That Was The Week That Was-3rd Week August

 CNBC reported, or repeated what we all know, that the dollar and the stock market have been contrarian forces. Bad economic news (just about every day) pops up and the dollar strengthens as money pours into U.S. Treasuries. As the dollar bloats the stock market sinks and vice versa and that’s been the story for the last three years. Investors who have traded on that scheme probably made a lot of money- buying and selling into weakness or strength. But something strange has happened the last few weeks. Even as the dollar puffs up the stock market has held significant gains intact. John Stoltzfus, chief market strategist at Oppenheimer in NY said it best as he recounted that the dollar and our domestic markets have been in-synch. A lot of that correlation, he said, is because globally the United States is considered to be the ‘place’ to be as somewhere ‘stable’. Because, my friends, as bad we are the rest of the world is in worse shape. If you compare the dollar index, which measures the greenback against a basket of currencies you’ll find that it is up 10% year to date, almost the same percentage as the S&P 500 index. The process of investing when the dollar strengthen or weakens may be over. It’s all about the best choice in a crummy global economy.

Don’t Forget  My Breakfast Fixed Income Meeting- You, Me and Friends. 9AM at Sycamore Hills Golf Club- Wednesday Sept. 19th Coffee, tea and breakfast rolls. One hour of talk about increasing yields on savings and investment and where the opportunities are. Everything from bank cds to stock dividends discussed. Bring a friend, co-retiree or neighbor but you must register first to let me know how many places to set and chairs to bring out of the closet.  586-783 –7080.

Zacks.com and from the desk of John Blank who blogged the only Investment Indicator You, Me and the Candlestick Maker will ever need is the….(wait for it… )…the jobs report. Good jobs numbers = good market, etc, etc. Here’s the formula ala Blank:

• Below +125,000 and the economy is losing
• Above +125,000 and the economy is doing O.K.
• Above +200,000 and the economy is percolating along
• The other number is plus or minus 80,000 and it could be a contraction and or not and is a standard of error number.

Retail Giant JC Penny Lost 2nd Q revenue by 23%. The company’s shares actually rose when CEO reported that the JC Penny overhaul is ‘on-track’, Ron Johnson, formerly of Apple, is trying to turn the company around from a straight up retailer to one that provides a store within a store. It’s Levi’s store has been a success and little else has been a hit with customers. The company has over $800 million of cash and is funding the turnaround from its own pocket. Johnson visions the company to be a mall within a store. Various vendors such as Martha Stewart would have their own ‘store’ while kids had a place to play, visit Santa or dad took a break sipping coffee while the spouse shops. The stock closed Friday @$23.40 and Morningstar likes it to $38.00 and suggests buying around $22.80. The dividend yield is an attractive 3.4%.

The Dow Jones Transports Are Off 5% YTD versus The Dow Jones Industrial Average.

While not a significant percentage it does show a  divergence and signals a slowing economy. Transports deliver goods to market…

Robert Hughes, Time’s Art Critic Dead at 74. He was a powerful force in the art world. His dismissal of Julian Schnabel’s painting was legendry, ‘Schnabel’s work is to painting what Stallone’s is to acting: a lurching display of oil pectorals.” He also called the art market frenzies nothing more than a scramble for status by insecure billionaires chasing brand-name operators like Koons and Hirst. The contemporary art market has been on a tear even as the stock market as languished. Big Movers have included Chinese art and calligraphy. (huh?)

Life Insurance Companies Exist Because of OPM ( Other People’s Money). The WSJ recently reviewed the fact that state insurance regulators estimate that the industry has failed to pay over $1 billion in death benefits. The reason is because the insurance companies believe it is the beneficiaries duty to notify them of a death. Unfortunately many policies end up paid up and the original certificates lost. Currently insurance companies hold the policies and benefits until the insured’s age 95 at which time they turn the benefits, plus interest to the respective state the insured was living at the time of purchase. The state makes an ‘effort’ at locating the insured but uses the proceeds as they await claims. Regulators and lawyers for families are urging the use of the Social Security data base which lists those who have passed away. There is currently a huge interest to those that manage data bases in developing programs that can and will search records of those that had owned insurance policies and died. Some of the most serious problems facing beneficiaries is ‘looking back’ at claims that were to be paid to parents or grandparents by relatives years earlier and now buried and forgotten. Could be billions and make the Swiss banks that held and hid for generations Nazi loot seem like pikers.

Russia Putting Together Privatization Plan The Putin government announced another plan for outsiders to acquire state owned assets. Sure this is nothing new in Russia where gangsters settle business  disputes the old Chicago 1930s gangland style. There is no question that Russian assets are significantly undervalued versus other emerging markets and developed countries, said Anthony Moro, managing director and head of emerging markets for BNY Mellon. From banks, shipping and oil producers there are 1400 entities on the block that could use fresh money. With the price of oil and gas at low levels the government is looking for alternative sources of revenue.  Experts contend that while Russia does not need an immediate infusion of cash some investors are wary as to the Russian business practices. There are some emerging market funds and ETFs that have and include Russian companies in their portfolios. And, you can buy Russian ETF   ERUS, an iShares product.

Michigan Education Trust  announces that enrollment closes August 31, 2012. This is the only way I know to buy a college education at a discount and guarantee that it’ll be there when you need it. Unlike the BS some insurance and brokers toss to sell 529 plans the MET is, in my opinion, the only way to save for a child’s education. Need info go to www.SETwithMET.com

The Street Loves  Ryan but their worries are that he won’t win the key states especially Florida. CNBC reported that while the response on the VP pick has been positive worries that the young Congressman may not add to the ticket. Josh Brown said, ‘He puts Florida further from reach unless these two can speak clearly on Medicare.’  Messing with entitlements is an ugly business and especially with seniors, some who truly believe they’ve earned it and an entitlement is something no one can amend or take away. We’ll see pandering galore from the left….right, Joe? Not that the right is above such things.

Fees on some short-term bond funds exceed yield. Time to clean out your portfolio and see what’s working and what’s more expensive to hold. The average 5 year CD paid 1.05% on August 9th, according to bankrate.com

Cody Willard’s gives a good reason for all investors and traders to have some cash set aside to be able to buy when the market offers value in his recent book. Often we have everything tied up in stocks and funds and the markets laugh at us and we see value and we can do nothing about it because buying would involve selling something else that may be under water. Some cash is a lifeline to double down on existing shares or scoop up something that screams bargain. Trading with Cody can be bought at Amazon and is an easy read with some old fashioned tips that anyone can understand.  I have it on my Kindle, which I am finding more enjoyable each passing day.

Dead Cat Bounce. Okay, I’ve written about this before. All a dead cat bounce is is a fake-out or small bounce off a steep decline. It could be the entire market or a stock. The name comes from even a dead cat can bounce. Here’s where a chart comes in handy. Before you pounce on what you think is the absolutely, positively bottom on a stock check the 30 and 10 day Simple Moving Average. You have to see some serious upside before pulling the trigger.

Porter Stansberry appears not only to be a convicted fraudster but a suspect racist as well. Somehow I got on a list and was subjected to the Stansberry video. According to Wikipedia   Stansberry has predicted that Europe will fall, Germany will leave the EU by August 2012, the U.S. dollar will lose it’s reserve status and the Treasury bubble will burst. In the past he’s promoted the stock of an unproven company with an AIDS vaccine bubbling that it was the only way for investors to make 50x’s on their money, reported Wikipedia.

This is Porter.

This is not.

 

60% of Our Economy is Dependent on Us. Bloomberg reported Tuesday that Retail Sales in the U.S. jumped more than Forecast. Stocks climbed as traders digested that this news could continue to bolster economic expansion. Retail sales for July increased by 0.9%- the biggest gain since January. Boy, do we love to buy stuff!  Markets ended the session off their highs. Week ended up-making it a six month summer rally!

Taking a few days off. Back Tuesday but keeping an eye open.

Questions, call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Need someone to help on your side call or e Paul. Share this blog with someone who cares about their money.