

‘Little French Songs,’ great new album by Carla Bruni.

Robert C. Johnson, CFA @ Morningstar. ‘Still Bullish But Not Too Bullish.’ Published on their website on Saturday July 13th.

Form E-Mailed to Update Your Investment Comfort Level Requested by the S.E.C.  Each account needs an update every 3 years. If You Need help- call. I will be mailing out to everyone who is not an active e-mail user.

586-295-0430.

 

Taking a few days off this week but it’ll be a working break so call or e- if you need anything.

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-1st Week July

Employment Numbers Jumped Friday! It was expected 165,000 or so jobs for June but the numbers came out to be 195,000.  The unemployment rate stayed at 7.6%. While the stock market loved the numbers and ignored problems overseas some analysts said the June numbers were not that impressive. Morningstar, in an interview with Jason Stipp and Jeremy Glaser, called it ‘no big deal.’ I have always been lead to believe that the economy needs to create a minimum of 240,000 new jobs per month to get an edge into the deficit. Rex Nutting at Morningstar wrote that the jobs markets wasn’t better yet. He went on and explained how jobs are depressed for the 25-54 year olds.

One reason that the unemployment rate didn’t drop is that 117,000 new people joined the ranks of those looking for work. Nutting doesn’t explain it but many of those could have come from high school and college graduates.Nutting explains that the new numbers indicate that the jobs market is improving and more people are willing to ‘dip’ their toe into the jobs market. In the past 12 months out of the 1.6 million people who have found jobs only 350,000 came from the 25-54 age bracket.

The Wall Street Journal had a different slant and reported that the jobs report showed ‘staying power’. And what we are seeing is strong progress. Progress that will aid the Fed in tapering it’s bond buying program. It is now guessed that the end of QE3 will begin this September. The President had his administration move the mandatory deadline of having large employers (50 plus) to add health care coverage starting in early 2014 moved to 2015. This after many employers indicated that the new rules were not only confusing but that it was tempering their hiring. Some employers considered dropping full time employees to part-time to get under the 50 employee ceiling. On the ECB front yields in Portugal jumped as high as 8%. The ECB and Bank of England are staying put at 0.5%. The ECB is also starting to better communication by giving forward guidance. It said that while the US may start tapering that it did not mean that they would begin easing anytime soon.

Morningstar commented Saturday that the jobs report had a little of something both for the bulls and the bears.  

Earning Season Begins Monday

What is the future outlook for the stock market? Heather Brilliant, CFA, with Morningstar reports at the end of the second quarter thusly:

• Stocks are trading at 94% of fair value. This is based on Morningstar analysis and coverage.
• Risk reward does not favor bond investors. Especially with the potential for higher rates looming.
• The outlook for equities is reasonably good for equities given a longer time horizon.
• There are pockets of undervaluation.
• The bond market will correct sending more assets into equities.
• Higher volatility in the short term.

 

Remember When…1999 the Roth IRA was introduced by Senator William V Roth, Jr.

On 9/17/2o01 Markets reopen following the terrorist attack and suffer their single one day biggest dollar loss of 7.13%.

Robert C. Doll, CFA, Chief Equity Strategist and Senior Portfolio Manager at Nuveen Asset Management gives his mid-year predictions:

• Real GDP will be around 2% with inflation around 2%. The private economy is growing closer to 3%.
• Signs that the European recession is becoming less of a negative.
• Earnings growth is medicore as stocks rise and P/E also rises.
• The yield curve steepens. We anticipate the 10-Year Treasury to settle in the 2.40% to 2.60%.
• US multi-nationals will outperform domestic focused companies.
• Larger cap companies outperform small cap companies and cyclical companies outperform defensive companies.
• Dividends increase at a double digit rate.
• A US manufacturing renaissance continues powered by cheap natural gas.
• The US government passes a $2-$3 trillion ten-year budget deal.

Markets all over the road Monday last. Finally finished up but off their highs. Gold made a strong come-back.

Medicare Does Not Cover Long-Term Care Costs.

Medicare will pay for short-term stays in skilled care. Basically if you qualify for need it will pay for the first 20-days. After that the patient pays $148 a day for days 21-100 and Medicare pays the balance. After that, Medicare pays nothing. There’s a great article on LT Care Insurance in the CPA Bulletin I received from my friends at Plotnick Feinberg Associates, PC.

One More Time: Things That Could Ruin Your Retirement-

• Not saving early
• Borrowing from your retirement fund
• Underestimating longevity
• Investing in the wrong places
• Cashing out 401(k) savings

Overseas Fears & Uncertainty Drove Markets Lower Tuesday. Wednesday saw more uncertainty as  MarketWatch.com reported early European stocks tumbling on global worries. Portugal assets fell as fears the government may not survive. Several ministers have already resigned. A new election in favor of anti-austerity policies would be held later in the year. Egypt is also pressuring global stocks as the military is soon to be taking over the reins of the government.

Morsi Out in Egypt Because He Forgot To Address The Economy First. This according to MarketWatch.com writer Amotz Asa-El .

Stocks closed up Wednesday even though some data was awful and global tensions increased in Egypt and Portugal. The trade deficit increased to the biggest since November, according to Bloomberg.

Payrolls climbed by 188,000 workers. Many employers are still holding new hires to part-time status, under 30 hours a week, in order to keep them from Obama Care guidelines (according to CBS News). Better than projected jobs turned the stock market around on Wednesday from a sideways action to a positive close. Europeans are holding back from buying and this partially lead to our trade deficit.

September Fed Taper. Former Fed Gov Lawrence Meyer suggested the start date in Bloomberg interview. The Ben Bernanke term end January 31st. The greatest gift that Bernanke can give the next Fed chair is the beginning date of the taper to take the heat off, said Meyer.

You Don’t See Your Grandkids as Much or Ever? In China Granny Sues! A 77 year old granny Chu did just that last April and won! In China the problem is escalated because of the distance and jobs. Low income migrant workers can not travel to see their grandkids as much as they want. In China caring for elders is still a moral imperative along with a cultural reverence. 

 

Finally- Douglas Engelhart Creator of the Computer Mouse Dies at 88. He filed his patent back in in 1967 and it was granted in 1970. Logitech International has manufactured and shipped over a billion of the instruments. Other companies have manufactured similar mouse products and yet Engelhart never received a dollar in royalties for his work. Without the mouse the world of personal computing may not be what and where it is today. Don’t feel bad since Mr. Engelhart won may awards and earned over $500,000 in his lifetime with those awards. Still, it would’ve been nice to get a dime for each mouse sold…

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.