That Was The Week That Was-4th Week September

 

CLIENT PORTFOLIO REVIEW & UPDATE 

If it has been over 1 year since you and I have reviewed your holdings you may want to update. Too many things are happening that are impacting portfolio holdings. Make sure you are on top of things and all is what you want and expect. Call or e-mail.

 

EXPECT A U.S. SHUTDOWN AS HOUSE VOTED TO DELAY HEALTH LAW! These folk live in a bubble.

  Congressional Approval is at an all time low of 6%.  And so instead of playing nice, reaching out in compromise and working to solve long ignored problems Tea Party Congressional dissidents looked to shut down the government if ObamaCare wasn’t dissolved. Political uncertainty marked the beginnings of what may be a volatile end of the quarter. Zacks on 09.24 reported they expect stocks to trade in a narrow range 1680-1729. Interestingly a CNBC report September 23rd showed most Americans approved of the national health care program even though they knew little about it.

The Health Care Act is at Best Confusing.

• Insurance Exchanges May Be Overloaded First Day They Open.
• There are Exchanges for Individuals and then there are Exchanges for Businesses.
• No One at The Exchange Can Make a Recommendation. Just The Facts.
• Some State Exchanges Are Being Lead By Obstructionists Determined to do Everything to Make the Law Fail. Pew Report.
• Some plans limit the Doctors They Pay For and Your Doctor May Not Be On The List.
• Not All Insurance Companies Compete In All Areas. Some Companies Will Only Offer Insurance In Select Markets.
• Low Income Participants Are On Their Honor For Federal Subsidies in 2014. Verification in 2015.

 

 

A Government Shutdown? How Would Oil & Gold React?

‘nuf said?’

 WHAT WORRIES INVESTORS IS THE DEBT CEILING – HERE’S HOW THE MARKETS REACTED IN 2011. 09/28/2013

Worries continued from the end of July to the next year. How About The Fiscal Cliff?

Next Time You Vote Remember This…

Talmer Financial Investment Services –The Monitor 09/20/2013 provided the following…

‘THE U.S. ECONOMY IS IN THE 5TH YEAR OF THE ECONOMIC RECOVERY. THE SIXTH LONGEST SINCE WW2. WE ARE HALFWAY THROUGH THE CURRENT RECOVERY WITH A CHANCE OF RECESSION IN THE IMMEDIATE TERM BEING LESS LIKELY.’ The likelihood of a recession in the immediate term and half-way through the economic recovery are important statements to digest as we move forward.

Doctor Doom Likes Us! He Really Really Does! Noriel Roubini, a noted harbinger of economic calamities, said on Monday, September 24th, ‘Those worried about inflation worry about all the money printing leading to that inflation. Inflation in advanced economies is going to the least problems developed countries will face in the next two-three years.’ He also said that the U.S. will be better positioned than most of its global competitors. The dollar is likely to be stronger rather than weaker. Gold is on its way to $1000 as inflation threat ebbs. He also said he is optimistic on Japanese stocks.

IPO for Chrysler. Fiat wanted to keep it all but the UAW union health trust, which owns 41.5% of the company said, ‘Nyet!’ Analysts said they estimate the company, depending on market conditions, to be $10-$11 billion.  

 US HOME PRICES CLIMB AT FASTEST CLIP IN 7 YEARS. Yes, there have been slowdowns as increasing interest rates has caused some buyers to cancel orders and this slowing could hurt the economic recovery. WSJ 09/25/2013

The Fed Tapering Isn’t Going To Crush Stocks, reported Morgan Stanley on 09/24/2013. MS reported that the next leg up in stocks will be lead by corporate investment cycle.

Nuveen Investment Management, Inc.’s Bob Doll wrote, ‘We continue to climb the wall of worry one issue at a time. …near term choppiness for equities…we continue to recommend a moderately pro-cyclical bias for U.S. equity portfolios.’ 09/24/2013

Rex Nutting wrote in MarketWatch- 5 Things You Didn’t Know About ObamaCare

• It doesn’t reform health care as much as it does health insurance.
• It’ll be affordable.
• It’s not a train wreck-it hasn’t been a smooth rollout but not a wreck, either.
• Almost all that scary stuff isn’t true- no death panels.
• The Republicans are afraid it’ll be a success not a failure. 09/26/2013

And there is no evidence that ObamaCare will cripple the economy.

BlackRock’s Theil Sees Negative Fixed Income Returns For Years. This was reported in the Financial Advisor Magazine. Scott Theil, deputy chief investment officer for fundamental fixed income.

Whisper Facebook runs until Twitter IPO end of this year. Closed above $50.00 for the first time this past week.

Markets Down For 5th Straight Day By Mid-Week- Longest Losing Streak This Year But Positive on Thursday! (whew)

According to WSJ 09/27 The Obama Administration Plain Doesn’t Like Jamie Dimon, CEO, JPM. With that regulators are negotiating a $11 billion settlement related to the 2008 Mortgage-Backed Securities Meltdown. Dimon finds himself square in the sights of government investigations even though the bank did not need taxpayer assistance, was begged by Washington to rescue Bear-Stearns and bought Washington Mutual when the government asked. The bank also did not involve itself in the credit excesses as many banks did, or as did quasi-federal agencies Fannie-Freddie. Even when government officials demanded that banks ‘gorge’ on mortgage securities JPM followed a more sensible approach. (Remember the mandate that everyone should be able to own a home?)  But Dimon has been a thorn in the side of the administration arguing against tighter federal regulations and even voicing his disdain for the current occupant of the White House. According to the WSJ, Dimon’s worst sin may have been that JP Morgan earned record profits last year despite a rogue trader’s enormous ‘Whale’ mistake trade. WSJ, ‘Washington in this era prefers dependent banks that quietly accept their role as money pots to be raided when politics demand. Mr. Dimon keeps deviating from the Obama script.’ Shareholders will pay the fine as JPM shares are off their highs.

THE WEEK ENDED DOWN ON FED CONCERNS.

Finally, John Shiinal’s Tech Investor in MarketWatch’s   September 27th Issue: For those thinking of buying Twitter the experts are comparing it to both Facebook and LinkedIn. The mistakes made by Facebook and the relatively smooth rollout by LinkedIn. Those involved in the IPO hope to avoid one and emulate the other.

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 SECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was-3rd Week September

Estate Planning is something attorneys do and not insurance agents, financial planners or stock brokers. A lot of insurance agents call themselves ‘estate planners’, but I still think their main job is to sell insurance. Still some of those mentioned specialties stick their nose under the tent and call themselves estate planners. Estate planning has to do with drawing up documents on who gets what, who’ll take care of the financials when someone is incapable of or unable to, and, if wealthy, how to legitimately reduce estate taxes. Some even say that a Trust avoids probate. It does but so does a will and naming beneficiaries. For the record I don’t claim to be an estate planner and have an attorney who does that for my family. Lately there has been a lot of noise in the press and other media about ‘tricky’ tax methods to reduce estate taxes. First, and last, there is nothing tricky about utilizing current tax law and implementing it for use. That’s why it’s called Tax Law. That being said, for most of us who have less than a $3 million dollar estate; we don’t need aggressive or complicated estate planning methods. What most of do need is a will. We don’t need a trust unless we desire to (1) Have income paid to an individual or charity over an extended period of time (2) Care for a child or adult incapable of caring for themselves. Some people use scare tactics to make other people create Trusts that do nothing that a named beneficiary and a simple will would accomplish. Unless you plan on establishing a charitable trust or create an Irrevocable Trust you are best served to keep things simple. Unverified numbers state that 3 out of 5 adults do not have a will. That’s basic. If you don’t get one. They’re not expensive and will ultimately save someone grief down the road. And, always, review and update ever two years. Things change.

what a difference a week makes…Syrian war drums on the global back table. Still there are four reasons, according to the Washington Wire in Sunday’s WSJ, why the deal could fall apart.

• The Syrian government may not want or cannot make full disclosure of all chemical weapons.
• Syria may stall and not give full and unfettered access to all sites.
• Russia and US have established an aggressive timetable and want it done by November.
• Russia and US may not be able to get past their agreement first steps.

Client and I talking and she complained that her account wasn’t making money…But, you are, I corrected. Not according to my statement, she said. It shows right there under the heading that’s labeled yield, she complained, I’m only making 1%! Of course, you and I know, that yield is not the total return on the mutual fund or stock but what the interest or dividend percentage is being paid. And, when you look at your statement make sure you know where you were at the end of 2012 and where you are now. That’s the easiest way to chart your progress.

Monday Markets Rocked…but not because of fundamentals. Fed- Possibly- Be- Chief Larry Summers tossed in the towel on his nomination Sunday last and markets rejoiced Monday.  Traders also had to cover their shorts, according to some whispers, leading to triple digit Dow.

Mitch Zacks, wrote in his ZIM Weekly Update, of 9/15/2013, ‘ There will always be weakness in the economy. Right now the positives outweigh the negative…and the bull market should continue for the foreseeable future. I don’t believe a full-blown market crash is imminent. Stick with your long-term investment plan.’

First It’s The Largest Pork Processor, Smithfield, sold to the Chinese. Now It’s Our Chicken Nuggets green lighted to be processed in China for consumption in the U.S.A.  According to the September 17th Salon.com the FDA earlier this month green-lighted four Chinese poultry plants to send processed chicken to American markets. The deal is the chickens will be slaughtered in the U.S., sent to China for processing, and come back for soups, nuggets, patties, hot dogs and whatever; all with No Oversight. Yep, no FDA in China. Economists contacted have wondered how Chinese processors can do this economically given the logistics. Which raises the question on what kind of short-cuts will be found in our patties, nuggets and dogs. The chicken processing biz is at best the foulest and riskiest in normal times let alone outsourcing to a country that has a history of poisoning baby food, pet food and was recently responsible for 44 deaths selling 46-year old chicken feet!

Stuff I Found While Looking Up Other Stuff

Germany now outsources elderly parents to Poland’s nursing homes. Bloomberg.com September 18th written by Naomi Kresge. ‘Germany’s migrating seniors are an early warning sign of a challenge of global proportions.’ With increasing nursing home health care costs rising many German families are seeing their savings being spent caring for their elderly parents. The solution, be it good or bad, is to take them to less expensive care in neighboring Poland. Insurance in Germany only pays half the cost of senior care. Costs for nursing and health care in Germany, as in the U.S. is expected to grow higher. The solution, in a country that is expected to have one of the world’s oldest populations by the year 2050, is to export parents to one-time Polish resorts now redesigned as long-term care facilities. The problem the United States faces is which country will we outsource our aging and growing Boomer generation? Habla Espanol?

Got Your Flu Shot?

SURPRISE! A REAL STUNNER! THE FED FOOLED EVERYONE BY NOT TAPPERING!

Wednesday just about every strategist/investor/trader/broker was tuned in to the Fed announcement at 2PM and was shocked as the Federal Reserve announced that business would continue as usual. The Fed would continue to buy bonds and mortgages to the tune of $85 billion a month for the foreseeable future. The Street was expecting, according to WSJ, Bloomberg and others, at least a cut back of $10 billion a month. The Fed also downgraded its view of the economy and expects GDP in 2013 to be in the 2% to 2.3%. It also cut its forecast for 2013 down to 2.9%-3.1% from 3-3.5%. Before the announcement markets were slightly off but as soon as the Fed spoke markets were off to the races, including gold. Howard Gold in his MarketWatch.com commentary  wrote that the ‘Fed postponed the moment of truth.’ He expects that a larger correction may now be in store when the Fed does eventually ‘bite the bullet’. There was a significant amount of money on the sidelines when the announcement was made. Global stocks, bonds surged on the Fed surprise, reported WSJ. Scott Jamieson at Kames Capital in London, said, ‘Equity and bond markets are currently heaving a huge sigh of relief, a sentiment not being shared by the U.S. dollar.’ Everyone pretty much expected a nice sized correction and were preparing for that eventuality. The only thing not known was how large a correction and for what length of time until the markets could fully digest the extent of the Fed taper. Only it didn’t come and caught investors by surprise. Markets in Asia and Europe also joined in relief on Thursday morning. Pullback Thursday, as expected.

Gross, Gundlach Cheer as Fed Holds Off. Retirees and those who fancy fixed income and especially bank cd’s can expect low interest until 2015, said Scott McGough, director of fixed income at Glenmede to Think Advisor. The policy rate will remain at 25 basis points for a very long time.

Ka-Ching! ObamaCare May Turn Into a Tax Cash Cow. Here are some of the reasons folks won’t enroll:

• Can’t afford the premiums
• Don’t need health insurance
• Won’t support ObamaCare

The penalty for not buying is $95 per adult in the family or 1% of family income, whichever is larger. People interviewed at CNNMoney on September 20th said they’d rather pay the fine than buy insurance they didn’t need or afford at $300+ a month. Even with government subsidy for a family earning $50,000 the cost of insurance would be about $4,700 with a $1,300 subsidy. The penalty about $500.00. Anyone not currently covered by employer health care or Medicare has to sign up for the federal national health insurance.

The Week Ended On A Bummer! Down 185 points at the close. Options expiration, Fed worries as conflicting stories whispered or Budget Battles in Washington as the House attempted to rid the nation of ObamaCare. All may have contributed to the sell-off. Still ETF Trends reported that a buying spree in September ETFs specifically the S&P 500 saw $12 billion of new money. Chris Hempstead, director of ETF execution services at WallaceBeth Capital reported that the August hysteria outflows was being replaced with inflows…

HOW LONG WILL YOUR RETIREMENT MONEY LAST? Go to my web site resources section and find the calculator that is labeled Retirement Portfolio Lifespan. You may be surprised to learn how maximizing your withdrawals will allow your portfolio to last a decade or more.

 

thanks to bob, dor & dean until next year!

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 THOUGH WESTMINSTER SECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was- 2nd Week September

News Flash! There is Obama Care and there is Medicare, don’t confuse the two. If you are covered by Medicare you don’t have to do anything with the open enrollment period for the ‘Health Insurance Marketplace’, set up for the Affordable Care Act, that runs from Oct. 1st through March 31st. Anyone who is on Medicare still has a window of opportunity to review, modify and change coverage and benefits and that enrollment/modification period runs from October 15th through December 7th. Still there appears to be concerns with seniors that Medicare is a-changing. It is not. Rest assured and folks just should do what they do every year around this time- either shop for changes in coverage or do nothing. According to the WSJ on September 8th, if you are still working and enrolled in Medicare check with your HR department at work. Employers may have Medicare as a secondary health responsible position. In most cases your employer will have a primary healthcare coverage.

Larry Summers Withdraws His Name From Fed Chief Consideration. The surprising news broke Sunday and almost assured that the Fed Taper would be slow and gradual due to the two top contenders being architects of the current central bank’s programs along with The Ben Bernanke. Sunday night markets seemed assured that the Fed would continue its process of easy money, as reported in this weekend’s WSJ.

Sweet Smell Monday of $$s! Markets roared ahead, gold fell and talks of  bombing Syria off the table- temporarily. DJIA up 141 points. After weeks of struggling the markets seem to have found their mojo in the midst of (1) Tapering talk and speculation (2) War drums (3) Emerging Market failures (4) No budget talks (5) Lousy payroll numbers. My world falls apart when the housekeeper doesn’t show, the toilet floods and the lawn guy chops off the rain sensor wire. Go figure…

No recession here… L.A. Little wrote, ‘Fear a squeeze and not a crash,’ in September 5th’s MarketWatch. com. ‘The probability is not on the downside.’

Robert C. Doll, Chief Equity Strategist, Nuveen Asset Management. In his newsletter Mr. Doll wrote, ‘ The equity markets remain in pause mode in the short term due to numerous uncertainties and subdued growth outlook. Over the next 6-12 months we believe global conditions favor equities over bonds and support a moderately pro-growth investment stance.’ 

Investment Banks Back. Reducing risk is the game today with Morgan Stanley saying their top priority was their client the United States government.

Caution is now the watchword at MS as they deal with new government regulations and a new stock valuation that is approx one-half of what it was in 2007.

The Biggest Shake-Up in the Dow since…?  Tossed from the Index on the 20th of September will be Alcoa, Hewlett-Packard and Bank of America, not all top performers in the 30 stock index. HP has been up 50% this year, Alcoa down 7% and Bank of America closed $14.48 Tuesday, off from its $50 a share in 2007. So what’s new? Added will be Nike, Visa and Goldman Sachs. Remember the index is not static and constantly changes. GM, Kraft Citigroup, AT&T, Eastman Kodak have all been replaced on the Dow.

  Jeff Gundlach, CEO at DoubleLine Capital shared a few bon mots with Ben Eisen at the close of business Tuesday. Here are the few…:

• A 3.1% 10-Year won’t be good for stocks.
• Short India- long Russia and China
• REITs are attractive

Facebook…Remember scoffs, sneers and a supremely poor IPO messed up so bad that they’ll be teaching ‘How Not To’ in IPO classes for generations is now a ‘darling.’ Shares popped just on the mention of a trip to China by CFO Sheryl Sandberg to promote her (yeah) ‘book’. Over a billion folks on Facebook and the company is mobile mobile and rolling out ad programs to reach consumers on smart phones and tablets. Shares reached an all-time high Wednesday. Still there are detractors.

Rediscovered Fall Fav Tomato Soup & Grilled Cheese Lunch…  Yum!

Blackrock e-mailed a chart compiled by Morningstar last week that illustrates why buying different assets in an investment portfolio is sound practice for Investment Optimization.

Twitter Files for IPO- Used by more than 200 Million people. 7 Years old and created a global on-line communication culture. Not a big and lasting business model like Google or Facebook. No disclosures if the company is profitable, by how much and if it is growing. Stay tuned.

Here are old charts I dug from the archives.

and here is the WSJ most recent chart on IPO performance published September 13th. Goldman Sachs is the lead on the Twitter IPO.

 

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 SECURITIES, INC. MEMBER FINRA/SIPC.