That Was The Week That Was-4th Week April

 Bad News First- Week ended on a sour note with the S&P 500 off 0.8%. Halfway through earnings season and its a mixed bag. Friday’s NY Times online reported Wall Street lower on corporate results. In the background a Ukraine non-named official said the standoff with Russia was the beginning of WW3, and that caught the Street’s attention and didn’t help the direction of the markets. Chris Bertelsen, Chief Investment Officer of Global Financial Private Capital in Sarasota, Florida, said, ‘..we were overbought yesterday and so it was another reason for investors to take profits.’ Now for the play by play…

Stress Testing Investment/Retirement Portfolios is all the vogue. Daniel Satchkov, president of RiXrema, a risk modeling and consulting firm, says that investors need to mitigate or accept certain investment stress points. What it boils down to is how fast a portfolio recovers from a major or catastrophic global economic crash. He also suggests when an individual ‘stress’ tests their investment portfolio is not to dwell on ‘what happened’, but what ‘may happen’. Here’s his chart:

Investors who own individual stocks may find this of value but those that are clients of active managed mutual funds may find this exercise impossible due to the lack of control over their individual holdings.

Monday Started The Week Up! Bloomberg reported big deal in pharma as Novartis bought Glaxo Cancer Unit and sold Animal Drug division to Lilly. 4/22. Social media still under Bear attack as 22 Bears tightening their grip on you-know-what-eh? after you-know-who’s buying binge. On opposite side is Credit Suisse upping estimates of the same stock. One of the major banks came out with 20 stocks to buy and hold forever and investors wrote and congratulated themselves on ‘not owning’ a one.

Robert C. Doll, CFA, of Nuveen Asset Management:

1. Less fiscal drag from fed weighting on economy and state and local spending appears to be on the rise.
2. Low inflation should help business and consumer.
3. Corporate profit rising.
4. House prices rise.
5. Manufacturing and energy renaissances are broadening.
6. Headwind from consumer deleveraging behind us.

Carl Icahn sips martini, brags up his company and slips an f-bomb on-air CNBC Tuesday. He also says that activism is vital in keeping companies responsible to shareholders.

Markets Up Tuesday Xross the Board.

David Einhorn’s Hedge Fund Greenlight betting against a ‘group’ of tech stocks that Einhorn calls ‘Cool Kid’.  Bloomberg 4/23 reported that Einhorn did not identify the stocks and also criticized ‘cheerleading analysts’.

USA reports Mass. Senator Elizabeth Warren’s new book, ‘ A Fighting Chance’, offers insight into the 2008 crisis. Warren writes that it ‘didn’t have to happen.’ She also stated that she could not understand why Washington showed so little concern about how the financial stress affects normal people. When she asked then Treasury Secretary Geithner why the widespread abuses by the major banks in the massive waves of foreclosures, Geithner responded by explaining that they were designed to ‘foam the runway’ for the banks. Obama refused to make her director of the Consumer Financial Protection Bureau, which she fought to create, because she made the banks ‘very nervous.’

 

Do stocks get a boost out of stock splits? John Kimelman in Barron’s.com responded that in the short-term shares are more volatile and suspect to day-traders. Long term shares will settle down to market efficiencies.GE is possibly getting rid of its financial arm and focusing on upping its industrial business. Nothing firm but WSJ reports that the company is looking overseas either buying all or part of a French conglomerate. Finally- Alibaba IPO- how big? It could be the biggest- like ever! Rumors that the company may top Ag Bank of China.

INFORMATION GATHERED FROM SOURCES CONSIDERED RELIABLE INCLUDING BUT NOT LIMITED TO NEW YORK TIMES, BLOOMBERG, BARRONS.COM., MARKETWATCH.COM.. WSJ AND CNBC.

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES PROVIDED THROUGH WESTMINSTER FINANCIAL SECURITIES, MEMBER FINRA/SIPC.

That Was The Week That Was-3rd Week April

 

If  a can of tuna fish was selling for ten cents people would be buying as many as they could carry. The stock market is the only place where bargains are ignored.

 

The Week Before Last We Saw A Perfect Example of a ‘Dead Cat Bounce.’  This is an expression that means be careful of buying either stocks or sectors after a trading day  where there was a substantial ‘bounce’ after a huge selloff. Thinking the ‘worse’ may be over investors pile in the day after, hoping for a continuation of a ‘rally’ (or buying on the dip), only to find Mr. Market suckered them in and experience a continuing correction. Before the year began we called for more volatility than we had in 2013 and we sure have been getting that. The interesting thing is that the VIX, or volatility index, has been rather subdued. The VIX is sometimes referred to as the ‘Fear Index’, and ratchets up when markets are in turmoil. Investors may trade the VIX through a number of ETFs. Volatility, it seems to me, is more intraday than day to day. Unless something or event really spooks the market I’d expect a less fearful atmosphere. Trading the VIX, even in these markets, can be most disconcerting.

Better Than Expected Retail Sales propelled the markets Monday. U.S. retail sales up 1.1% in March, biggest gain since September, 2012. Reported by the Commerce Department. Citigroup, the third largest U.S. bank, reported an unexpected profit increase. The news on both retail and banking jump started the markets but saw gains wither almost into negative territory until the last hour of trading where strong buying suddenly brought the Dow up 146 points,  the S&P +22, while gold lost $13.00 and oil was off 1. to 103. It was truly a roller coaster Monday.

Ditto Tuesday’s Action. It was the same story- up, then down and closed up in the final hour, or so. More gloom and doom stories appearing in various online publications. Robert C. Doll, CFA, of Nuveen Asset Management, which the parent company, has been sold to TIAA-CREEF, wrote 4/14:

• First Quarter earnings will likely be unimpressive. But 2/3rds of reporting companies beat estimates!
• FOMC minutes provided a bright spot as Fed Chair Yellen confirmed fed fund rate projection was not considered a policy change.
• Fed deficit fell below 3% of GDP in first quarter.
• Ultimate global risk from Ukraine crisis should be limited.

Bloomberg April 16 Reported,’ Industrial Production in U.S. Rises More Than Forecast.’ And with that the DJIA was up over 160 points and the markets were in the black-again- for 2014. ‘Aluminum demand will continue and the auto sector will probably remain a mainstay for manufacturers.‘

MIXED MARKETS THURSDAY. Bureau of Labor Statistics reported the following five foods marking their largest monthly gains in price since September. 2011.

• Bacon +13%
• Ground Beef +8%
• Oranges +23%
• Coffee –17% but +31% over 4 years.
• Peanut Butter –2% but +30% over 4 years.

MARKETS CLOSED FRIDAY FOR HOLIDAY.

Questions call PAUL @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with people who care about their money.

SECURITIES OFFERED THROUGH WESTMINSTER SECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was-2nd Week April

  Friday continued the selloff…Here’s the recap.

The Week Started Ugly. Naz off again, and continued it’s worst stretch since 2011. Robert C. Doll of Nuveen, in his Market Weekly Investment Commentary wrote that he thinks we’ll see a sideways market for awhile. Michael Kahn, in Barrons.com, Monday’s Getting Technical, reports, ‘ The Nasdaq is now broken and favorite momentum stocks are toast.’ Yes, dear Reader, these are the stocks that traders adored and ran on hope that earnings would eventually catch-up to price. Cody Willard at MarketWatch, writes about his specific stock shorts and is concerned about the markets short-term but more positive he writes on a ‘momentum stock recommencement probably sometime this summer.’

 

IRA Ruling by The U.S. Tax Court Stuns Advisors and Savers.  For 20-years the IRS Publication 590 was the bible on how you could do certain things with your IRA. It allowed one could have a rollover for each IRA once a year.  The Tax Court says not so. The IRS has now disagreed with its own publication and ordered that individuals may only do 1 Rollover per year no matter how many IRAs you own. A rollover is where you take physical possession of the IRA assets and have to place them back into an IRA within 60 days in order to keep the tax deferred status. Those with multiple IRAs were under the impression they could do a Rollover once a year with each IRA. Not so, sayeth the Tax Court. Only 1 Rollover per year no matter how many IRAs one owns. If someone does two the other rollover becomes a taxable event. Make sure you get guidance before doing a rollover. New updates to the IRS publication will be available in 2015.

No One Knows The Short Term Direction of The Market. Dennis Gartman, editor of the Gartman Letter, told CNBC late last Monday 4/7, that the pullback in momentum stocks in tech and biotech space scared ‘one big bull out of the market.’ He said he wouldn’t be buying stocks until they got much cheaper.He said that the ‘whole world has changed.’ Here’s the problem on April 1st he was raving about the markets on the same CNBC program. Tuesday markets up minimally across the board.

Gotta Ask?  Wednesday Dead Cat Bounce? Dow up Wednesday over 180 points. We will wait and see. So far not much of a real correction. Federal Reserve Video Conference Meeting early March. Very hush-hush where Fed officials discussed abandoning fixed employment percentage as a starting point to increase interest rates. Yellen stated in minute meeting March 18-19 that this in no way changed fundamentals of Fed policy. Here’s what got me excited…AT&T building out an ultrafast Internet in North Carolina. Google also looking at the same market to bring out its version. This will be about 10 times faster than current internet service. Which will mean that I will get ten times more frustrated when it goes down during peak hours. 

I hate it when I’m right about bad things. Thursday stocks got walloped. Anyone who bought into the ‘bounce’ got a big unexpected surprise. Naz was the biggest loser and the list of stocks that lost 4% of more was lengthy. It was a dead cat bounce, and if you didn’t know the meaning Wednesday by Thursday market close you were an expert.

MarketWatch.com published the above chart from The Financial Philosopher. Investors now must manage expectations, wrote Jonathan Burton in his MarketaWatch.com column First Take, 4/11. Thursday’s action saw the Dow off 2% and the Naz off 3%.

JP Morgan missed earning estimates Friday while Wells made theirs. Outside of that there was no real reason for the markets to continue their descent. The DJIA fell another 148 points. This is not the beginning of a recession but a good old fashioned correction. Merrill forecast another 10-15% correction for this coming Fall. Barrons.com 4/12.

Information gathered through sources considered reliable including Businesswire.com, WSJ, Barrons.com, MarketWatch.com, CNBC, CNN and others.

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-1st Week April

 

The Worst News First. Friday Markets Drop. The DJIA OFF 160 – The Nasdaq Fell 110 points! The Worst Day in a Year for the Naz. Part of it was disappointing jobs data and the other appears to be a rotation from small caps to large, according to Keith Springer of Springer Financial. The jobs report wasn’t that bad although there was a slight increase in the percentage of unemployed. Momentum stocks fell substantially. There may be more to come as earning season starts this week with JP Morgan and Alcoa kicking things off. Investors will be focused on sales and organic growth.

 

 

Chuck Jaffe reminds readers 3/30, that it’s not 1929. Investors should ignore scare tactics of a coming crash and instead concentrate on the economy, over the market, and the long term trend. Ignore what’s happening now, he writes. Some people so scared they’re sitting on sidelines earning nothing while the markets have marched higher. It’s sad.

Fed Reserve Chairwoman Yellen said last Monday that the recovery still feels like a recession to many Americans, which is why the central bank will keep extraordinary  support for the economy for ‘some time to come!’ And just like that ‘poof’, the markets took off 135 points on the DJIA. 14 on the S&P and 43 on the Naz. The last time she spoke and defined ‘when’ as 6 months  the markets fell over 100 points. Monday she explained it in more nebulous terms and this time the markets ate it up. Gee, they like this woman!

Flash Trading has been around a decade. Maybe a bit less. It’s had articles printed about it. Blogs complaining about it. Investors frustrated by it. But the FBI and Security Police haven’t done anything about it until Michael Lewis wrote his book and showed up on 60 Minutes. Now that Lewis explained exactly how flash trading has been screwing institutional investors and in a round about way you and me the cops suddenly are interested in putting someone in jail. Kind of like the Bernie Madoff thing. Some people complained, others knew he was stealing and nothing happened until Harry Markopoulos spent 8 years getting the evidence to nail him.

Another Good Day Tuesday Dow +70 and Naz +60. Speculation on a spectacular second quarter. Matthew Lynn at Dow in London suggests that the next big mover will be overseas as deflation fears will spur ECB to boost euro-zone recovery. He writes that the Bull market will end some day but the ECB is about to extend its life another 12-18 months. Party on…

Wednesday had its ups and downs but ended mostly up. The DJIA plus 40. Whispers about a grand April and I have to remind myself that the ‘Sell in May’ crowd didn’t show up in 2013 but could in 2014. Then there was this April 1st piece in Barrons.com by Steven Sears that suggested someone ‘flash traded’ and did a bit of front running ahead of the publication of ‘Flash Boys’!  Heavy ‘bearish’, and very suspicious, option bets on the Nasdaq OMX, that operates some of the biggest stock and options exchanges, and would be a suspect in any regulatory ‘flash trading’ investigation, were made before the Lewis’ book hit the public. It was as if someone knew that it was coming out and would create a stir.   

Before 2014 even started experts called for a ‘flat’ year for utilities and maybe the same for health care. I thought that utilities may be out of favor for 2014 only because tech, manufacturing and health still had lots more room to run. What’s happened is that the utility sector has been a super winner so far this year and the health care sector still see plenty of gas, that according to Jeff Reeves at Dow Jones. Energy is another sector that Reeves likes…a lot. Especially in the domestic drilling firms. On-land domestic drilling has made a ‘pretty’ penny this year, he writes for MarketWatch.com. Attention now to Warren Buffett who talked to Forbes Magazine and said crashes occur when total market value exceeds GDP, and supposedly gave 2 interviews; one he predicted ultimate crash and then the next week, in another interview, said it would be a few more years before there would be a recession. A lot of doomsters are giving credence to Buffett for predicting the 2008 market crash only he warned folks about a coming market collapse four years earlier. Lots of money lost if you pulled cash out and waited, and waited…

Finally- Next Week The IRS Publication 590, the bible for IRAs, the Tax Court Rules, is wrong!

Information gathered from sources considered reliable which included: CNBC, Bloomberg, WSJ, MarketWatch, Barrons and others.

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.