“Now his pension plan’s been slashed in half and he doesn’t have enough money to die,” sings John Rich, of the country music duo Big & Rich, in his new, controversial song, Shutting Detroit Down. Two things no one is ever financially ready for, particularly if he or she is a wealth spender: retirement and demise. Monetarily speaking, it is difficult to die at the correct time, unless you may know much more than anyone else and are able to plan your demise. Folks are so obsessed in saving for retirement, 401k plans, life insurance policy, IRAs, money markets, or anything else they can find that will give extra money for retirement and death. If you pass away too early, the paychecks your relatives was living off of are spent. If you die too delayed, you impoverish your family or incarcerate yourself to an repulsive local retirement home by depleting your investments.
One unanticipated side effect of the slump is a increase in sales of fixed instantaneous annuities, that give out definite revenue for life. New York Life reported an 82% sales jump this quarter by itself. A man at retirement age paying them $100,000 currently will get $650 a month for life, that is perfect for a retired guy whose residence and truck are paid off and bills are small. That’s equivalent to 7.8% of the sum each year, twice what most retirement investments disburse out.
Christopher Blunt, who runs New York Life’s retirement division believes that annuities present the best way to secure in certain retirement returns. Retirement income is generated from a stock-and-bond group requires keeping plenty of assets in cache in case they’re required to support a long life or contend with a malicious bear market,” he says. The point is that you can obtain the identical retirement earnings as you could from your portfolio, with 25% to 40% less principal.
The way they create greater retirement income is by transferring it from persons who do not collect it to persons who do.For example, if you give them $100,000 and expire three days later on, your money is gone and goes to someone who is still collecting. On the other hand, if you survive until you’re 85 and you have been collecting since you were 65, you have received $156,000 over the occupancy of the affiliation, over 50% profit. If you are lucky to live to 95, you have probably received $234,000, with a revenue of nearly 150% of what you paid. For those who are well at 65, it is a fine investment, particularly if that person also has investments and stocks to hold over during unpleasant times or to defer to their families. Assuming you are in pleasant physical condition, there are few downsides to a fixed annuity, especially if you retain your product features simple. You pay $100,000 of your investments to provide for the remainder of your existence. If you have been saving correctly for retirement, you likely still have $350,000 to leave to your relatives whether you collect or not.
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Stock markets had a rough day on Tuesday, giving up most of the gains made on Monday. The Dow Jones Industrial Average lost 82.38 points or almost one percent, the Nasdaq gave up 9 points or half a percent and the Standard and Poors 500 Index, the broadest of the three, was down 7.91 points or 0.85 percent. The Dow was actually in positive territory this morning until the release of the consumer confidence number of 49.3 for June. A big drop from the 54.8 number in May and huge miss of the consensus estimates that were as high as 56. With the consumer being two thirds of the economy this was a painful miss for the markets.
Despite Tuesdays losses the Dow still finished the second quarter with a gain of 838.08 or 11.01%. It was one of the best quarters for the Dow in more than five years. Because of the down first quarter the Dow Jones is still negative year to date by 3.8%. The Standard and Poors 500 index had its best percentage gain in a quarter in over a decade, tacking on more than 15%, but year to date the index is only up by 1.8%. The technology heavy Nasdaq has been the best performer over both periods gaining 20.1% in the second quarter and 16.4% on the year. Some of the best performing stocks on the quarter were Genworth Financial (GNW), Office Depot (ODP) and Ak Steel (AKS). Some of the worst performing stocks were KeyCorp (KEY), CIT Group (CIT) and Eastman Kodak (EK).
Sealy Corporation the largest global manufacturer of bedding, reported their second quarter earnings after the bell today. Net sales were $298.5 million down from the $375.4 million in the same period a year ago. The net loss turned out to be 0.06 cents per diluted share and was below analysts estimates. The company cited a very difficult retail environment and said they expected a challenging retail environment moving forward. The stock (ZZ) was unchanged on the day at $1.96 per share.
Trading volumes have been increasingly falling since May but after the big consumer confidence surprise trading may step up over the next couple days on the release of more economic data. For Wednesday we have the ADP report, motor vehicle sales, the ISM Manufacturing Index and Construction Spending among others.
The motor vehicle sales report is another measure of consumer spending and is the unit sales of domestically produced cars and light duty trucks. A high number here is viewed by market traders to signify economic growth.
The ADP report is an employment report representing 24 million U.S. employees in the private sector (non government). It is typically released the day before the Bureau of Labor Statistic’s non farm payroll report. The employment statistics also shows data on wage trends and wage inflation helping the federal reserve in determining monetary policy.
The Institute for Supply Management Manufacturing Index surveys over 300 manufacturing firms on different aspects of factories including employment, inventories, production, and new orders. Readings above 50 indicate an expanding factory sector. May’s number was 42.8 and the estimates for June are for an increase to around 45.
For tomorrow (Wednesday July 1) if any of these economic releases drastically surprise either positively or negatively we could see an increase in volume going into the July 4 holiday. Also six companies will report their earnings tomorrow including Constellation Brands Inc. (STZ) estimates are for 0.32 cents per share and General Mls Inc. (GIS) estimates are for 0.80 cents per share.
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Oil prices jumped significantly higher today after trading virtually sideways all week last week. Crude oil for August delivery was up $2.33 or 3.4 percent and finished the day on the New York Mercantile Exchange at $71.49 a barrel. This was the highest close since June 12. In early trading on Tuesday June 30 it was up another .76 cents and the forecast is bullish.
One of the factors driving oil higher is the continued attacks on oil interests in Nigeria by rebel militants. Royal Dutch Shell had to close one of its facilities six weeks ago after an attack and a rebel group said it attacked another Shell facility on Monday. Just last week Nigeria’s president offered amnesty from prosecution if the militants turned over their weapons, they ignored the offer wanting money from oil companies who they claim are destroying the environment and for members of their groups to be released from jail, the Nigerian government of course, refuses to meet those demands.
Chevron and other U.S. companies also have oil interests in the volatile region of Africa as Nigeria sells 44% of its oil exports to the United States. According to government sources the attacks have at least temporarily stop about 1.26 million barrels per day of oil production. Nigeria is a member of OPEC and produces approximately 2.17 million barrels per day of oil and is the 5th largest foreign oil supplier to the United States.
In addition to the problems in Africa, a positive stock market help buoy oil prices, many traders think a greater economy equals more spending and more spending equals more gas usage. The recent market turnaround has help to raise oil prices since it was trading around $40 in February. Oil has found recent support and resistance levels at $69 per barrel, $70 per barrel and $72 per barrel. So this recent price action may be a breakout sending oil prices significantly higher. Many commodity investors are still in fear of an oil superspike this summer that will make last years $140 a barrel oil look cheap. Some saying we could see prices go well over $200 a barrel.
Gold prices also rose over a dollar to nearly $942 per troy ounce. The precious metal should trade relatively sideways this week as people clean up their portfolios before the July 4th holiday. Gold prices have been strong since around June 12 when the dollar began its clear down trend. The $940 level has also been a key support and resistance level and this breakout signifies to many gold investors that the commodity is headed higher. Some commodity investors believe that we will see gold at $1300 before the end of the year. The bullishness of gold has also brought silver prices off of its June lows of around 13.86. Now trading around the $14.oo per ounce level.
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The summer doldrums are definitely here as the stock prices crept upwards on Monday. The Dow Jones Industrial average had the largest percentage gain of the three major averages rising 90.99 or 1.08% points to close around 8529.38. The Nasdaq added 5.84 or 0.32% and ended the day at 1844.06 and the S and P 500 Index finished up 8.33 or 0.91% settling at 927.23. The news of the day was unrelated to trading and involved Bernie Madoff getting a sentence of 150 years in a medium security detention facility, meaning the 71 year old crook will likely die behind bars.
The earnings season is also creeping up on us and the largest tax preparer H and R Block reported today. The companies earnings were better than most stock traders were expecting saying in their press release that income from continuing operations grew to $513 million or 15%. Their earnings per share grew to $1.53 up from $1.36 in the same period last year. Their consolidated net income increased to $1.45 per share or $486 million after reporting a loss for the same period last year. They said earnings for the full year 2010 from continuing operations were expected to be $1.60 to $1.80 per share. They closed at 15.67 per share up around .25 or 1.62% around its highs for the day, it is still down nearly 33% year to date.
The other report stock traders were focused on was Apollo Group, Inc. which reported its third quarter fiscal 2009 results. Apollo Group is a company primary focused on higher education for working adults and runs colleges such as the University Of Phoenix and Western International University. Some of the highlights of their press release were posting their first quarterly revenue of over $1 billion a 26% increase over the same period last year. Apollo reported $201 million in net income on revenue of $1.05 billion for the three months ending May 31, 2009. The company had a third quarter profit of $1.26 per share significantly higher than the .85 cents per share they reported in the year ago period. Also well above analyst consensus estimates of 1.12 per share. The stock opened the day slightly higher but then dropped more 3.6% ahead of the news to close at 65.99 per share. After the bell Apollo Group jumped 5.3% and was trading around 69.53. Look for that good size pop to follow through on Tuesday.
Stock markets on Monday saw a decrease in trading volume since the couple large moves last week and should continue the lazy summer trading tomorrow. Tuesdays most popular earnings release will be Sealy Corporation which analysts expected to make 0.04 cents per share. For Tuesday June 30 stock market investors will also be watching the release of the Chicago PMI (Purchasing Managers Index). The Chicago PMI is a survey released by the Institute of Supply Management surveying manufacturing and non-manufacturing business conditions in the Chicago area. Numbers above 50 percent indicate an expanding business sector. Stock market investors are looking for healthy economic growth the thinking being that means corporate profits will be higher. While bond traders look for moderate growth that won’t create inflation. May’s number was weaker than expected at 34.9 and the consensus for June is estimated to be 40.
The other economic release traders will be watching is the consumer confidence number. The Conference Board surveys five thousand consumers across the country and asks them about their attitudes and expectations of the economy. Consumer spending is two thirds of the economy so their confidence directly and significantly affects economic growth. Stock market traders want a high number which would mean higher corporate profits, while bond traders are always worried about excessive inflation should the consumer be overconfident. The number for May was 54.9 a major jump off the April level of 40.8 and the consensus estimate for June is 57.
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The summer doldrums are definitely here as the stock prices crept upwards on Monday. The Dow Jones Industrial average had the largest percentage gain of the three major averages rising 90.99 or 1.08% points to close around 8529.38. The Nasdaq added 5.84 or 0.32% and ended the day at 1844.06 and the S and P 500 Index finished up 8.33 or 0.91% settling at 927.23. The news of the day was unrelated to trading and involved Bernie Madoff getting a sentence of 150 years in jail, meaning the 71 year old crook will likely die behind bars.
The earnings season is also creeping up on us and the largest tax preparer H and R Block reported today. The companies earnings were better than most stock traders were expecting saying in their press release that income from continuing operations grew to $513 million or 15%. Their earnings per share grew to $1.53 up from $1.36 in the same time frame last year. Their consolidated net income increased to $1.45 per share or $486 million after reporting a loss for the same period last year. They said earnings for the full year 2010 from continuing operations were expected to be $1.60 to $1.80 per share. They closed at 15.67 per share up around .25 or 1.62% around its highs for the day, it is still down nearly 33% year to date.
The other report stock traders were focused on was Apollo Group, Inc. which reported its third quarter fiscal 2009 results. Apollo Group is a company primary focused on higher education for working adults and runs colleges such as the University Of Phoenix and Western International University. Some of the most important parts of their press release were posting their first quarterly revenue of over $1 billion a 26% increase over the same period last year. Apollo reported $201 million in net income on revenue of $1.05 billion for the three months ending May 31, 2009. The company had a third quarter profit of $1.26 per share significantly higher than the .85 cents per share they reported in the year ago period. Also well above analyst consensus estimates of 1.12 per share. The stock opened the day slightly higher but then dropped more 3.6% ahead of the news to close at 65.99 per share. After the bell Apollo Group jumped 5.3% and was trading around 69.53. Look for that good size pop to follow through on Tuesday.
Stock markets on Monday saw a decrease in trading volume since the couple large moves last week and should continue the lazy summer trading tomorrow. Tuesdays most popular earnings release will be Sealy Corporation which analysts expected to make 0.04 cents per share. For Tuesday June 30 stock market investors will also be watching the release of the Chicago PMI (Purchasing Managers Index). The Chicago PMI is a survey released by the Institute of Supply Management surveying manufacturing and non-manufacturing business conditions in the Chicago area. Numbers above 50 percent indicate an expanding business sector. Stock market investors are looking for healthy economic growth the thinking being that means corporate profits will be higher. While bond traders look for moderate growth that won’t create inflation. May’s number was weaker than expected at 34.9 and the consensus for June is estimated to be 40.
The other economic release traders will be watching is the consumer confidence number. The Conference Board surveys five thousand consumers across the country and asks them about their attitudes and expectations of the economy. Consumer spending is two thirds of the economy so their confidence directly and significantly affects economic growth. Stock market traders want a high number which would mean higher corporate profits, while bond traders are always worried about excessive inflation should the consumer be overconfident. The number for May was 54.9 a major jump off the April level of 40.8 and the consensus estimate for June is 57.
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