That Was The Week That Was-1st Week March

 

Late Breaking News… (ahem)…Friday markets took a tumble as Great economic News turned into Bad stock-market News. It was a Super Strong Payroll Number that jinxed the stock and bond markets Friday. The jobs number surprised everyone considering how bad the weather. More than 295,000 jobs were created which indicated that the Federal Reserve would ‘have’ to start raising rates, according to some experts, either in June, or certainly by September. The Dow fell 275 points while the yield on the 10-year hit a high of 2.24%, or a 6% spike. According to Barrons.com it was more than just the jobs report that did the damage: (1) Federal Reserve SF Bank President Williams said that mid-year would be a good time for a rate hike. (2) Oil prices fell- again. (3) Better numbers on German industrial output. (4) The ECB was upbeat about printing money to buy bonds. All that contributed to the sell-off.

Gold also had a horrible day. The worst since December, 2013. The dollar hit a 11-1/2 year high against a basket of currencies.

The news wasn’t that wonderful once the jobs numbers were examined. The biggest single occupational increase in the jobs report was bartenders and wait-staff. The hourly average wage increase was just 3 cents.

The DJIA OFF 279, S&P 500 –29.78 and Nasdaq –55.44. Info gathered from WSJ, CNBC, Barrons.com 3/6/2015

February S&P 500 Index Rose Most Since 2011. DJIA Has Best February Since 1998! Truly spectacular month for stocks even though only a few days contributed. If you missed the great up days you missed the rally that went on. The Nasdaq was up 7.1%, closing in on its previous high from March, 2000. This was the best February for that index since February, 2000. The gains all came in spite of a real lousy last week in the month where all indices were off slightly. Info provided Barrons.com 2/28

  and I saw this in The New Yorker Feb 7 2015.

You Very Happy? Satisfied? Have a Dull & Routine Life? Or Dissatisfied With Your Life? George Kinder developed three questions to help people focus on what is most important to them. What he found is that many people spend their lives pursuing financial goals they aren’t excited about. They don’t know what they really want from their lives. George has 3 questions:

• What do you care about most if you had all the money you really needed.
• If you only had 10 years to live what would you do to change your life and how.
• If you only had one day left to live what would you look back at and say you missed, failed or did not get to be? Jonathan Clemens, WSJ 2-28-2015

SURGING STOCK MARKET MAKES INVESTORS FEEL SMART.You have to be careful, writes Morgan Housel, WSJ, UPISDE, 3/1/2015. Everyone loves a bull market. Be careful when markets turn. When investors feel good they feel smarter and more confident and make mistakes, writes Housel. Check your ego at the door. Don’t be impatient and don’t worry about things you cannot control. And, you and your advisor are allowed to change your mind. The analyst that says, ‘I don’t know.’ may never be popular but he or she is the one you want to listen to.

I remember getting investment advice from businesspeople, school teachers and engineers; all telling me that the 1990’s stock market would roll on forever and we’d never see a market correction.

 

Who Do You Know That Needs Me? Did you know that the average investor hasn’t come close to matching the S&P 500-Index Returns for the past 20-years? Some people look at investing as if they were buying a sofa or new lawn mower. Others think more is better; and others ignore risk and buy  those investments that did well the year before. There are those investors that simply never change allocation and ignore economic signals. If you know someone like that have your friend, relative, co-worker or neighbor call or email me for a no charge meeting. In about 45 minutes I’ll be able to tell them if I can help them and how. chart source Blackrock. Dalbar.  

Monday Markets Up Strong on China Rate Cut. DJIA + 155. Kirk Spano splashed some cold water, at MarketWatch.com wrote that Big Money is Moving to Cash. He pointed to a Sunday Barron's article that described how large management firms were holding more money in cash and short-term Treasuries.  Also, Berkshire Hathaway’s Warren Buffett talked about holding cash and short-term treasuries, in likely response to that fact that Berkshire’s Treasury holdings have grown to a record. Spano suggests that investors accumulate a larger cash position no matter what the market plans on doing. It’s obvious Spano is unsure and is simply increasing cash as have other investment management firms. The amount of cash may have been the selling of fixed income investments  (bonds) , or selling of equities. We do not know,  nor do the firms advertise what they are doing. MarketWatch.com 3/3/2015

Add another opinion…

Robert C. Doll, CFA, Senior Portfolio Manager, Nuveen Asset Management, ‘The bull market is nearly six years old. Investors have faced many steep walls of worry. The economy has been growing, and the stock market has been rising as a result of profits from entrepreneurial activity. We anticipate these trends will continue until corporate profits fall sharply, interest rates rise significantly or the stock market increases beyond the current value of discounted earnings.’ March 2, 2015.

and…

Jim Cramer on Mad Money Monday said, ‘This market isn’t exuberant, it’s just happy!’

Tuesday Markets Off Slightly After Being Down Triple Digits Earlier in the Day.

 Been There Done That. Yeow! Cramer Has 6 Worries That Could Turn into Disaster. CNBC 3/3.

• Retail & Restaurant's- what if people stopped shopping and eating out?  There’s been a slowdown recently. Hey! It’s cold out here. Like everywhere.
• Car sales and financing. Cramer worries about subprime financing being pulled back. Subprime is a tricky business. There’s a reason why it’s called subprime.
• Housing?  People don’t go home shopping in minus degree weather.
• Slowdown in sales in the PC Tablet world. The biggest maker of tablets had a horrible quarter.
• China with Macau casinos down 49% and the big CHINESE IPO Aliwhatsit down off its IPO price- what’s going on there? Cramer worries that China is no longer pulling its weight in the global contribution game.
• Last is Oil. Oil is down and Cramer wants it to go down more. Tuesday markets saw an uptick in oil prices and most ‘commentators’ want oil prices to stabilize, and rise. Hey, remember the dollar is strong and getting stronger. That says it all in oil prices. Except for the glut…

Markets Off-again- Wednesday The 10-Year held steady at 2.12%.

 

Cold Weather Grumps or Heading for a Slowdown? Norman Fosback, former president of the Institute for Econometric Research and editor of Fosback’s Fund Forecaster, pointed out that as long as ‘margin debt’ (the amount borrowed from brokerage houses to buy stock) remains over a 12 month average this is bullish when the debt is below the moving average this is a bearish signal. Here’s the chart from MarketWatch.com 3/5/2015:

WHERE’S THE CHEAP MONEY? Corporate America has rushed to the EU, where investors are hungry for any kind of yield (déjà vu?). Corporate America is sitting on record amounts of cash. Much of it stashed overseas because bringing it home invites the taxman. The recent EU stimulus has sparked a bond blitz (WSJ 3/5) as investors have been buying anything in the fixed income sector banking on falling yields to replace any significant interest payments. The average yield for corporate bonds issued in euros is a near-record low 1.08%. Companies such as Berkshire Hathaway, Kellogg and Cocoa Cola have rushed to load up on cheap money. GDF Suez, a French utility, is the first company in over 14 years to issue bonds in euros, bearing no regular payments to investors. Investors bought the bonds on the bet that interest rates will fall further and they’ll make money on the increased value of the bonds. WSJ 3/5

CNBC THURSDAY 3/5. U.S has the largest stockpile of oil not seen in the last 80-years! 430 million barrels of oil. In fact, the U.S. is fast running out of places to store the stuff.

 

Longest Winning Streak Without a Major Correction?  We ain’t close! Chart provided by@NickatFP published in MarketWatch.com 3/5/2015 Shawn Langlois reporter.

 

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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