That Was The Week That Was-5th Week January

As Goes January So Goes The Year? That has been the saying for as long as I can remember and if that’s the case we can look forward to a cold summer and a lousy stock market. Last Monday, after the bell, a certain California phone and tablet maker, reported earnings but forecast less than sunny next quarter. Investors punished the stock after- hours even as the CEO explained they were in the business of making the best and not the most. The company is the most widely owned among the large mutual funds and institutional investors.  Markets mixed Monday. It was still ugly and finding winners involved staying glued to the computer through most of the day as some stocks took severe hits in the morning only to come roaring back late in the day. 1/27

JP Morgan in their weekly Market Insights Reported that the Fed Needs to Clarify It’s Own Guidance Over the Next Few Meetings if the markets are to believe that rate hikes are not coming sooner rather than later. 1/27 I had to laugh as investors have beat up lowly PE stocks of quality while bidding up no-earning high PE stocks of social interest while the Street still cries for transparency and guidance. It doesn’t make sense, does it?

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MarketWatch.com reported the changing face of home ownership. The above chart from Trulia is interesting. 1/28

Bloomberg.com Reported on Emerging Markets Fear 1/28. Emerging markets are not sneezing enough to really worry that the rest of the world will catch cold. The MSCI Emerging Markets Index is down 7.1% in 2014. Torsten Slok, chief International economist in NY at Deutsche Bank said,… ‘that the central expectation is while the US markets could take a temporary hit, the shock will not be a major one for the U.S. economy.’ While fears of currency devaluation will hurt sales of S&P global companies the real threat is posed with China.

Turkey’s economy in 2013 was the darling of investors and today- not so much. Inflation over 7% and a falling currency contributed to a weak Turkey Stock Market and Economy until…The Central Bank raised interest rates by a lot on Tuesday of last week. For example it more than doubled its benchmark 1-week lending rate for banks from 4.5% to 10%! And it also shifted it primary lending to the weekly from the over night rate. The result was significant tightening in what is the 15th largest economy in the world. There remains unrest in other sectors of the emerging market world economies which is causing discomfort with U.S. and global traders. WSJ 1/29

Stocks were broadly higher across all indices closing Tuesday with the DJIA up over 90 points.  relief….

On Wednesday the Dow fell 190 points and the Federal Reserve Stuck to its plan to decrease bond buying by $10 billion a month to $65 billion. It was that kind of scary day- if you were a stockwatcher. Stuff that you own went down and stuff you wanted to buy didn’t. It was like that and nothing you could do as the emerging market story still played out as investors were rotating from on thing to another. Still U.S. investors should know that emerging markets panics are about as common as NCIC cable reruns. Matthew Lynn reported in MarketWatch.com there are 3 reasons not to be concerned that the emerging market problems will impact us:

• They sell us stuff not the other way around. When have you heard of huge exports to Turkey or Argentina?
• Currency collapses are part of the solution not the problem. What do you and I care if a Zurich bank made a bad derivative trade?
• Emerging markets are actually growing. The IMF reported that growth in emerging markets would be 5.1% in 2014 versus 4.7 in 2013.

Thursday Markets were Up! It was all about corporate earnings as some reported Huge numbers and others didn’t hit consensus. The Dow closed up over 100 points on earnings and the fact that in the last quarter U.S. GDP jumped 3.3% and could have been a point higher if the government hadn’t contributed with shut-downs, squabbles and the rest you know. We do this shopping business better than anyone else in the world and we’re back doing it again. The consumer was back and numbers, seasonally adjusted, showed just how much we like to shop. The WSJ reported 1/31 how the oil bidzness is assisting in growing the economy. The following info chart from Commerce Department gives you an idea of the contribution energy has.

The Daily Beast Reported 1/31 on how several schools confiscated children’s lunches, tossed them because parents were either behind in their lunch monies or had a zero balance. The lunch costs $2.00 in Salt Lake City Schools and 40 kids were punished. Lunch ladies, who prepare and serve the food, were reportedly in tears as they were ordered to grab trays of food from kids and throw them away. In Dickenson, Texas, a 12 year old was told to throw out his breakfast because he was fifty cents short. In 2013 in Attleboro, Mass two dozen middle-schoolers were left crying after being told to throw away their lunches because they too did not have enough in the lunch money account. This is where school board members stand on their haunches and get things fixed. If not, these are the events that define who we are. Then there is the Greenville, SC school teacher, Margaret Southern, who lived modestly and when she died left over $8 million to Community Foundation of Greenville, S.C. for the benefit of children and animals.

Finally:Dow finished January the worst since 2009. Mitch Zacks reported that the important number on the S&P 500 Index is 1800. If we close under that expect more pain. If above markets should start to recover lost ground 1/30. Historically whenever the DJIA ended lower in January over the last 42 years it followed down for the rest of the year 62% of the time. But,dear reader, before you run to hide for the next 11 months this coming week has some huge numbers to consider including numbers on employment and manufacturing.

Questions call Paul @ 586 205 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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