There were a couple of events earlier in the day that triggered
investor buying. One was the headline out of Europe indicating that
Greece would scrap its previously-announced referendum and simply
accept the agreed-up bailout from the EU. The second was news that
the ECB had lowered its own interest rates this morning to 1.25%
(while the U.S. is at just 0.25%). Both items were seen as bullish
by investors and it was off to the races.
On the first Thursday of every month, many retailers report
monthly sales figures. Some of today's better-than-expected figures
came from the likes of Macy's (
), Kohl's (
), Ross Stores (
) and TJX Companies (
). However, on the other end of the spectrum, we saw shares of
Abercrombie & Fitch (
) fall nearly $15 (-20%) on disappointing sales data.
Meanwhile, earnings results helped push stocks like Qualcomm (
), Kraft Foods (
), and Estee Lauder (
) nicely higher. On the flipside, stocks like Kellogg (
), Cimarex Energy (
), Hartford Financial (
), Whole Foods (
), and Transocean (
) all traded in the red. It was an unusual rally day with yet many
earnings-related disappointments. That said, it was good to see
some actual strong volume during today's rally.
Art Market Forecasting Spending Cutbacks for the Rich?
Some analysts like to look at how the rich spend their money as
a gauge of the economic climate. The art market is a popular
indicator used in this capacity.
Well, a recent Christie's modern art auction could be "painting"
(pun intended) a gloomy picture. Christie's sold nearly $141
million at its Impressionist/Modern art show Tuesday evening, well
below the company's estimate of $212-$304 million. Some attendees
argued the auction had unreasonably high reserve prices for several
pieces, but the lack of fervor for spending big dollars by some of
the wealthiest people in the world could still be seen as a
negative economic sign.
"Low Rates Are Good for Savers," Says Fed Reserve Chairman Ben
As we were reading some of the commentary from yesterday's
Federal Reserve meeting, we ran across the gem in the headline
above. Apparently Mr. Bernanke is pushing the idea that low rates
are for the "greater good" of the economy. He believes savers won't
receive decent returns on their savings until the economy is doing
better anyway, because the best investments are investments that
are made in an economy that's growing (I know, that doesn't make
any sense to me, either).
Although mostly spin, part of Bernanke's statement has some
credence. Low rates can help people that are struggling to pay
their bills and stay in their homes. However, it doesn't make much
sense to stay in a home one can't afford.
During normal economic cycles, people make mistakes. They buy
things (in many cases, homes) that they can't afford. The remedy
for the problem is simple: they must sell the item and take a hit
on it. Consequently, investors and more responsible consumers swoop
in and acquire these items (homes, cars, etc.) at a discounted
price. The economic decline, on the whole, eventually remedies
Many investors have made savvy financial decisions over the
years when faced with these situations. People are always willing
to step up and take a shot on items when prices are discounted.
Where they stay away, however, is when regulators step in and try
to put false bottoms on markets.
Despite what the government would have you believe, the bailout
of the banks is still an ongoing process. That's why we continue to
see extremely low interest rates and plenty of help for homeowners
who are under water.
Anyway, getting back to savers who choose not to invest in
things like real estate, and stick to the basics (money markets,
bank CDs), there is no answer to when they will be able to see any
sort of decent returns on their savings. Fortunately, many have
decided to put their money in high quality dividend-paying stocks
like those on our
Best Dividend Stocks List
At some point, I believe we will eventually see less
intervention and there will be a normal lift for the economy. In
the meantime, we simply make the best possible investment decisions
based on the cards being dealt.
New Watchlist Article Out Today
Be sure to check out our weekly
Top 50 High-Yield Watchlist Names
post that is out today, only for
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