That Was The Week That Was-4th Week October

  Alan Greenspan’s New Book,  ‘The Map and The Territory’, reveals what has gone wrong with American politics and the U.S. economy. An increase in entitlements has contributed to a lack of personal savings in Americans, and that’s been critical in financing our capital investments. Both parties, Greenspan writes, are responsible for trying to outdo the other in the entitlement department. The decline in savings has been partially offset by the U.S.’s borrowing from overseas. The growth of entitlements has to cease. He also said, in a separate interview, that he thought the markets were still undervalued.Greenspan was Fed Chief and is married to TV journalist Andrea Mitchell. Material & pic culled from October 20th WSJ.

Zacks, in his ZIM Weekly Update Sunday, writes that he thinks something has to give. In order for the markets to continue to advance there needs to be a 5%-10% correction. He believes that there are a lot of positives out there but that the markets are a little frothy and running ahead of itself. Unemployment is still a huge issue and the only thing making the markets run is the Fed liquidity philosophy. 

Economists Revise Growth Expectations After Government Shutdown. Jeffry Bartash at Dow Jones on October 28th reported that the economy was sputtering before the shutdown and now it could take awhile to get it moving once again. Retail is showing signs of weakness. 

Middle Class Shrinkage Could Continue with lower income classes growing as current unemployment numbers become the New Normal, and expanding entitlements such a National Health Care are supported by middle and upper classes. Republicans advocating capitalism have done themselves no favor by allowing Tea Party radicals to hijack recent debate. National Healthcare could be doomed if the young and healthy decide the IRS penalty is cheaper way than the buying of insurance. Rates will surely explode across the board. There is no way that actuarially insurance companies can provide coverage for those aged and the seriously ill at moderate premiums.  One insurance company reported last Tuesday only 100 sign-ups on national website while expecting thousands.

Got any Idea Where Your Candy is Made? Jelly Belly is expanding to a factory in Thailand. Mint Twists are made in Guatemala. It’s all about U.S. sugar price supports which cost candy makers twice as much as anywhere else in the world. Rising labor, utility, packaging, health care in the U.S have driven some candy makers overseas to build factories and to be able to compete globally.

Last Monday markets mixed. Zacks reports:

• The trend is your friend and the trend is still bullish.
• U.S. economic data remains in positive territory.
• Stocks not overvalued versus the alternatives.

WHISPERS BELIEVES IN S&P 500 REACHING 1800. i can remember when folks were worried markets wouldn’t- couldn’t climb 1400.

Tuesday a Lousy Jobs Report Spurred The Markets. Experts figure the worse the economic jobs report the longer the Fed continues its stimulus. Paul B. Farrell reported,’ Bet on The Bulls Now.’ Don’t miss it, he writes, ride it into 2014. And, he waxes enthusiastically about how growth is driving returns and expect 2014 to be a great year for the markets. He even compares the boom to the Roaring Twenties Stock Market. He believes the opiate of the market is the central bank liquidity. The degree of stimulus since 20o7 has been unprecedented. Washington’s political drama is good for the markets. History tells us that the best time for the market is when unemployment is high, above 6%, and falling.

2014 could be one of those years where you lock in an all equity-income growth allocation and snooze. 

A Market Correction? Markets don’t run straight up without taking a rest. They’ll run sideways and then down for a bit before resuming their run. U.S. stocks declined on Earnings Forecasts after a 5 day rally, reported Bloomberg. The S&P 500 Index was valued at 15.9 times estimated earnings last Monday. This is the highest since December, 2000. We’ve been looking for a slight pullback since May…

The WSJ reported Thursday what we need to worry about in the jobs market is that there are no real new businesses to hire workers.

Since the recession things have been moribund for new business. New Biz is the engine of commerce and for hiring. Fewer people working fewer people buying goods and services. That simple. While the article doesn’t blast the administration for lack of effort it can be pointed out that Congress and the Executive branch have done virtually nothing in the last five years to stimulate business.

 

 

Finally-October 26th Our Friends at Talmer Financial Reported: Equity markets had a choppy week on a mix of data. Talmer reported in their The Monitor, ‘We expect earnings season to be stronger than the past several quarters, but certainly not a ‘blow out’. And Morningstar Interview on Friday with Jeremy Glaser concluded There is more downside than upside in current job market. He still liked equities going forward.

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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That Was The Week That Was-3rd Week October

 

  According to Mark Hulbert in his MarketWatch blog of 10-11 the easiest way to pick a winning stock is by choosing the ones that are the most profitable.  A Professor Robert Novy-Marx, finance professor, gives an example of Apple: Total Sales in 2012 were $156 billion, versus $88 billion cost of goods. When divided by total assets of $176 billion the gross profitability percentage was 39%, putting Apple in the middle of the profitability pack.

Another method is a simple chart to buy stocks that are ready to run. This is by watching a stock’s short-term moving average breaking above  its longer moving average. Below is a chart from Investopedia that shows the 50 day SMA crossing over the 100 day.

Some traders use a 30 day SMA and watch for the 10 or 15 day SMA to cross before they buy. Others maintain that if you buy anything that is crossed over the longer moving average the stock will continue to run until the shorter term moving average falls below the longer. As with anything neither of the above are guaranteed of success and are to be used in conjunction with other fundamentals.

Whispers –CNBC Squawk Box Conversation Monday -Some Believe We Are 1/2 Way Through a Bull Market Recovery and S&P 500 will reach 2000 in 2014.

That’s How it Ended But First:

Monday Markets Dove 100 Points Early on The Dow Ended Up Positive at the Close.

Bob Schieffer on CBS News Monday 14th explained how he believes the government will reopen and default will be avoided…until next year. We’re not creating great Statesmen in Washington, Schieffer said, but some of the world’s best can kickers. U.S. officials have criticized the EU for just the same tactics. Remember?

What Sectors Were The Best Performing The Last Four Times The Market Declined Over 15%:

• Consumer Discretionary
• Finance
• Technology
• Industrial

CEO of BlackRock Lawrence Fink said in an interview Monday 10-14. on CBS, about the government shutdown when asked if he thought the politicos understood what they were doing. Not only do they not understand the consequences but also a complete lack of grasping  the enormity of what could happen for such a small inconsequential demand. A U.S. default would throw the world into a massive recession. paraphrased from the Scott Pelley interview on CBS news.

John Feehery, one-time Congressional Aide, on CBS News Monday 10-14, The Warning to both parties on the possible loss of voter trust.

The Republicans should not think that the government shutdown won’t come back to haunt them in 2014.

 

No Deal on Debt Ceiling or opening the government  Last Monday in Washington and Markets Fell over 130 Points on the Dow.

Lots of Pressure Being Put on So-Called Politicos by Unions and Business. Surmising that campaign money may be waved or held back as a carrot, Still getting the arch-conservatives to do the right things caused the House to throw in the towel on a compromise bill late last Monday. Months of negotiation have been wasted and no end in sight as Tea-Party types have dug in their heels on so-called principal. With re-election for many of them right around the corner Irwin Kellner wrote his commentary Monday in MarketWatch that in a recent poll a great many Republicans and quite a few Democrats are unlikely to be re-elected come 2014. Kellner suggested that Wall Street get in the game and only a ‘stock market crash’, such as the one in 2008 would catch these people’s attention. Yes, a great many of these pols have investments and hitting them in the wallet is the only way to catch their attention. Unfortunately it burns the global markets at the same time and all of us. While most investors are still optimistic, even at this late stage, the worry of such an actual crash is seeping into the markets. Global tensions are real enough.

Note that for 2 weeks concentration of this blog is about politics and not the economy and money management.

  At the last minute politicos pulled the plug on a possible default and the President signed it around midnight Wednesday.

  YOU CAN’T FIX STUPID.  DEFAULT AVERTED AT LAST SECOND. Angry voters may keep Republicans in the minority for a long time. World wide grumblings and disgust on political mischief caused by threatening global depression by key Tea Party representatives. I would expect contributors, business leaders and moderate Republicans to clean house before the 2014 elections.

Thursday Markets Celebrated With S&P 500 Hitting All-Time High.

China  Growth Speeds Up GDP up 7.8%. European Markets Cranked Out Wins For 7 Straight Sessions Ending Thursday On China News. Bloomberg 10 18 2013.

Twitter IPO November 15th

 

Finally: John Boehner, according to MarketWatch, is the most popular… Halloween Costume.

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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That Was The Week That Was-2nd Week October

No Deal Monday Morning With Stock Futures Slightly Down in Pre-Market.

Shutdown, According to Monday’s WSJ, Likely to Prolong Fed’s Stimulus. This chart WSJ survey.

STUFF YOU KNOW AND YOU’RE NOT ALONE…

 The Daily Beast’s John Avlon Reported, ‘Republicans With A Death Wish’. Going into Sunday morning there was no deal to end the government shutdown or progress on paying the nation’s bills. Avlon reports on the vicious Civil War within the Republican Party between Tea Party types and ‘responsible’ centre -Right. Seems Sen Ted Cruz stands at the head of the table in the hunt for ‘Republican Heretics’, who are not ‘sufficiently conservative enough’. Cruz calls them ‘collaborators’ with Obama. But lately Cruz has not been seen. Grover Norquist criticized Cruz by saying, ‘He pushed House Republicans into traffic and wandered away.’ As of Sunday Avlon reports that the inmates are running the asylum and leadership looks impotent. The GOP is in a tightly controlled panic mode. With mid-term elections coming in 2014 and the big one in 2016 donors are warning the GOP to clean up their act. Avlon’s piece was originally published in The Telegraph October 12th. This is Cruz not to be confused with… Tail-gunner Joe.   scary, huh?

 Rana Foroohar, columnist for Time Magazine, The Curious Capitalist, 10-11-13:

She labels it- The Gridlock Economy Blues. Rana warns readers that the New New Normal will be both the economy and politics, and both will be more volatile. ‘Politicians play chicken with the country’s credit, borrowing rates and the politics becomes more polarized and extreme as a result.’  She goes on to write that it is difficult to imagine how any decision can break the cycle. And, she warns, this is the real New Normal, and we will all pay the price.’

U.S. Money History Quiz!

Q: What currencies were used in earliest colonial times?

A: Americans Used English, French and Spanish currency. Spanish was the favorite- pieces of eight.

Q: When was the first ‘American’ coin struck.

A: In 1793 at the U.S. Mint in Philadelphia.

Q: There has been more than One Federal Reserve or U.S. Bank in the United States: Name the other two.

A: The first bank was chartered by the Continental Congress as the Bank of North America in 1781. The Second U.S. bank was granted a 20-year charter and opened in 1816. Our current Federal Reserve Bank was created as a nation’s central bank in 1913. There are 12 regional banks representing the country with the New York Federal Reserve Bank- First among equals.

 

The Week Was All About Politics: Here’s The Highlights… 

MARKET ANXIETY NOT FELT BY SOME PROMINENT MONEY MANAGERS. The WSJ reported Tuesday morning that while some measure of anxiety was spreading in the financial markets there are some that don’t think the shutdown will last or, more important, fear that the U.S. will fail to make payments on debts due.

Cliff Robbins, CEO, of Blue Harbor Group, ‘I don’t see the lurching fear but if we do it will be a buying opportunity.’ Mr. Staley, managing partner of BlueMoutain Capital, ‘I don’t expect consolidation in the banking arena. This will help the current group of megabanks to regain the pricing power that Wall Street historically had.’

Some of the managers discussed the current inequality of income as a serious problem. The inequality is unprecedented, said Richard Robb, founder of Christoferson, Robb and Company.

Robert C. Doll, CFA. In his Oct 7th, Weekly Investment Commentary.

1. Fed taper talks continues to stall the investment community but focus is on timing rather than on the actual need to begin.
2. Rancorous debate in Washington has compromised investor confidence.
3. Earnings outlook may be far from encouraging in the upcoming earnings release period.

IS TWITTER THE BEST IPO OPPORTUNITY SINCE TESLA?

IT WAS ANOTHER BAD DAY FOR MARKETS TUESDAY!

AND THE REPUBLICANS HAD THE EFFRONTRY TO SAY THEY WERE NOT WORRIED ABOUT THE 2014 ELECTIONS. 

Mark Hulbert @ MarketWatch.com on October 9th reported, ‘No signs of a top. Banking stocks are hot.’ Hulbert reported that the entire financial sector, in general was growing in popularity with investors. There was no one particular bank the experts liked especially well. Hulbert reviewed over 100 sectors of the Dow Jones classification system and the second most upgrades recently were in the financials.

Bloomberg reported 10-8-2013, The recession in Europe has created a huge business in payday lenders. The interest rate being charged by these payday lenders is at a theoretical 5,853% per annum. Yep, five thousand and eight hundred fifty three percent! There are more than 8 million short term loans in the U.K. with more than 2 billion pounds a year. 

Get Used To This Face. Janet Yellen should be confirmed as Fed Chief. What makes her different, besides being really smart, is that she believes the Central Bank should promote employment. Expect her to speak about ‘full employment’ and inflation in her testimony before Congress. Her economic theory is full employment or low inflation; you cannot have both. and the Kingston Trio advocated ‘Clean Body or Clean Mind.’

this is about right…

MARKETS GOT ALL GIGGLY WEDNESDAY ON NEWS THAT THE PREZ AND THE GUYS WOULD BE HAVING A SIT-DOWN.

Thursday a Huge Bounce! DJIA +300 plus!

WSJ Friday 10/11 Released Poll on Who’s to Blame! Republicans scored worst- lowest scores in 20-years!

70% interviewed said the Republicans put politics before what was good for the country. Ugly.

 

HEY! We Got Earnings Season Coming Up!

Opps! Continued -Robert C. Doll, CFA @ Nuveen Asset Management reported in his 10/07 Investment Commentary: ‘The U.S. economy has shown impressive resilience over the past three years, suggesting the recovery may only be blown off course in the event of something sizeable and protracted.’

No deal at the close of business Friday but markets UP over 100 on the Dow.

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

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