I took notice the Pittsburgh Pirates have “brought up” their #1 draft pick: Gerrit Cole who struck out the first batter he faced with a 99 mph fast ball and followed up with a 2 RBI base hit with his first at bat against San Fran’s Cy Young award winning pitcher.  Gerrit went on to record his first win, and on Sunday he recorded his second.  The Pirates have a deep pitching staff.  And, they have the will and motivation to win thereby snapping Pittsburgh’s more than 2 decade drought of winning seasons, the longest in the history of professional sports.  Even if you are a Phillies or Yankees or Sox fan, a small part of you has to cheer for the Pirates to finally have a winning season.

Retail investors who just recently started feasting on stocks again are getting a serious case of indigestion, and some are seeking the comfort of an old staple: cash. Uncertainty about the Federal Reserve’s purchasing plans has sunk bond markets in recent weeks, and stocks have also proven unsteady; the drop hasn’t been dramatic, but it has been persistent. The major indexes have now fallen three times in the past four weeks.

The Dow fell 177.94 points, or 1.17%, on the week to close at 15,070.18. The index fell 105.9 points on Friday. The S&P 500 dropped 16.65 points to 1626.73. The Nasdaq composite fell 45.66 points, or 1.32%, to 3423.56.

Investors continue to seek clarification from the Fed, which hinted that it might curtail its $85 billion-per-month asset-buying program later this year as the economy picks up. A change in that plan would be relatively small in terms of absolute dollars—the Fed might cut its purchases of securities by $10 billion or $20 billion per month. But even the suggestion of a reduction has rippled across global markets. Bonds in emerging economies have tumbled since early May, and the International Monetary Fund warned the U.S. central bank on Friday that the way it communicates its intentions could disrupt economies in far-off places.

With all that in mind, Ben Bernanke will sit before a lectern next Wednesday and answer questions from the press following a meeting of the FOMC. Traders will likely remain on edge Monday and Tuesday.

“The market has become a drug addict and the Fed is the dealer,” says Ed Yardeni, president of Yardeni Research. “Everybody’s going through the shock of withdrawal.”

INVESTORS AREN’T FLEEING the markets en masse yet—bond and equity funds saw inflows in May, according to ICI. But retail money-market funds have risen by $20 billion in the past two weeks, including $11 billion in the week ended June 12. That’s the largest jump since Jan. 2.

Cash earns you “bupkis,” while U.S. stocks are still attractive, Yardeni notes. “Staying home is good advice for equity investors.”

U.S. conglomerates with foreign exposure might be the best bet, says Bank of America’s head equity strategist Savita Subramanian. Stocks with high foreign exposure are trading almost at parity with domestic-focused stocks in their price to sales ratio, a rare phenomenon. (In 2009, multinationals were more than twice as expensive as U.S.-centric names.) That’s partially because “the housing recovery is the No. 1 theme investors have been buying into” and expectations for U.S. investments have been revised higher as the rest of the world has been revised lower. If history serves, the momentum could shift back toward multinationals ( Source:  Barrons Online).

Most of the time, the U.S. stock market looks to 3 factors to support its upward trend – let’s grade each of the factors:

Because of some quirks in our governmental accounting system, the Federal deficit will appear to be shrinking during the next several months.  This is a short term illusion.  Medicare continues to be an enormous future problem due to the baby boomers entering the Medicare system – participation will soar from 52 million to 66 million in 8 years- and due to the soaring cost per participant: from $11,500 to $15,151 per year. Total Medicare dollar outlay will increase 67% over 8 years.

My sympathy goes out to those affected by the tornadoes in Oklahoma and other parts of the Midwest.  At times like this, I reflect on the relatively “secure” climate of Eastern Pennsylvania.  Yes, we have to put up with the occasional heavy thunderstorm, flooding, ice or snow storm; but, overall it pales in comparison to some other U.S. sections which are hit with much more severe storms, drought, floods, hurricanes, earthquakes or wildfires.

Another week, another record high. The stock market continues to party like it was 1999, and last week equities soared 2% on mostly good economic news and a strong dose of reviving animal spirits.

Another sign of change through the free market system:  the first refinery to be built in the U.S. since 1976 is under construction – in NORTH DAKOTA.  The refinery will sharply cut the cost of diesel fuel in the state and reduce North Dakotans’ dependency on oil products refined in other states or countries.

“The mother’s heart is the child’s schoolroom”  -H.W. Beecher

Heartfelt thanks to my wife Jo Anne for being the mother of our two daughters and fondest memories of my mother Isabelle Riddle (1919 – 2002)

The home building industry has been a critical part of past economic recoveries. It makes sense to keep an eye on current developments, even forecasting what the future holds for the home building industry.  My analysis is that the home building industry is poised for a sharp move ahead, thus adding a significant number of new jobs to the economy.  My forecast is based upon the number (or lack thereof) of homes for sale.  Keep in mind that a surplus of homes for sale like we saw in 2008 – 2012 will deter developers from starting new homes to build.  GOOD NEWS:  As of March 31, 2013, there were 1.93 million existing homes for sale in the USA whereas just 4 years earlier, the number of homes on the market was 3.65 million (source: National Association of Realtors).  For more information, click: http://www.realtor.org/topics/existing-home-sales/data

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”