That Was The Week That Was-4th Week August

Market Corrections Watch. Kevin Cook at Zacks Weekend Wisdom wrote, on August 24th, bearish reasons on a possible market slide this year. He reiterates his long-term bullish outlook but states the S&P 500 Index may fall back and revisit 1570. When, do you ask? Cook doesn’t know anymore than anyone else but suggests the next FOMC meeting around September 17th-18th, is a possibility. Citing reasons for a pullback Cook gave the following:

• Slowing economic growth and mixed leading indicators.
• Stalling earnings growth and disappointments from key bellwethers.
• Fed tapering before the economy can stand on its own.
• Rapidly rising interest rates choking off housing recovery.
• Multiple technical indicators flashing warning signs as chart’s break down.
• Washington debt ceiling and budget battles brewing.
• Departure of Steady Ben from the Fed and anxiety about Summers as a replacement.
• Margin debt near record levels seen at the market peaks in 2000 and 2007.

Market go up and down and correct and move and still long-term hold-em investors have been well rewarded. Remember corrections are short-lived and V shaped when graphed. In other words –they bounce.

Moving? Thinking of a New Home or Condo? Downsizing at Retirement? My friend BillMinor@billminorsellshomes.com shares some ideas on what to look for in addition to the actual real estate. Call Bill for more info at 586 530 1059.

1. Ease of commute by car
2. Access to health and safety services
3. Family friendly neighborhood
4. Availability to retail stores
5. Access to cultural and outdoor activities

Mitch Zacks, ZIM Weekly Update, August 25th. Assumes a correction may be due but he is positively bullish citing:

• Jobless claims declined to the lowest level since 2007.
• CPI increased by 0.2% from June to July.
• Rail freight shipments increased by 4% for the four weeks ending August 10th.
• New home construction rose 6% in July.
• Retail sales rose 0.2% – the fourth straight monthly increase.

While there are global economic concerns investors are focused on the Middle East. 

Monday Markets Fell on Syria News and a ‘Really Awful’ Durable Goods Report.  The dollar strengthened, gold was up and Treasuries fell. Durable goods are the big ticket items like dishwashers and stuff people don’t buy all the time. The report was the worst in over a year. Certainly this is one area of the economy that the Fed will look at before beginning its tapering in September. But ‘war’ whispers was what really quelled a modest gain in the markets. The market hates uncertainty.

Whispers became Shouts as Global Concerns on War Became a Reality. By this weekend final plans or the beginning of retribution for the use of chemical weapons may or will have commenced. Tuesday markets fell in the U.S. and global markets Wednesday morning show uncertainty. Investors are more than concerned as other items start piling up including the Washington, D.C. budget battle that doesn’t seem to have a winner or a compromise. Tuesday the Dow was off 170 points. This was the worst day since the end of June, 2013.

September is Historically the Worst Month for Investors. BlackRock’s Russ Koesterich, CFA, writes in the firm’s Investment Directions Newsletter of August 20th, that 3 things worry him that could lead to a very volatile September.

• European political process causing Sovereign debt concerns to flare up again.
• Turmoil in the Middle-East causing oil prices to spike again.
• The 10-year Treasury making a substantial move over 3% and short-circuiting the economic recovery.

Markets Rebounded Wednesday. Primarily an oil stock rally the market rose, fell and closed positive for the day. More whispers about the war and possibility of Iran attacking Israel if the U.S. hits Syrian command and defense. New home pending sales pulled back but the chart doesn’t look that bad. Shares of Pulte and DR Horton fell.

Quick Name the Largest Wireless Phone Company? Hint- it’s in China. Okay, name the second biggest? It’s Vodafone headquartered in the U.K. and owns 45% of Verizon. The two companies are back at discussing a $100 billion buyout of Vodafone’s interest.  Shares in VOD popped in early pre-market trading Thursday.

My Dad once said that no CEO was worth $10 million. That was 15 years ago and since then CEO’s pay has skyrocketed. Al Lewis at MarketWatch.com blogged Thursday, August 29th that in the last 20-years a good percentage of CEO’s were convicted of fraud or bailed out. Here’s the chart from the Institute of Policy Studies.

FINALLY…

HOW DID THE MARKETS REACT TO WAR? HERE ARE THE CHARTS FROM FRIDAY’S AUGUST 30TH MARKETWATCH.COM.

 

 

 

Have a safe Labor Day Holiday!

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

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

That Was The Week That Was-3rd Week August

Driving home from an up north weekend I tuned  my radio to an early morning talk program. The on-air monologue I listened to while avoiding wild turkey’s and meandering deer centered on inflation and why was the government reporting such low inflation numbers. The radio host wondered if inflation was truly low or was it being manipulated? The show was selling gold and silver and so it wasn’t a truly impartial program. To illustrate his point, the radio host said that the government was fudging the inflation numbers. He then played a clip from a CNBC argument between talking heads from the Friday, August 17th CNBC show to prove his point. The recorded CNBC give and take illustrated that even the so-called experts couldn’t agree if the government numbers on inflation were right or being purposely skewed. I have to believe the definition of inflation has slowly morphed over the years to accommodate political economic policy. The one thing we all can all agree on is that the government cannot afford to have inflation and interest rates get much higher at this point in our domestic economic recovery. If the numbers climb that means the government pays more to those that buy our bonds. Higher interest means they print more money and printing more money means more inflation. But even at less than current 2% inflation we are still seeing higher food prices and energy costs. Contributing to higher inflation, but seemingly not calculated are the prices of goods such as cars, clothes and even homes. And if you don’t think things are moving smartly higher take the 10-year bond that just a while back was 1.65% and on August 20th was 2.85%.

Some  government experts contend that ‘a little’ bit of inflation is good for us. That’s like the FDA mandate of acceptable number of rat hairs in my oatmeal .

REALLY BIG NEWS OF THE WEEK! STEVE BALLMER,CEO, OF MICROSOFT, ANNOUNCES RETIREMENT SOMETIME IN THE NEXT 12 MONTHS. Shares in the company soared 7% on the news! This was the intractable leader that brought Windows Vista and Windows 8 to the marketplace and basically piddled away with a 38 year virtual monopoly in operating systems.

Cody Willard in his blog, The Cody Word, published in MarketWatch.com on August 23rd said when Ballmer says goodby Willard says hello to Microsoft shares. ‘Ballmer,’ Cody wrote, ‘always seemed to skate to where the puck is instead of where the puck would be.’ A poor leader who frittered away opportunity. Willard offers the following charts of Microsoft and Yahoo when shareholders are given a strong CEO.

The above chart is Microsoft shares. Published from Cody’s blog on August 23, 2013

The above chart is Yahoo.com shares. Published from Cody’s blog on August 23, 2013. Both charts from BigCharts.com

 Sunday Late Breaking News! Trump University is being sued by the NY AG. The accusation is that the school (hrmph), was involved in illegal practices, according to the NY Times. This was billed as the best place to learn the secrets of The Donald in managing your money. The school(?) blew into Detroit a few years back with much bally-hoo and faded rather quickly amid much criticism.

  This is Year to Date Performance from Last Week. Monday, August 19th markets moved down for the fourth straight day.

From The ‘Didja Know This’ Department of Investment Knowledge. If you buy a life insurance policy from a company the actual liabilities may not be with the company that issues the policy. Most companies, if not all, have buying and selling agreements with other life insurance companies. They may or may not sell a portion or all the risk of your policy to a company that may not be as financially strong as the one you decided to buy a policy from. And while the company issuing the policy has the original liability in case of death it could prove rather sticky if a massive liquidation suddenly takes place. We just don’t know because it’s never really been tested.

According to Cody Willard in his blog August 20th- On Apple’s $150 billion cash hoard. How big is all that dough? Well $150 billion is more than the market cap of Hewlett-Packard, Dell and Netflix- combined! It is also more than the ‘entire’ market cap for Oracle or Cisco or Intel. If the company paid out the entire amount in a special dividend it would be like 1% of the 2013 U.S. government GDP. And, if they didn’t spend it on acquisitions, stock buy backs or dividends,  and at the current rate of accumulation, the $150 billion could be worth $1 trillion by 2020.

Asset Allocation is Different from Diversification. Neither are intended to increase returns but reduce risk and, hopefully, volatility unless there is a severe market correction in which case nothing works.

Something I’ve been Noticing…The stock markets been getting out of the gate fast and furious but fades quickly in the late afternoon. Tuesday was no exception as the Dow was up all day until near the closing bell. Still the S&P closed up ending a four day down spell.

 Here’s a Tip From MarketWatch.com. According to them the following 10 stocks rally in late August…like every time since 2003. Wallace Witkowski compiled the information and the following chart that was published 8-20-2013 on MarketWatch’s The Tell.

Nuveen Investments Published The Following Chart on Fixed Income Yields Through August 16th.

Thursday Markets Dropped in the Last Few Minutes of Trading for a 105 point loss on the DJIA.

There didn’t seem to be anything new Wednesday as the Federal Reserve reaffirmed their plan to start unwinding their easy money program. So, while nothing new, this seemed to unnerve traders who first sold and then calmed and  bought and then in the last hour tossed in the towel to continue a sell-off started last month. There was a sense of ‘uncertainty’ in the Fed minutes of June regarding the strength of the economy and perhaps it was that investors glommed on to. This doesn’t mean the Federal Reserve stops its easy money policy only ‘tapering’ how much it buys every money. It could mean just a bit less and stretched over many years. The unknown is driving traders crazy.

Art Cashin on CNBC warned August 21st  if the 10-Year hit 2.9% ‘ Alarm bells go off’.

Thursday Squirrels Got Into The Nasdaq System and Shut ‘er Down for 3 Hours! I had varmints chew on my cable lines downing my WiFi a week ago but you’d expect better security from one of the world’s largest financial institutions and their systems. Squirrels did send down the Nasdaq, where most of the tech stocks like Apple and Facebook trade, in 1984 and again in 1997, by gnawing on their cables and questions arise what happened this past week? A Naz glitch spoiled the coming out party for Facebook in 2012 and it took the stock a year to recover. It seems these glitch events are getting about as regular as a diet laced with Metamucil. If the Nasdaq was an airline they’d be grounded until they got it corrected. When traders are betting millions, if not billions, of dollars and suddenly they hit a black hole with no warning they don’t know if and when the system returns whether their broke, rich or breaking even. This doesn’t install confidence in a financial system. Some accuse high frequency traders and their computer systems as the culprits to the latest black-hole. The Commodities Futures Trading  Commission is developing some rules to taming high frequency trading for the commodity exchanges. According to the August 23, 2013 WSJ, the CFTC report is due out this week and runs about 100 pages and paves the way for greater scrutiny to these practices.

New Home Sales Plummet 13.4% in July to the lowest level in 9 months.

Experts blame the higher interest rates. Mortgage applications since June have fallen a full percentage point when rates increased.

Sad. Elmore Leonard Died Tuesday at his home in Bloomfield Township three weeks after suffering a stroke. He was 87. For those who don’t recognize the name he wrote 45 books, many that became movies, and countless stories. He was a home town boy who could have lived anywhere but chose Detroit. The Seattle Times called him ‘The Big Daddy of Crime Novels’, even though he started his career writing westerns. A short story of his became a current hit cable television series, ‘Justified.’ Movies made from his stories and books were: Get Shorty, 3:10 to Yuma, Hombre, The Big Bounce, Killshot and Glitz. I can’t remember the first book or story I read that he wrote but it made me a life long fan. Asked to write for the NY Times an article on how to write Leonard obliged with ‘Ten Rules on Writing’. The best was, ‘Try to leave out parts that readers tend to skip.’

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

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

That Was The Week That Was-2nd Week August

Morningstar Interview August 7th with Jason Stipp and Bob Johnson came to the conclusion that our economic Indicators were looking up, but Johnson said for investors to mind the headwinds. On employment Johnson said that we got the boat headed in the right direction. Manufacturing has been softening for some time and he believes we’re at the bottom of the cycle. Purchasing Managers Indexes are picking up. The service number for last month’s PMI was stunning. Even some areas in Europe are picking up. The durable goods orders have also been improving. The GDP report showed that the government wasn’t really a very big drag in the June quarter. China, Johnson said, he wasn’t worried about. But a lot of our commodity goods and manufacturing is going over there and those are seeing some slowing. Finally, Johnson said he thinks the stock market tumbles back a bit right about here. He was right on the money as the first and second weeks in August were a real stinkareeno.

The WSJ Sunday Last Published Brett Arends, ‘Five Ways You Can Really Mess Up Your Retirement.’

1. Mishandling Social Security. Take it later say the experts. Take it now I say because no one knows how long you got. The winner is living the longest. The loser is not taking it at all.
2. Splurging on Big Ticket Numbers. Experts are right! Paying cash for a $40,000 car when that same money can provide a lifetime income of about $2,000 a year. Or, the payment/lease for the same auto.
3. Not Making a Budget.That’s soo 1950s…
4. Not Making a Nonfinancial Plan. Duh?
5. Moving. Yes, indeed. Heading south and discovering 110 degrees in the shade and lizards in the toilet. Next spending a bundle moving back home.

How Many Ways Can You Create a Retirement Income Plan? The other day I was working on some investment income ideas and wondered how many different ways was it possible for someone to establish an income plan that would stay the course of time and economies. I came up with a huge number of specific sectors that couldn’t and that included bank interest, stock dividends and real estate. I came to the conclusion there were only one way someone could maintain a long-term income plan: Systematic Withdrawal. Systematic withdrawal plans simply target a reasonable rate of return and can be modified up or down as the markets dictate without incurring huge losses either of principal or income and be used in either fixed or equity portfolios. If you need to know more about how to design and implement an income plan call or write me.

Markets Mixed Monday…

Robert C. Doll, CFA, Nuveen Asset Management, Chief Equity Strategist, wrote Monday August 12th:

• Expect a slow multi-year rise in U.S. Treasury yields after an abrupt start this spring.
• A sustained increase in inflation is unlikely since wage growth remains weak.
• Growth should increase in the 3rd quarter.
• Chinese economic activity shows signs of stabilization, including a stronger than expected rise in exports from China.

Sunday. August 18th, MarketWatch.com reported that this week’s market tone will be dictated by FOMC Minutes and earnings from Target and JC Penny. The DJIA is off 3% off its high and experienced the worst single week of the year as Cisco reported steady earnings but gave weak guidance going forward, along with stating they planned on laying off 4,000 employees. Wal-Mart also reported weak earnings and similar guidance. Higher interest rates and an almost certain revision on earnings has caught investors almost unaware. As Cisco shares fell Talking Heads on CNBC last Friday still supported the company and a much higher share price. Housing stocks are off 25% from their 2013 highs. Apple had its best week since 2011 as Carl Ichan Twittered that he took a huge position in the company and had spoken to the company CEO to expand their stock buyback plan. Shares in Facebook also got a boost and Big Money has jumped into the party as Seeking Alpha reported Saturday. Rounded off over $321 million new money bought FB shares while $137 million were sold. Jack Hough in Barron’s wrote that the markets are more richly valued than you think. CNBC on Friday were conflicted as to the length and depth of the sell-off. We should see some bottom after or around Labor Day, said one analyst.

Extra Cash on the sideline?   Do what the pros do and make you stock wish list and price you’d pay for your favorite stocks which may have gotten away from you earlier in the year when ‘almost’ everyone thought the markets would tank on the re-election and government do-nothing. Then call me.

Questions call Paul @ 586 205 0430 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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

That Was The Week That Was-1st Week August

 

  Zacks reported Friday August 9th that the Breakout is on Hold. “Mr. Market,’ wrote Steve Reitmeister, Executive VP of Investment Research, ‘does not want investing to be so easy.’ There is a huge amount of Bullish confidence out there and still the markets stalled last week after reaching 1700 on the S&P 500 Index.

It was an Ugly Week! Bloomberg reported Friday last that U.S. stocks have worst week since June due to Fed concerns. Hank Smith, who oversees $7 billion as chief investment officer at Radnor, Penn based Haverford Trust Co., said in a Thursday, August 8th interview, ‘There is still plenty of skepticism and anxiety in the market.’  

 

Reuters reported Monday August 5th that the first taste of a Test-tube burger was described as, ‘Close to Meat.’  The patties were grown from cattle stem cells at a cost of $332,000. The burger was created by ‘knitting’ 20,000 strands of lab-grown protein combined with salt, breadcrumbs, red beet juice and egg powder. ‘It’s a very good start,’ remarked one of the tasters, who also wished that the test-tube burger was served with onions, ketchup and pickles.  Didn’t we already reach a culinary low with Hamburger Helper?

Makets Fell Monday August the 5th on news that the Fed was soon to taper. Where have we heard this before? Excuse du jour. Losers were utilities and industrials while consumer staples and technology gained.

Joe Terranova of CNBC said in mid-morning Monday that the markets were set to ‘rip higher’. Terranova also said he expected flows to continue from bonds to equities. Here’s some more Talking Head comments from the same program:

• Stephen Weiss of Short Hills Capital said he was taking a pause.
• Josh Brown of Fusion Analytics said he was a buyer.
• Jeremy Suefek sees bullish earnings growth.
• Stephanie Link of The Street said we’re buying stocks we like.

Robert C. Doll, CFA, Chief Equity Strategist and Senior Portfolio Manager at Nuveen Asset Management reported in his weekly newsletter:

• Real GDP for the second quarter was relatively weak.
• Jobs numbers disappointed.
• July ISM Manufacturing survey reported the biggest one month increase since 1996.
• Case-Shiller home index is up nearly 15% from its low.

Markets Tumbled Tuesday. Equities fell on Fed Fears, according to Tuesday’s WSJ. Two Federal Reserve officials indicated that the central bank could begin reducing its easy-money buying as soon as September. Again this is nothing new but somehow traders don’t want to hear this. IBM was downgraded earlier in the day and weighed heavily on the Dow. Shares fell to $190.46. Mark Newton, chief equity strategist at Greywolf Executive Partners, told the Journal, we could see a real downside acceleration, with the downgrade. He also added that most of the selling involved commodity related, materials and industrials.

  Long Term Happy Faces and Exuberance!

‘It’s the Rodney Dangerfield of bull markets,’ LPL Financial Chief Market Strategist Jeff Kleinton said Tuesday August 6th, on CNBC. Fav stocks for him have been consumer discretionary. He went on to gush that this was the most powerful bull market since WW 2.

MarketWatch.com offered up 6 Countries where Bank yields are 10% +!

• Argentina
• Serbia
• Vietnam
• Bangladesh
• Mongolia
• Ukraine (17% 1 Year CD!)

Offering A Free Dinner and Information About Money Matters is Still The Way Some People Prospect.  I cannot for the life of me understand how someone thinks they’re getting something of financial value from a free meal while listening to a sales talk. The raw land sales guys used the same gimmick to sell dirt and swamp back in the 1950s! From my side its unprofessional and demeaning. People who buy into the free and cheap end up wondering why it eventually blows up.  

Gold still under $1300- Closed Wednesday at $1290.

 HOMEBUILDERS FALLEN 25% SINCE MAY

WHILE HOME SALES HAVE GONE FROM A RECESSION ZERO TO 470,000 ANNUALLY IN THE SECOND QUARTER OF 2013 THIS IS STILL FAR UNDER 1972 NUMBERS, ACCORDING TO THE WSJ, THURSDAY, AUGUST 8TH, WHEN THE POPULATION WAS 1/2 OF WHAT IT IS NOW AND THE AVERAGE SALES PER YEAR WERE 546,000. TOUGHER LENDING RESTRICTIONS AND HIGHER INTEREST RATES MAY STILL PROPEL PEOPLE TOWARD RENTING. HOWEVER THE THOMAS REUTERS/UNIVERSITY OF MICHIGAN SURVEY OF CONSUMERS SAID IT WAS A GOOD TIME TO BUY A HOUSE. Major Listed homebuilders are likely to get the business since many of the independent home builders were lost in the depression of 08.

Thursday Markets Up Across All Indices. after 3 down days…

Market Headwind Warning…says Morningstar.

Markets ended down Friday making it 4 our of 5.

Have You Completed Account Update? Please do it or call for help. Failing to update account may possibly slow down your future transaction until account(s) is updated. This needs to be done every three years and is a SEC requirement. and, yes, I know you’re busy!

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

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