Public Pension Assets Increase More Than $257 Billion

Public Pension Assets Increase More Than $257 Billion for State and Local Public-Employee Retirement Systems in 2010

All American Investor

The nation’s state and local public-employee retirement systems had $2.7 trillion in total cash and investment holdings in 2010, a $257.2 billion or 10.6 percent increase from $2.4 trillion in 2009, according to new statistics from the U.S. Census Bureau.

This follows a $722.2 billion loss the previous year.

These statistics come from the 2010 Annual Survey of Public-Employee Retirement Systems, which provides an annual look at the financial activity and membership information of the nation’s state and local public-employee retirement systems, including revenues, expenditures, investment holdings, and number of retirement systems and beneficiaries

The Morning Call + Monday Morning Chartology + Fed smackdown

The Market
Technical

Monday Morning Chartology

The S&P short term trading range is marked by the brown lines. The purple line is the lower boundary of the intermediate term uptrend. The red line is the 50 day moving average.

The Closing Bell-EPS expectations are too low

Statistical Summary
Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

Thoughts on Investing from Michael Pollock

Thoughts on Investing--from Michael Pollock

This year's (2011) mutual-fund scoreboard highlights an interesting conundrum about investing in emerging markets.

Economies of big emerging-markets countries such as China, India and Russia have been growing much faster than the plodding U.S. economy. Yet if you own a fund that focuses on emerging-markets stocks, the chances are good that its performance this year has been lagging far behind the returns of the U.S.-stock funds in your portfolio.

How could that be?

Morning Journal-Austerity is not a 4 letter word

Economics
This Week’s Data

March pending home sales rose 4.1% versus expectations of a 1.0% increase.

The second revision of first quarter GDP came in +2.2% versus estimates of +2.5%’ the GDP deflator was +1.5% versus forecasts of +2.0%
http://www.calculatedriskblog.com/2012/04/real-gdp-increased-22-annual-rate-in-q1.html

The Morning Call + Subscriber Alert + Houston, we have a trading range

The Market

Technical

The Averages (DJIA 13204, S&P 1399) had another good day, putting both (1) well above the 12919, 1372 level. In fact, the ‘distance’ element is now sufficiently pronounced that when coupled with a truncated ‘time’ element [which I mentioned in yesterday’s Morning Call] and the clear move above their respective 50 day moving averages [13017, 1379], it pushes me to confirm 12919, 1372 as the lower boundary of its new short term trading range and (2) well within their intermediate term up trends [11508-16508, 1209-1776].

Volume fell; breadth was mixed. The VIX declined but remains above the lower boundary of its short/intermediate term trading range(s).

GLD was up, closing above the lower boundary of its short term trading range and continues to develop a reverse head and shoulders formation.

The hidden role of gold at the IMF (medium):
http://www.usnews.com/opinion/blogs/economic-intelligence/2012/04/23/the-hidden-role-of-gold-at-the-imf

The Morning Journal-the US has a spending problem

Economics
This Week’s Data

Weekly jobless claims rose 2,000, in line with expectations.
http://www.calculatedriskblog.com/2012/04/weekly-initial-unemployment-claims-at_26.html

The April Chicago Fed activity index came in at -.29 versus the March reading of +.30.

Other

Another plus for natural gas (medium):
http://mjperry.blogspot.com/2012/04/another-reason-natural-gas-is-game.html

Monthly vehicle traffic improving (short):
http://mjperry.blogspot.com/2012/04/traffic-volume-increases-in-feb-for.html

The US has a spending problem (2 minute video):
http://www.zerohedge.com/news/which-came-first-spending-or-debt

The Morning Call-Apple sold more iPads; all is right with the world

The Market

Technical

The Averages (DJIA 13090, S&P 1390) rallied hard yesterday. Both index closed (1) above their 12919, 1372 level. Pending confirmation by our time and distance discipline, this will become the lower boundary of the new short term trading range [13302, 1422 are the upper boundaries], (2) above their 50 day moving averages [13010, 1380] and (3) within their intermediate term uptrends (11508-16508, 1207-1774].

Volume was flat; breadth improved. The VIX fell, violating the lower boundary of its very short term uptrend (a positive for stocks) but remaining well above the lower boundary of its short/intermediate term trading ranges.

Money flow into the S&P is still positive (short):
http://tickersense.typepad.com/ticker_sense/2012/04/sp-500-money-flows-still-positive.html

GLD was up fractionally, although to get there, it had to bounce hard off the lower boundary of its short term trading range following the FOMC meeting and subsequent statement release and Bernanke news conference.

Bottom line: on the surface, stocks seem to be resolving the issue of the lower boundary of their new short term trading range; and if they hold both the 12919, 1372 level and their 50 day moving averages, then I think that they will have succeeded. Our time and distance discipline is now operative, though with a shorten ‘time’ element. If 12919, 1372 are confirmed and with some authority, our Portfolios may nibble at the names on their Buy Lists on any subsequent weakness.

Yesterday’s GLD bounce off of the lower boundary of its short term trading range was the fifth such since January--a pretty good sign that this level is gaining strength. Further, it continues the development of the right shoulder of a reverse head and shoulders formation--which if completed will also be a positive technical signal for GLD. Any indication that buyers are getting serious will prompt additions to holding.

Fundamental

Headlines

Overnight Tuesday, we got bad news out of Europe (poor German bond auction and a poor first quarter UK GDP). This was complemented by some lousy US economic data-lower weekly mortgage applications and horrendous March durable goods orders.
http://scottgrannis.blogspot.com/2012/04/capex-no-longer-bullish.html

But not to worry; Apple sold more iPods and iPads and that means all the world is right. Stocks opened strong and never looked back. To be sure, the Apple news was aided by better than expected profits from several other companies; and as you know, the somewhat better than anticipated first quarter profit reports thus far has me noodling over our forecast--my concern being that our Models are too pessimistic.

Of course, we just went through this a month ago when the aggregate economic data had a solid run of upbeat numbers and then faltered. So I am not going to revise our Models just yet; but this is clearly a development about which I am watching and worrying (worrying in the sense of our forecast not that conditions may be improving more rapidly than I thought).

Here is one reason I am being a bit circumspect--as usual, Jim Bianco brings some perspective to the current quarter’s earnings ‘beat’ rate (medium):
http://www.ritholtz.com/blog/2012/04/the-earnings-beat-rate-in-perspective/

The other subject occupying the chattering class yesterday was the completion of the most recent FOMC meeting and the subsequent press release and Bernanke press conference. In sum, the Fed left interest rates unchanged and slightly upgraded (sounded more positive) the language in FOMC statement describing the economy. Importantly, it did not take QEIII off the table. I didn’t view this statement or Bernanke’s interview as all that newsworthy and certainly wouldn’t be buying or selling stocks off them; but they did have the talking heads all atwitter.

Here is the full FOMC statement side by side with its prior release:
http://www.ritholtz.com/blog/2012/04/the-fed-statement-side-by-side-comparison/

Here is Bernanke, in his own words:
http://pragcap.com/more-from-the-fed

And here is a bit of analysis from a leading bond manager on the Fed’s current dilemma (9 minute video):
http://www.zerohedge.com/news/gundlach-explains-biflation-cheap-seats

**Overnight various EU confidence surveys came in abysmally down; and talk began to circulate about permitting direct lending to the banks by the ECB and instituting ‘growth’ measures. If enacted this would all play to our ‘muddle through’ scenario, at least in the short term. Fortunately longer term instead of moving governments and banks to more fiscally responsible behavior, these steps would just feed the debt beast, kick the can down the road--again--and likely lead to an ultimate resolution even worse than if things just fell apart now.
http://www.zerohedge.com/news/germany-folding-europes-insolvent-banks-get-direct-funding-esm

Bottom line: the macroeconomic numbers and the first quarter earnings reports as well as the forward guidance appear to be inconsistent. While they almost surely won’t be when finally viewed in retrospect, at the moment, they are and I haven’t heard a good explanation as to why. If stocks weren’t already overvalued (at least as measured by our Model), I would have less trouble dealing with the seemingly contradiction between poor macroeconomic measures and corporate profits; that is, if equities were undervalued, I would feel safer nibbling. But, if frogs had wings..................

So I am again on the sidelines not quite believing the prevailing investor rationale; but with a bit more confidence that our Valuation Model has it right following the last very short lived attempt to permanently take out the 12919, 1372 level. Nothing that happened yesterday demands me to buy stocks.

Earth to Europe!!! Government spending does not promote growth (medium):
http://online.wsj.com/article/SB10001424052702303459004577363641872355030.html?mod=WSJ_Opinion_LEADTop

Germany running out of allies supporting austerity (medium):
http://www.spiegel.de/international/europe/0,1518,829440,00.html

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

Morning Journal-More on the natural gas renaissance

Economics

This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers up 0.8% versus the prior week and up 3.6% versus the comparable period a year ago: Redbook Research reported month to date retail chain store sales down 0.1% versus the similar timeframe last month but up 2.7% on a year over year basis.

The February Case Shiller home price index rose 0.2% versus expectations of a 0.1% increase.
http://www.calculatedriskblog.com/2012/04/case-shiller-house-prices-fall-to-new.html

March new home sales were below estimates; but was offset by a big February upward revision. The net effect was a 4.7% advance.
http://www.calculatedriskblog.com/2012/04/new-home-sales-in-march-at-328000.html

April consumer confidence came in at 69.2 versus forecasts of 70.2.
http://scottgrannis.blogspot.com/2012/04/confidence-is-up-but-still-extremely.html

The April Richmond Fed manufacturing index was reported at 14.0 versus expectations of 8.0.

Weekly mortgage applications fell 3.8%, though purchase applications rose 2.7%.

March durable goods orders plunged 4.2% versus estimates of a 1.5% fall; ex transportation, orders were off 1.1% versus forecasts of a 0.4% advance.

Other

The renaissance that will be wrought by cheap natural gas (short):
http://mjperry.blogspot.com/2012/04/coming-us-shale-based-boom.html

The latest ASA staffing index (short):
http://mjperry.blogspot.com/2012/04/asa-staffing-index-highest-since-2008.html

The interest rate risk for banks (medium):
http://www.nakedcapitalism.com/2012/04/the-hidden-bank-time-bomb-interest-rate-risk.html

G10 macro data is deteriorating (short):
http://www.zerohedge.com/news/g-10-macro-data-plunges-worst-six-months-turns-negative

US China trade as an economic indicator (short):
http://advisorperspectives.com/dshort/guest/Craig-Eyermann-120424-US-China-Trade.php

Politics

Domestic

We all better hope life does not become ‘fair’ (medium):
http://www.realclearmarkets.com/articles/2012/04/24/president_obama_better_hope_life_never_becomes_fair_99634.html
News on Stocks in Our Portfolios

More quarterly earnings per share reports:

Reported Expected

T Rowe Price $.75 $.78
Sigma Aldrich .99 .99
Illinois Tool Works .97 .95
CH Robinson .65 .65
Total System Services .30 .30
Caterpillar 2.37 2.15
Boeing 1.22 .95
General Dynamics 1.57 1.69
Praxair 1.38 1.36

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

The Morning Call-Don't get too jiggy over Apple's earnings

The Market

Technical

The Averages (DJIA 13001, S&P 1371) rallied a bit yesterday. They remain in a short term trading range. We just don’t know its lower boundary. Currently in the running are 12919, 1372 and 12744, 1332, with the former the clear favorite. The Dow finished the day above 12919; the S&P remains below its comparable level (1372). That clearly leaves this support level in question and the indices diverging; although, as noted, given the proximity of the S&P to 1372, it appears that 12919, 1372 has a better chance of becoming the lower boundary than 12744, 1332.

Both indices are solidly within their intermediate term uptrends (11502-16502, 1206-1773).

Volume fell; breadth improved. The VIX declined but continues within its short/intermediate term trading range and above the lower boundary of a very short term up trend.

GLD inched up, continuing the stabilization within its short term trading range.

Bottom line: the Market remains somewhat directionless, searching for a support level to its short term trading range. Until that boundary is set, I see little incentive to do anything other than set on my hands. GLD, on the other hand, seems to have set a new support level, though it seems to be meandering along its lower boundary with little inclination to bounce. I would like to Add to this holding; but I am going to wait for the visible return of buyers.

Fundamental

Headlines

Investor attention shifted yesterday from Europe to the US. Early in the day, we got a number of economic datapoints: weekly retail sales which were mixed to positive; new home prices which were up more than anticipated; new home sales were up though the stats were a bit confusing; April consumer confidence came in below estimates; and the April Richmond Fed’s manufacturing index was very strong. All in all, a decent set of numbers. So a lift in investor sentiment wasn’t surprising

Stocks were also helped by the continuation of a surprisingly good earnings season with several big visible industrial firms reporting better than expected results.

Of course, however, positive one views the above, the S&P still couldn’t successfully challenge 1372. I suspect that anticipation of the Fed policy statement due at the close of the FOMC meeting today as well as residual concerns over Europe weighed on investor minds.

The debt of the PIIGS just keeps getting bigger (short):
http://www.zerohedge.com/news/new-european-normal-squiggly

John Mauldin looks at Spain (long):
http://www.ritholtz.com/blog/2012/04/the-pain-in-spain-2/

And lest we take our eyes off of Greece (short):
http://www.zerohedge.com/news/ich-bin-ein-athener

**Overnight Germany experienced a failed 30 year bond auction and the UK reported a negative first quarter GDP (-0.2%). Of course, all of above is apparently being rendered irrelevant by the better than expected Apple earnings.

Bottom line: the economy continues to track our forecast; although earnings are coming in better than anticipated. This is a bit of cognitive dissonance and may re-open the possibility that the economy will be stronger than expected this year. On the other hand, the news out of Europe just keeps getting worse; and that too is giving me heartburn but of the complete opposite nature. With such contradictory signals, it is small wonder to me that stocks are having directional problems; and given that at current levels, our Model has equities prices above Fair Value, there is every reason to maintain caution.

What the Market needs to go higher (short):
http://www.minyanville.com/business-news/markets/articles/stocks-market-market-news-earnings-earnings/4/23/2012/id/40557

Why Europe will fail (medium):
http://advisorperspectives.com/dshort/guest/Lance-Roberts-120424-Impatience-Will-Lead-To-Our-Demise.php

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

Morning Journal-The near term risks in monetary policy

Economics

This Week’s Data

Other

Entitlement programs continue their move to insolvency (medium):
http://www.zerohedge.com/news/us-welfare-state-run-out-cash-sooner-hoped

The end of the debt road gets ever nearer (medium):
http://www.zerohedge.com/news/guest-post-project-%E2%80%9Cend-japan%E2%80%9D-continues-advance-well-west

More on student debt (medium):
http://www.zerohedge.com/news/think-us-student-loan-bubble-bad-you-aint-seen-nothing-yet

The risks in monetary policy over the next two weeks (medium(:
http://www.zerohedge.com/news/citis-englander-what-can-go-wrong-next-11-days

Weekly gasoline price update (short):
http://advisorperspectives.com/dshort/updates/Gasoline-Update.php

The Morning Call-News flash: Europe isn't getting any better

The Market
Technical

The Averages (DJIA 12927, S&P 1366) backed off yesterday. That negative pin action complicated process of defining the lower boundary of the new short term trading range. As you know, in last week’s Closing Bell, I put off calling 12919, 1372 as its lower boundary because the S&P was having trouble penetrating its 50 day moving average (1379). Then yesterday, the S&P finished below the 1372 level (the Dow managed to stay just above its comparable level). Since our time and distance discipline never confirmed 12919, 1372 as the lower boundary of the new short term trading range, there is no boundary to negate (though this price decline is clearly negative). Meaning that issue remains open. Complicating matters, the DJIA and S&P are now diverging at the 12919, 1372 levels (also not a positive). Candidates for the lower boundary of the new short term trading range continue to be 12929/12744 and 1372/1332. The upper boundaries are 13302/1422. One final negative development-both index traded below the lower boundary of its very short term uptrend.

However, there is no confusion about the Averages intermediate term uptrends (11489-16489, 1205-1772).

The Morning Call-Monday Morning Chartology 4/23/12

The Market
Technical

Monday Morning Chartology

Absent the 50 day moving average (red line), I would conclude that the 1372 level had successfully held the recent challenge. However, I am holding back calling 1372 as the lower boundary of the new short term trading range, until the moving average can be overcome.

The Closing Bell-Europe is still the 900 lb gorilla

Statistical Summary

Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

Morning Journal-Thoughts on the Constitution

Economics

This Week’s Data

March existing home sales fell 2.3% versus expectations of a slight increase.

The April Philadelphia Fed’s manufacturing index came in at 8.5 versus estimates of 11.7 and March’s reading of 12.5.

The March leading economic indicators was up 0.3% versus forecasts of up 0.2%.

The Morning Call-Tops are a process

The Market
Technical

The Averages (DJIA 12931, S&P 1376) closed above the 12919, 1372 support level, the Dow for the fourth day, the S&P the third. Depending on today’s pin action, this support level may be confirmed as the lower boundary of a newly re-set short trading range, Making that call would be easier if they could regain their 50 day moving average (12995, 1379) which they crashed though yesterday. Both index is solidly within their intermediate term uptrend (11489-16489, 1203-1770).

Volume was abysmal; breadth mixed. The VIX fell but remains within its short term trading range and above its very short term uptrend.

GLD was up a bit, continuing to trade above the declining upper boundary of a very short term down trend and the lower boundary of short term trading range.
http://www.zerohedge.com/news/sprott-biderman-paper-vs-physical-gold

Morning Journal - Elmo explains the national debt

Economics
This Week’s Data

Weekly jobless claims rose 6,000 versus expectations of a 10,000 decline.
http://www.calculatedriskblog.com/2012/04/weekly-initial-unemployment-claims-at.html

Other

Fed policy again looks to be a day late (short):
http://scottgrannis.blogspot.com/2012/04/understanding-risks-of-fed-policy.html

The Morning Call - 12919/1372 looking like the number

The Market
Technical

Yesterday, the Averages (DJIA 13032. S&P 1385) sold off modestly, leaving them (1) above the 12919, 1372 support level [third day for the Dow, second day for the S&P] which continues its status as the leading candidate for the lower boundary of a new short term trading range [12919/12744-13302, 1372/1332-1422], (2) above their respective 50 day moving average and (3) well within their intermediate term uptrends [11489-16489, 1203-1770].

Volume was flat (and low); breadth fell. The VIX rose, remaining with its short term trading range.

GLD slipped fractionally again but keeps going down at a slower pace than the upper boundary of its very short term down trend. Not encouraging although it is still above the lower boundary of its short term trading range. As long as it holds above that level, the inverse head and shoulders pattern (a positive formation) will continue to develop.

Occidental Petroleum (OXY)

Occidental Petroleum (OXY) produces and markets crude oil and natural gas, manufactures industrial chemicals, plastics and fertilizer and transports natural gas through pipelines.

The company has grown profits at a 24% over the last ten years. Dividends grew at a lesser rate (10%) though they are expected to rise to an 11% pace. OXY’s return on equity has been in the 11-20% range. The company should continue to grow dividends and earnings as a result of:

(1) rising production from new properties,

(2) the company’s expertise in enhanced oil recovery techniques,

(3) acquisitions,

(4) resumption of operations in Libya,

(5) improving profit margins,

(6) stock buyback program.

Gold Quarterly Statistics Commentary Q1 2012

Quarterly statistics commentary Q1 2012. Rising price in all major currencies with yen investors benefiting most.

All American Investor

This brief commentary summarises gold’s price performance in various currencies, its volatility statistics and correlation to other assets in the quarter. It provides context to the investment statistics files published at the end of each quarter.

The primary macroeconomic events that shaped Q1 2012 for gold were broad-based US economic data strength, China slowdown concerns, ECB (European Central Bank) bank loans and future European bailout potential. In an eventful quarter for the global economy that saw increased volatility in capital markets, gold finished the quarter materially higher despite a number of headwinds.

Morning Journal -- Depression is a choice

Economics

This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers down 1.0% versus the prior week but up 3.2% versus the comparable figure a year ago; Redbook Research reported month to date retail chain store sales up 0.2% versus the similar timeframe last month and up 3.0% on a year over year basis.

March industrial production was unchanged versus expectations of a rise of 0.3%; capacity utilization came in at 78.6 in line with estimates.
http://scottgrannis.blogspot.com/2012/04/industrial-production-is-still-strong.html
http://www.capitalspectator.com/archives/2012/04/industrial_prod_3.html#more

Weekly mortgage applications rose 6.9%; however, purchase applications plunged 11.2%.
http://www.calculatedriskblog.com/2012/04/mba-mortgage-applications-decrease_18.html

The Morning Call--I am clueless

The Market
Technical

The Averages (DJIA 13115, S&P 1390) smoked everything in sight yesterday. The key development was that the S&P moved above 1372, joining the Dow (its second day) above the 12919, 1372 resistance turned support level. Our time and distance discipline is operative; so it will take a couple of days before 12919, 1372 are confirmed as the lower boundaries of the indices short term trading ranges (12919/12744-13302, 1372/1338-1422). Both of the Averages are in an intermediate term uptrend (11489-16489, 1202-1769). Both of the Averages closed above their 50 day moving average.
http://www.bespokeinvest.com/thinkbig/2012/4/17/sp-500-back-above-50-dayfor-now.html

Despite the Titan III shot, volume was down, though breadth improved. The VIX declined but remains in a short term trading range and above the lower boundary of a very short term uptrend.
http://www.stocktradingtogo.com/2012/04/17/market-recap-tech-earnings-market-rebound-intc-ibm/

Morning Journal-The 'fast and furious' (gun sales to Mexican cartels) scandal is not over

Economics
This Week’s Data

February business inventories rose 0.6%, in line with expectations; positively, business sales increased 0.8%.

March housing starts fell 44,000 versus estimates of a 7,000 increase; howver, building permits surged 30,000 versus forecasts of a 2,000 decline.
http://www.calculatedriskblog.com/2012/04/housing-starts-decline-in-march.html

The Morning Call -- No time for getting jiggy

The Market

Technical

The Averages (DJIA 12921, S&P 1369) had a mixed day--the Dow up, the S&P down. Both remain in short term trading ranges (12919/12744-13302, 1372/1228-1422) and intermediate term uptrends (11489-16489, 1201-1768). As you can see, the DJIA finished the day above its 12919 level while the S&P stayed below its comparable level (1372). That potentially sets up a divergence--which must be noted; but I am sure it will be resolved soon. Finally, both remained below their 50 day moving averages (12995, 1376).

Despite the negative divergence and the resistance of the 50 day moving average, there are still plenty of positives; one of the most important is multiple support levels: (1) their 200 day moving averages [12124, 1271], (2) the neckline of the reverse head and shoulders pattern [12287, 1266] and (3) the old resistance/support level [11741, 1230].

The Morning Call-Monday Morning Chartology 4/16/12

The Market
Technical

Monday Morning Chartology

The short term uptrend has clearly been abrogated. I have drawn in the two leading candidates for the lower boundary of the new trading range. The red line is the 50 day moving average.

The Closing Bell -- Investors realize Europe is still a problem

TStatistical Summary
Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

Morning Journal

Economics

This Week’s Data

The March consumer price index came in up 0.3% versus expectations of up 0.2%; core CPI rose 0.2%, in line with estimates.
http://www.calculatedriskblog.com/2012/04/bls-cpi-increases-03-in-march.html

Thoughts on Investing--New Rules of Money

#10 Mine Your Networks for Ideas

The best hedge fund managers collaborate on stock ideas and research all the time. The Web and mobile connectivity afford individual investors the same opportunities. Tap into expert networks ranging from LinkedIn to Web communities like Value Investors Club with its in depth research reports and to ValueForum.com, a message board featuring mostly yield and commodity oriented investors.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

The Morning Call-China OOOOps; now can the bulls maintain the upper hand?

The Market
Technical

What a day. The indices (DJIA 12986, S&P 1387) rallied big. Not enough to get close to the lower boundaries of their former short term up trends; but sufficient to recover the 12919, 1372 resistance turned support level after two days below it.

That leaves the short term trading ranges in tact. 13302, 1422 remain the upper boundaries. On the strength of yesterday’ pin action 12919, 1372 is now the leading candidate for the lower boundaries. I am not willing to bet on that occurring; but it certainly has a much higher probability than this time yesterday.

Another near in contender for the lower boundary is the weak 12774, 1332 support level.

FactSet Research (FDS) 2012 Review

FactSet Research, FDS, supplies financial and economic data including to the global investment community through 1600 databases with information on tens of thousands of companies, multiple stock markets and governments.

The company earns a 25%+ return on equity and has grown earnings and dividends 20-25% over the last ten years. FDS should continue its above average performance as a result of:

(1) its portfolio analytics system is the industry leader; because of its extensive product development and strong client relationships, FDS has not only created a high barrier to entry but is also increasing its market share,

(2) its ability to sell additional products to existing customers such as coverage of corporate bonds and fixed income derivative securities as well as products for investment banking, plan sponsors and corporate finance,

(3) acquisitions.

Morning Journal-For austerity, 'how' is as important as 'how much'

Economics

This Week’s Data

The Fed released its most recent Beige Book survey. Bottom line: it reflected continued improvement in the US economy measured both geographically and by industry. The main concern: high gasoline prices might crimp consumer spending.
http://www.calculatedriskblog.com/2012/04/feds-beige-book-economic-activity.html

The March US budget deficit came in at $198 billion versus expectations of $196 billion.
http://www.zerohedge.com/news/us-posts-biggest-march-budget-deficit-history-or-how-chart-became-chart

Weekly jobless claims rose 23,000 versus expectations of a 2,000 decline.
http://www.calculatedriskblog.com/2012/04/weekly-initial-unemployment-claims_12.html

The March producer price index was unchanged versus estimates of a rise of 0.3%; core PPI increased 0.3% versus forecasts of up 0.2%.

The February US trade deficit came in down $6.6 billion versus expectations of down $0.1 billion.

The Morning Call-Follow through is important

The Market
Technical

The indices (DJIA 12805, S&P 1368) bounced yesterday. However, the S&P joined the Dow in confirming the break of its short term up trend. Both are now in

(1) a short term trading range. We know the upper boundary, i.e. the recent highs [13302, 1422]; but must await the setting of the lower boundary. It is possible that equity prices could rally further, close above the 12919, 1372 resistance turned support level. However, both of the Averages have now completed a second day below those levels under our time and distance discipline. So that outcome is a bit iffy; and I would add that given the time it took to violate this level on the way up, I would have expected much more support on the way down than has been exhibited thus far. That is not a good sign if your are a bull.

Morning Journal -- Is the Treasury going to issue floating rate notes?

Economics
This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers were up 0.5% versus the prior week and up 4.5% versus the comparable period a year ago; Redbook Research reported month to date retail chain store sales up 0.8% versus the similar timeframe last month and up 4.1% on a year over year basis.

February wholesale inventories rose 0.9% versus expectations of an increase of 0.5%; more important wholesale sales jumped 1.2%.

Weekly mortgage applications fell 2.4% while purchase applications dropped 0.5%.

The Morning Call + subscriber Alert + Don't confuse an oversold bounce with a buying opportunity

The Market
Technical

Yesterday was another rough one for the indices (DJIA 12715, S&P 1358). The Dow confirmed its break of its short term uptrend; the S&P will follow suit at the close today barring a significant bounce.

In addition, both index busted through the former 12919, 1372 resistance turned support level, activating our time and distance discipline for the level.

There is a very weak support level at 12730, 1340; but clearly the DJIA has also penetrated this level. The two most visible support levels below 12919, 1372 are (1) the lower boundaries of the Averages intermediate term uptrends (11410, 1199) and (2) their 200 day moving averages (12111, 1132).

AT&T (T) 2012 Review

AT&T (T) is one of the world’s largest telecommunications companies.

The company has grown profits and dividends at a 5% pace over the past five years earning approximately 10-12% return on equity. T has been through a rough period as the growth of its traditional wireline business slowed and margins came under pressure. Looking forward profits should regain momentum as a result of:

(1) expansion of its wireless business via expanding broadband and smartphone usage,

(2) building the most technologically advanced digital networks systems in the industry. It will include voice, video and internet in a vast wireline (U-verse) and wireless infrastructure and has resulted in increased penetration of both the business and household markets,

Morning Journal -- The enormous capacity of the political class to spend our money

Economics
This Week’s Data

The February Chicago manufacturing index advanced 1.0%:
http://mjperry.blogspot.com/2012/04/chicago-fed-midwest-manufacturing-is.html

Other

QEIII is still coming (medium):
http://www.thestreet.com/story/11487951/1/qe3-is-still-coming.html?kval=dontmiss

An in depth look at the energy market (medium):
http://scottgrannis.blogspot.com/2012/04/threat-of-higher-gasoline-prices-is.html

More on student loans and what is says about unemployment stats (short):
http://advisorperspectives.com/dshort/guest/Shedlock-120409-The-Real-Consumer-Credit-Story.php

The Morning Call -- The technical outlook darkens + Our Portfolios blew out VIG yesterday

The Market
Technical

Both indices (DJIA 12919, S&P 1382) closed below the lower boundary of their respective short term up trends (13248-14605, 1404-1512). Our time and distance discipline is operative now with the Dow ending its third day and the S&P its second day below those lower boundaries. If the DJIA closes below its boundary today it will confirm the break; the S&P will follow tomorrow.
http://macromon.wordpress.com/2012/04/08/ugly-chart-contest-trend-breakers/

Should that occur, I don’t see a reason for a lot of concern. For one, our Portfolios blew out the VIG trading holding yesterday, as I noted they would in yesterday’s Morning Call. That takes our Portfolios’ cash holding back in the 30-33% range. Coupled with their GLD position, that puts them in a well hedged position.

The latest from John Taylor-Trust the markets not the government

The Morning Call + Friday's NFP number + the student loan bubble

The Market

Technical

Monday Morning Chartology

The S&P closed slightly below the lower boundary of its short term up trend, though not by much. That said, the DJIA is well below its comparable lower boundary. Barring improvement today (which early futures trading suggest won’t happen) in the S&P, VIG is gone.

Lilly (LLY) Alzheimer's Test Approved by FDA

A much-anticipated test developed by Eli Lilly, LLY , that detects the presence of proteins in the brain that are related to Alzheimer's disease was approved Friday by the Food and Drug Administration.

The tool could enable clinicians to detect Alzheimer's earlier and more accurately in patients at the earliest sign of memory problems—a potential boon to treatment and developing drugs against the disease.

The test uses a chemical called florbetapir, known by the brand name Amyvid, which is a radioactive agent that tags clumps of a sticky substance called an amyloid. Amyloid proteins are hallmarks of Alzheimer's disease. The chemical, which costs $1,600 per dose, then is detected using a brain imaging technique called positron emission tomography, known as PET scans.
Read More

Read More about Alzheimer's in the Alzheimer's Reading Room

Google Project Glass

From Google

We believe technology should work for you — to be there when you need it and get out of your way when you don't.

A team within our Google[x] group started Project Glass to build this kind of technology, one that helps you explore and share your world, putting you back in the moment.

Follow along with us at http://g.co/projectglass as we share some of our ideas and stories. We'd love to hear yours, too. What would you like to see from Project Glass?

All American Investor

If you don't see the video -- go here.

The Truth about Taxes: Just About Everyone Pays Them

Who Pays Taxes? A closer look reveals that nearly all Americans do, in fact, pay taxes.

A popular myth swirling around Washington, DC, and throughout the media these days is that many Americans do not pay taxes, and are therefore free-riding off of our society without contributing themselves.

This has even been referred to by some as a “new orthodoxy.” The origin of this misconception is the observation that only about 54 percent of American households paid federal income taxes during recession-affected 2011. But that statistic is misleading because it provides an incomplete picture of the overall tax burden on American families, and because it incorporates individuals who naturally shouldn’t be paying taxes because of their age or economic circumstances due to the Recession.

THE EMPLOYMENT SITUATION -- MARCH 2012

Nonfarm payroll employment rose by 120,000 in March, and the unemploymen trate was little changed at 8.2 percent, the U.S. Bureau of Labor Statistics reported today.

Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade.

All American Investor

Target (TGT) 2012 Review

Target (TGT) is a leading discount retailer concentrated in California, Texas, Florida and the upper Midwest. It has grown profits and dividends at an 11-14% pace over the last 10 years earning a 15%+ return on equity. 

The company faltered a bit in its 2008 fiscal year due to the slowing economy but has since recovered and should continue growing at an above average rate as a result of:

(1) improving comparable store sales and operating margins due to its product innovation, aggressive pricing strategy and its efficient, multi channel marketing strategy,

(2) rising store productivity arising from expanded grocery offering, better store layout and an enhanced in-store shopping experience,

(3) introduction of smaller stores in urban markets,

(4) expansion internationally.

(5) active stock buyback program.

Xilinx (XLNX) 2012 Review

Xilinx designs, develops and markets complementary metal-oxide-silicon programmable logic devices, including field programmable gate arrays and complex programmable logic devices and markets hardware devices and develops software design tools for programmable electronic technologies.

Steve Cook

The company has grown profits at a 10% pace over the last 10 years and has raised its dividend per share from $.20 in 2004 to $.64 in 2010. Return on equity has come in between 16% and 20% in the last five years. XLNX experienced a hiccup in 2009 due to the recession but recovered in 2010 year and should continue to make progress as a result of:

(1) benefiting from the global trend of programmable logic devices replacing application-specific integrated circuits,

(2) improvement in demand from its two principal markets,

(3) new products expected to open new markets,

Subscriber Alert - Ready, Aim

SUBSCRIBER ALERT

4/4/12

Today the S&P (1398) closed right on the lower boundary of its short term up trend, while the DJIA (13074) closed below its comparable level (13198). Since our VIG holding is a trading position, our time and distance discipline is not operative. So if the S&P closes tomorrow below the lower boundary of its short term uptrend, VIG will be Sold.

HomeSnap Lets You Snap Photos Of Houses And See How Much They're Worth

Every wonder what a house is worth? If so, you will love this new app. What do you think?

HomeSnap lets you snap photos of houses and know what they sold for and how much they're worth.

Robert Scoble was raving about it yesterday during a panel session at the Startupism conference in San Francisco.

Family Dollar Stores (FDO) 2012 Review

Family Dollar Stores operates a chain of 6,785 general retail discount merchandise stores in 44 states. It provides competitively priced goods to low and middle income consumers, including home products, apparel and accessories, seasonal goods and electronics. 

FDO has grown profits and dividends at an 11% pace over the last 10 years earning a 15-20% return on equity. The company successfully navigated its way through the recent recession and should continue to improve earnings as a result of:

(1) its strategy to upgrade its merchandising, marketing and store operations,

(2) aggressive price management and cost containment programs,

Home Prices Seen Dropping 10% in U.S. on Foreclosures: Mortgages

As many as 1.25 million of America’s least cared for homes are headed for auction after a year-long probe into foreclosure practices kept them off the market.

Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.

Read more in Bloomberg

All American Investor

Is Sugar Toxic, 60 Minutes

Dr. Sanjay Gupta reports on new research showing that beyond weight gain, sugar can take a serious toll on your health, worsening conditions ranging from heart disease to cancer.

Read the transcript and more in the Alzheimer's Reading Room.

Gmail Tap -- Morse Code for Android and IOS

The QWERTY keyboard was invented in 1874 and yet it is still used today, largely unchanged. Google introduces a new input method designed for the future: Gmail Tap for Android and iOS.

With Gmail Tap on your phone, you'll be able to:

• Tap without looking at your screen
• Replace 26 keys with 2
• Double your productivity by typing two emails at once

All American Investor