That Was The Week That Was –2nd Week September

• China’s CPA jumped at its fastest rate in 2 years. The index gained 3.5% from a year earlier and matches Wall Street analysts targets and pushes the return on deposit, currently 2.25% significantly negative, according to MarketWatch.com.
• Dividends account for 43% of the S&P 500 stock index gains over the past 20-years.
• Remember the 90s when there wasn’t a stock an analyst didn’t like? Today more than 54% of ratings in U.S., U.K. Japan and Brazil are holds. This is the highest level since Bloomberg began tracking the data in 1997.
• There’s a new insurance people can buy –WedLock, a new type of casualty insurance that gives the unhappily married policyholder a payout after he or she is unhitched. The cost is $16 a month for each $1,250 of coverage. According to the firm some of their customers are spending more than $1,000 a month for the coverage.
• Markets fell Tuesday as the excuse du jour was the weakness in European banks. Rising yen and worries about undercapitalized banks in Europe took their toll.
• What stocks work well in deflationary times? According to Ned Davis Research, a quantitative research firm, large cap stocks with low debt/equity ratios seem to work best. Small caps lag the large caps by about 13%. Consumer staples and health care seem to be the sectors best suited.
• The Fed survey, called the Beige Book, Wednesday called the economy cooling and the U.S recovery slowing. Traders ignored the news because on the other side of the coin Portugal bonds were sold and THAT made US feel better. Go figure. Market was up as was oil and gold.
• Not with anyone’s money am I thinking of gold at these levels. One wrong trade and someone can be underwater for months.
• The Fed, according to Chris Reed at Reuters, is expected to raise rate by .75% from an initially expected 1.25% in the 4th quarter of 2011.
• Burning books, any books, unless its a truckload of Suze Orman vintage prose, shouldn’t be allowed. I am wondering if any of this would be happening if initially the press and internet simply ignored him.
• Corporate blue chips are borrowing by the bushel basket and investors cannot get enough even at the low rates being offered. Last week HP and Home Depot issued $33 billion at less than 4%. Patrick Spoor at American Beacon Advisors said, ‘Investors definitely have more money than companies need.’
• Okay, better jobs report. You think? Not so fast, HR. Barrons.com provided a bit more insight. All the employment gains were part-time. Full time employment, according to Household Survey, plunged 254,000. Those working part-time had no choice. Of the 67,000 rise in private-sector jobs, 10,000 reflected returning construction workers who had been on strike. (I don’t get it either).
• Thursday markets finished up with oil and gold off. Dow closed way off its highs. Bears seem to be gathering.
• MarketWatch reported banks slowly closing down their proprietary trading. This accounts for 15% of profit.
• Michael Kahn, technical analyst for Barrons.com, bearish both technically and fundamentally, at least for several months. (Until the window- dressing ‘bonus’ months!). Kahn reports in his 9/9 column that the bulls miss public participation in the market. Still room for gold and Treasuries.
• The week ended with all indices positive with gold pulling back off its highs. The President clarified his reach across the aisle on tax cuts stating he wanted the tax benefits for the middle-class and eliminate any tax savings for the wealthy.
• For those that loved the 90s and looking for the next Bull market leading sector Barrons.com reported on all rallies since 1974 and examined the 10 leading sectors. And, the consensus is….foreign company stocks, especially those investments concentrating in emerging markets.
• CNBC reported on the Byron Wien annual summer conference with high net individuals, which included more than 10 billionaires at this year’s meeting. The purpose of the get-together is to get an idea where the wealthy think the economy is going and exchange investment ideas. The consensus in 2010 is the really rich are just as pessimistic as you and I. Real change, they feel, is months maybe years away. No one, according to the report, had a super investment idea to share, sell or buy.
• From the Department of Just Plain Silly: A Diamond (like in jewel) ETF is on the drawing board and available soon.
• Bank #119 in Florida closed by the FDIC Friday.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.