My once-a-year cheeseburger & French fries binge is complete. On St. Patrick’s Day Thursday I and a support group of 13, descended upon Emeril’s Burgers & More for that special order. The verdict: the cheeseburger graded at a 9.9 on a 10 point “delicious” scale but the fries came in at a disappointing 6 (not crisp enough).

Last week, more NEGATIVE than POSITIVE developments were announced and the stock market continued to be volatile.

Below is a succinct list of last week’s events:

Positives:
1) Bilateral intervention halts yen spike.
2) China and India continue to tighten policy to offset rising commodity prices.
3) Philly Fed survey best since ’84 and NY also good but old news?
4) Housing starts awful, but I say good with too many existing homes for sale.
5) Europe agrees to expand EFSF and gives Greece more rope. Spain sells 10 and 30 yr paper successfully.

Negatives:
1) Japan cannot stabilize damaged reactors but hope is alive that they’re getting close.
2) Commodity inflation still elevated as CRB back to flat on week on rebuilding bets and Libya/Bahrain unrest after mid week selloff.
3) CPI, PPI and Import Prices rise above forecasts.
4) Will China and India engineer a soft landing with more policy tightening?
5) Housing starts awful, bad for construction.
6) Europe will learn hard way that more debt on too much debt won’t end well, Moody’s downgrades Portugal to in line with S&P.

Source: The Big Picture

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The U.S. stock market suffered its third loss in four weeks as investors struggled to gauge
how Japan’s earthquake, tsunami, and unfolding nuclear emergency might affect the global economic recovery.

Buyers stepped in late last week, reflecting the consensus view that Japan’s disaster and higher oil prices have brought about a mere correction, but not yet the start of a bear market. But the buying was tentative, and the bounce shallow, with many still waiting for clearer signs that the selling pressure has exhausted itself.

At midweek, stocks fell briefly into the red for this year, and were off 6.4% from their Feb. 18 peak. More than half the components of the Standard & Poor’s 500 were plumbing fresh 20-day lows, a sign that the pullback came hard and fast. But credit markets remained relatively stable, both here and in Japan, which supports the argument that traders were simply paring risks after stocks’ 28% rally since August.

Barclays Capital’s economists, for example, say the global recovery should withstand the shocks so far. “The most significant risk comes from an energy-supply shock, where the nuclear uncertainty in Japan could compound the tensions in the Middle East,” they write. They’ve cut projections for Japan’s growth, but “do not foresee a major dislocation to global activity from the calamity.”

Given the prevalence of views like this, any news that Japan’s nuclear fallout is contained could unleash more buying. “This is a consensus intention, and not yet a consensus position,” notes Jan Loeys, JPMorgan’s global head of asset allocation. “The uniformity of positive views seems dangerous, but we see it more as confidence than complacency.”

Beyond that, however, restoring confidence and extending the bull run will require at least two things, says Jonathan Golub, UBS’ chief U.S. equity strategist. Investors will want to see evidence that these recent setbacks haven’t caused corporations and consumers to pull back more permanently. When companies report first-quarter earnings, bulls also will want to see companies passing on higher raw-material costs without too much damage to profit margins.

Markets got a boost Friday from financial stocks, which rallied after the Federal Reserve pronounced some banks healthy enough to be allowed to raise their dividends. JPMorgan (ticker: JPM) promptly upped its quarterly dividend to 25 cents, from 5 cents, while Wells Fargo (WFC) hiked its payout to 12 cents, from 5 cents. Caving to public pressure, the mature tech giant Cisco Systems (CSCO) says it will begin paying a six-cent quarterly dividend.

The Dow Jones Industrial Average ended last week down 186 points, or 1.5%, to 11,859. The S&P 500 Index absorbed its worst week in four months. The Nasdaq Composite Index fell 72, or 2.7%, to 2644, while the Russell 2000 gave up 8, or 1%, to 795.

QUANTIFYING JAPAN’S IMPACT on multinationals is impossible when Tokyo is still fighting to contain the radiation fallout from its nuclear plants. While the tsunami hit less than 5% of the population, power rationing in the aftermath could affect more than 40% and prove the bigger drag, along with the yen’s spike as foreign wealth is repatriated.

Shortages of parts from Japan have already prompted General Motors to shutter a Louisiana plant. Global companies have tended to downplay the disruptions to their supply chains as temporary. But “in a world of typically lean inventories, this could prove optimistic,” says Credit Suisse analyst Richard Kersley. “Moreover, other providers of components, should they source elsewhere, may raise prices.”

Take Mitsubishi Gas and Chemical’s suspended resin production at a plant damaged in the earthquake. A three-month delay in the production of resins and laminates could put at risk up to 50% of the output of chips used in smartphones.

Many tech analysts, have warned clients about potential disruptions, but have yet to change their profit estimates. Apple (AAPL) fell 6% last week, on concerns that the already tight pipeline of its coveted iPads and iPhones might be pinched. Nearly a third of the Boeing 787 is made in Japan, and Boeing (BA) slid 4% (Source: Barrons Online).

Last week for the second consecutive week, US Stocks and Foreign stocks decreased and Bonds increased. During the last 12 months, U.S. STOCKS outperformed BONDS.

Returns through 3-18-2011	1-week	Y-T-D	1-Year	3-Years	5-Years	10-Years
Bonds- BarCap  Aggregate Index	.4	1.0	5.3	5.7	6.0	5.6
US Stocks-Standard & Poor’s 500	-1.9	2.1	11.9	-4.2	-2.4	1.4
Foreign Stocks- MS EAFE Developed Countries	-2.7	-1.0	3.9	– 6.2	-2.0	2.6

Source: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized excluding dividends.

“When you feel like giving up, remember why you held on for so long in the first place.”

– Author Unknown

The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP®. This week, Laurie will discuss:

“Your state and local income tax questions”

Laurie will take your calls on this subject and other financial planning topics at 610-758-8810. WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton/Phillipsburg area; and, it is broadcast on FM 93.7 in the Fogelsville/Macungie area – or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.

QUESTION: My mortgage rate is about 6% and the rate will be adjusted in 2012. When should I refinance?

ANSWER: As soon as possible. Interest rates have recently dropped but this dip will probably be temporary. Act now to refinance before interest rates continue their upward trend. The reason why interest rates will rise is that mortgage interest rates are closely linked to the 10-year maturity U.S. Treasury note interest rate. In 3 months, the FED will probably stop buying these as part of its quantitative easing AND the Japanese, a big purchaser in the past, will be forced to withdraw their buying power in order to redirect its money to rebuilding Japan post earthquake/tsunami/meltdown.

Feel free to contact me if you or someone you know has this type of situation. Financial Planning and tax planning advice presented here is general in nature, and individual circumstances make applying these general rules tricky; thus, the above answer cannot be applied to all circumstances because the slightest variation could cause a different outcome.

   

My leisure reading habits are such that I flip-flop between fiction, non-fiction, fiction, non-fiction, etc., I just finished a non-fiction book titled, “This Time is Different: Eight Centuries of Financial Folly”, which presented more evidence for fearing our government’s proclivity for spending.

My next read (fiction) is a challenging project: “Atlas Shrugged”, by Ayn Rand. This literary masterpiece was first published in 1957; and, I have been toying for a decade about reading this 1,368 page behemoth of a book. Why now? Its story line seems appropriate for today’s controversy between big government and those who celebrate individual drive and the reward for a job well done, rather than the equal division of profit to all regardless of the work put in. AND…… the movie by the same name is debuting 4/15/2011 after 40 years of a tug and pull contest in Hollywood on whether to make this controversial book into an accurate rendition of Ayn Rand’s philosophy. So, I intend to read the book and then see the movie on Saturday 4/16/2011 (I marked my calendar!).

Last week, more NEGATIVE than POSITIVE developments were announced and the stock market became more volatile.

Below is a succinct list of last week’s events:

Positives:
1) Oil prices moderate but for both good and bad reasons
2) Day of Rage ends up being Day of Nothing, Saudi stocks rally this week
3) Retail Sales good but what’s next with higher gasoline prices?
4) US Treasury finds aggressive buyers for 10 and 30 yr debt
5) NFIB small biz optimism index hits best since Dec ’07

Negatives:
1) China reports unexpected trade deficit
2) Gasoline prices up another $.05 to $3.54, hasn’t fallen in 24 days
3) Initial Claims rise but remain below 400k
4) UOM confidence drops and follows fall in Bloomberg poll as one yr inflation expectations jump to 4.6% from 3.4%
5) Higher than expected US trade deficit leads to cut in Q1 GDP forecasts
6) Moody’s downgraded Spain’s credit rating, yields continue to rise in Greece, Ireland and Portugal.

Source: The Big Picture