 |
 |
Dallas, TX
January 25, 2010, 08:00 EST |
 |
Dr. Joe Duarte's Market I.Q. |
 |
 |
|
|
 |
The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors
|
|
New Reality: Retirement Impossible
|
|
|
 |
 |
What's Hot Today: |
|
U.S. stock index futures are pointing to a higher opening
on Monday. The market is oversold. The key is whether stocks can close
above the 20 and 50-day moving averages on the S & P 500 by th ened
of the week.
Today's Economic Calendar:
- Existing Home Sales 10:00 AM ET
- 4-Week Bill Announcement 11:00 AM ET
- 3-Month Bill Auction 11:30 AM ET
- 6-Month Bill Auction 11:30 AM ET
News For Thought
Google founders in sell mode. Google's founders Larry Page and Sergey
Brin are cashing in, at least a little. Each of the two will be selling 5 million
shares of company stock over the next five years. According to The Wall Street
Journal: "Under the trading plan, the co-founders would reduce their combined
holdings in Google from about 57.7 million common shares, or approximately 18%
of outstanding capital stock, to 47.7 million shares, or about 15% of the company,
according to the U.S. Securities and Exchange filing. Under the stock trading
plan, adopted on Nov. 30, 2009, the two would also reduce their combined voting
shares from 59% to about 48%."
White House not backing off. According to The Wall Street Journal: "Coming
off one of the most difficult weeks of his presidency, Barack Obama has beefed
up his political staff and is expected to deliver an uncompromising State of
the Union address. Aides said Sunday that the White House wasn't making any abrupt
policy shifts, even as the message was retooled to focus more sharply on job
creation. If anything, an unfinished agenda from 2009 will grow larger as, in
addition to tackling health care and unemployment, the president presses for
a bipartisan commission to tackle the budget deficit against resistance from
Republicans."
Bernanke's future improves, but remains less than certain. According to
The Wall Street Journal: "The political winds appear to be shifting in Federal
Reserve Chairman Ben Bernanke's favor, as the White House escalated efforts to
win the 60 votes needed in the Senate to confirm him for a second term and Senate
Republican and Democratic leaders predicted those efforts would succeed. But
despite a flurry of activity over the weekend, confirmation wasn't a certainty.
As of late Sunday, 31 senators were publicly committed to voting for Mr. Bernanke,
with 17 opposed, according to a Dow Jones Newswires survey. The Senate is expected
to vote before Mr. Bernanke's term expires on Jan. 31, Senate Democratic staff
members said."
Wal-Mart cuts 11,200 jobs. According to The Washington Post: "Wal-Mart
Stores said Sunday that it is cutting about 11,200 jobs at its Sam's Club warehouse
division as it outsources in-store product sampling to the marketing company
Shopper Events. The terminations represent about 10 percent of the warehouse
club operator's 110,000 staffers across its 600 stores. About 10,000 members
of the demonstration department, most part-time workers, were let go. The company
also cut its new "business membership representative" positions, affecting about
two staffers per store, or about 1,200 staffers in total."
Looks like another week of crazy stuff is about to start. The State of the Union
address is certain to be a doozy. We would expect all kinds of flim-flam in this
one, more than usual, and lots of partisanship from the gallery. If you're an
investor and you aren't scared, you should have yourself checked out.
|
|
|
New Reality: Retirement Impossible
|
|
 |
|
The Final Chapter Of The American Dream Now In Jeopardy
|
 |
|
|
The American Dream had a few components, a home with a
family, a job, and a retirement. The home, job and family components have been
under siege lately, but the retirement part was still plausible. Now new data
suggests that even that is no longer as likely as it once was.
According to Reuters, citing results of a report commissioned by Pulte Homes
Inc. (NYSE: PHM): "People just starting to consider retirement are less optimistic
about their ability to stop working than older people." The survey details are
illustrative of the current economic uncertainty as: "Of those who turn 50 this
year, 41 percent say they will never be financially capable of retiring and 23
percent have not even started to save."
To be sure, there are multiple reasons currently for the situation, such as job
losses, falling home prices, and a stagnant economy. But if you look at other
sources of retirement income aside from drained 401-k plans, pension funds are
also in trouble. The state of Washington, not one that's in the news as much
as its southern neighbor California, has a brewing pension problem. According
to The Seattle Post Intelligencer: "The state retirement system -- which includes
teachers and state and local government employees -- covers more than 300,000
active members and about 100,000 retirees" has two retirement plans that are
being described as "at risk," which means that they are not fully funded. Data
from the state puts one fund at 77% funded and the other at 72% funded.
And that means that "As a result of delayed and suspended contributions, increased
benefits, and the large investment losses of the last two fiscal years, previously
healthy plans remain healthy, but are now at risk of becoming unhealthy. Previously
unhealthy plans are now at risk of running out of assets before all benefits
get paid," according to a report issued last year by the actuary's office."
The issue is not just a U.S. problem. In the U.K. there is a growing lobby calling
for the scrapping of the mandatory retirement age of 65. According to the Telegraph,
in a January 25, 2010 article: "The number of older workers still hoping to move
up the career ladder is more than double the number who are looking to take a
downwards step to ease their workload, according to a survey published today
by the Equality and Human Rights Commission. Of nearly 1,500 people surveyed,
62 per cent of women and 59 per cent of men aged between 50 and 75 said they
want to continue working beyond the default retirement age."
Yet, times are extremely difficult for older workers. According to the Forth
Worth Star Telegram: "Older workers continue to have a tough time rebounding
from unemployment. The number of unemployed workers age 55 to 64 has nearly tripled
since the recession began, to about 1.6 million of the nation’s 15.4 million
unemployed as of November, according to the Labor Department. These unemployed
job seekers say it is even harder for them to find work because of what they
see as age bias."
What is most interesting, and what is likely to become a sigificant influence
on future policy is the fact that "According to 2009 data from the Bureau of
Labor Statistics, the number of people age 55 years and older in the labor force
is expected to increase by 43 percent by 2018 and workers 55 and older will represent
35.4 percent of the labor force."
Already there is a new and rising trend being dubbed the "encore career." This
is where former high power executives and corporate types who lose their jobs
become teachers, counselors, and other similar professions that allow them to
both work as well as to use their skills in a different venue.
The reason for the switch, aside from losing the corporate job is often disillusionment
with the corporate world. Yet, a new civic minded gig isn't always easy to transition
to. As MSNBC.com points out: "It’s not an easy transition. In fact, the tough
economy that inspires some people to make the switch may also be the reason why
some are unable to follow their more civic-minded career dreams, which may pay
much less."
Conclusion
As health care reform, the fate of Mr. Bernanke, Iran, Iraq, Afghanistan, and
Haiti grab the headlines, something more personal is happening to many in America.
They are getting older, and their retirement plans just aren't likely to come
through any time soon.
There are multiple reasons for it, but they all boil down to one, most people
don't have enough money to retire to that resort community in Florida and play
golf for the rest of their lives.
That means that people in their 50s are now having to figure out how they're
going to meet their financial needs once they reach that 60-plus age where pressure
to retire or to make a change in their lives increases.
Medicare and social security will have increasing pressure on their funds. Employers
and states will try to figure out ways to meet their obligations, but will face
rising stress on pension funds. And the government, looking for increasing tax
revenues to fund deficits and pet projects will add pressure to the situation.
What is starting to materialize is a less than rosy scenario. Shrinking funds
will be facing rising liabilities. And those who wish to retire, whether mandated
or not, will find it more difficult to do so purely for financial reasons.
This isn't a new concept. But it is now palpable and easy to visualize, since
it's starting to gain ground.
Our government can't even handle what it has on its plate now. Imagine what things
will be like in about five years when this trend is fully underway and the current
problems are nowhere near being solved.
This is clearly a call to arms for those who are looking for opportunities to
start new businesses who cater to what is likely to be a wave of older, yet healthier
and active people who will be looking to earn a living, whether to supplement
or replace incomes.
Know when to sell and how to make money when the market falls. Get a detailed
trading plan in your pocket. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for
All Seasons. Also Available As Kindle Books. |
|
|
|
|
Market Moves - Stock Of The Day
|
|
|
|
Select SPDR Financial ETF (NYSE: XLF) Crumbled On Bernanke Fears
|
|
|
|
|
Shares of the
Select SPDR Financial ETF (NYSE: XLF) took a beating on
Friday as fears of non-confirmation for Federal Reserve
Chairman Bernanke rose.
Chart Courtesy of StockCharts.com
Keep an eye on XLF on Monday. The ETF broke well below
three key support areas on Friday. First it fell below
15. Then it took out its 20 and 50-day moving averages.
In fact, the ETF closed near its October and December 2009 support levels, which
means that a break below this key area would likely lead to a possible series
of new lows.
The financial sector is clearly under pressure from Washington. President Obama
is trying to fine the banks after many of them have payed back their TARP loans.
The market is also alarmed about the potential separation of deposit bank functions
from investment bank functions in large conglomerates such as Citigroup and Bank
of America.
While the fine is not a great idea, the separation of functions isn't a bad idea
at all. The problem is how the White House wants to go about it. Instead of doing
something in a way that worked before, such as just updating the Glass-Steagall
act, which was repealed by President Clinton and Congress, the White House wants
to impose measures that would make life hard for banks.
If the separation of investment banking and commercial banking can be put together
in a decent way, we could actually get something good out of it.
For now, though, the action in XLF is likely to be very volatile.
|
|
|
|
| |
|
|
