That Was The Week That Was- 1st Week September

 

In 2011 many of us worried we’d never again see the S&P 500 Index reach 1400. Today it’s over 2000. There were also worries about slow growth and a double-dip recession. The Ben Bernanke devised something in 2011 he called ‘The Twist’, where the Fed would sell short term Treasuries and buy the long-end. Unemployment was 9% in 2011. Japan had a devastating Tsunami. Credit rating of the U.S. was downgraded. Inflation 3.2%. Interest on a 10-year was 2.01%. Worries about the EU and their banks continued and  their governments  had little money and less in the ideas department. European stocks were hammered late in the year. It seemed like a replay of 2008 for many EU members.The U.S. birthrate it was announced in 2011 had decreased for the 3rd year in a row ending in 2010. The three biggest worries Americans had were the Federal debt, jobs and economic instability. It was an awful year of worry and uncertainty but slowly we have gained ground, housing has edged up along with employment, the stock market and consumer confidence. It’s good to look back and see where we were only to appreciate where we are. There’s plenty of concerns facing us in 2014 which include geopolitical risk, a frothy market, political apathy, and low wages. Information gathered from multiple sources including WSJ, Wikipedia, Investopedia, Time.com, Google finance.

ALTERNATIVE MUTUAL FUNDS ARE IN THE NEWS BOTH AS THE NEXT BEST THING TO CREAM CHEESE AND CONCERNS THAT THEY MAY BE TICKING TIME BOMBS ARE IN THE NEWS.  Morningstar reports that $57 billion in new money has flowed to these ‘Frankenheimer’ funds the last two years. Mainly on the investor hope that theses funds will not collapse if the overall market should. The problem is that investors have little knowledge exactly what these funds invest in and no knowledge at all on how these funds will indeed perform if and when there is a market sell-off. Not all alternative funds are equal. Critics contend that they are mini-hedge funds investing in long-short, market neutral or absolute return strategies. With no history and no guarantee that these funds will be liquid in case of a market run investors may be faced with horrible losses or worse. The S.E.C. is conducting examinations of these funds not for enforcement but to gather information.  Information gathered from WSJ 8//12/2014 and MarketWatch.com 9/1/2014.

Boring? My Utility Fund Pick Has Had a Remarkable YTD. This on top of a great 2013 and an early consensus investment industry warning that the sector may well underperform this year.  It’s sometime good to ignore the experts.

Under the Radar- Gold at an 11 week low. Oil is relatively cheap. 

Banks May See New Liquidity Rules that Syphon off Dollars. Expect regulators to approve a so-called liquidity coverage ratio which would require large banks to hold safe assets-enough to fund their operations for 30 days. This would divert money from investment and from being loaned to business and consumers. The result would be a drag on earnings. WSJ 9/2/2014

While the assumption is correct during ultra-low yield atmosphere this could provide a boon when rates adjust upward.

Peek at Beige Book Report Ahead of Fed Policy-Making Meeting shows either an economic outlook that ‘brightened’ during the summer  or showed ‘Tepid Growth’ over the same period. Barrons.com saw it as tepid and the WSJ labeled it as ‘brightened’. Both reporters read the same report and were on same planet Earth but phrased their report a bit differently based on their subjective investment philosophy. The Barrons report was on the bond-fixed income market and WSJ focused on equities. The WSJ wrote about consumer spending and housing demand while Barrons used that information to indicate bonds were flat when the Beige Book report was released. WSJ & Barron 9/3/2014. There was nothing in the report that wasn’t already in the news. But you can see how someone can skew news to suit their philosophy.

Markets are so far showing no fear. There doesn’t seem a geopolitical concern that the market doesn’t digest and then discard. I read an interesting article at ETF.com where investors ‘may’ find a investor indicator by viewing the inflows and outflows of certain sector Exchange Traded Funds. While not a perfect indicator it may give a slight clue as to immediate investor sentiment. At the same time investors should remember that the ETF marketplace is where large investors trade and a large sale or purchase could very well be a portfolio rebalance or simple rotation that indicates absolutely nothing.

Sam Zell on CNBC Thursday 9/4 said that he thinks a stock market correction is coming. According to MarketWatch.com Zell joins a group of billionaires that are cautiously anticipating a ‘market crash’ or correction. This includes George Soros, and Carl Icahn, who said he’s very nervous about the U.S. stock market.

QUESTIONS CALL PAUL @ 586 295 0430 OR WRITE HIM @ pstanley@westminsterfinancial.com. SHARE THIS BLOG WITH SOMEONE WHO CARES ABOUT THEIR MONEY.

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