Monday, September 29, 2014

Here Comes The Feds To The Rescue Again!

(CNBC). U.S. stocks rose sharply on Friday, cutting losses for the week, after the government raised its estimate of economic growth in the second quarter and consumer sentiment rose in September.  "The backdrop for a lot of this nervousness is the end of QE," Peter Boockvar, chief market analyst at The Lindsey Group, said. "We have lots of data this week, followed by lots of earnings over the next month." Stocks did not move much in reaction to a 1 percent decline in pending home sales for August, and futures were little changed after reports that personal income rose 0.3 percent in August , as expected. Earlier, protests in Hong Kong had rattled global markets and U.S. stocks about percent lower, but most analysts said the situation would not have a long-lasting impact on markets. 
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(CERR Finance).  The financial markets seem to be playing rope a dope today. Markets dropped 100 points today until Feds made a statement. That is not a bad thing but it surely shows markets are getting weary. "Caution" is the word for today. Fed policy is trying to protect big institutions, banks, and big companies from market loses. It is like trickle down economics being played out. Why don't the Fed increase the spread between how much we loan to banks instead of how much they loan to the average citizen. Banks would not exist without capital and the free money they are getting from the Feds.  Feds are trying to keep the average citizen in check by saying they will not raise rates for the near future. What does that mean? Translate - we are not going to allow you to make any money off of your bank accounts, money market accounts, bonds, CDs or anything that is considered low risk.  Overseas markets are being challenged by citizens who want more opportunities. The time for overseas rulers to share wealth to their people has come. People with billions of dollars of worth need to do more to create a level playing field for ordinary workers. Until workers feel like government is working for them (lower minimum wage, minimizing certain drug laws to kill to prison complex, making tax laws favorable to middle class, and changing big welfare laws for big pharma, energy, foreign aid, and taxes. 

Saturday, September 27, 2014

Time For Caution! Close Relationship Between Feds and Banks

(Yahoo.com -By Jonathan Spicer and Emily Stephenson, September 27, 2014 ). "When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy," Warren (Elizabeth Warren - Democrat on the Senate Banking Committee) said in an emailed statement. "Congress must hold oversight hearings on the disturbing issues raised by today's whistleblower report when it returns in November."
Brown, in an email, said: "For too long, too many financial regulators have been too cozy towards the very industry that they are meant to police."
Carmen Segarra, a former New York Fed bank examiner who brought a wrongful termination lawsuit against her former employer, recorded the conversations and provided them to the investigative news outlet ProPublica and the public radio show "This American Life" to illustrate what she saw as an inappropriately close relationship between regulator and bank.
Segarra was fired after nearly seven months at the New York Fed as a so-called embedded supervisor at Goldman. She later sued the branch of the U.S. central bank for $7 million but the suit was dismissed in April for failing to state a claim that merited whistleblower protection, a decision she is appealing.
"The New York Fed categorically rejects the allegations being made about the integrity of its supervision of financial institutions," it said in a statement on its website.
On Friday, Goldman tightened rules on investments its bankers can make in individual stocks and bonds, a company spokesman told Reuters.
A source familiar with the situation said the bank's new conflict-of-interest rules on Friday were in the works for some time and were unrelated to the Segarra case.
Asked about the possibility of hearings, both the New York Fed and Goldman Sachs declined to comment.
In one conversation said to be among Fed examiners following a meeting with Goldman officials, one participant appeared concerned about pushing the bank too hard for details on the Santander deal.
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(CERR Investments).  This is not hardly surprising. No bank executives went to jail for the financial crisis, no average citizen got there money back from stolen mutual funds and pensions, and banks got a reprieve due to TARP funding. People are holding onto their cash now because they see and understand that institutions and the government are working together. Sooner or later capital will dry up or at least will be in the market. How will you continue growth? Well you need new money. What money? Money sitting on the sideline lines in money markets and banks. Why do you think the Feds have near zero interest rates on bank accounts and money market funds. They want average citizens to invest. However what about big business who is also holding onto capital, companies going overseas to avoid taxes,  and banks not issuing loans? You can see Fed policy not going after those fat cats. 

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(Yahoo.com). London (AFP) - Six banks may face record fines in Britain as they begin talks about a settlement following an investigation into allegations of rigging currency markets, the Financial Times reported on Friday. Barclays, Citigroup, HSBC, JPMorgan Chase, the Royal Bank of Scotland and UBS have begun meetings with the Financial Conduct Authority (FCA) to agree a settlement, and fines may amount to over one billion pounds ($1.6 billion, 1.3 billion euros), the FT reported, citing sources close to the situation.
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Thursday, September 25, 2014

Is the Sky Falling or Are We Getting Back to Financial Norm?

(Yahoo.com).  Stocks slammed by global worries; Dow off 250 pts.  U.S. stocks declined on Thursday, a day after the S&P 500 jumped the most in more than a month, as Wall Street weighed reports that Russia was considering a measure that would let its courts seize foreign assets. "To us that would signal a threat from the Kremlin that the Russian-U.S.-Europe conflict economically might take a turn for the worse, should it be enacted. They are signaling that unless concessions or negotiations take place, we're prepared to do this," said Jim Russell, senior equity strategist for US Bank Wealth Management. Reuters reported the draft law, submitted to Russia's parliament on Wednesday by a pro-Kremlin deputy, would also allow state compensation for those whose assets were taken in foreign jurisdictions.

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 (CERR Investiments).  Do you really think the markets are declining because Russia threatens to take foreign assets? Well Russia has foreign assets. What do you think the world would do to their things.  Small Caps stocks and now Large Cap stocks are getting hit. Reit Funds are getting slammed!

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(The Street). All 10 sectors of the S&P 500 were in the red, with most posting a drop of more than 1%. The S&P 500 information technology sector was bearing the brunt of the negative action as both Apple andYahoo! (YHOO_) tumbled. The iPhone maker was down 3.53% after pulling its iOS 8.0.1 updatemere hours after releasing it. (This could turn your phone into a brick!). Yahoo! fell 1.76% after revealing that it agreed to a one-year lock-up period that restricts the sale of the remaining ordinary shares it owns in Alibaba (BABA_) .  The overall declines in equities on Thursday were mainly attributable to end-of-quarter profit taking, thinner volumes due to the Jewish holidays, and the unwinding of trades that were driven by dovish Federal Reserve speak during the prior session.

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 (CERR Investiments). End of quarter profit taking to say the least Street0! Big companies are getting ready for the sweet free money to end in October. As long as Feds keep bank deposits by ordinary individual near zero interest rates companies will invest because there is no other place to go if you want to make money.  However the small investor is the key. The small investor is not going to forget 2008 and all the ponzy schemes that went on. Until the markets seem fair, bank deposit rates go back up, and financial regulations are again keeping insider traders from stealing your money, markets will stall. 

Wednesday, September 24, 2014

How Does The Small Investor Compete With Big Institutions

(Yahoo.com-William A. Galston). If they (Americans) were judging the economy by the monthly jobs report, working Americans would be popping champagne corks. Total employment has risen every month for more than four years. According to the Current Population Survey, more than eight million jobs have been created since the trough, while the number of unemployed has been cut by nearly six million. The unemployment rate has declined to 6.1% from 10%, and the number of Americans enduring long-term unemployment (27 weeks or more) has fallen to three million from 4.3 million in the past 12 months. This year's report (U.S. Commerce Department) found that median household income was $51,939 in 2013, 8% lower than in 2007, the last year before the recession (crash of 2008). Households in the middle of the income distribution earned about $4,500 less last year than they had six years earlier. No wonder 56% of Americans told the Pew Research Center that their incomes were falling behind the cost of living.What's going on? The Census report offers a clue. The median earnings for Americans working full-time year round haven't changed much since 2007. But more than five years into the recovery, there are fewer such workers than before the recession. In 2007, 108.6 million Americans were working full time, year-round; in 2013 only 105.9 million were doing so. Although jobs are being created, too many of them are part-time to maintain growth in household incomes.

______________________________________________________________  (US Census Bureau). New Economic Indicators from the US Census Bureau show that Residential Housing Sales (single family) are up 16.3% as of Aug 14.  However new construction is down -7.9%.Profits from retail trade are up $7 Billion. Construction spending was up 1.8%. Rental rates were down 7.5%.  Home ownership rates were down 0.3%.  The nation's 65-and-older population is projected to reach 83.7 million in the year 2050, almost double in size from the 2012 level of 43.1 million. 

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(Wikipedia.org/wiki/Middle-class_squeeze).  The middle-class squeeze is the situation where increases in wages fail to keep up with inflation formiddle-income earners, while at the same time, the phenomenon fails to have a similar impact on the top wage earners. Persons belonging to the middle class find that inflation in consumer goods and thehousing market prevent them from maintaining a middle-class lifestyle, making downward mobility a threat to counteract aspirations of upward mobility. In the United States for example, middle-class income is declining while many staple products are increasing in price, such as energy, education, housing, and insurance.[1]

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(CERR Investments).  What does this mean? This is my read:  Industries and investors are buying houses instead of regular home buying residents and renting them at higher than normal prices (profits $7 Billion) - keeping residents from renting (rental rates down 7.5%).  People are finding themselves priced out of the housing market (ownership rates down 0.3%).  This tells me the younger people and the middle class are getting squeezed and older generation is trying to hold on to their existing houses as long as possible (housing starts or construction down 7.9%). 

Tuesday, September 23, 2014

The Bears Are Running!

Stocks Fall For Third Straight Day — Dow Down 116

(Reuters) - U.S. stocks fell on Tuesday, with consumer staples leading the S&P 500 down to its third straight daily loss, as investors grew concerned about the pace of global economic growth. The day's losses were broad, with all ten primary S&P sectors down. Consumer staples .SPLRCS were the weakest on the day, off 0.9 percent, while industrials .SPLRCI lost 0.8 percent. Wall Street's losses tracked Europe's .FTEU3 1.3 percent slump after data showed a contraction in French business activity and slower growth in German manufacturing this month. The Russell 2000 .TOY fell 0.9 percent during the normal session, and the small cap index's 50-day moving average fell slightly under its 200-day moving average, a condition known as a "death cross," which many investors view as indicating a coming bear market.
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(CBS World News) BANGKOK - World stocks were muted Tuesday as a string of record highs on Wall Street instilled caution about a possible bubble in stock markets fueled by easy monetary policy.
The Dow Jones industrial average has surged 900 points since early October and crossed the 16,000-point threshold Monday. Wall Street has not suffered a significant pullback in the past two years even though the U.S. economic recovery has been painfully slow.
Comments from influential investor Carl Icahn during the Reuters Global Investment Outlook Summit also reinforced jitters that stock prices are out of step with reality. "Icahn feels many companies' earnings are a mirage and earnings may be fuelled more by low interest rates than strong management," said Stan Shamu, market strategist at IG in Melbourne, Australia. "At such elevated levels investors are always looking for excuses to take some profits off the table," Shamu said.
In Europe, Britain's FTSE 100 fell 0.6 percent to 6,680.19 and France's CAC-40 shed 0.8 percent to 4,288.25. Germany's DAX was off 0.4 percent at 9,185.23.
Futures pointed to a retreat on Wall Street, with Dow and S&P 500 futures both down 0.1 percent.
Japan's Nikkei 225 stock average closed down 0.3 percent at 15,126.56 and China's Shanghai Composite Index dropped 0.2 percent to 2,193.13. Australia's S&P/ASX 200 lost 0.6 percent to 5,352.90. Hong Kong's Hang Seng was little changed at 23,657.81. Markets in Southeast Asia mostly fell.
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(CNBC) The U.S. stock market remains in positive terrain for the year after a recent drubbing that pushed the S&P 500 and Nasdaq Composite to five-week lows.
The same can't be said for the Russell 2000 index of smaller companies, now down 3.9 percent on the year, and leading some to question whether its decline is a harbinger of things to come for the broad market.
"The Russell 2000 getting weaker is a point of concern. What the market is dealing with is whether this is a reallocating of assets as we head into the end of the quarter or a fundamental breakdown," said JJ Kinahan, chief strategist at TD Ameritrade.
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(CERR Investments) Small Cap stocks are taking a beating lately. Global markets are showing signs of the turmoil from  Russia and in Syria. I expect the Feds to come out this week with another speech soon to ease the markets. Has the market correction begun?  When all of the hype is gone from Chinese stocks we will see it is as exactly that, hype. Interest rates are going to go up soon and then we will see the real players in the game. Hope my mutual fund managers and stock company CEOs are smart players. 

Monday, September 22, 2014

Oh Really" They are just realizing the market rally is fictitious!

 (Yahoo.finance.com) Finance ministers from the Group of 20, which includes the United States, the U.K, the European Union and China, warned at their latest meeting that financial markets may be headed for a slump. “Downside risks persist, including in financial markets,” the group said in a statement from Cairns, Australia. “We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility. At the same time, big companies have been buying back their own shares at a record pace, which protects investors in the short term by pushing stock prices higher than they’d otherwise be, but has two major downsides. First, stock buybacks can mask underlying weaknesses in the stock market, since they make demand for stocks seem stronger than it is. That can breed complacency, which is one of the concerns now. Buybacks also make a company’s performance seem better than it is, since the stock usually rises on a buyback, even though earnings don’t.   

(CERR Investments). Here they go again talking about a market correction.  Well if you don't know by now the market has already been in a correction.  It not for Fed involvement you would see the real size of the market. The big players have all the cards at this moment and the small time investor is being taken for a ride. Just think, we can't trade in and out of the market because that would be costly due to expenses being charged by our financial services. If markets correct watch how Mutual Funds react. Hopefully they have made the trade to safer investments before the correction happens. that is why we pay them. Our only hope is the long time horizon of the market it showing that someday it will bounce back. At least that is the hope. 

Get ready for the SEC finding more crooks, ponzy schemes, insider traders, and cheats when the market corrects. Money will be less diluted so companies will truly have to prove how they are making their money.

Sunday, September 21, 2014

The World of Finance

(CERR Investments):  Hello everyone! This is the first entry to what we believe will be a fantastic blog. We hope to share ideas concerning governmental financial instruments like quantitative easing, geo-political environments, and stock market investment options. Isn't it odd that the Feds have decided to make bank deposits and money market funds interest neutral in an effort to get the ordinary investor to put money into the market. What are they thinking? Do they not understand that most of us have been punished by the stock market in the early 2000's and badly in 2008. Feds are now trying to reduce financial regulations again on equity funds so the people in the financial markets may have another chance at us again. The SEC needs to continue to find the  inside traders and ponzy schemers.  No one will trust the markets until it feels like a level playing field.