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.