“The great thing in the world is not so much where we stand, as in what direction we are moving.”
–Oliver Wendell Holmes Jr.
Motivational Quote of the Week
Personal Notes
It was a tough loss yesterday in the “Battle of Pennsylvania” when the Philadelphia Flyers eliminated the Pittsburgh Penguins in National Hockey League playoffs. I think the Penguins have an outstanding team with plenty of talent. But, the Flyers have had great success against them. We need to attribute a great deal of their success to Philadelphia’s coach and General Manager. I wish the best to the Flyers and I hope they carry the Stanley Cup back to Pennsylvania!
Economic Reports Last Week
Last week was a good week for economic reports as POSITIVE developments
exceeded NEGATIVE developments
Below is a succinct list of last week’s
events:
Positives:
1) German business confidence index and investor economic confidence index showed improvement.
2) Spain sold 12 mo, 18 mo, 2 yr and 10 yr debt successfully, yields hold steady near highest since December.
3) UK retail sales and jobs data both better than expected.
4) US Retail Sales in March broad based and above estimates but core figure ex auto’s, gasoline and building materials were touch light.
5) Housing construction permits rise to most since Sept ’08 led by multi family housing.
6) Refinancing applications rise to 5 week high as mortgage rates drop near lows again.
7) Brazil and India both cut interest rates as focus more on growth than inflation.
8) Shanghai index closes at 5 week high on growing speculation of another Reserve Requirement Ratio cut.
9) Positive for Japanese exporters as yen weakens after Bank of Japan deputy Gov says they will print all the yen it takes to get to 1% inflation.
Negatives:
1) While Spanish yields flat on week, Credit Default Swap rate rises to record high, the Spanish IBEX stock index trades near lowest since Mar ’09, Italian 10 yr rises to just shy of highest since Feb, Italian and French Credit Default Swap at most expensive since Jan
2) Initial Jobless Claims again surprises to upside, 4 week average rises to most since Jan
3) Existing Home Sales, Starts and National Association of Home Builder’s builder survey all below expectations
4) Purchase applications fall to 6 week low
5) NY and Philly manufacturing surveys fall but components mixed
6) Industrial Production flat month over month
7) China says home prices fall in 37 cities in March, up from 27 in Feb
Source: The Big Picture
The Markets This Week
Stocks finished generally higher last week, and on an up note Friday. Nevertheless, a big drop in Apple’s (AAPL) share price and some other highflying stocks damped market sentiment.
In particular, investors last week were worried about the first round of elections in France, scheduled April 22, where Socialist party presidential front-runner François Hollande could score important gains. Some momentum investors in particular wanted to get out of way of any losses that might come next week on electoral results unfriendly to capital markets.
On the domestic front, the first-quarter earnings results seen so far are as expected, for the most part. Second-quarter U.S. economic data continue to be less positive than that seen in the first quarter.
The Dow Jones Industrial Average rose 1.4%, or 180 points, to 13,029.26, for the first weekly gain in three weeks. Bucking the trend, and hurt by Apple’s 5.3% drop, the tech-heavy Nasdaq Composite drooped 0.36% to 300.
Other stocks that fell last week after huge run-ups included Priceline.com (PCLN), down 3.4%, and Chipotle Mexican Grill (CMG), falling 5% even though it posted strong first-quarter results last week. These are names being “rented” by momentum funds, but they are getting skittish ahead of the elections and earnings results, traders say.
“The French elections will be closely watched,” says Timothy Ghriskey, chief investment officer at Solaris Asset Management, “and a big influence was Apple,” which is reporting first-quarter earnings Tuesday.
Apple has shown two weeks of relative underperformance, which is unusual for this stock.
The big event for markets over the next four weeks or so will be the giant Facebook initial public offering, which will probably come about mid-May, he Ghriskey says. It’s likely to be a huge IPO where the value and demand will be closely watched by market participants. The Facebook road-show is likely to get under way soon, and if the IPO goes well, it could give a lift to the market as a whole, he says (Source: Barrons Online).
The Numbers This Week
Last week was a good week for economic reports as POSITIVE developments
exceeded NEGATIVE developments.
|
Returns through 4-20-2012 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.1 |
1.2 |
8.0 |
6.9 |
6.4 |
5.7 < /td> |
|
US Stocks-Standard & Poor’s 500 |
.6 |
10.3 |
5.9 |
20.8 |
.7 |
4.1 |
|
Foreign Stocks- MS EAFE Developed Countries |
1.6 |
7.0 |
-13.0 |
10.3 |
-7.6 |
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.
“Your Financial Choices” on WDIY 88.1 FM
The show
airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley
National’s Laurie Siebert CPA, CFP. Last week’s show was rescheduled to this
week. Laurie and guest attorney Stanley Vasiliadis of Vasiliadis and
Associates will discuss:
“Long Term Care Planning – What is it
and What is the Process?”
Laurie will
take your calls on this subject and other financial planning topics at
610-758-8810. This show will be broadcast at the regular time. 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.
MOTIVATIONAL Quote Of The Week
“There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them.”
–Denis Waitley
Real-Life Situations
QUESTION: I am buying a new home and I am trying to figure out when to “lock” in my mortgage rate. Would you lock in the rate now or what until closer to the closing date?
ANSWER: I recommend locking in the rate today. Mortgage rates move up and down in reaction to up and down moves in the rate on 10 year U.S. Treasury rates. While no one can foresee the future on exactly how interest rates will behave there are at least two compelling reasons to believe these interest rates will move higher in the coming months: (1) Investors will demand higher interest rates in the face of the inability of the politicians in Washington to solve our national debt problem and (2) The FED has indicated in it vague language the QE III may not be implemented which removes a large buyer from the market.
Feel free to contact me if you or someone you know has this type of situation.
Financial 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.
Personal Notes
I am looking forward to attending the “The Irish Comedy
Tour” at the SteelStacks on Wednesday 3/14/2012 at 7:30PM. The Comedy
Tour’s goal is to set a party atmosphere of a Dublin Pub with boisterous and
belly-laughing comedy. I will be attending the comedy event with my
American golf buddies who are accompanying me on our Ryder Cup format golf trip
to Dublin in late May. We intend to pick up some Irish humor to pass
along to our Irish competitors when we all arrive at the 19th hole.
For more information about The Irish Comedy Tour including
ticket availability, click: http://www.artsquest.org/pages/details.php?52356
The Economy
Last week POSITIVE developments outweighed the NEGATIVE and the economy appears to be slowly improving.
Below is a succinct list of last week’s events:
Positives:
1) LTRO2 gives 530b more euros to European banks giving them cheap money, more time, chance to prefund ’12 maturities and play carry trade
2) Italian, Spanish bond yields fall again
3) Euro zone economic confidence up 1 pt, a touch better than expected
4) German consumer confidence rises to 1 yr high
5) US Initial Jobless Claims at 351k, lowest since Mar ’08
6) Vehicle sales reach 15mm for 1st time since Feb ’08
7) Consumer confidence jumps to best in a yr
8) Pending Home Sales rise another 2% to most since Apr ’10
9) Purchase apps gain 8.2% off last week’s lowest level since Oct
10) China’s state weighted mfr’g PMI rises to 5 month high at 51
Negatives:
1) LTRO2 take more than in Dec, banks still need help, dependency on ECB grows, what will happen in 2015 when 1T euros need to be returned to the ECB?
2) Portuguese bond yields rise, are they next problem child?
3) Euro zone unemployment rate rises to 10.7%, highest since 1997
4) Feb German jobs report a touch weaker than expected
5) Euro zone inflation remains sticky with Feb CPI up 2.7% y/o/y and Jan PPI up 3.7%
6) Jan US Durable Goods well below expectations, hangover from gov’t tax benefit?
7) CS home price index falls to lowest since Feb ’03
8) ISM mfr’g surprisingly weak with new orders, backlogs, production and employment all down while prices paid rise to highest since June
9) According to AAA, gasoline prices rise another .07 on the week and now up .30 over past month.
Source: The Big Picture