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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