That Was The Week That Was-4th Week May

 

  Inflation hurts retirees more than any other group. While we’ve been spoiled, the last half a dozen years, that the inflation ‘bug’ hasn’t boosted prices on everything, we’re seeing a noticeable increase lately in the price of food. Food and energy are not included in the calculation of the Consumer Price Increase. The Bureau of Labor Statistics reports that the current methodology used in determining the U.S. CPI is flawed because it is difficult to determine ‘the treatment’ of public goods such as safety and education, and other broad concerns such as health, water quality, and crime that would comprise a complete CPI framework. Fixed income investments in a rising inflation cycle certainly hurt retirees more than any other investment sector.

TIME FOR YOUR ANNUAL REVIEW. CALL TO SET UP A CONVENIENT TIME. 586 295 0430.

Monday saw Markets move higher albeit modestly. It was a boring trading day that started with a telecom making news by buying a television provider ostensibly in order to continue paying its current and substantial dividend to its shareholders (CNBC –talk-5/19). JP Morgan’s Mislav Matejka argued whether or not low yield were good for stocks, according to Barrons.com. This in a strategy session with Goldman and MKM Partners. Nasdaq and small caps experienced a better than expected rally. News of the Chinese Amazon, PayPal, Google et al company IPO whispered for a August debut.

 Right quick it went from Boring to Scary on Tuesday when Philly Fed President Charles Plosser said the Fed was ‘sitting on a ticking time bomb that could severely damage the economy.’'  The Dow fell 200 points as traders digested that bit of news, finally closing off over 130 points in an orderly sell-off.  Plosser is worried that the reserves (about $2.5 trillion) held by the Fed, which are basically doing nothing, may suddenly be ‘borrowed’ as the need for more business expansion is required. Depending on the need and how much is quickly drawn down may cause the Fed to react by raising interest rates sooner than expected. Plosser explained the problem with either a ‘grow to slow or grow to fast’ economic situation always has seen the Fed ‘behind the curve’ in a reactive mode. CNBC, MarketWatch.com, Bloomberg, et al contributed. 5/21

Wednesday Markets rocketed up and took back previous day’s losses. New York Times piece (5/21)reported that Fed officials are troubled by the housing weakness. The concern that inflation was running below the committee’s longer-run objective and was seen as posing possible risks to economic performance. Weakness in housing was discussed including factors such as higher home prices, construction bottlenecks from a shortage of labor to tighter credit.

First it was Titleist then bourbon Jim Beam and now (sob) Ragu…all  bought by Japanese companies. Ragu was owned by Unilever, a Anglo-Dutch conglomerate, that still owns Ben and Jerry’s and Lipton Tea.

Volatility? There is no stinking volatility! The stock market fear gauge has fallen to its lowest level in more than a year (WSJ/5/22). Even as the markets have done absolutely nothing in 2014 the Vix has fallen as investor ‘complacency’ has settled in. Traders are not afraid of anything the market does. The latest survey of sentiment by the American Association of Individual Investors found that investors have been neutral on the market outlook for the longest spell in 15 years. The financial outlook for most traders is that there is little risk of an economic downturn, near record stock prices, low interest rates, steady if unspectacular U.S. growth and expanding if receding Federal Reserve support for the economy and financial markets.

Markets will be closed Monday for the Holiday.

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 May

From USA Today.  Seems that way for a lot of people…

Bad New First - Markets Fell Thursday over 200 points Before Closing off 160+ on the DJIA, the worst pasting in 5 weeks (MarketWatch.com 5/15). The Russell 2000, is, according to experts, in correction territory. The reason for the drop in domestic stocks Thursday had to do with weak economic data coming out of Europe. Mike Larson, of Money and Markets, had a different slant. He reported that billionaire hedge fund manager David Tepper told an audience in Las Vegas that it was ‘nervous time’, and that caused the free-fall. Tepper, who made $3.5 billion last year said that he had taken 40% of his equity assets off the table earlier in the year. In Vegas he told other hedgies, ‘The market is dangerous right now.’ That was enough to spark a free-fall. (5/15) Tepper has respect in the institutional investment community.  Or, it could have been a combination of poor economic news and a strong scary message. Interestingly the VIX was extremely subdued. There was no real fear in the selloff. Here’s the play by play as the week unfolded.

WSJ ‘Tech Stocks Are Still Too Silly For Some.’ It’s been the youngsters that have fallen out of favor in 2014. Those high flyers that enamored investors with the promise (wink-wink) of super returns have fallen. In the ‘blink’ of an eye, reports the Journal (5/12). ‘We’ve gone from three times silly to times times silly,’ said Mitch Rubin, chief investment officer at RiverPark Funds. That’s because many investors still feel that valuations are too rich. These tech stocks are now cheaper but not cheap. WSJ/5/12 

Monday Market’s Rocked! New highs for the Dow, S&P 500 Index and both the Nasdaq and Russell 2000 were up sharply. According to Barrons.com (5/12), stocks got a boost when China’s State Council offered a blueprint for liberalizing its financial markets. Momentum stocks got a jolt as almost all were up for the day. It was too early to tell if the momentum rally was sustainable. Or, a Dead Cat Bounce.

Bob Doll, Chief Equity Strategist Nuveen Asset Management Provides these facts to the market direction: (5/12)

• Improving trade
• Eurozone on better footing
• House prices are rising
• Impact of both manufacturing and energy are broadening

 Wednesday Indices Fell as Global Bond Rates dropped to their lowest levels of the year (WSJ 5/16). According to Min Zeng, writer for the Dow Jones, sluggish economies in E.U and U.S. have ‘confounded’ central bankers and surprised investors. The yield on the 10-year fell to 2.523%, the lowest in more than 6 months. Scared investors ran to bonds Wednesday as central bankers promised to keep rates low and pumping in more monies into the economies. Joseph G. Paul, chief investment officer at AllianceBerstein, in a Barrons.com, ‘Wall Street’s Best Minds’, explained why he forecasts the 10-year return of U.S. stocks is 7.1% a year. He goes on to explain that low returns are a fact of investment life today and that investors should adjust their perspective to accommodate this new reality.

Finally: The Chart of the Week. This tells the story more than anything on how this market has disappointed so far this year. Chart sent by Talmer Financial. Source Bloomberg- Business Insider 5/17

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 May

 A FEW YEARS AGO THIS WOULD HAVE BEEN CONSIDERED IMPOSSIBLE THERE ARE NOW PUBLIC COMPANIES IN THE MARIJUANA RELATED BUSINESS.

Takeovers Fueling Stocks Run in 2014? More M&A activity this year since before the crash. Of course the run is more like a fast walk…

average stock price jumped 18% on the day after the deal was announced. WSJ/5-5-2014 Still others believe there is more cautious optimism bidding up shares rather than fundamentals or earnings. Marketwatch.com 5/5Buffett, on CNBC Squawk, said most of the deals are ‘tax driven’.

Markets Up Monday- slightly- After Being Down Most of The Day. In other news: What stocks the pros short may often give traders an indication of what ‘not’ to buy. Two formidable investors, Gundlach and Einhorn, were reported to have shorted ‘homebuilders and health-information technology’ stocks. The homebuilder story is compelling because it has to do with young people not being able to get good paying jobs and faced with rising rents and college debt. Health-information technology has had a remarkable run and some professionals believe they’ve run too high too fast and in a bubble. (Stories from multiple sources including MarketWatch and WSJ 5/6). REUTERS

Tuesday Dow off 130 points.  Naz off 1.4%. ‘Money and Markets’, a Weiss Research Newsletter, reported on the battle between stocks and bonds. Bond yields are off their highs and stocks are stuck in a trading rut. At the same time metals are doing nothing and the volatility index (VIX) has simply collapsed. According to M&M there are two battles going on between stocks and bonds and one will eventually become the winner. While most believe the ‘bubble’ is in bonds there is no clear conclusion. 5/6

Sometimes the news just comes to me…Brian Levitt, Senior Economist at OppenheimerFunds, sent me an email poo-pooing the ‘sell in May & Go Away’, theory.  He wrote that from 1926-2013 and from May to October that period of time averaged a gain of 4.2%. Those that are quick to sell as soon as May is closing may want to rethink their strategy. Here’s a Morningstar chart Levitt included: from 4/10 S&P 500. chart supplied by Morningstar via Brian Levitt.

WSJ SURVEY-ECONOMISTS SEE GROWTH REBOUND. According to the WSJ 5/9 the U.S. economy is ‘speeding’ ahead this quarter- perhaps faster than 4%. Still investors shouldn’t confuse the stock market with the overall economy. Small caps, according to Anthony Mirhaydari, are sending a bearish signal. If one looks only at the Dow Jones, AM reports, everything looks peachy. Then there is the Russell 2000, which represents the small cap sector. See the chart. And this can be nothing more than investors rotating from small caps to large cap value stocks, which the Dow is comprised.

Jimmy Cramer commented on CNBC Friday that as investors sell the Russell the money is invested in other sectors- specifically Large Cap Value. He isn’t buying that the selloff in small caps will rout the entire market into a crash.

Postal Service Loses $1.9 billion in the first 3 months of this year. So why are we not shocked?

Finally Dow ends up for the week and sets a record close. Naz down for the week.

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 –1st Week May

Experts predict that even a million dollars may not be enough to live on for retirement. Most people will never save even a fraction of that and they may just be fine if they don’t listen to the experts.

Retirement planning by the ‘so called experts’ demands that retirees not touch their principal. This has to be ignored if the average family wants to retire in relative comfort. Someone who’s saved $250,000 may only get an income of $10,000 a year, according to the experts. But, using both principal and earnings, on a portfolio that has a total return, on average, of 6% a year, a retiree may be able to get $24,000 a year income for 14.9 years, before running out of money. Do your own calculation using both principal and earnings using any online calculator. Or, go to my calculator section at primaryplanner.com

Money Manager Survey Illustrates Majority of Managers Bullish Over the Next 12 Months.

Report and chart from Barron’s.com April 25, 2014.

Jonathan Golub, chief U.S. market strategist at . RBC Capital Markets said on 4/28, ‘Bull market won’t die until a recession hits.’ And, according to Jonathan, we’re a long way from a recession.

MARKETS CLOSED MIXED MONDAY. APRIL 28th. Ditto Tuesday. Ditto-Ditto-Thursday.

 

Experts, see the chart at the top of the page, like European stocks. Investors may see value to compliment their domestic holdings.

MARKETS UP WEDNESDAY ACROSS THE BOARD.

• First Q GDP lousy. Only 0.1% versus estimate of 1.2%. Markets should have taken a nappy but…
• Chicago PMI showed stronger manufacturing growth.
• The Federal Reserve issued a statement saying the economy ‘improved’ in the last few months. Which is about the same thing they said in March. 2014. (information from Barron’s.com 5/1/2014).

WSJ reported Retirement Plan Investors are putting more money into stocks since the crash of 2008. Stocks accounted for 67% of all new money for the month of March. 5/2/2014

Bloomberg Reports Jobless Claims Unexpectedly Climbed to a 9 Week High. Personal spending rose as did income for the month of March. 5/2/2014

Barrons.com published Boston based money manager Jeremy Grantham’s essay on stocks and direction of the markets. Grantham’s still bullish and states we could see another 20% upside on the S&P. He also writes that 2008 was a true global asset  bubble and he fails to see that in today’s market. 5/2/2014

The Week closed down. Ukraine overshadowed a surprising job report- that still had some ‘sticky’ bits, such as there were 800,000 less job applicants due to dropping out, retiring or going back to school (CBS News reports 5/2). Investors sold off not wanting to come in Monday morning to invasion news (Bloomberg 5/2). John Manley, chief market strategist at Wells Fargo Funds Management said of the Ukraine situation, ‘I don’t see it going away right away.’

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.