WASHINGTON, May 16, 2014 – Just when bulls thought they’d need to hide in their fallout shelters, the market got a bit of good news this morning when reports came in that housing permits “unexpectedly” skyrocketed in April after a couple months where they were nearly nonexistent.
Not such big news, really, when you consider that this winter’s astounding polar vortex chill fest ground everything about housing to a halt, at least from America’s breadbasket east.
In any event, this news might give the bulls a chance to goose the averages a bit after this week’s—and particularly yesterday’s—severe pummeling on a big financial news day. The market opened up slightly up this morning, perhaps at least slightly cheered by J. C. Penney’s (JCP) significantly better but still subpar quarterly numbers.
Job claims were reported down last week, although all these figures are bogus, to us at least, masking the true scope of long term unemployment and wage stagnation for the average American. The Consumer Price Index (CPI) was up .3 percent in April, a bit high by recent standards, but still statistically masking the sticker shock that most grocery shoppers experience on a daily basis when trying to buy staples.
Manufacturing numbers improved, but other figures tanked, Walmart (WMT) reported anemic numbers, and the bond market continues its allegedly mystifying tear wherein prices are going up which drives yields down, particularly in U.S. Treasury issues. But this is no mystery to the Maven.
The U.S. “recovery” has been slower than a snail in February as Washington, and particularly the Democrats, continue to do everything they can to discourage entrepreneurship, bring fossil fuel usage to a halt, and damage our positions abroad in myriad ways while relentlessly raising taxes and encouraging many Americans to abandon their citizenship to escape the long arm of the IRS.
Cisco (CSCO) looked pretty good yesterday, but that’s the first time in a long time for that networking giant. It still didn’t help the NASDAQ (plunging another 37 points), which is currently in the grips of at least a short-term tech bear market. Nor did it help anything else. All averages were down hugely, although bulls mounted a what ETF guru Dave Fry would call a feeble “stick save” at the close, trimming the huge loss to only slightly more palatable levels.
We continue to suggest you stay fairly cash-y. We’re mostly back to favored REITs for now, but are also in a number of preferred stocks, which have huge dividend yields (5-8.75%). The preferreds are acting like bonds, which they often do, and bonds seem to be in a favorable “risk-off” environment right now. We may have to lighten up on these at some point if interest rates start going up in a big way.
Ditto utilities, which have actually been getting hit a bit lately anyway, likely due to profit-taking.
We slip in and out of little positions in the precious metals, which some mysterious powers seem to be capping—gold at about $1300, an ounce and silver at about $20 an ounce. Serious hanky-panky here on the part of big movers whom we expect to be both governments and mega-banks in collusion. But no one will confess.
It’s interesting, though, that the London silver fix (daily price-setting) will now apparently go the way of the dodo in mid-August. Who knows what this will do to the price of silver?
We got lucky yesterday on the IPO front, taking a flyer on Zendesk (ZEN) a set of website tools “for the rest of us” as Steve Jobs once described the original Mac. Didn’t get all the shares we asked for, of course, but our tiny stash popped a swell 45% or so. Of course, our broker makes us hold these for 30 days, allowing flippers to exit before us, but at least yesterday made us feel good.
Today’s IPO (which we just learned we also obtained) it TrueCar (TRUE), a company that many of us have used although we may not have been aware of it. TRUE is the underpinning of its own and many others’ car-buying services and directly or indirectly is quite popular among folks who like to save money when buying a car.
We’ll see where this one opens—its expected asking price of circa $12 was cut back to $9 on the offer, driving enough interest that the Maven’s request for shares was cut back once again.
Options expiration today will complicate trading, though, so likely the Maven will hold the interest bearing stuff, pray that the IPOs stay healthy for 30, and begin the weekend early. You should, too.