That Was The Week That Was – 1st Week March

USA CARTOON FROM COLLECTION PRINTED 3/11/2014

Monday Markets Tanked as Nothing Good Was Seen Coming From Russian ‘Troop Maneuvers in Crimea. But Tuesday morning news that the Russian President had called troops back from ‘war games’ saw markets reverse. Still it’s like waiting for the next shoe to drop because Russian troops are still hanging out in Crimea. If you’re an investor there was nothing safe during the trading day except cash as the markets fell Monday, albeit in an orderly fashion. It was very much like a mild sell-off. There was no panic, reported Barrons.com. CBS news concluded on their evening newscast that there was very little except sanctions that the U.S. and E.U. could impose on Russia that would do anything to catch the Russian’s attention. Even sanctions would impose an equal hardship on the U.S. and its Allies. Oil prices could certainly go through the roof and $4 a gallon gas would put the kibosh on our consumer spending. It was reported that  President Obama spent 90 minutes speaking with Putin Monday last. The thing is that the Russians are still in Crimea. even though they’ve called off the ‘war games’, and are likely to stay there for a very long time. By the end of last week this was old news.

Robert C. Doll, CFA. Top Themes For The Week.

1. 4th quarter GDP estimate was revised down 2.4% from 3.2%.
2. China’s competitive position is still strong but its balance sheet has weakened.
3. Tax reform legislation is not likely this year.
4. Stocks are no longer cheap, but neither are they expensive, and valuation risk is not elevated as long as the global recovery stays on track. This was written before the crisis in Crimea. 3/3/2014

Monday Markets Blew The Doors Off With a Huge Relief Rally! The DJIA Closed Up Over 200 Points! Don’t let that stop you from jumping on the equity train as Lawrence J. McMillan at MarketWatch.com wrote that  an ‘upside breakout confirmed’. He then supplied charts with arrows, red squiggles and other lines that showed what he was talking about. But we know that because we confirmed that last year! 2014 WFI Investment Strategy- Economic & Policy Drivers:

• GDP growth accelerates
• Housing and Autos remain strong
• Unemployment declines more quickly than expected
• Corporate EPS reach record levels –again
• Inflation increases but remains at 2% level
• Global economic growth recovers

CALL OR E-MAIL ME FOR YOUR ANNUAL REVIEW OF INVESTMENTS INCLUDING RISK, RETURN AND SECTOR ALLOCATION: pstanley@westminsterfinancial.com.

The Russian Problem Won’t End Here. Art Cashin warned not to get too excited about the Russian situation. It’ll probably play out further, he said on CNBC to Bob Pisanti on Tuesday 3/4/2014.

Holman W. Jenkins, Jr. wrote in his WSJ article that if Putin wanted to invade Ukraine he would not have talked to Obama for 90 minutes or given a televised interview. Jenkins went on to scold Western leaders as being a short-term minded lot. He also reminded them and us how the West has allowed the head of the Russian klepto-banquet to do whatever they wanted like seizing the oil giant Yukos on trumped up tax charges, looking the other way when he double crossed Western oil companies, on a serial basis. The West also looked the other way from murders of journalists and Russian legislators and inconvenient persons- possibly including Mr. Putin’s own mentor, the late mayor of St. Petersburg. Putin’s biggest fear Jenkins writes is of finding himself hanging by his heels from a lamppost or sitting in a dock for 20 years answering questions about the theft of food money to the murder of critic Alexander Litvenko in London. 

Wednesday Markets Were Flat- While doing my research for each day’s news there is that underlying theme that things are not just right and investors and markets are simply waiting for the next explosion from Europe, or shoe to drop. Activists in the Ukraine have split up into hundreds of 100 paramilitary volunteers, according to Bloomberg’s Will Kennedy and Balaz Penz. It wouldn’t take much for the Russian army to simply roll into downtown  Kiev.

Happy News From Jeff Kleintop in Wednesday’s Barron’s, ‘Wall Street’s Best Minds’, column. He goes on to explain how well 2013 equity returns were and  predicts that 2014 may not be as good. However, new investors and those that have participated in the past can take heart, he writes, ‘…we have the potential for a good ten years to look forward to based on predictive relationships that have withstood the tests of time.’

And, you may ask what is that predictive relationship? It’s the valuation and performance that has worked consistently in different economic, political and demographic environments of the 20th Century. The valuations of the stock market,measured by the trailing price-to-earnings ratio has been a very good indicator of long-term returns. He also writes that a investors should expect during this same period volatility, a possible recession and a bear market along the way.

By the by-Has anyone seen Jack Welch recently?

Yawn….Thursday. Mixed Market. Dow Up. Former Fed Chair Greenspan, in the WSJ, 3/7 and Oaktree’s Howard Marks agree that investors have not fully fallen in love with stocks – again. When that last person finally capitulates, so will stocks. We’re just not at that point, yet. Greenspan goes on to write in the American that by keeping liquidity in financial institutions we can prevent the kind of a meltdown we saw in 2008. He specifically wrote ‘contingent convertible debt (co-co-bonds) that would automatically become equity under pre-determined crisis conditions.

Better Than Expected Jobs Report even with the weather factor surprised markets, which ended slightly up Friday. YTD market gains up 1.61% and almost 8% from ‘market correction’ in January. Earning season is out of the way and the markets will have a rather quiet week going forward and perhaps digest ‘global’ disruptions. Morningstar wrote that this better than expected jobs number may continue to accelerate. Oil ended flat for the week after a 7-week climb.

Information gathered from multiple sources considered reliable, including but not limited to WSJ, Morningstar, MarketWatch.com., Barron's, CNBC, Bloomberg.com

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

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