That Was The Week That Was-2nd Week April

Happy April 15th!

 

Plagiarism is the sincerest form  of laziness. Since I got nothing last Sunday but Morningstar reports every quarter on the scariest numbers here are a few:

1. 6.7% Tax leveled on all deposits of less than 100,000 Euros in Cypress Bank Accounts.
2. 1,000 Euros only allowed to be taken off the island of Cypress.
3. 57% of US workers who have less than $25,000 in savings.
4. 49% of US workers who say they are not at all too confident that they will be able to save enough for retirement.
5. 6% retirees who said they retired after age 70 in 2013.
6. 26% percentage of current workers who expect to retire after age 70.
7. 12% Euro zone unemployment rate.
8. -14% Apple’s share price performance in the first quarter.
9. 2.27% dividend yield of the S&P 500 Index.
10. 60 million Window’s 8 licensees sold without any real excitement.
11. 20% of women’s pants at Luluemon removed because of unacceptable sheerness. I’ve been lead to believe the designer was canned…really!

Remember Jeffrey Vinik? In the 1990s he was the manager of Fidelity Magellan and known as the guy who changed the fund from a growth fund to a bond fund because he ‘thought’ the markets were going south. They didn’t. He sold stocks and bought fixed income. Markets didn’t tank for another five years but Vinik’s timing was so bad that Fidelity ‘excused’ him from the helm of their flagship fund. Today Vinik is a billionaire owning the Tampa Bay Lightening and managing Vinik Asset Management, a hedge fund. The news is Mr. Vinik isn’t doing too well in 2013 with OPM anymore than he did in the mid-1990s. Returns are pathetic and investors are running for the door, even as the firm announces restructuring of its investment management talent. Some things are just so easy to spot…

China Investment Company is a $500 billion sovereign-wealth fund. So far the fund has invested $6.3 billion in US companies between January and September 2012. In 2010 there was more that $5.8 billion invested in US industries. Now some places are rejecting investment from CIC. ‘Some politicians view Chinese money with suspicion,’ said the CIC fund manager Mr. Lee. A toll-road investment in Bellevue, Washington needed funding but the mayor told the Chinese their money wasn’t needed. CIC said it takes a low profile and while thinks the US is more open to outside investments than other countries the company doesn’t want to be seen as a ‘saboteur’ of industrial companies around the globe. The fund earned more than 10 1/2% in 2012 after posting a 4 1/2% loss in 2011. Maybe it’s that computer hacking and spying  that’s got us a little unnerved…

Rising Home Values Continue. Time Magazine reported, Rising home values have a broad benefit. Home values are seen as increasing by 6% a year from 2014 to mid 2017. Every $1 increase in household net worth yields 4 to7 cents in spending the next year. And, as everyone knows, spending is what drives the US economy.

Monday Markets Underwater Most of The Day then rallied to close up all across the board- even Gold moved up and so did Alcoa as they reported a 59% upside to profits. Don’t get too excited as this was a one time cost cutting and benefits even though the price of aluminum rose and cut into profits. Shares were up 15 cents in after hour trading. JC Penny board fired ‘store-within-a-store designed Johnson. They brought back the old team that was running old JC into the ground. The exercise cost Penny’s about a billion in losses in 2012. And, yes, according to analysts the old new regime has no plan. Expect this company to be doomed for some time.

I follow Cody Willard. He sez, Apple $1000 in 2-5 years. Okay plenty of wiggle room and who’ll remember anyway? Willard is also holding inordinate amount of cash and shorts on Goldman Sachs. Wednesday he wrote the First Solar was ready to move. FSLR closed up $36.32.

Stick a Fork in My Eye! 97 month car loans? I’ve never had relationships that lasted 97 months! According to Experian 17% of all auto loans were between 73 and 84 months.  Car makers have mixed feeling since the longer loan keeps buyers out of the showrooms longer. Lee Iacocca originated the 20% down and $56 a month for a 1956 Ford in…what was that year?

Best Bank Stock to Invest In? According to  Morningstar its Wells Fargo. Has a solid dividend of 3% and increasing. A sweet balance sheet and does nothing with smoke and mirrors. A simple approach to banking that makes it a delight to own. Morningstar also reported that banks will probably not be the earners they were before the crash as they have less leverage to earn.

Markets up Tuesday but Dow Transports were Down- Again. What wins ball games is solid defense! This year I am a big fan of defense instead of an all-out rambunctious offense. (1) Consumer Staples (2) Technology  (3) Real Estate (4) Health Care (5) Emerging Markets – both equity and bond. Own some or all in the above and you should whether rough spots better than most.

Can we talk? Penny’s fires uber-retail savant ex-Apple retail genius Ron Johnson in the mid-point of his grand experiment of turning the retailer into a bazaar of stores within the JCPenny store along with fixed prices, which, as consumer, we all hate. Hedge Fund manager William Ackman of Pershing Square Capital Management, and a cozy buddy of Johnson was invited to sit on the board, cheer from the sidelines and buy oodles of JCP stock using Other People’s Money in his hedge fund. He paid abut $25 a share for JCP which is now valued at $14.00. Before he was fired the board considered Johnson a retailing wunderkind. Johnson brought along other Apple alum which, most realistically, will certainly be shown the door. While we think the problems at Pennys may be fatal for the stocks for some time the problem is hedge fund manager Ackman who loaded up his hedge fund with JCP stock. This only reminds me of Woolworths and K-Mart. Now Ackman who derided the old management needs that very team to boost store sales and his huge wrong-way bet. The company is looking for $1 billion to assist in the remake of its old-self. Occasionally you can bet the jockey but a poor rider on a sick horse rarely wins the race.

Speaking of Apple…Google alum Marissa Mayer and now Yahoo Chief in Charge have been yakking. Infamous Siri, which cannot take a joke, is in great part hosted by Yahoo engines, and she may see other Yahoo partnerships, so reports WSJ. Apple is looking to separate itself from Google and Yahoo may be the perfect buddy. Yahoo doesn’t compete with Apple in the same areas as does Google, Facebook and Amazon.com. Yahoo does not own a mobile device, a search engine of its own (it uses Bing), or a social network. Marissa, speaking in Davos, said the firm was looking to build strategic partnerships. (hint, hint!)…nothing solid and maybe not for a-while.

Wednesday S&P Hit All-Time High & Held It. Japanese stocks rose higher as yen fell more- some 22% year to date. Cross currents between slow-growth, slow-down or continued stock market marching higher. Weakness in commodities dictate higher markets but Steve Reitmeister writes he is ‘uneasy’ about the current market. He gives four reasons:

1. Soft economic reports
2. Every Bull must rest
3. History repeating itself
4. Large Caps are now leading the market, safety is an issue for traders and behind the trade lurks a bearish attitude.

Same Day Different Room…Treasury yield forecast decline for 2013. Bloomberg reports that the world investor cannot get 100% out of bonds. The economies are struggling and the US economy is losing momentum, said Hideo Shimomura the chief fund investor at Mistubishi UFJ asset management. The 10-year is expected to top at 2.25% revised from 2.35% by year-end. Fidelity reported that the decline in global growth has kept inflation in check- so far this year. Has anyone checked the price of GS since the first of the year- off from its high of $160.00…

Effective May 1st- My New Phone- Old Numbers Kaput, Cancelled, Fini

New -586-295-0430

Microsoft May Have to Re-Invent Itself.

The operating system behemoth may be on the verge of being the new Microsoft. Intel may have to do something since its business is tied to the PC. MSFT stock fell 5% last week along with Intel and HP. Business and emerging markets appear to be the only markets left for them as mobile devices are the cutting edge of what’s happening now. The problem may be, according to the news in last week’s WSJ, that Microsoft may have come late to the party. Others say the company will do just fine and see higher share prices down the road.

Financials Reporting Friday Numbers Were Not So Pretty… Stocks were down 70 points but ended even and up for the week by the close. Gold kept falling- down another $69, closing at $1475, or officially bear territory. Not so pretty for either gold or silver since Japan entered the currency race to the bottom, getting admonitions from the US, of all places. Gold officially entered Bear Market territory and a few hedge funds are taking gas. Stephen Klein, portfolio manager at NY hedge fund AT, said, ‘Looks like gold has gone over a cliff.  Sentiment has changed.’

A One-Two Punch of lower consumer sentiment along with lower retail sales, both the lowest in nine months, helped to contribute to the volatility last Friday. Putting a soothing hand on the situation Michael Feroli, chief US economist at JP Morgan, said, ‘It’s not like things are falling apart, they’re just softening relative to a strong start to the quarter.’

Finally…Calamos Investment Committee provided this:

• Expect the US & Emerging Markets to lead the recovery.
• US equities are compelling by many measures.
• Investors should expect a sell-off.
• History shows a secular Bull Market. Focus on the long-term perspective.

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

Securities Offerd Through Westminster Financial Securities, Inc. Member FINRA/SIPC.

That Was The Week That Was –1st Week April

 

Markets fell more than 200 points Friday on worsened jobs picture before closing down 41 on the DJIA. According to Mellody Hobson, CEO of Ariel Investments, talking on CBS news where she is a paid consultant, this was a warning to the Administration and politicians that they need to do something. Morningstar reported, ‘The economy serves up more warmed over gruel.’ The economic numbers were nothing that traders were not expecting, Johnson wrote, but this time the markets didn’t shrug off the bad news and acted accordingly. The sell-off isn’t an indicator of another recession, wrote Robert Johnson, CFA of Morningstar. This is a low-growth environment. Don’t expect, say some experts, including Ms Hobson, that 2013 is a break-out year. Longer Term More Assuring, continued Johnson. Auto Sales remain in the safe zone. Falling gas and commodity prices mean the consumer will start feeling better soon. Still there will be more immediate bad retail news. This is not an economy ready to zoom. Expect more plugging along.

Earnings Season!   ‘The consumer is still spending because they’re sick and tired hearing about the end of the world.’-Howard Silverblatt. Alcoa starts today, to report earnings, and you can bet nothing can move this stock. No great news, or moderately bad news can do anything to edge this stock either one way or the other. In 2008 it was trading around $40 and now $8.50. The big reports will be not on industrials or fast food but on the banks later in the week. That’s when JP Morgan and Wells report. Most analysts don’t expect anything out of the ordinary, and perhaps a small decrease here and there. If there is an extraordinary pop in earnings you can bet the markets will respond favorably.

 

There’s a slew of ways to take income from your investments. Most people think only of chasing fixed interest rates at banks, credit unions or buying bonds. I remember a day playing golf with three other old poops and one crying about the high yielding bond he owned that was called away. ‘What can I replace it with,’ he moaned. Now with bonds pretty well played out and the only way left for them is up, and when that happens things won’t be pretty, here are a few ideas on getting income:

• Stocks offer some remarkable dividends. Some pay more than the yield on the 30-year Treasury. Build an income portfolio as you would a anything else using a variety of sectors like telecomm, real estate, etc.
• Buy consumer  staple funds or stocks. Usually do very well in up and down markets.
• Did I write real estate? How about REITs? Shopping centers, apartment houses and the like all bundled up and paying a tidy yield. Yes, there are mutual funds that invest in real estate investment trusts.
• You can ladder your bonds. Make sure you stick with them to maturity. The longer the maturity the better the yield. Buy a five year, then another one for seven years, another out to 10-years; as one matures you invest farther out. If you buy bonds with insurance and die your family gets face value or market value, whichever is higher.
• Systematic withdrawal- target a % you want out from your total investment portfolio and the fund/investment company will send you a monthly, quarterly check for that amount. They’ll even deduct for income tax if its an IRA. You can get 4%to7% without hurting yourself.
• Annuities-always in the income business there are a variety of withdrawal methods that will get you a lifetime highest earning return and make sure either you or, in case you die, your family gets the principal back.
• Master Limited Partnerships send checks on the under laying equity. Usually gas, oil or coal.
• Mortgage bonds, real estate, emerging markets and other income producing assets can be found in strategic bond funds.
• Best bet is keep it simple and don’t think you’re smarter than the average bond trader- chances are you’re not. Always remember if it looks too good- probably is. 

NOW FOR THE REST OF THE WEEK’S NEWS & RECAP

Some Banks & Investment Types Play Games & Offer Extra-Ordinary Yield But Tied to the Price of a Stock. These are structured investments that are essentially bonds that pay a mouthwatering yield. I have heard of banks tying these bonds to investment names we’re all familiar with. As long as the stock stays close to the price at the time of issue everything is okay-dokey. But at maturity if the stock increases in value the bank gets the stock and the retail investor gets their money back.  The really bad news is if the stock tanks (like Apple did) and at maturity instead of getting all your money back (as you would in a normal bond) you get stock in the company. In the above case Apple at a big haircut and you have to wait for it to recover. This is sold and happens more times than you can imagine. Last year about 450 structured products were sold and linked to Apple. Lots more of these with other stocks linked to the bond than one would think.

Icky Monday Last. Tigers won their first game of the season but did it ugly. Middle reliever Smyly caused heart palpitations but Phil Coke stamped out any rally with 7 pitches in the 9th. The boy looks like he means business in 2013. Speaking of which the markets were just as ugly but finishing off 6 points on the Dow but the Naz was the big loser while gold drifted lower.

Domestic Auto Stocks Stuck & Here’s Your Problem. We own Ford and GM and both are doing well, acting like auto manufacturers and not like banks. Stocks of both have been moribund and investor impatience with them has been more than a little troubling. So what’s holding them back?

Analysts simply don’t like them. Ford is trading at half the average of the valuation of the S&P 500 based on comparison of P/E ratios. Only 1 analyst has a buy on the stock with 1 for GM and none for Toyota and Honda Motors. But there are 7 analysts who give strong buys for the semiconductor industries. If you’re wondering why- Here’s your problem! The average analyst has long memories, or not. The age of analysts may have something to do with traditional manufacturing versus semiconductors. Someone, at some time, has to take an interest to ignite any rally. The companies, while recovering, have broken stocks that have little analyst attention.

Tim Cook Listened! Last week I wrote how Chinese officials were on a rant on Apple  and I wrote that Cook should play nice- kiss-kiss, and that’s what he did in a letter posted on the company’s web site last week. Cook apologized for warranty issues and promised the company would replace and not just repair iPhones. He also said…well, it doesn’t really mean anything what he said and what they said, we know the Chinese can be very obstreperous when it comes to their businesses. And with one billion or so folks that could be in the market for a smart phone it is only smart to say,’ Sorry.’, and move on. Hopefully…

Yep, Tuesday Markets Up. Gold prices are falling off the table, as are silver’s.

Ouch! Simple reason why gold and silver are falling is that there are more and better places to make money in the markets. The Fed also signaled it may slow its bond buying later this year. Gold closed at $1568. and still fell in after-hours trading. Oil is off a touch as supplies are robust. The Dow was up 89 points.

Wanna Invest Like Warren Buffett only You Cannot Afford Buying Berkshire Hathaway- either A or B shares. BRK-A trades for $157,500 and the B’s are $105.14. In order to try and mimic ‘some’ of the Buffett’s portfolio the folks at ETF news suggest that you invest in an Industrial Average ETF ( or mutual fund) and a Consumer Staples ETF (or, again, mutual fund), and you should be able to replicate some of the Buffett’s investment portfolio. Sure, except the exact recipe percentage, the preferred's and other holdings that Buffett made and extracted from the sick and needy in 2008 and 2009. You get bare bones but not the price.

Last month I reported how the Federal Reserve made $89 billion and turned it over to the Government. Now we read that Fannie Mae and Freddie Mac, combined, made a net of $28 billion and sent that to the Treasury!  Critics of Fannie and Freddie say that they are making money on the difference between the cost of money and the cost of mortgage spreads. As costs on money increases losses could be reported on existing mortgages, so say critics. Naysayers may be reminded that the average mortgage is 7 years. This the length of time that it is either sold, retired or refinanced. All old interest rate properties should be washed out by 2019.

Markets Fell 112 Points on the Dow Wednesday. It was more than brutal earlier in the day but I think there is more to come. Gold was painful losing $22, and falling through support at $1550. Reason du jour is that comments that the Fed may lighten up in the bond buying department sooner than later this summer. Gold is now forecast to close at $1500 in 2014. Bank of Japan serious about getting from under the 15 year deflation cloud. The yen plunged after news of a concentrated easing plan was announced. (Deflation is like the economic bedbug, unwelcome and difficult to remove). Defensive holdings for conservative investors include utilities, consumer staples and health care.

Don’t Let Boo Birds Dissuade Your Convictions. Too many times you read, or hear, someone you think is smarter than you saying that buying such and such a stock is a fool’s errand. You dump your holding only to come back and see it’s tripled. Do your homework, follow the stock, put in stops for stocks and ear plugs for critics.

Markets up Thursday- Gold closed at $1552. Facebook announced a smart phone called Home.This should hurt Google more than any other firm. It’s not the phone but the setup when you open the phone it goes right to your Facebook page. This is where the mobility advertising is key. Google allows any app or program on their system and Facebook just took it right away from the folks that created it. Yep, you open and messages, et al right there. Zuckerberg said the ‘open Google’ technology would benefit Google more as other firms used the technology. And I got a bridge for sale!   More liquidity globally as G Soros says the Yen is headed for the basement. BOJ is determined to break the logjam of deflation. Still not everything rosey as short term things look bright but long-term many problems economically and politically. Experts say the markets are entering the 4th Spring Swoon as evidenced by Higher Treasury Prices. Flight to safety was also escalated by North Korea’s saber rattling. Get your buying list ready for later in the year. Auto’s had outstanding numbers and yet shares fell in both Ford and GM. Shares are less than they were in January. iPhone 5 will be best selling ever smart phone, reports Quentin Fottrell. Glitches in iPhone4S will be fixed and features enhanced. Not only will this outsell previous models but Apple keeps adding carriers. Currently Apple has 17,000 outlets up from 7,000 a year earlier. Mutual Funds, according to Investment Company Institute, took in more Investor Dollars last week. That’s the good news, the bad is that the dollars were just about evenly split between bonds and equities. Money markets and stable value funds assets fell. ICA states equity holdings in 401(k) plans down from 2009 by 4%.

Fear of Equities Continues to Be The Biggest Promoter for ‘Doing Nothing’ or ‘Earning Nothing’ Investors. Last time we saw this act was after WW2 and in the mid-1940s. The U.S.  bought and owned all short and long term bonds, more than today’s Fed. The failing of GM, Lehman Brothers & Washington Mutual (6th largest bank in the US), caused many retail investors to pause and continue to stay away from the stock market.

Reverse Splits were instituted in 13 Exchange Traded Funds several weeks back. What I found interesting was a huge exodus from the FAZ ETF, triple short Bear financial, on last Thursday. Friday markets tanked and it would have been the best bet of the day. I asked a buddy why and he said investors see the reverse and think they made a lot of money and sell. A reverse split simply consolidates shares. Citi did that on a 10-1 reverse and shares went from $5.00 to $50.00, values are the same but less shares.

Wal-Mart Schmart. The company had $5 billion of bonds maturing through October and Friday sold an equal amount in a 4 part offering.  The company’s weighed average coupon of 2.09 was about half the 4.02 paid on the approx $4 billion maturing so far in 2013, according to Bloomberg.

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

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

That Was The Week That Was- 5th Week March

Yeah, that was last week…  Up one day, down the next.

 Thursday S&P 500 Index broke its previous high set in 2007 and closed @1569. Momentum, explained the Street. The markets are being supported by the Fed, make no excuses other than that. Modest growth is what its being called in the financials and we know if The Bernanke pulls the plug on buying the long-end (oh, sure and the short end, too!), the whole  Magilla goes south in a heartbeat. A lot of institutional money has been taken off the table lately but some still is there because firms are afraid if they scoot they’ll miss some or all of the upside. They do that and then they got some ‘splaining to do.’ Michael Harnett @ Bank of America, Merrill Lynch said to the WSJ, ‘The strongest reason for the stock market renaissance has been easy money from the Central banks.’ There it is. Only a year back folks were concerned whether the markets could close at or close to 1400. Now we look back and some recalculate going forward 1635 for the S&P 500. ETF investors moved substantial money to short the Treasuries the last two weeks. Concerns are evident that we have moved too high too fast in 2013 when everyone (or pert near everyone) expected a Tsunami in January as our politicians couldn’t get their act together at the close of 2012.  Markets always disappoint the greatest number of people.

 

Dow Theory Reminder…

Since Mid-March the Transports have been lagging the DJIA. Dow Theory, as you well know, states that one cannot sustain without the other. You cannot manufacture and sell goods and services without delivering same goods and services. DJT has been around since 1884 and is senior to DJIA, but most retail investors ignore it. According to Richard Russell if the DJT falls to 6100 it is signaling a top.

 

The Cyprus Issue was supposed to be solved the week before last.  Or so we thought when we last reported to you. The Devil, however, is in the details. Seems the details changed from one week to the next and if the Cypriots didn’t grab on the EU lifeline Monday last they would have been ousted from the EU ( such a bad idea?). What we didn’t know until we were well into the trading day last Monday was the deal involved the two major island-nation banks. One was set up with all uninsured depositor money going to, what is now labeled, a bad bank, where the assets would be ‘run off’. The depositors at the Bank of Cyprus would have their accounts frozen and then converted partially to equity in the bank, where losses on the savings could be as high as 40%. Effective the two major banks of the country would be drastically diminished. I would imagine a run on whatever assets are left would have started as soon as the bank allowed withdrawals but a cap was placed on how much money could be withdrawn. The EU is having bank depositors pay for the country’s bailout. Our domestic markets awoke from mid-day slumber and didn’t like the news much Monday as we were heading for a new high on the S&P 500 Index. Then everything fell apart except Oil which rose a bit. Gold fell to $1603. The Dow was off its lows but closed  down 64 points. Tuesday traders emerged and proceeded to bid stocks up as if fears of a domino effect in the EU banking sector was all a mirage. Markets moved smartly up Tuesday with the Dow +112 and the S&P closing at 1564. Wednesday fears of contagion and a much weaker euro started the day and the Dow and S&P closed off its lows.

So What’s the Big Deal? Banks use loans from people like you and me that we call deposits. Banks pay us little or no interest for the money which in turn we have the right to pull out  anytime we feel like it. But few of us feel like pulling our money all at once and moving it somewhere else or burying it in the backyard. A run on a bank starts with one and cascades because many people want their money out at the same time. Banks have very little cash on hand since they use our money to invest. With the new EU philosophy of having bank depositors pay for the sins of the banks and  ills of the country investors now worry over which EU country’s banks and depositors will be next? Will this be the EU plan to solve their 2008 Recession? If you really wanted to freeze a nation from doing anything make the banking system a pariah and turn the country into a cash only society.  And if EU is the single largest trading partner of ours guess how fast our markets may tumble?

 BBC News commented that Capital Controls, while good in some measure, could actually be damaging as the memory of investors is long and nation’s banks may not be able to recapture the Trust they once enjoyed.

 Financial Planning?

For us ‘ahem’, seniors, who’ve finally come to the conclusion that what we got is what we’re all ever going to get. Having someone write a financial plan for us is like wheat germ sprinkled on a banana split. It’s not going to do much good. For those young un’s who are contemplating a financial plan I can only say, ‘Think, again!’ Because it’s my opinion a financial plan serves no good purpose except cause you, and possibly your spouse, to fall into a deep depression. The numbers needed to secure a lifestyle at retirement equal to that enjoyed as  healthy, bright-eyed and working optimists involves accumulating monies well into the seven digits. Most of us only can wish. There is a retirement plan calculator on my web site and its free and pretty accurate, as far as financial engines are concerned, if that’s what your looking for. You can take it out for a spin, print the results and burn them for all the good they’ll do. The problem with doing future this or that or what I call what-ifs is that things change from the moment we finish scribbling out a plan. Needs change, jobs change and even in half the cases, according to statistics, spouses change. And when spouses change you can bet that a significant amount of your combined wish list just went into the toilet. So what can people do if they just want a guide for the future? How about common sense? Here’s a few ideas for those who are just getting to that mature, sensible age and realizing life isn’t one big party:

• Save as much as you can without taking food or necessities off the table.
• Don’t have a broker or financial guru? Don’t know where and what to invest in? Buy the S&P 500 Index, and then ignore talking financial heads. well-meaning friends and neighbors.
• Married with children? Buy as much long-term level term life insurance as you think prudent.
• For your estate plan-Write a will or just put beneficiaries on everything you own. You won’t need a Trust until your kids and grandkids prove they’re as irresponsible as you think they are.
• Buy MET for the kids college education ( or even the grandkids), and run really fast from someone who tells you to buy their 529 Plan for education funding. Just ask those folks who were set to send kids to college in 2008. 
• Over the years you may get sick, be in an accident, lose your job, get divorced, sued, file for bankruptcy or any one of a dozen bad things can happen to you that happen to other folks every day. You’ll survive only you won’t have as much money as you had before the bad stuff happened. Just understand it.

Last Week in Robert Powell’s blog he quoted Matt Greenwald, president of Matthew Greenwald and Associates, which conducted the research for the 23rd Annual Retirement Confidence Survey. Matthew thinks he has the answer to solving the US retirement confidence:

• Calculate how much we need at retirement.
• Provide Employer Financial Education.
• Get Employer’s to use auto enrollment aggressively.

The numbers that are traditionally illustrated for comfortable retirement are stratospheric and impossible to reach. (2) Employers could care less, for the most part teaching employees anything but how to do their job effectively. (3) Aggressive auto-enrollment could do more financial harm than good. Back to the drawing board…

Regular Folk Buying Homes to Rent.

According to the WSJ we’re on the cusp of a rental boom and a lot of major players along with Moms and Pops are getting into the action. While this is good, for now, for the housing market, critics say that if values erode some of the ‘players’ may abandon what they own.

Bulls 12 Bears 11.

Baseball is the only team  sport played with no clock.  While the stock market does have a clock the game keeps being played during good times and bad. The score over the last 50 years is Bulls 12 versus Bears 11 and some say the the current Bull run of 4 1/2 years is a little long in the tooth since the average Bull market runs 3 1/2 years. It may be time for the Bears to even the score.  Curmudgeon Paul Farrell at Dow Jones gives us a dozen reasons why this market is set to correct. His list includes Bandwagon bias, Rationalization, House Money, Pride, etc.  Tuesday markets up while consumer confidence was down. What Farrell doesn’t give us is fundamental reasons why we’re toast. The average Bear market lasts about 10 months and we’re due for a correction anyway. But, the way Farrell reports the Bear market is an Armageddon of the first order and not a simple orderly retreat. He wants us all into the bunkers as he writes about a coming Crash and not a Bear market or a correction.

A Note From My Bond Desk at Westminster Financial Securities, Inc. alerted me to the news that copper is expected to rise to $4.00 from its current $3.417, which is where it closed at on March 26th. I researched what would be the best and easiest trade? Obviously owning either a mining stock or an ETF would make sense. The Copper ETF that BlackRock is attempting to create is not on the market and is fighting regulatory hurdles involving storing the actual metal. The problem is that unlike gold or silver copper weighs a lot. There is, according to some, 200 pounds of copper in each home.  This is causing builders and processors of the metal to argue that storing copper will create an artificial shortage and escalate prices. Currently investors can buy Exchange Traded Notes that deal with futures or buy stock in mining companies like Freeport McMoran to invest in copper.

 

 

What the 10-Year Yield is Telling Investors.

Bond Traders may think they are the smartest money managers and, I for one, will not disagree. If you want to know where the markets are going don’t ask an equity trader but go to the bond desk. Andrew Thrasher writing for Today on-line said for us to watch for were the 10-year settles. Remember it was over 2% and going higher earlier this year and now it fell back to yield 1.94%. As the yield falls the conclusion is that weakness is in the equity markets.

Where Are Hedge Funds Moving Fixed Investments? The demand for fixed income yields continue and some Junk Bonds are seeing their premiums exceed 100%. Yields fall as price increases. According to the above sources Hedge Funds that specialize in fixed income are buying equities.  This isn’t really new news anymore, is it?

Markets Want to Rest. Momentum may be the only thing keeping things afloat and news in MarketWatch was that the law of physics is what’s pushing the markets higher. Cisco lifted divided 21%, the stock still off its 52 week high by a buck. Apple getting the needle by the Chinese government. The state is seriously going after the global brand by attacking its warranty and customer service programs, as an excuse to beef up sales of home-growth brands ZTE, Lenovo (they’re the folk who bought IBM computer biz) and smart phone maker Huawei. Early signs appear that citizens are not being swayed. Still…(make nice..) Craig Stephen sez, ‘Apple has gotten under the skin of Chinese authorities.’ Seems Apple is a pretty tough negotiator and haven’t inked a deal with China Mobile but has a deal with much smaller China Unicorn. If China Mobile doesn’t do a deal quick with Apple they’ll lose customers to Unicorn. It galls the Chinese to have a foreign company make money on their own turf, namely their proprietary 3G networks. Soon CM will do the deal with Apple but won’t be happy about it.

Play Ball! 

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