That Was The Week That Was – 4th Week February

• Markets plummeted Tuesday last on Mid-East worries. All domestic and foreign indices fell but closed off their lows. Worries about oil disruption in the Middle East sent the price of crude to new 2011 highs. Libyan dictator vowed to stay the course Tuesday. Worries that civilian discontent could spill over to Saudi Arabia and Iran drove market fears.
• The coming week will be dominated by OIL, according to The Street. Jobless numbers plus auto sales will be announced but will oil continue to gain or drop like a stone? CFO Almir Barbassa of Petroleo Brasileiro, SA, one of the world’s largest energy company, stated on Sunday that oil prices will find themselves between $70-$90 in the short to medium time.
• Warren Buffett said in his letter to clients, ‘…we live (American citizens) six times better than when I was born.’ He continues to say that he expects 2011 to be an outstanding year, housing will begin to recover next year and he is eager for new acquisitions. Net income in Berkshire Hathaway increased in the 4th quarter 43% over the year before. He also said there is an abundance of opportunity in the United States.
• Wal-Mart same store sales fell even though the retailer posted a 27% jump in profits; problems persist as the company fights the dollar stores. Management has been slow to get lower price goods into their stores. Sales have fallen for 8 consecutive quarters – the longest losing streak in company history.
• For several weeks Middle East unrest didn't faze the markets. But with the push into the oil producing countries along with 2 1/2 year market highs a pullback was in the cards. Certainly this was a lesson that owning energy funds still make sense.
• Amidst the unrest companies still report earnings but all attention is on the Middle East as Libyan conflict overtakes all the news, the price at the pump rises and worried traders wonder if civil unrest will transfer to other dictatorships in the region. Talking heads confuse the issue as one pontificates that $150 a barrel oil will kill the economy while another head tut-tuts with, ‘We’ve been there and done that,’ attitude, So far there is no oil disruption just traders nervous and bidding up the price.
• Wednesday last the markets started off swell and then someone reminded someone that there was trouble on the horizon and the tanking began. All indices off, the Dow triple digits.
• Buying junk by investors has paid off big time. Investors who had the guts to buy bonds of troubled firms that were in default, bankruptcy or in some measure distressed were well rewarded.  Often times, a Moody’s study found, companies use the threat of default as a bargaining chip so that bondholders ride  to the rescue and bail the firms out. MGM the film studio used that tactic, according to Moody’s, and was rewarded with elimination of $4 billion in debt. Lenders later recovered 44 cents on the dollar.
• Markets mixed Thursday last with Apple and IBM showing gains. Experts from CNBC and the Trading ‘Getting Technical’ suggest another 10% before Bulls cut in and waltz.
• Didja know that you can invest in the IPO market, especially with huge investor interest in the coming Tech stocks, by buying an exchange traded fund? Not a one of us has enough clout to get shares at the IPO price so the ETF called The First Trust U.S. Index Fund buysan IPO seven  days after issue and sells after 1,000 days. The ETF has outperformed the NASDAQ over the past 2 years but not the past five years. Russel Kinnel director of mutual fund research at Morningstar says he wouldn’t buy the fund. (Russel is worse than Warren Buffett when committing dollars on the cheap and has a history of waiting way too long.)
• The Justice Department is waging a war of extinction on the tobacco companies. They want the industry to state that they purposely deceived Congress and the public for years and publish this in newspapers and on their product. (There has to be a reformed smoker somewhere in this mess.)
• According to U.S. officials current oil stockpiles are sufficient to meet any supply disruption.The White House said the U.S. and the world community had the ‘capacity to act’ should a major disruption of supplies occur following events in Libya. (Ya’ll know what ‘capacity to act’ means, doncha? If you ever wondered why the USA keeps its Big Boats in that part of the world, now you know it’s the capacity to act.)
• It’s not nice calling China sneaky but according to the WSJ the country’s government wealth investor last year more than doubled their investments in major Japanese blue-chip companies very quietly.
• Stocks closed the week with a slight bounce but still off 2 1/2% their 2 1/2 year highs. (Hey, you can buy that number straight or box it!) Oil settled off highs but smart traders say the deal with Saudi Arabia to step in and even out the rough spots may not be all that it is supposed to be. The country may indeed be in the crosshairs of civilian change.  James B Stewart in Saturday’s WSJ, ‘Common Sense,’ said he wouldn’t be selling oil related stocks but adding to them for the long haul.
• Barron’s Cover reported that 3M is the 3rd most innovative company in America with a machine that introduced 1,300 products last year while the stock moved only up 7%. According to Barrons the company may be entering a ‘sweet spot’ for its stock. The company is into health care, energy conservation, touch screen gaming and 3-D technology. (Yeah, it make those sticky things, too.)
• India’s economic growth slowed to 8.2%, the expansion was below the expected 8.6%. (in case you were wondering why emerging markets slipped the last quarter). This compared to USA 4th quarter grew at 2.8% rate down from 3.2%.
• Nasdaq is looking for a partner to team up and buy venerated NYSE Euronext’s stock trading biz. The Naz has been super aggressive with their financial policies and their triple B bond rating is two notches above junk. As you recall the Germans have been on the prowl to add the venerated NYSE to their German exchange.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

 

Nurturing Your Inner Investment Guru

In the roaring 1990’s, when everyone was going to get rich betting on tech and day-trading sprouted its baby teeth, investment experts proliferated like weeds. It was when kindergarten teachers were schooling me with their high tech picks that I should have had that V-8 moment, picked up my marbles, and taken a time-out. Instead I stuck it out only to watch the NASDAQ crash and burn at the beginning of 2000. It was a time of investment irrational thought and action and the NASDAQ index hasn’t seen those pre-crash numbers since.

Before that happened the guy who printed my business cards  postulated that the markets would never go down because too much money was being invested and the sheer weight of in-coming dollars was enough to provide perpetual growth. He never understood, nor would he listen. that what went up could come down.  The concept of immediate liquidity was lost on him and countless millions of other investors.

From that time to this day in almost every business, factory, government building and job site there exists a self-proclaimed investment expert in which every other employee reaches out for counseling and advise. It doesn’t make any difference if this expert’s ideas are about as cockeyed as an Australian Emu race people take his or her words as gospel.

Some of the worst investment advise came out in 2008 when the markets collapsed. Even respected investment professionals were completely wrong. Just before the crisis escalated Jimmy (The Mouth) Cramer appeared on The Today Show and pleaded with a national audience to get into cash if they needed any money over the next five years. Five years!! In six months he was back on the same program proclaiming the crisis over and everyone should get back into the markets. And he wasn’t the only one. All across the country self-styled gurus were preaching from the same hymnal. Get out and stay out. Abandon ship. Climb back aboard. Nutty times.

We know for certain that those who bailed are still far behind and may take years longer to get anywhere near the asset value they had before the crash. Those that ignored the guru’s bleating are in much better financial shape than those that didn’t. 

Which brings me to the point who you should listen to when times get complicated and you need to make a big decision. Who’s your guru?

Inside each and every one of us is a little germ called common sense who’s sole duty is to protect us from making too many silly decisions. Common sense has saved each of us a lot of grief. It’s that little voice that whispers in our ear. I don’t how it works but common sense has saved me from climbing a water tower tank and riding the big revolving light on top at midnight to not voting for Sarah Palin. 

It’s an override switch that filters all the world’s horse poop and somehow makes us do things that eventually turn out to be the right things. Anyone who’s been to a high school or college reunion and seen their old boy or girl friend twenty years after graduation knows what I mean. What could have been and what was and we get a cold shiver just thinking about it.

Common sense doesn’t, unfortunately, work in a vacuum. In order for the germ to work at its optimum it needs to be primed with knowledge and experience. The good thing about common sense is that it doesn’t need a lot of education. In fact it needs just enough information to be able to ask questions. Questions and a little knowledge are like yeast for common sense. Somehow it makes things work better. Whenever some self-anointed water cooler swami  crosses their arms, adjusts their turban and pontificates what you should be doing with your money or your life a little knowledge creates questions that your inner guru  says need to be answered.

Nurturing your inner financial guru takes only a small amount of effort. Make time each day to read something about money, how it works, investments, mutual funds or Google a lesson on dividends or bonds. While its an infinite amount of information that neither you nor I will never be able to work our way through what we do learn will be enough to keep our common sense working at its optimal best.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

 

The Dangers of Default for Defined Benefit Pension Plans

 You don’t have to be an actuarial genius to understand that defined benefit pension plans are in trouble. The global market collapse hit plans twofold – less investment dollars being invested into the plan because the companies simply did not have the money plus assets invested fell to cruel levels. As far back as 2005 alarm bells were being sounded as airline pensions were going kaput and the Pension Benefit Guaranty Corporation reported to a Senate Committee that promised pension benefits may not be available for a good percentage of  employees in certain industries. And, unless things changed, PBGC would not be able to guarantee even minimal retirement payments since its charter was not backed by the good faith and credit of the United States government. The company is supported by fees from member corporations.

In 2004 there were 44 million workers who depended on PBGC to ensure their getting benefits. Even though 401k plans have taken over as a primary retirement funding plan for many workers about 40% of those retiring baby boomers are relying on income from a defined benefit plan. The defined benefit plan is funded by the employer for the benefit of the employee. Usually it provides a guaranteed retirement income using a formula based on the employees tenure and earned income.

In 2004 the scale of corporations that were underfunding their pension plans was alarming and pervasive the agency estimated that total underfunding (2004!) was around $600 billion.

When PBGC reported to the Senate Committee 70% of their insured losses were from two industries – steel and airline. Today we can assume that those losses have accelerated across a wide spectrum of businesses.

The problem gets worse when you realize that PBGC does not cover government employees. Those employees have to look to the state or city for their guarantees, or rather the lack of them. All of us in Michigan know how mismanaged the City of Detroit’s Employees Pension has been with the F.B.I. investing alleged corruption and possible theft.

The fallout to current and future retirees from mismanaged or underfunded pension plans will at best result in far less guaranteed income than had been projected and promised. The worst that can be expected is no benefits at all. Add the fact that municipalities and states are having budget troubles and shortfalls and its no stretch to understand that this is a problem with possible distressing consequences.

Unfortunately there is little an employee can do except be vigilant regarding their pension benefits.  Don’t assume that because you’ve retired and the income stream has begun that everything is okay-dokey. The danger of default for iffy firms is a constant concern.

How do employees check on the health of their defined benefit retirement plan?

• Make sure that you are getting an annual report.
• Call and ask about the financial health of the plan if you do not understand the report.
• Talk to your Human Resources department. Sometimes they do not know and you should take your suggestion to your supervisor to find someone that does know.
• If the firm has had a bankruptcy that often impacts the pension but not always as in the GM bankruptcy.
• Finally go to www.pbgc.gov and check their records and on-line files for information about your private defined benefit pension.

You should always have a systematic retirement or savings plan set outside your workplace. This can be a valuable asset for children’s education, an emergency fund and last but not least a supplemental retirement plan.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was - 3rd Week February

•   The New Presidential(proposed)Budget indicates higher taxes for those in the upper tax brackets, according to Barrons.com writer Randall W. Forsyth. The Obama budget is making muni’s more attractive (ignoring the possibility of default). Budget cuts over the next decade would only attack the deficit by one-quarter of the suggested proposal by the President’s own budget commission. Citigroup called the President’s proposal disappointing.
• Monday last started off with markets mixed.  A major freeze in Mexico earlier in February has resulted in a shortage of tomatoes, cukes, bell peppers and other veggies.  The freeze was the worst in 50 years and consumers get hit with the double whammy of higher costs plus shrinking supplies.
• For a ‘Buy and Hold’ investor Warren Buffett pulls the plug when a holding reaches fair value. In his 4th quarter report The Buffett sold stakes in Bank of America, Nike, Lowes and Nestle plus others. He increased his holdings in Wells Fargo. He now holds only 25 U.S. companies. The fewest the $53 billion portfolio has held in several years. Yes, you read right – 25.
• China’s prices rise 4.9% an indication that it and other Asian countries may be losing the fight against inflation. Rising food prices blamed as prime culprit. Them tidy-whities may soon be made in some other place.
• Fed-Ex cuts profit target blaming weather and increased fuel costs for fiscal 3rd quarter. Incidentally, across the street, the folks in Brown also cited bad weather as a 1st quarter headwind.
• The credit wars are just beginning as providers will be rolling out smart phones with an embedded chip allowing consumers to buy things simply by waving their phone over an item. AT&T, Verizon, T-Mobile and Discover have formed a joint venture to roll this out by the end of next year. Can anyone say, B B B B Billions…?  (there’s a trade here…anyone?)
• Markets mixed but off their lows Tuesday last. Fund managers are more bullish on global equities at any time in the current decade, according to Myra P. Saefong of Marketwatch. This higher appetite has been accompanied by a dramatic downsizing in allocation to emerging markets. But, this respite is but a temporary moment.
• Say Cheese! Kraft’s cannot keep prices to consumers up with increasing costs of food materials has seen the food giant report a 24% drop in profits. The Oracle was against the recent purchase of Cadbury by Kraft and now you know why Buffett’s the Oracle.
• It’s in the Brew as Heineken profit UP 41%.
• Banks are wanting bigger down payments from home buyers. Gone are the handshake and here’s the keys to the front door daze. Now the average down payment is 22% nationally. Not surprising a study by the Federal Reserve Bank of St Louis found that those who had smaller down payments had a greater chance of defaulting. (I could have told them that – you too?)
• While home prices keep falling farmland keeps rising. Fueled by rising crop prices irrigated land has increased 14.8% and non-irrigated by 12.9% in the latest quarter in the farmland belt of Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico. Bankers suspicious and waiting for crop prices to fall. They may indeed have a very long wait.
• Markets up mid-week. South Korea’s national pension fund- the world’s 4th largest- is planning on investing in alternative assets with $4 billion overseas. The usually conservatively managed fund is trying to ensure supporting retirees in a nation with one of the longest life spans and lowest fertility rates in the developed world.
• The Detroit Pension Fund Trustees allegedly work under a different set of rules than those mandated by FINRA. The newspaper Detroit Free Press reported in 2009 that pension trustees had few ethical or financial disclosures rules and were allowed to travel the world with virtually no restriction and accept gifts, trips, tickets and expensive dinners from money managers, law firms, investment advisors and others seeking business on the board. The Feds be investigating.
• N.E.S.T.L.E.S., Nestle’s spells the very best…’ and the company reported profits tripled in 2010 but it wasn’t why you’d think. Profits were helped due to the sale of its eye care business and increased emerging markets sales and nutrition division. A Swiss company with deep American roots. (The company owns Kit Kat candy and Lean Cuisine.)
• Dow is getting Big in the water biz while DuPont looks to expand into the food business.
• Cisco missed numbers last week and traders punished the stock. Morningstar gives it 5 stars.
• Dutch navigation systems Tom Tom fell as profits crashed 29%.
• AOL’s CEO buys $10 Million stock in company. AOL is reinventing itself after buying blogger Huffington Post for $315 million.
• Foreign banks find loophole in Capital Rule to avoid adding more capital in order to operate in the USA.  Barclay’s attorneys said that having the additional capital trapped was just not worth it. Ah, the games afoot.
• Ford Motor stock falls but news it allies with Russian auto maker. Ford is #2 in Russia and sales were up 24% in January.
• Stocks roared again Friday last and closed at 2 1/2 year highs. Still many small investors are sitting things out and waiting for the bottom to fall out. Some think that those that missed the rally are hoping the markets crash again in order that they can get in and rectify their mistake. ‘This is a market that just has momentum and it wants to go higher,’ said Dan Genter, CEO, CIO, of RNC Genter Capital Management.
• Violence in the Middle East and oil falls. This doesn’t seem right. Buying either the Oil ETF or the refiner VLO may make some sense.
• A Double-Dip is virtually off trader’s investment screen as 419 of the non-financial companies in the S&P 500 list were up 49% from three years ago. Profits were higher with $1.64 trillion, the highest in four years according to government data at the end of 2010.
• Stocks up 100% from March 2009 lows and Barrons’ The Trader calls it a love fest. Already this year almost 1/3 of investment into China Index Fund and the iShares Emerging Markets has been pulled by traders to be invested in USA stocks. Earnings are still strong in emerging market stocks and China looks to have another banner year but all the attention is on domestic stocks.
• So How High the S&P? According to Chief Technical Strategist Mark Arbeter another 2% from current closing….but….that’s just the resistance level based on March 2007 low. Smart money guesses 10% from this point because of a lack of sellers.
• Markets were closed Monday for President’s Day.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Saving Social Security

The Social Security System could be saved overnight if Congress, the President and the American public wanted. The Washington Post reported that by 2037 all reserves would be drained and  the system would be able pay only 75% of required benefits. There is no secret the fixes could be made quickly and place the system  firmly into the black. There is nothing stopping it except for the political bickering and juvenile emotion associated what is perceived as a guaranteed entitlement.

Without question Social Security through its income programs for those widows, widowers, orphans, retirees, sick and disabled has made life acceptable if not comfortable for millions. We all know that it was never created to be what it is today. In the beginning it was to provide needed income for those reaching age 65 at a time when the average person barely lived to 63. Today the average life span has exceeded that by over a decade and it is estimated that in any one family benefits may be paid out for as long as 26 years. Not only are millions more on the receiving end than the creators of the program ever imagined but the benefits are far greater than what was originally designed.

The real problem, according to Eugene Steuerle of the San Francisco Chronicle, is that Social Security has morphed into a middle-aged retirement system.

In October, 2010 Social Security first went into the red paying out more in benefits than it collected. This was a shock as it was anticipated the program would continue until 2018 before reaching this milestone. In 2011 there will be more red ink and it’ll only get worse unless someone steps up and does something.

Both President’s Bush and Clinton, at different times, suggested moving some social security assets to personal accounts or to be invested in the stock markets. I was against that then and even more so today. Thankfully no plan was ever implemented or we’d be really looking at an Alice in Wonderland scenario.

The tragic minefield that politicians have to tread is the outcry from Social Security recipients and those contributing to the plan. It is truly looked by many as  something that is engraved in stone and that each of us is entitled to. If the mini-public employee revolt in Wisconsin in February 2011 is any indicator of public outcry to change and reduction of benefits the wrath of many Americans will be directed to those that attempt to make changes or save Social Security.

The attitude has always been that people have been paying into Social Security and that they better get everything they paid into it out or else.

Here are a few ideas, certainly none of them new or mine. The problem with entitlements is just that – folks get to thinking that they deserve the benefits no matter what their economic situation.

1. Index retirement benefits based upon net worth, pension income or assets.
2. Raise normal retirement age benefit to start at 70.
3. Reduce COLA formula or freeze them.
4. Increase percentage contributions by workers
5. Raise ceiling on contributions to $150,000 or on all earned income

All the above will work and save the system if we really want to have it continue. The problem is that greed and the entitlement attitude gets into the way of common sense. The most important thing to remember is that Social Security benefits the young and infirm along with the aged. Lets make sure the benefits continue to those that truly need it. For more info on Social Security please go to www.SSA.gov.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

 

Retirement Income Methods

    For some investors it’s like the baseball player who can hit but  can’t field or throw. There are investors who can accumulate money in a retirement plan but haven’t a clue how to get a steady stream of income from their savings when they stop working. 

Income plan and design is as important, if not more so, than the accumulation of retirement assets. When investors are planning income their saving days are at an end. There are no second chances to return to the proverbial work well and start over in case a mistake is made in plan design and implementation.

Setting the wrong plan and income design and retirees may well find themselves running out of money well before they run out of life.

There are five methods for income withdrawal. Depending on the investment portfolio, personal risk level and the amount/percentage of withdrawal a retiree may use one or a combination of the following.

Cash

Uncertain on the retirement plan future account value? Moving a year or two of income into the cash or money market fund sector will provide worry-free monthly income. Sometimes you hear sales people refer to moving buckets of liquid assets to money market or savings. This is what they’re talking about. Cash investors will get a smooth ride, have money for emergencies and worry about the bulk of their invested portfolio down the road.

Interest

Individual Bonds and bond mutual funds (both open and closed) and exchange traded bond funds pay interest which can be reinvested or paid in cash. Using bond interest as income is as old a method as there is. In fact there are more bond investors than equity. Laddering of individual bonds (with varying maturity rates) to create a portfolio that constantly takes advantage of current interest rates is the key to buying bonds and building a sustainable income plan.

Dividends and/or Capital Gains

Stock investors may not get the highest percentage of income from their portfolio but they may own companies that should have a history of providing continuous and increasing income in the form of dividends. Those investor who own mutual funds and Exchange Traded Funds may also create portfolios that provide income through dividends and the annual payment of capital gain distribution.

Systematic Withdrawal

Mutual fund companies created the systematic withdrawal income plan. Simplicity is key for the retiree to receive monthly/quarterly income by having the fund company redeem shares in a percentage that exactly matches the amount or percentage needed. Dividends and capital gains are reinvested and fund shares are sold (without charge) to the third decimal. Retirees are able to request and receive the highest income stream from this method.

Annuitization

Buying an annuity for income is still a smart thing to do if the insurance company is fiscally sound.  Generally fixed annuity incomes should not be purchased when interest rates are at all time lows. Annuity income is based on interest rates, the annuity option and retiree age. There are a variety of confusing income options available and the annuitant would be smart to have someone who knows how those options work explain them in detail. It is all too easy to make a mistake and choose an income option that disinherits a spouse or significantly reduced benefits.

While I have made the income withdrawal plans sound simple they are extremely complex to implement. Retirees would be wise to make sure they review and update their income plans and investments every six months to ensure that they are on the right track.

Finally, there is a reason why some men wear both a belt and suspenders, they really are afraid their pants will fall down. Use the same reasoning in income plan design. There is no reason why retirees cannot use several  of the above methods to ensure successful continuous lifetime income.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

 

That Was The Week That Was – 2nd Week February

• Happy Valentine’s Day!
•  Whispers at CNBC say that corporate execs would prefer to buy-back corporate shares rather than hire people this year. It’s the ugly secret and a beneficiary of QE2. The bond buy-back by the Fed has made the stock market recover nicely and folks just don’t want The Ben Bernanke to stop. Chief Market Strategist Nicolas Colas at BNY ConvergEx said, ‘The power cord for the stock market runs right to the Federal Reserve.’ If employment doesn’t improve by summer expect The Ben Bernanke to implement QE3. Good for investors, bad for America.
• Back to Fundamentals This Week-As Egyptian Crisis cools traders focusing on what’s happening here.
• Michael Kahn, technical analyst, and writing for Getting Technical a column in Barrons.com reported that no matter what low rates The Ben Bernanke wants if the Street wants higher rates, rates will go higher. And, according to Kahn, prices started moving up last November and continue to do so. ‘We cannot call it the end of the 30-year trend towards lower interest rates, but it is the necessary first step in making that change.’ Consensus is that the Fed will raise rates by December. Mark that.
• Cash buyers are lifting housing. In some markets, according to the WSJ, buyers are snapping up homes in all-cash deals. In the Miami-Fort Lauderdale area last year half of all deals were cash. In Phoenix paying cash hit 42% of all purchases. This activity helped contribute to the markets jump of 69 points on the Dow Monday last.
• Lady Analyst Meredith Whitney who correctly called the fall of the Big Banks is being verbally pummeled for her latest prediction of 50-100 municipal bond defaults in the coming years. The ‘Boy’s’ say it ain’t so that Whitney is only looking for publicity but a  glance at the chart of states in trouble with tax revenue shortfalls and revenue gaps have to give the sista some credence.
• Apple sold 16 million iPhones last quarter and analyst pumped up their valuations. The company is considered the most valuable on earth. Brett Arends writes that shareholders should watch for ‘rumors’ of Steve Job’s demise which would cause the stock to fall and rumormongers would scoop up shares at discount.
• Fund manager Charles de Vauil was asked what assets he liked and said it would be better if he answered what he didn’t. ‘Avoid emerging markets, all commodities except oil and gas, small cap stocks and most European stocks are no bargain either.’ He is even ‘edgy’ about gold and said it wasn’t acting like gold but rising like everything else.
• Inflation worries are spreading: Brazil is expected to increase its overnight rate which is already at 11.25% because of inflation. China is raising rates by 1/4 of 1%, this is the 3rd time in 4 months. Some expect Chinese inflation to hit 6% in 2011. In the USA still under 2% even with rising food and energy. 
• Risky Business: Last year Congress ordered bank regulators to calculate which financial companies are the riskiest and turn the list over to the Federal Reserve so they can be supervised more closely. The names of these banks will be named later in 2011. However, Bloomberg Businessweek reported that in event of a 40% market meltdown that currently the riskiest of the big banks is (drum roll): Bank of America.
• One of my favorite snacks – apple crisp- is on my no-no list as the apples used in the recipe are grown in China. I emailed the company and asked if the USA had run out of apple orchards and still waiting for a reply. Food products from China and other Asian countries are on my ‘Don’t Buy List.’ Most fish we buy is harvested overseas and grocery chains and Big Lot stores buy and sell because the product is cheap and loaded with profit. Until other countries get the concept of ‘safe food’, I’ll do my dining with products grown and raised in U.S.A.
• Wednesday markets down until the last few minutes and then managed a slight gain.Cotton futures highest since the Civil War. Sugar is also up.
•  After 219 years the NYSE is looking to be acquired by Deutsche Borse AG in a deal that WOULD create the world’s largest financial exchange. Alan Abelson calls it the Schnitzel Takeover. Tongue firmly in cheek he writes in Barrons.com that it’d be plain silly to see the floor traders prancing around in lederhosen. Combined value of the company would be $25billion-or 7 x’s the value of Twitter. One veteran Wall Street trader said, ‘I hope these guys know what they’re doing.’
• Speaking of Twitter tech is starting to resemble the 1990s. Talks with execs at Facebook and Google are exploring alliances and how to unlock advertising value. Twitter value has increased exponentially.
• Blockbuster puts itself on the block. Emerging from bankruptcy the firm is looking for a buyer who understands brick and mortar and late fees do not make a business plan. (has anyone been in a Blockbuster lately?) Speaking of bankruptcy say bye to Borders as the Ann Arbor firm is shuttering stores, laying off employees and allowing itself to be reorganized in bankruptcy.
• Dow broke its string of 8 winning sessions Thursday last. Cisco stubbed its toe and Dow followed. Oil and gold up…a smidge.
• Detroit ranked #6 nationally in foreclosures. (In case you didn’t know.)
• Troubled Finnish telecom hooking up with Microsoft. The NOK has long struggled although it is the #1 handset maker. A Microsoft exec compared Nokia to a man standing on a burning oil platform who jumps into icy waters to escape the flames. NOK shares fell 9.7% on the news of the alliance.
• You read it here: U.S. corn stocks will be down this year 70 million bushels, a decline of 1.8 million metric tons. Corn futures have nearly doubled from late last June. According to Morgan Stanley analysts prices of corn need to move higher to ration demand. (Corn the caviar of vegetables)
• Morningstar analysts like in the year 2011 natural gas, materials and some tech. According to a recent report current natural gas prices are unsustainable and look for them to pop.
• The World’s Most Respected List of Companies has Apple numero uno with Amazon next followed by Berkshire Hathaway. You don’t want to know where Toyota was listed. No, seriously, you don’t want to know.
• Friday markets meandered, or if you’re from out west, moseyed close to even with no direction until the news that legendry Egyptian strong-man Mubarak had packed his bags and family and skedaddled to his beach house while taking the hint and retiring. Markets moved up and closed that way for the week with gold and oil down. Oil way off its highs.
• Ford stock up Friday last when it announced another $3 billion bond buy-back.
• This coming week see what the U.S does diplomatically and more from the retail sector.
• Finally blogger and wag Al Lewis  describes USA inflation as biflation. This is where everything you own goes down in value and everything you need is going up. Biflation happens when the Fed creates trillions of new dollars out of apparently nothing, but mostly just gives it to the banks.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.