30. November 2009 by Dan Walkow, CFA, CMT.

According to the Center for Responsive Politics they are:

1. US Chamber of Commerce

2. Exxon Mobil

3. Pharmaceutical Research and Manufacturers of America

4. General Electric

5. Blue Cross/Blue Shield

For the whole list go here.

Posted in Economics | No Comments »

30. November 2009 by Dan Walkow, CFA, CMT.

Up until this year the corporate mantra was “outsourcing, outsourcing outsourcing” which meant hiving off non-core divisions, just-in-time inventory management and contracting low cost suppliers to supply product inputs through the product development and delivery cycle.

This trend is changing with the corporate tide swinging the other way to “in-sourcing” where companies are seeking to control end to end product development, manufacturing an delivery. This is only the beginning.

Several deals this year such as Oracle/Sun, Pepsi/ Pepsi Bottling/Apple/ Hewlett Packard and others are “buying in” and corporate integration is back.

See the recent article at the WSJ here. (subscription)

Posted in Uncategorized | No Comments »

30. November 2009 by Dan Walkow, CFA, CMT.

You can skip your distribution this year and save on taxes.

If you are at least 70½ years old, you normally must take a taxable distribution from your traditional IRA or employer-provided retirement plan by the end of the year — whether you need the money or not — or face a stiff penalty equal to half of the amount you failed to withdraw. But this year is different. Uncle Sam says you can skip your required minimum distribution for 2009. (Employees who continue working past age 70½ are not subject to mandatory distributions from their company plans until they retire, but they still must take distributions from their IRAs.)

IRA owners who turned 70½ between July 1 and December 31 would normally have to take their first distribution by April 1, 2010. But thanks to the waiver, they can skip that, too, delaying their first mandatory-distribution deadline until December 31, 2010.

Read more here.

Posted in Taxation | No Comments »

29. November 2009 by Dan Walkow, CFA, CMT.

The recovery rally in markets around the world, since the lows last March, has been technically-driven and not a result of earnings growth. It has been a case of the market adjusting for less-bad than expected.

What now?

For the next up-leg of the market we need to see earnings growth as Paul Lim explains in the New York Times. He says:

IN the first leg of a bull market, when optimism and euphoria are ascendant, investors are willing to bet that the economy will improve and that corporate profit growth is just around the corner. This faith manifests itself not just in rising share prices, but also in rising price-to-earnings ratios.

But hope can take the market only so far. Earnings — the “E” in the P/E ratio — must soon recover and become the catalyst for rising prices if this rally is to last. All reports so far, however, show that earnings are still falling.

It may very well be that, with the rapid rise in markets, we are now a bit ahead our ourselves here, as we may need earnings to catch up to the market.

A digestion period should not come as a suprise.

Read more here.

Posted in Markets | No Comments »

29. November 2009 by Dan Walkow, CFA, CMT.

Tyler Cowen, a professor of economics at George Mason University, lays a warning on the line regarding the huge overbuild in China. Trees do not grow to the sky, especially when propped up with artificial stimulants and loose monetary policies.

Worth a read here.

Posted in Markets | No Comments »

26. November 2009 by Dan Walkow, CFA, CMT.

Read the rest of this entry »

Posted in Real Estate, Uncategorized | No Comments »

24. November 2009 by Dan Walkow, CFA, CMT.

RANDALL W. FORSYTH in Barrons writes a good piece on what can go wrong with the reflationary trade that governs the markets at this point in time. As he writes:

GOLD SET ANOTHER RECORD MONDAY while the Dow Jones Industrial Average gained 1% to a 13-month high, supposedly based on the cheery thought that the U.S. dollar would inevitably collapse to zero.

And as if to underscore the public’s interest in the latest gold rush, the five most-read stories on Marketwatch.com were all about gold. (Marketwatch is owned by News Corp., which also is the publisher of Barrons.com.)

Indeed, Albert Edwards, Societe Generale’s global strategist, sees the risks running quite the opposite of the consensus, which has a global recovery on track with a steadily falling dollar. Instead, he looks for a double-dip back into recession leading to a surging greenback, with a collapse of “the China economic bubble” resulting in a double whammy for commodity prices. Worth a read at Barrons here (By subscription)

Posted in Investing | No Comments »

24. November 2009 by Dan Walkow, CFA, CMT.

For many investors the drubbing of 2008 wears deep and there is a developing view that “Alternative Investments” such as long-short funds, where downside protection is added to a portfolio to stabilize volatility and take advantage of cyclical downdrafts in the marketplace is gaining popularity.

Timing is everything when it  comes to investing and we are advocates of utilizing Inverse-geared Exchange Traded Funds to “immunize” portfolio volility.

Here is a clip from Bloomberg –

Bloomberg) — JPMorgan Chase & Co. and Pacific Investment Management Co. are inundated with money from individuals attempting to mimic the performance of hedge funds speculating that the stock-market rally is over.

So-called bear-market and long-short mutual funds, designed to protect against falling stock prices, attracted a record $10 billion this year through October, more than double the previous high in 2006, according to Morningstar Inc. Asset managers have opened 19 long-short funds, the most in one year.

The funds’ rising popularity shows how skeptical small investors remain even after the Standard & Poor’s 500 Indexrecouped almost half the 57 percent loss incurred from October 2007 to the March 2009 low. Conventional mutual funds that only buy U.S. stocks posted $4.6 billion of redemptions in the first 10 months of the year, while bond funds added $280 billion.  Read more here.

Posted in Investing, Exchange-Traded Funds | No Comments »

24. November 2009 by Dan Walkow, CFA, CMT.

 The US Treasury sold $44 billion of two-year notes at a yield of 0.802 percent, the lowest on record, as demand for the safety of U.S. government securities surges going into year-end.Investors are piling into short-term Treasuries on concern that this year’s rally in risk assets has outpaced growth prospects and as Federal Reserve officials signaled interest rates will remain near zero for an extended period. Rates on some Treasury bills turned negative last week for the first time since last December, when global credit markets froze.

How low can we go? By the time the investment dealers take a markup on T-Bills the interest rate to a retail investor is next to nothing. This is nothing new but furthers emphasizes the point on the previous post that when interest rates turn upward there is going to be pain in bond-land. Read more here.

Posted in Fixed Income | No Comments »

23. November 2009 by Dan Walkow, CFA, CMT.

Deficit-ridden governments around the world, led by the United States, require massive amounts of funding and they raise money by selling bonds. In particular there is a movement afoot to reduce reliance on selling short term investments like Treasury Bills and increase long term funding like 30 year bonds. It is like locking in your mortgage payments  at low interest rates for 30 years as opposed to having a floating rate mortgage.

This is a smart move at this juncture in the economic cycle, for governments, corporations and individuals alike. There is a very strong possibility we are at generational lows in interest rates and the competition for long term funding will ensure that the direction of interest rates will be up, perhaps dramatically so.

The interest  rate stage is set and investors who hold bond mutual funds, annuities and longer dated bond maturities could feel the wrath of the coming interest rate tsunami in a very significant way. Buyer beware!

For more read this embedded story by the New York Times on how the massive funding needs by the United States is going to change the interest rate landscape, good for long term borrowers not good for investors. Read the story here.

Posted in Inflation, Fixed Income | No Comments »