retirement interruptus: That Was The Week That Was

A good old fashioned rally Monday last that made everyone forget Greece, high oil, unemployment and housing. Globally banks will be required to hike capital requirements. France agreed to extend maturity on Greek debt it owned. The Dow cranked a solid three digit gain with oil down a tad and gold down a lot. Silver fell to $33 and change. Consumer spending was flat for May. Ford announced it expects better than May sales for June. And CEO Mulally named CEO of the year by the Greenwich based Chief Executive Magazine.
Even the Jimmy ‘The Mouth’ Cramer capitulated by saying that the corporate pre-announcements would be slightly worse going forward but after a modest pullback The Street expects a rally other than a more severe or sustained decline. No timetable given but I’ll keep you informed…
Gold was off its feed for a few days but Mark Hulbert and Michael Kane (Technical Analyst) wrote not to worry and it was merely a pause. Good news on Greece stumbled the metal along with a stronger dollar.
The Greek Garage Sale may be a bust as many of the public properties have been offered for years with no takers. The list includes a campground, vacant airport, dry salt-works, a casino and marina. Anyone?
According to last Tuesday’s WSJ companies are starting to let loose with cash. The game plan for over half the companies is to spend and expand their business rather than pay down debt. This bodes well. Trust me…
China getting to be buddy-buddy with lots of other folk in the world. News that the U.K. and China inked a $2.2 billion trade deal. China also helping hand in the buying Euro Bonds as I reported last week. Also loosening its share of U.S. debt. The Brits and China have a long history with HSBC bank being in country long before anyone else. China looking to plunk down a few pounds to upgrade U.K. infrastructure.
Check your life, health, annuity and long-term care insurance policy. Do Google search and check financial health. Some European insurers could be facing huge losses holding sovereign debt bonds and bank debt from Greece, Portugal and Ireland. Losses could trigger premium increases or worse.
Two days of solid returns as the world awaits Greek vote on austerity. Dow up 145 points. Gold and oil also up. Black gold over $93.
Meredith Whitney, former Oppenheimer analyst that made banks fear her opinion in 2008, states investors should be wary of July 1st. State budgets will be cut creating eventually a massive muni-default. Seems no one on the Street is taking her seriously but she’s sticking to her guns.
Bank of America close to a $8.5 billion settlement with high profile investors. Recipients include money manager BlackRock, Met Life and the Federal Reserve Bank of New York. Originally the mortgage backed securities were valued at $105 billion. Much of the problems were inherited from its acquisition of Countrywide mortgage. Shares of BAC have been sagging.
Global inflation should be moderate, according to Standard & Poor’s. World economies should average 3.2% and advanced economies around 1.6% in 2012.
S&P also reported that the average S&P 500 % change after First Rate Hike in 12 month was 6.2%. However, some years have seen huge losses; 1989 witnessed a loss of 17.4% 12 months after first Fed hike.
New Yorker magazine reported that Sarah Palin staffers revised history of Paul Revere’s ride on Wikipedia to conform to Palin’s version of the historical event. History buffs corrected it and staffers came back again.
The Poker site Full Tilt Poker shut down by UK regulators in a worldwide crackdown on internet gambling. Rumors that a member of Vegas’ family famed Binion would have been supplying a bridge loan to the firm.
Wednesday makes it Three Days in a row markets up. Greece passed their austerity package. Basically get the money and run. Showboating for television- rioting by a handful in front of parliament before being dispersed. Visa and MasterCard had a great day as Fed crackdown on debit card fees was upgraded to about double where they wanted plus a nickel swipe fee. Oil closed over $94 – seems the strategic oil release cannot hold back the price even at the beginning. Experts remind us that $100 a barrel going to be baseline for oil.
Analysts have too high expectations and have to ramp down their corporate earnings, so sayeth economists. Remember earning season begins on the 11th with Alcoa. Expect disappointments.
Does anyone believe the politicians are acting in our best interests and not working directly for big business? The President was right when he scolded them that they are not at work. Every time you turn around Congress is on a break saying their doing their job visiting their constituents. Lock them up until they come to an agreement. (if they were that busy Weiner wouldn’t have had time to Twit strangers).
Eliminating tax breaks for oil and gas companies only increases the costs to the consumer. Tax hikes and tax breaks are never paid by the company but always passed on to consumers.
Why shouldn’t you own a commodity indexed fund? You shouldn’t if you believe gas, food and clothing will be less tomorrow then today. If you believe your coming winter heating bill will be more than last winter, clothes will cost more and breakfast, lunch and dinner a lot more a year from today you better be thinking of hedging your income strategies. Add in that China, South America and India are all vying for the same pool of commodities and you can see where you need to add alternative investments to your portfolio.
Commodity guru and billionaire Jim Rogers, who once wrote that he would have wanted to have lived in London in the 1800s, New York in the 1900s and China in 2000, as they were the centers of commerce and innovation, was interviewed by IndexUniverse.com and said the next great short was the long U.S. Treasury. ( the man practically slobbers just thinking of the trade and I wrote about it a few months back)‘Long term the U.S. dollar is a disaster and no politician can solve the problem’ On the government opening the spigot on the Strategic Oil Reserves he said, ‘The world uses 86 million barrels of oil a day and releasing 60 million barrels is two-thirds of a days consumption.’ Rogers said he was embarrassed by what the politicians did and the press reporting it He also said he was shorting emerging market stocks, American technology stocks and large American banks. He is long currencies and commodities.
Four days in a row but volume not that exciting as the Dow posted 153 points to close the month, The Naz was in the black for a double three and Gold fell under 1500. Oil closed at $94.40. Managing Director at PNC Financial Services James Dunigan said the next level the S&P could reach is 1360; unless talks on the deficit completely deteriorate. The S&P closed Thursday at 1321.
Barrons reported that estimates for corporate profits are too high and analysts are expected to reduced starting this July. Materials and energy sectors that are the engines for the broader stock market, Barrons.com wrote, are expected to profit by more than 40% and 38% respectively.
Finally- keep your eye on Bonds as the end of QE2 saw the 10-year Treasury yield jump to 3.11%. This was the highest since May 25th and may signal that traders and investors will push yield higher even though the Fed won’t raise rates. But, Michael Franzese, head of Treasury trading at Wunderlich Securities in New York said, ‘I am buying on dips here. I don’t think the bull run in Treasuries is over yet, though selling dominates in the short term in the overbought market.’
Have a safe and fun 4th.