The market surge that has gone on the past several weeks got a dose of reality this week, with inverstors seeing first hand how full of crap the Fed actually is, how unimportant Greece's economy is to the rest of the world, and how little anyone cares if Spain falls off of the earth or not, provided their soccer team is spared.
The Wax Ink portfolio was down 1.5% for the week, with an average share price of $23.07.
By comparison, the Dow was down 1.0%, the Nasdaq was up 0.7%, the S&P 500 was down 0.6%, and the Russell 2000 was up 0.5%.
Year to date, the Wax Ink Portfolio is down 1.8%, while the Dow is up 3.5%, the Nasdaq is up 11.0%, the S&P 500 is up 6.2% and the Russel 2000 is up 4.6%.
The market focus this week was on the Fed, and the continuation of Operation Twist, another hair brained government scheme intended to drive down the interest rates on 10-year Treasuries. This lowered interest rate on 10-year Treasuries will, at least in prayer, keep the cost of lots of things low, since the interest rates to lots of things are tied to the 10-year Treasury.
What a nice concept, and one that would probably work if so many people were not out of work, and if there were demand for the things tied to the 10-year treasury.
Personally, I think it's all a big load of pig dung. If Twisted Operation were actually working, why did the Fed revise GDP growth from 2.4% to 2.9% down to 1.9% to 2.4%?
Also, if Operation Slobbermeclean were actually doing anything, why did annualized home sales decline in May by 70,000 units? And why did the U.S. Flash Manufacturing PMI fall to its worst level in the past 11 months?
If Operation Twistmeup really were all that dynamic, and was actually having some positive impact, [keyword coming up] why did the Philadelphia Fed Survey fall to its lowest level since August 2011, and why has China's PMI report shown economic contraction for the past eight months, since most of the worthless crap we buy in this country now comes from China?
Could it be there is simply lackluster demand [keyword] for the goods and services ties to the 10-year Treasury? And what about the credit scores of the consumers Operation Twistmystones is supposed to impact? Does anyone with two brain cells that connect, really believe with the economy in the current state of ruin that it is in, demand for much of anything is expanding?
Yet the markets, and as Karl says, my point 401k, all hinge on the actions of two mental giants, namely potential ex-con Timothy Giethner, and Ben Affleck look-a-like,Ben Bernanke.
No wonder the average worker in this country has only $25k in savings and $14.5k of credit card debt, since not one thing that the government has done, at least that I could find, has created one permanent job.
The Wax Ink Portfolio didn't exacly have a banner week last week, but there were a few holdings that ended the week with blissful smiles including airplane repair company AAR Corporation (NYSE: AIR), up 16%, payday lender Moneygram International, Inc. (NYSE: MGI) up 7%, and custom processed steel company Worthington Industries, (NYSE: WOR), up 7%.
The holdings needing the most air freshner for the week included uranium producer USEC, Inc. (NYSE: USU), down 15%, oil and gas company BP plc (NYSE: BP), down 5%, and electronics manufacturer Maxwell Technologies, Inc. (Nasdaq: MXWL), down 3%.
Every week I continue to be amazed not by our political system, but instead by our politicians.
Reading some of the banter among Nancy Pelosis, Karl Rove, and Harry Reid reminds me of things that can happen in the deep blue sea.
Things that, well...we simply never consider.
Wax Ink is comprised of individual investors, NOT licensed or registered with ANY government agency. Please obtain the advice of a registered investment professional BEFORE considering any information obtained from this site. [more]
The market surge that started last week continued this week, causing many "investors" to believe a corner has been turned, the market correction is at an end, and happy times are surely right at hand.
Certainly that may be the thought for many, at least at first glance, but don't be fooled by the hype and stupidity that is Wall Street. Just consider the lyrics of The Wall Street Song, and don't let it happen to you.
Your legs were spread but the bear is now dead
So there is no more need for kindness.
Just bend at the waist as we increase the pace
And get you back to blindness.
The Wax Ink portfolio was down 0.5% for the week, sinking on the backs of two of the portfolio's long held companies.
By comparison, the Dow was up 1.7%, the Nasdaq was up 0.5%, the S&P 500 was up 1.3%, and the Russell 2000 was up 0.3%.
Year to date, the Wax Ink Portfolio is down 0.4%, while the Dow is up 4.5%, the Nasdaq is up 10.3%, the S&P 500 is up 6.8% and the Russel 2000 is up 4.1%.
Admittedly, I was a bit perplexed that the portfolio was so far off when compared to the broader indices. Sure there were a couple of holdings that were a drain on the portfolio during the week. But to fall 0.5% when the broader markets were up, on average, 0.95% for the week? What's wrong with this picture?
The $125 billion handout Spain is receiving to shore up its banks, is widely considered to be too little to late to do much good. The broader markets increased, on average, 0.95% for the week.
Cyprus asked the World Bank for some cash to shore up its banks. Granted the economy of Cyprus is like a fart in a whirlwind when it comes to the Eurozone economy, but still, it highlights that another Eurozone country is in trouble. The broader markets increased, on average, 0.95% for the week.
JP Morgan Chase (NYSE: JPM) testified before the Senate Banking Committee that everything at the bank was cool and the $2 billion they lost trading crap that they had no understanding of was all good, and the bank would be solidly profitable in the current quarter. The broader markets increased, on average, 0.95% for the week.
May retail sales were down 0.2%. They were expected to be down 0.1%. The broader markets increased, on average, 0.95% for the week.
May producer price data was expected to decline by 0.7%. Instead it increased by 1.0%. The broader markets increased, on average, 0.95% for the week.
Initial jobless claims increased from 380,000 to 386,000. The expected number was 375,000. The broader markets increased, on average, 0.95% for the week.
The June Empire Manufacturing Survey, the Fed's estimate of manufacturing activity, declined to 2.3 from 17.1. The broader markets increased, on average, 0.95% for the week.
The University of Michigan’s consumer sentiment number declined to 74.1 from 79.3. A decline to 77.0 was anticipated. The broader markets increased, on average, 0.95% for the week.
So with all of this negative economic data, why were the broader markets up almost 1%? The most obvious reason is short covering.
As the markets began to fall weeks ago, those with high speed trading platforms (read as not you or me) went short in the market.
Now as it looked like the market was could turn upward, the short positions needed to be closed. This created demand for shares and caused the broader markets to rise.
Another lesser factor is quantitative easing. With all of the poor economic data and economic growth seeming to decline, the markets are trying to determine if the Fed will act in some positive manner which could help the global economy and thereby help investors.
Personally I don't think that will happen, but then, I know less about this stuff than a hog knows about the hereafter.
The Wax Ink Portfolio didn't exactly benefit from the broader markets last week but there were a few holdings that ended the week on a happy note including uranium enrichment company USEC, Inc. (NYSE: USU), up 51%, small tool company The L.S. Starrett Company (NYSE: SCX) up 8%, and oil and gas company BP plc, (NYSE: BP), up 6%.
Those holdings that really stunk up the joint last week included airplane repair and maintenance company AAR Corporation (NYSE: AIR), down 13%, business equipment maker Verifone Systems, Inc. (NYSE: PAY), down 13%, and communications equipment company Tellabs, Inc. (Nasdaq: TLAB), down 7%.
Politics is without a doubt the world's dumbest profession.
The new controversy is some drool and slobber television show that displays what folks are saying is President George W. Bush's head on a stick. Personally I didn't see the resemblence at all, but I'll let you decided for yourself.
Is this President Bush, or just a clay head on a clay stick? Stomachs with too much gas need to know!
Wax Ink is comprised of individual investors, NOT licensed or registered with ANY government agency. Please obtain the advice of a registered investment professional. [more]
The markets surged during the week, leading many Wall Street types to put on their red spandex body suits and Prada pumps, and declare it's all up from here. No explanation of what was up, but with a little imagination I'm sure a mental picture will emerge. [more]