That Was The Week That Was-4th Week January

 

Friday’s Sell-Off .  

The Dow lost over 300 points Friday. For the week Markets were down. This was the first time we’ve seen this kind of volatility and market jitters in over one year. We have almost forgotten what it was to like see a market fall on news that is not remotely connected to our economy. It was about the emerging markets. Countries such as Brazil, China, India, Turkey, Poland and Mexico. These are countries that have about as much to do with each other as mayonnaise has to do with being on a hot dog but jitters about economies over there translated into a sell-off over here. There were emerging currency strains along with economic worries. But, as the WSJ reported 1/24 ‘ Ukraine and Argentina both look worrying but their impact on global financial markets should be limited.’ I’ll have more on this at our Breakfast Meeting February 8th. Right now I’d ignore the week for the bigger picture which is our economy and the fact that this sell-off represents an opportunity to buy…or to sell.

‘Behind ever bubble, historically and forever, is easy money.’- Fred Hickey, Editor High Tech Strategist. The Week Started with Jeffry Bartash @ MarketWatch.com reporting that The U.S. is on track for best growth since 2005. Christopher Lowe, Chairman of the ABA’s 13 member panel and chief economist said a rising number of economists predict the U.S. will exceed 3% growth. Lowe calls this a ‘breakout year’. The main thing investors and the economy will not have to deal with is a dysfunctional government. That has been placed on hold for 2-years. While businesses may not like some of the decisions coming from Washington the Street understands that there is at least no uncertainty in what Washington does do. so why the 2 week sell-off? Is it a rotation from defensive to cyclical? Profit taking? Or, worries about sustainable and increased corporate earnings and lower expectations from China?

Client Breakfast Meeting. Call or write. February 8th at Sycamore Golf Course. What sectors should do well? How well do I think the economy will do? What should we avoid? Call or email reserving your seat. Continental Breakfast- Free 15 page Material Booklet.

MarketWatch and WSJ Predict Next Round of Tapering in the Fed’s Bond Buying Program to be January 29th. A December lackluster jobs report failed to dissuade the Fed from its second reduction in 6 weeks.  Expect the following language and get used to hearing it, ‘Measured, gradual reduction in the pace of portfolio purchasing as the economy tracks our expectations.’ Or, something like that. 1/21

Expert Joe Blanton Schools Younger Brokers How to Manage Fixed Income in a Period of Rising Rates.  Editorial/essay by Corrie Driebusch 1/20 WSJ/ explained that there is no way that brokers can eliminate all the risk that rising rates pose to bonds. Jim Moore at Wells Fargo Advisors says, ‘Accept the fact that you may lose money on your bonds.’ Using alternative investments are suggested by both advisors such as floating rate and bank rate funds. The following chart shows the fall of bonds since the 1980s.

Baby, it’s cold outside…. Tuesday markets started off positive and by lunch -time turned ugly and even uglier as the day went on, losing triple digits on the DJIA, even though the Naz stayed positive throughout. By the closing bell the Dow recovered and was off only 44 points. PIMCO CEO El-Erian Out at the firm in March….surprised most everyone and left founder Bill Gross alone at the helm. According to Tuesday’s whispers and WSJ sources 1-21 El-Erian’s ventures into the equity side lagged others and could have been the reason. PIMCO’s Total Return, which Gross has managed, has seen investor’s money run for the exits as bonds have been ‘extremely’ out of favor. Gross said to Bloomberg that El-Erian’s leaving surprised him. He also twitted he plans on staying for another 40 years…which should be a cute trick since Billy’s 69, and us Baby Boomers don’t trust anyone over the age of 100. Later whispers emerged that Gross and El-Erian have been at odds and El-Erian didn’t need Gross’ grief. Adios!

The Global Elite Start Arriving in the Ski Town of Davos For the Annual Big Power Meeting of Business Leaders, Rock Stars and Monarchs. 55% of attending business leaders were positive on the economy this year as opposed to 15% of those attending last year. Another source gave it as 60% positive.

Wednesday Marked 3rd Day in a Row of Mixed Markets- Dow Down Naz Up… Carl Icahn had a busy day twitting what he recently bought more of (named after a fruit) and also appearing on CNBC and advocating E-Bay split off PayPal unit. I think there’s a security law that forbids most investment professionals from doing what Carl does. Then again we can’t move markets like Carl can and have a billion dollars to back us.  Claude Erb created a comprehensive model that showed the correlation between interest rates and the price of gold. His reveal in MarketWatch’s Mark Hulbert’s column showed that if interest rates rise to 4 1/2% the value of gold would fall to a tad under $800 an ounce. WSJ 1/23 reported on the reluctance of employers to hire people. Yes, factories, are running at full capacity and the fear that the economic engine will peter out is still with many CEO/owners who are building more capacity, increasing the use of robotics but holding the line on hiring additional workers. This is across industries where expansion is necessary but companies are finding ways to delay or buy what they need at more expense than hiring workers. There was no conclusion to the ‘why’ in the WSJ article but the  inference was the lack of trust by business leaders in the government. While this attitude works well for shareholders it could derail a healthy recovery if people are not put back to work to spend money.

That kind of day Thursday. Markets off triple digits.

Georgia school lunch lady steals over $1 million from school over 20-years. Lives in a 5 bedroom manse. Retires when worried over being caught. What a country, huh?

Fears over China Drives Indices Down Thursday China’s manufacturing number fell below 50 (a magic number for analysts and traders). The estimate was for 50.3. The technical worry, according to Barrons.com 1/24, is that no China no economic global recovery. The worry is if the U.S. can do it all alone- again. No nice numbers, no mixed indices, it was all a freight elevator down. Dow off 175 points.

Icahn Girds His Loins For Proxy Fight and to push E-Bay to split off its PayPal unit. WSJ reported that Icahn believe PayPal could be put up for sale and make it a better deal for shareholders. Two Directors on the E-Bay board twitted that they are aligned to keep the companies together. 1/24

Did You Know there was such as thing as a ‘Surprise Index?’ Sure You Did.

This is a measure of the actual outcome of economic data-release relative to consensus estimates. With two years of stronger than expected data the Surprise Index was/is expected to get a little relief.

Finally- From the WSJ 1/27  investors may see not only a sell-off but a good old fashion correction. That’s when the markets pullback at least 10%. Why do some experts think its possible its because no new cash came in to the market last week and that’s always a sign of more pain to come. We’ll talk about that plus a lot more at my Breakfast Meeting February 8th.

Material and information gathered from sources considered reliable which include but not limited to WSJ, Bloomberg, Morningstar, Barrons, MarketWatch.

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-3rd Week January

 

Get Your Reservation In for Client Breakfast Meeting. The days are flying by and before you know it Spring will be here and we’ll be dusting off golf clubs and tennis rackets. First there are things you have to know in 2014 about your money, the markets and what you can expect. Call or write me for your reservation. In addition to the economy I’ll be talking about how your beneficiaries may best manage your gifts. February 8th 8:30-10:00 AM at Sycamore Golf Course. Call or email!

 

 The week started lousy with Goldman Sachs saying the Market was expensive & 180 points on the Dow went pfhtttt. But that wasn’t the bad news! The horrible, really awful news (sob!) was that an American Institution was being sold to the Japanese! I am talking about the parent company that makes Jim Beam bourbon, and also distills sipping whisky Makers Mark, being sold oak barrel, charcoal and all to the Japanese firm Suntory. Yes, there was a 25% premium paid for the company, but that’s not the issue. Selling the spirits maker is like selling the Washington Monument or the Grand Canyon. This is an iconic American company. Bourbon is really America’s liquor. The Russians have vodka, the Japanese Saki, and the French have Champagne and cognac. But for the U.S. to sell BEAM to the Japanese is like selling them the company that makes Titleist golf balls…..oh, yeah, we did that, too, a few years back.

Off the record - The Street listens to Goldman but doesn’t believe Goldman. The rumor on GS is whatever the company downgrades is something they have their eye on and will eventually buy once the price comes to where they want it.  

WSJ and CNBC announced. Google to Buy Nest Labs for $3.2 Billion. Nest labs is run by several x-Apple execs and their products are sold in Apple retail stores and on-line Apple. The company makes smart thermostats and smoke alarms. Pricey- I may add. But Google wants the execs themselves and their knowledge of getting into the homes of consumers through smart utility products. Current Nest has only 1% of American homes as clients. The CEO of Nest Labs was early designer of the iPod. 

  Alex Rodriguez is frosted over baseball’s arbitrator’s decision to bench him for a year, and is taking his case to a federal court for appeal. Alex and his lawyers don’t seem to grasp the arbitration process…Arbitration  doesn’t have anything to do with the law and who’s right or wrong. It’s all about what the Arbitrator ‘feels’ is right. It’s not about English law but rather Medieval Justice. The law has absolutely nothing to do with it. You can use and argue it in an arbitration but that doesn’t mean it carries any weight.  Many credit card companies now state that if you want to sue them that you have to use the arbitration process. Read the small print on those little updates to your credit card agreement they send you in the mail. As for A-Rod, see ya next year!

Tuesday Markets Bounced Back over 100 points! Expect more days and weeks like this in 2014. Probably more trading markets like 2012 than 2013. And another 100+ point day Wednesday as gold & oil fell.

Michael Kahn in 1-16s ‘Getting Technical’ in Barrons.com wrote, ‘Bulls Still Rule.’ How far the next leg up on the Dow is anyone’s guess, according to Kahn but the charts are still bullish.

Big Investors like BlackRock and Pioneer in MarketWatch.com report 1-16 are betting against Bond Giant Bill Gross.

Not since the 1930s has the U.S.A. seen such a protracted downturn as we have experienced since 2008, reported Harvard University economists Carmen Reinhart and Kenneth Rogoff. ‘Still the USA can count itself lucky, with the exception of Germany, no major economy in Europe has returned to its per capita GDP peak.’ Many economists still believe the U.S. economy remains well below its production capacity- which is really good news. MarketWatch 1-16

Japan has 10 firms that specialize in ‘Hire a Friend’. These firms charge the lonely for companionship. I am trying to think of something clever but just thinking about it is sad.

Not All Banks are Equal- In the Big Bank Too Big To Fail Department: Citi didn’t make numbers, JPM ditto, BAC did-barely and Goldman did it but not like Goldman of old and so Wells rounds the corner a big winner. material compiled from various sources through the week. Markets down Thursday.

Marissa giveth and Marissa taketh. The CEO of Yahoo hired former high ranking Google person Henrique De Castro as COO back in October. Fired him in January before the poor soul could get his Bentley detailed and his jeans pressed. Reasons: He was divisive and didn’t ‘move’ fast enough to suit the CEO. And, according to Ad Week, 1-16-2014, Henrique had trouble building a team. Off he goes and the Street, according to MarketWatch applauded and was concerned at the same time. Concerned about earnings and happy that the boss acted fast.  Don’t feel bad for Henrique as a settlement package valued at $60 million is a parting gift.

According to Zack’s.com Profit from the Pro’s Goldman had it wrong when the set about explaining how the markets are overvalued. According to Zack’s. com the markets are fairly valued moving toward fully valued. And, according to Zack’s the Bull Market is still in place. 1/17 If the 10-year moves to 3.5% then there will be some reaction to the equities. 

Finally- Friday Dow up (but not an up that you’d be proud to talk about or even show off) Other indices off with gold and oil up. Thomas Kee, of Dow Jones, on 1-16 reported that on price alone the Dow looks vulnerable. He warns of a possible modest pullback. 

Material and Information gathered from sources considered reliable and include financial as well as general information print and internet resources.

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- 2nd Week January

 

Earning Season Approaches. So What to Look For? Markets sideways so far this year and our friends at Talmer Financial report that something has to give for equities to continue their trend higher. The markets will need revenues to continue to beat previous quarters in order for the overall market to move to next level. 1-10-2014 If not, expect a possible correction or simply more sideways action.

Did everyone have fun last week?

Don’t Forget February 8th Client Breakfast at Sycamore Golf Club- 8:30-10:00. Register by calling or emailing. Thanks! Bring your beneficiary, or a friend, so they’ll know what to do when your not there. Also 2014 Market Forecast.

The other day I was talking to acquaintance and mentioned how people I knew managed their retirement by buying quality dividend paying stocks. I said those stocks recovered nicely after the market crash of 2008, were increasing in value as the portfolio grew and was also taxed in a most friendly manner. All this didn’t happen over night. When I suggested that these folks consider the same they recoiled in horror. While they liked the ‘idea’ of consistent income and increasing wealth they didn’t like what they termed the seemingly random volatility of common stocks. Instead they preferred the feeling of comfort knowing their money was (1) guaranteed (2) earning less on their savings than inflation and taxes combined, what we call taxflation (3) Sadly- they also avoiding any part of understanding how money works for themselves and passing it on that knowledge to their children. The folks at Motley Fool published the following 5 rules for successful trading and investing:

1. Wealth takes time.
2. Most financial problems are caused by debt.
3. Forecasting is impossible and it’s dangerous.
4. Simple is always better than ‘smart’.
5. Odds of experiencing market volatility exactly 100%.

 Big Banks still Big and Getting Bigger. Washington tried to curtail the growth of the major banks with new regulations. Those new rules barely phased the growth of the five biggest banks in the nation over the last few years. This during a period when interest rates have been at historic lows and many people are not borrowing money. The new rules are hurting small to mid-size banking institutions more so than the majors. Lack of capital is hurting some of the regional's.  JPM being fined for its role in the Madoff Affair.

The First Real Day of Trading a Bummer. All indices off except oil.

The Deep Freeze Didn’t Stop Traders From Bidding Up Stocks Tuesday. Markets up over 100 points Naz a bit less than 40. Gold off.

Very Interesting Report on JP  Morgan’s Fine of $2+ Billion in MarketWatch.com. Seems one senior exec joked about the small (and it was) inexperienced accounting firm that certified Madoff’s business and the JP Morgan exec wrote that maybe the bank should visit the firm and make sure it wasn’t a car wash. Suspicions on Madoff’s trading continued until the bank pulled all its money out of Madoff’s feeder funds but neglected to warn clients or anyone else for that matter. Later, when the scandal was exposed, the executives congratulated themselves for their intelligence once the Madoff theft was brought to light. Along the way families lost most if not all their wealth through the largest financial fraud in American history. You don’t want to be in a shipwreck with these guys. I would assume that women and children first is another thing they don’t believe in following. According to news reports in various financials on 1/9/2014 this fine could impact JP Morgan’s bottom line.

Allocations For 2014 Equity Investors Revealed. Westminster Financial Securities, Inc. Prepared five distinct allocations for 2014. Portfolio percentages from Aggressive to Conservative. Call or write to discuss how these portfolios fit your comfort level.

Roller Coaster Wednesday as Stocks Split with Dow off and Naz Up.   Jobs numbers were whispered as being good (officially on Friday they were not) but markets off because all Fed members were on the same page for tapering, according to Barrons.com 1/9/2014. Could the sell-off be because the 6.5% unemployment rate be hit sooner than later with Fed accommodation stopping sooner than investors originally expected? Seems Aneta Markowska is already predicting that. Microsoft still on the hunt for a CEO as Ford’s Mulally announced he isn’t moving from Ford. Dividend hike at Ford surprises the Street. Higher interest rates may boost some pension plans- especially the larger company plans. 1/9/2014 WSJ.

In the Department of ‘We Knew This But…’ Apple’s next big thing is business. The A is popular with business as employees lug in their iPads and corporations seeing this figure out new apps that help in the business of doing business. Shucks we knew this but seems the rest of the folks at WSJ were surprised that Apple only had a 1% hold in the biz world until last year and then started growing. The iPhone is rapidly replacing the Blackberry as the corporate phone of choice, so writeth WSJ 1/10/2014

Whispers why Mulally said he didn’t want the Microsoft job was simply: (1) Too many waggling tongues leaking info at Microsoft and (2) Gates and you-know-who remain sitting on the board. Yeah, it would be like pushing a cooked noodle up a hill… we got it, Alan.

Bank of America Merrill Lynch report gold could fall to $1150. Ugly, is the world used, and  MarketWatch reported 1/10/2014. Gold, in my estimation, is a trade. Own it during inflationary times otherwise it makes a very pretty paperweight. Buyers in China and India will keep the price of gold from falling more, writes Michael Widmer at BAC.

In Barrons.com BlackRock’s  Fixed Income Chief Rick Reider said the jobs report shows unemployment is structural. It’s not something the Fed can fix with quantitative easing. The jobs number was disappointing. Estimates of 200,000 job increase for the month turned out to be a measly 75,000. The loss of 16,000 net construction jobs was especially worrisome Reider said. Others blamed the cold, especially on construction losses for the month. Share prices did not collapse when the news was announced- which is telling.

Finally: 24 Bank Failings in 2013 versus 51 in 2012 and 157 in 2010. Mortgage Rates Fell Last Week. 30-Year 4.65% –off .05. reported bankrate.com

Information gathered from above sources considered reliable during the week of January 5-11 2014

Questions call Paul @ 586 205 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 January

 

 

Markets Opened the New Year with a Thud! Before  I could begin to savor the Michigan State win in the Rose Bowl the stock market took a healthy step back Thursday even as analysts were predicting in Barrons.com a 10.6% jump in corporate profits for 2014. The Weekday Trader, 1-3-2014, wrote they thought that increase in profits was a bit optimistic but also added their ‘promising’ sectors’ to the 2014 list. (I’ll share those with you at our breakfast meeting.) In the biz it’s called a ‘tease’. The DJIA was off 136 and the Naz 34. Friday saw the markets claw back a bit but nothing worth mentioning.

 

 

  2013 Winners Were All About Boring. Results through 12/30/2013. 2014 presents its own challenges. First and foremost can the rally continue? Technically what do investors need to see in order to have supreme confidence in a continuation? Register for my client breakfast meeting and I’ll give you that plus more. Surprisingly good numbers from overseas but still lagged the U.S. by a wide margin. Emerging markets never did recover in 2013 but many still have them on their ‘fav’ list for 2014. Lack of inflation hurt commodities and gold was wrecked as investors sought better returns holding stocks.

Masterful, magnificent Aden sisters – Mary Anne and Pamela – predict ‘That there are all sorts of reasons to remain bullish’. I’ve been a big fan of these ladies who are very good at what they do.  They give several reasons why this market is for real:

1. Stimulus and low rates to stay.
2. Main Street is buying.
3. Technical's are bullish, too.

New Year’s Day skimmed through Bloomberg, Barrons, WSJ, MarketWatch and assorted bloggers and pundit scribbling and saw no new news to give me concern on the direction of the market for 2014.

REGISTER FOR CLIENT BREAKFAST FEBRUARY 8TH STARTING 8:30 AM –10 AM. Casual dress- of course, lots of goodies, coffee, tea and information to guide you in 2014. Call me at 586 295 0430. Or email me to get your seat and friend reserved. Sycamore Golf Course in Macomb on North Avenue.

Bring someone special: Information on estate and final taxes on inherited accounts. plus where the markets are headed in 2014 and why.

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.