Tell Me What's Happening: Interest Rates Rising / Homebuyers Are Hurrying

There are a few themes going on around me right now.  Is it just me or does everything seem a little 'CHOPPY'!  This seems to apply to the weather, the stock market, jobs, interest rates...and definitely GAS prices.  So I wanted to start a dialogue to help us understand why.  There is no point in me writing (or talking) much I want to post a few videos that may help explain why.

First up is Interest Rates. These rates help determine what our mortgage rates will be.  The Federal Reserve can manipulate interest rates to help speed or slow down our economy when it needs to...think like a treadmill.  They have hinted they may be doing less tinkering with the economy and that is making rates move higher.  Oddly enough, this may be great for homeowners as buyers may race to get in on this historically low rates BEFORE its too late.

Check this video out:

1st Quarter 2013: PREMIUM STOCK ALERTS

1st Quarter 2013: 3 PREMIUM STOCK ALERTS

Please contact me directly (email_urbanomics@yahoo.com) to subscribe to this quarter’s premium stock alerts.  Find out what I have my eye on and more importantly when I will be adding these stocks to my portfolio.

1st Quarter 2013 Premium Stock Alerts

My 1st quarter picks are FINALLY OUT. I’ve been researching these stocks over the course of the last 3 months and found 3 stocks with margin of safety and the right catalysts.  Please see the following stocks that were sent to subscribers receiving premium alerts.

Stock #1: **********

Details

Sector: Financial Industry: ????? Tip I've got Montrose...and I'll even count Benton

Stock #2: **********

Details

Sector: Consumer Goods Industry: ????? Tip You need 1 for March Madness...

Stock #3: **********

Details

Sector: Basic Materials Industry: Oil and Gas Tip In Texas "Its The Law"

Its March and my newest picks are finally out. The Fed is 'Making It Rain' money and stocks will continue to do well. But I only really like stocks that have been beaten down...like they stole something. So its really getting difficult to find a lot of discounts. More stock reveals coming soon.

Urban Download...

Am I a degenerate investor...YES!  Most people will attest to the fact that I have a Wall Street Journal with me everywhere I go.  I like reading and taking in data because these bits of data each day may eventually lead to bigger things.  I may wanna know about the latest technology that is disrupting 'Business As Usual', random opinions about why gas prices are high, and I even keep up with companies that are Buzzworthy.  Some of these are great for talks around the water cooler, others good to know, and just maybe one day I may connect some dots and find something that makes a compelling argument for an investment one day.

Technology Disruptor

VIBER (http://www.viber.com/)

This app for your phone seems like a really cool idea.  They've been labeled the Skype for your phone and claim to allow you to call and text any other user for FREE.  No user ID is needed because it recognizes your phone number once downloaded and even automatically adds any friends that have VIBER without needing to search and add for those users.

Anyone using this app...please post your feedback

Things that Make You Go Hmmm....

I was listening to people that follow the market and the Gas industry and found the following details interesting:

1) Gas prices have been up every day since Jan 17th
2) Whenever gas has hit $3.80 as a national average...the economy has turned sour
3) From here going into the summer driving season, gas prices usually rise another 26%

Buzzworthy

Groupon - Everyone has an opinion on this stock. They reported earning and the market didn't like what it heard.  Down 24% 
GRPN Story

Zynga - The hitmaker of your favorite apps is making a brake for the 'Online Gaming' industry. Stay tuned. 
Zynga Bets On Gaming

Herbalife - The debate continues on whether this company is legit or a Ponzi Scheme.

Hewlett Packard - Back from the brink of death??? They will be selling a $169 tablet.

Yahoo - The CEO (Marissa Mayer) just told their employees that telecommuting is no longer an option. Ouch...get back to work.

Dow at 14000 (Pt.3) - The Markets Will Go Lower!?!

If you've followed my last few posts its very clear by now that the Dow Jones Industrial Average (DOW) is trading right around 14,000.  The Dow is a broad representation of many companies throughout the US and is often used as a indicator by many investors. These levels are significant because they are very near all-time highs and more importantly a representation of how far we've come. If we go back four years ago, the DOW was at roughly 8900 and thanks to the American people, companies, government we've bounced back almost 50%.

  In PART 1 of this series (Dow @ 14000), I tried to show you how information available to the public can be used to develop your direction on where the markets are headed.  In short you should always be invested in the stock market but when the market is cheap you should invest more and when its expensive you should pull back some.  So clicking on the link above helps to show that through a little research the average investor can pick up on some signals that assist us in knowing when to buy stocks.  And who better to get some tips from then billionaire investor, David Tepper.  

So we participated in this nice run up in the markets, however; the REAL question is... will stocks continue to go up??  I guess the first thing to point out is there will be a correction! A correction in this case will be a pull back or a move down in the stock market. Simply put, a correction will likely happen because the markets have moved up in a straight line.  And think about the markets like you think about dieting...it never goes in a straight line (no one loses all of the weight all at once).  There will be really good weeks and a few bad ones and while the markets are getting healthy and losing the weight but they haven't had any setbacks.  You can almost hang your hat on the fact that there may be a pullback because so many investors are talking about the need for one to justify that this market is for real (one with fluctuations) and not just some type of fad (like with diets).

So now its time to listen to some really smart people who believe the market(s) may go lower.  First up is Jeffery Gundlach who predicts that another crisis is coming to world markets who will try to stall by pumping money (see 'Making It Rain')...however; this story likely leads to inflation and possible default for some countries. I've read the following link and found his points very interesting:

Gundlach's Negative View On Markets

Now that you've read the article along with me, I find it interesting that Gundlach wants to buy the following hard assets: 

• Gemstones,
• Art, and 
• Commercial Real Estate

When it comes to stocks he'll be investing in the following types of equities:

• Chinese stocks
• Nat Gas producers
• Gold Mining stocks

The next investor that believes that the picture is also a little murky is Marc Faber.  Please click on the link below to hear why Marc thinks the markets are due for a pullback:

What do you believe?!? If you feel that it's intuitive that markets can't just go directly up then you may be in the camp for a pullback because that is natural and healthy.  So you could benefit by selling some of your winners and/or by waiting for a pullback to buy more stocks.

What's Up With The Economy, The Deficit...

That is a really good question, "What's Up With the Economy?"!  The best analogy is the economy is sorta like a really nice business train that is slowly chugging along and starting to lose passengers at each stop.  I think this is an accurate picture because the data is definitely mixed, showing corporate businesses are doing quite well and chugging along, like the train.  The passengers being lost at each stop are comparable to middle-class Americans that are being negatively impacted by: 1) high gas & food prices, 2) declining housing prices, 3) still high unemployment numbers.  And the biggest problem is JOBS, JOBS, JOBS, or the lack thereof.  Jobs are so critical because they give Americans confidence that the economy is getting better when they see their neighbors getting up and going to work, coming home with bags of groceries, and investing in their homes.  So who is focusing on getting more Americans jobs? That's the question that needs to be asked of everyone from the president and his administration, to your senators, then your local congressmen, and also of the companies that are doing well.  Every moment should be spent on turning the dismal job scenario around and we've seen our politicians come up with some solutions but not nearly enough.  The formula is not that difficult as it usually comes down to stimulating Americans and stimulating the companies who are tasked with hiring more Americans.  Its a shame the debate in Washington is whittled down to spending versus tax cuts, but that has been the case.  Last time I checked both scenarios cost taxpayers money but are needed to bring this economy back to life.

Notes from the Matix - April Download Pt II

Pharma
Pharma is short for pharmaceuticals and this has traditionally been an industry that I have shied away from as I’ve tried my best to incorporate a rule that I have learned from Warren Buffett and Peter Lynch awhile ago: Invest In Things That You Know

This is at odds at times with the strategy that I’ve been harnessing over time and that’s being a MACROVALUEQUANT. Often, my screens lead me select a stock that I believe has positive momentum (QUANT) and I further weed out these stocks if they are not trading at a low valuation (VALUE) and support my general view on what industries and sectors should do well in the current global economic environment (MACRO). My screens recently led me to 2 pharma stocks (See Pharma Premium Alerts Post) and I was very reluctant to nibble at the bait.

Training Day...Alerts

Come take a ride with me on your first day, just like rookie cop Ethan Hawke took a ride with Denzel...whips I mean Alonzo Harris. See in both of our worlds street justice reigns. In Training Day, Alonzo let his brand of street justice play out until he gets burned. In my world of investing, Wall Street enacts its own brand of street justice. You can get a cheap thrill by not doing your homework and buying the flavor of the month stock. Sometimes you'll win but you don't wanna lose...and get burned like Mr. Harris.

To help you transition into this tough game of investing I'll take you on a Walk down Walk Street. We are gonna ride because its not a race, its actually hours and hours of research to find deeply valued plays that have explosive potential. I believe in my process and hope to share some of these deep values with you. Email me to begin receiving alerts so that you can follow along while being your own boss by picking your own selections.

Here is a quick summary of my most recent Alerts:

Urbanomics Market Update - June 20th

Urbanomics Market Update
~the update for people that don’t watch the “stock channel”

GAS, the last time I wrote my update I predicted gas prices were going to rise and boy did they take off. As of a couple of days ago, the price of gas at the pump has risen for 50 (this is not a typo) straight days!! AAA, noted recently that the nationwide price average is around $2.679 and every state is joining in this party at the pump. Since I was sport on with my last analysis I will include my most recent prediction on the direction of gas.

Gas Prediction: My thoughts are that gas will start to top out at these levels. The fundamentals of economy just can’t support gas at these levels…people will take other measures as they did last year to ease this costly burden. At the right price, I would look to make an investment that gas begins to drop.


STOCK MARKET, this week the stock market was down roughly 3%! You may think that there are a few signs that things may be improving but I would not be running to join the crowd. Be afraid because a number of experts are betting that the rally is running out of steam just as the everyday investor is starting to pump money back into their investment portfolios, mutual funds, and retirement portfolios. My prediction won’t change…so check out my write up from last time below.

Market Prediction: if you had peeked at the stock market you might have seen that it has been doing really well in the last couple of months. If you feel like you missed the party…DON’T. The reasons vary as to why it was moving up rapidly (like people spending their tax checks at the beginning of the year) but it probably won’t continue going up so quickly much more. This is my opinion but the economic data doesn’t lie. The data recently released says:
- Consumers are saving and not spending money
- Housing foreclosures are on the rise again (And rates continue to rise!)
- Unemployment continues to reach record monthly numbers (Unemployment dipped last month and is on the rise again!)

WHAT TO EXPECT NEXT,

Cash for Clunkers – The Congress just passed a bill known on the streets as “Cash for Clunkers”. It probably took a cue from Germany which has passed a wildly popular strategy in their country. This bill was going to be hard to argue against as it helps boost a lagging industry, cleans up the environment, and lowers the consumer’s bills. The bill requires you to buy a car that is more fuel efficient that your last car and you will get a voucher of up to $4500 to make this switch. The real name of the program and a link to the website can be found here: www.ConsumerAssistanceToRecycleAndSaveProgram.org
Or try the auto industry’s site aimed at promoting the bill:www.CashForClunkersHeadquarters.com

Home Buyer Tax Credit – A new proposal is moving around the senate to INCREASE the existing tax credit. Senator Johnny Isakson of Georgia is the brains behind this new proposal which want to raise the existing $8000 credit to $15000!!! The other changes are this bill would be for ALL homebuyers in contrast with the last which was just for first time buyers. The other change would be to eliminate the income limits which are currently capped at $75000.

Prediction: My opinion is this will have some trouble passing through Washington. At a time when Wall Street and the Real Estate industry have lost our trust, this bill will raise too many questions about who is really benefitting from the latest home tax credit. By removing the income limit and opening it up to anyone this could potentially benefit wealthy homeowners and property investors…two groups who may need the least assistance out there and have the least amount of trust out there.

HOUSING, things still look uncertain for this part of the market.
- A new wave of foreclosures are still set to hit the market
- The tax credit deadline is looming
- Rising interest rates are not positive for consumers

Urbanomics Market Update ~ May 15

Urbanomics Market Update
~the update for people that don’t watch the “stock channel”

GAS, the price of a barrel of oil (better know as gas you put in your car) continues to rise, so this means that the cost you pay at the pump will be rising also. I know you want to know why, and all I can tell you is that has to do with the season, speculation, and investors betting the economy is turning around.

STOCK MARKET, if you had peeked at the stock market you might have seen that it has been doing really well in the last couple of months. If you feel like you missed the party…DON’T. The reasons vary as to why it was moving up rapid (like people spending their tax checks) but it probably won’t continue going up so quickly much more. This is my opinion but the economic data doesn’t lie. The data recently released says:

• Consumers are saving and not spending money
• Housing foreclosures are on the rise again
• Unemployment continues to reach record monthly numbers

WHAT TO EXPECT NEXT, the talk around the investing water coolers is the next shoe to drop is the realization that the Credit Card and Commercial Real Estate industries are hurting. In a nutshell, unemployment is bad for consumers who stop paying their credit card bills and a recession is bad for businesses that stop paying for the buildings they use. Both of these problems affect banks and real estate companies which have hundreds of billions of dollars at risk.

DOES THE STIMULUS WORK, surprisingly the answer might be yes. The stimulus plan appears to be working with estimates stating that roughly a billion dollars a day has been released in the first 80 days, I will let you do the math ($80B). And states representatives have indicated that they are putting the money to work quickly. For example, I was shocked by the potential numbers noted by the state of Texas, which says they estimate that 69,000 jobs will be saved or created through the implementation of stimulus money for transportation projects.

HOUSING, number from two key sources, the National Association of Realtors & RealtyTrac (foreclosure experts) are out.

• Home Prices fell 14% since this time last year (Largest decline ever)
• First-time homebuyers accounted for HALF of all new sales
• “Distressed” (foreclosures and short sales) accounted for HALF of all transactions
• Foreclosures filing up 32% from a year ago (RealtyTrac record)
• 1 in every 374 housing units received a foreclosure notice

Industry Predictions: Housing may not return to normal until 2010, until then BUYERS are running the show

I Am Investor

Now I am no Will Smith in I Am Legend, but by being one of the few non-believers of the rapid rise of the real estate market I often felt like I stood alone. This was often documented here at Urbanomics and my lone bad investment that reminded me to always stick to my judgement was in New Century Financial. So is being Legend easy, actually yes just pick up the Wall Street Journal. Yesterday's paper confirmed my recent post about INFLATION, which continues its rise and has reached its highest level in 27 years.

Next, we discussed Freddie Mac and Fannie Mae and their sharp decline. Freddie recently auctioned more of its debt as rumors continue to swirl about a possible government bailout. If the government steps in to bail out shares at very low prices current investors could basically be left with nothing.

Oil & Gas has rebounded today and saw gains of roughly 5%. This is largely due to the disruptions between Russia and Georgia. Our position in natural gas pipelines should fare well during these times.

The last point I will discuss is one that I believe will continue to play out in the retail sector. I believe that a number of the retailers benefitted from the economic stimulus plan and many had really good quarters. I have already highlighted retailer, Big Lots, who I think like Wal-Mart benefitted from this factor. Notice that Wal-Mart noted that they see future weakness and Target also see declines. I will closely watch the retailers and look to short players like Big Lots when they rebound and closely reach their 52 week high.