That Was The Week That Was-4th Week February

 

 It was a very good client breakfast meeting the Saturday before last, and I appreciate all those who attended. A few drove more than fifty miles one way BRAVING the early morning freezing cold. For those that were not able to attend I have a few of the materials that were handed out. If you are a client and want a copy just email me or call and I’ll get  them out to you. This will include the Larry E. Powe, Esq. estate planning information as well as my 2014 year-end and forecast booklet. Thanks to all for attending.

The nice lady after the meeting who was packing up our left-over pastries and fruit was a dear client/friend who, along with her hubby, was on their way to help feed the hungry. They do this all the time (and not just on that particular Saturday), and I’m glad that our bounty was being shared.

 

S&P 500 and DJIA Hit Records.

Friday, February 20th markets rallied on news that an agreement, of sorts, was reached by the ‘anti-austerity Greek government & the Euro Zone ministers for a  4 month extension of Greek’s bailout. WSJ 2-21. We’ll back to this page, you can bet. On CNBC Monday commentary that Germany got more than Greece out of the negotiations.

Not the time to unload stocks, according to Steven M Sears, The Striking Price, in Barrons.com 2/22. Quoting RBC market strategist Jonathan Golub, who has a 2015 price target for the S&P 500 Index of 2325, far above the recent number of 2089. There is expected a massive inflow into stocks as there is a structural imbalance between stocks and bonds. A chart shows that there is a $1.63 trillion spread between bond fund inflows and equity fund outflows from January, 2007 to January 2013. Over that period $1.23 trillion flowed to bonds and $409 billion exited equity funds. This suggests a massive influx from the bond market when the Fed  starts raising rates.

‘1 in 3 Americans on Verge of Financial Ruin!’ If there is one thing financial news has not skipped is the hyperbole in its reporting. We seem to have taken our message reporting from nighttime news when a cough is translated as an epidemic, and a snowstorm is nicknamed a ‘killer’. MarketWatch.com reported that Bankrate.com released a survey of 1,000 people and found that 1 or of 3 has more bank credit card debt than their emergency fund asset value. Unsurprisingly it’s the 30 to 49 age group with the most debt to savings ratio and the 65+ with the least. 2/23/2015 I’ve been doing this so long that even this is old hat. The numbers are pretty close to what they’ve always been. Younger folk higher debt. Old poops less. It’s what it is.

 Monday markets ‘chillin’ waiting on Fed Chair Yellen’s Testimony to Congress later this week.

According to CNBC U.S. Tech Companies will continue to be ‘flush’  with cash, and it’s likely to be another big year of acquisitions. CNBC 2/24

The Nasdaq is again clawing its way back to 5000, once visited in March, 2000 before dissolving like a cheap cardboard belt in a rainstorm in what was called the dot.com bubble. Is another bubble forming? According to Jim Cramer it isn’t. Back in 2000 this company … had a valuation of $550 million. That was the market leader 15 years ago. Now it’s this company… leading with a $736 billion market cap. But, according to The Cramer, it’s the market multiples. Back then the former was trading at 80 times earnings while now the leader is trading around 18 times earnings. Big difference, says Cramer. On CNBC 2/23/2015.

 

Lift-Off?!  That’s what’s being called the moment when the Federal Reserve raises rates. Fed Chairwoman Janet Yellen, according to the WSJ 2/25, offered up an upbeat take on the economy to the Senate Banking Committee Tuesday. The only soft part is inflation, and excluding energy and food, that’s running 1.6% annually. The Fed is looking for around 2%. The countdown to a June liftoff will begin – unless the economic situation changes. The risk is that the markets may tumble or overreact on the first tightening move.

MARKETS HIGHER TUESDAY ACROSS THE BOARD.

Saudi’ Naimi says oil demand is growing, markets calm. The oil minister made the comments since the price of crude rebounded from a near six year low. There has been grumbling and some public criticism among OPEC members that the Saudi decision may not have been the right approach. North Sea Brent trading about $60 a barrel. CNBC 2/25

 

Through good and bad times the stock market’s broader average returned over the past 20-years 9.2%. The average investor earned a measly 2.5%. One reason is that American investors don’t have a clue what’s happening with the economy or the market. MarketWatch.com reported 2/24 that  U.S. adults answered correctly 2.9 our of 5 basic financial questions. In a Gallup poll, a few months later, when asked how the market performed that year, after the S&P 500 rose 30%, only 7% could recall what it had done. If you’re managing your own money, or even if you have someone else doing it for you, here are a few reasons why you may be trailing the indices (from the same above article).

• We have no idea what we are doing.
• We grow older but no wiser.
• We don’t know when we are getting scammed.
• We treat investing like a high school popularity contest.
• We’re too scared to invest to much.

POLITICS?

 The President’s 6th veto.

 

 

WHAT HAPPENS TO THE MARKET WHEN THE FED HIKES RATES? S&P CAPITAL IQ’s SAM STOVALL PROVIDED THE FOLLOWING CHART.

The index fell 11 out of 16 times initially but slightly further out, as you can see on the above chart, the markets calmed and declined 6 out of 16 but recorded a median gain of 4.8%. S&P Capital IQ 2-25-2015 PS Don’t forget the massive inflation fighting hikes from 1977-1980.

Thursday Markets Closed Mixed. U.S. crude fell 5.5% to $48.17 per barrel.

 

Alan (where the heck you been?) Greenspan, former Fed Chief, told CNBC Thursday that the reason that yield on Treasuries were falling is an indication of how weak the overall global economy. He went on to say that it’s probably to what we saw in the later stage of the Great Depression. And, it’s not anywhere near what the problems were back then but we haven’t seen anything like that since then. And, maybe that’s why we called the 2008-2009 Market Crash a Depression!? 2/26 And, he got a bunch of stuff wrong when he was writing his memoirs.

  Irving Kahn, who called the 1929 Market Crash, died at 109. He worked to the day he died at his investment firm. At 100 he told Barrons he was married to the business. In 1928 he was convinced that stocks were overpriced and shorted Magma Copper. When the markets crashed in 1929 his $300 had turned to $1,000. He was a student of Benjamin Graham, and worked with Graham on his first major work, Security Analysis. He also met his wife at one of Graham’s lectures. Barrons.com 2/27

QUESTIONS CALL PAUL @ 586 295 0430 OR WRITE HIM @ pstanley@westminsterfinancial.com. SHARE THIS BLOG WITH SOMEONE WHO CARES ABOUT THEIR MONEY.

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