Guiding Friends Since 2003

Global Recovery Underway?

Yes indeed, FredCast News thinks that a global recovery has begun and the worst of times is behind us.   The election is over and America can now focus on something other than partisan politics.  We think that you'll see a nice recovery in jobs by September as companies are forced to hire more workers to keep up with increased demand for American goods.  We've also seen a nice bounce in new home sales and the lowest number of foreclosures in six years.  Both great signs that the inventory of homes has decreased to the point where home prices will begin to rise again. 

With housing and manufacturing seeing signs of life, the Fed is continuing its policy of keeping rates artificially low, so we are getting an extra kick to jump-start this emerging boom.  With that said, FredCast highly recommends buying or upgrading your primary residence now.  Rates will not be under 4% forever and this is a great time to borrow mortgage money on the cheap.  We will see 6% rates before you know it.

What about stocks & bonds?  FredCast likes stocks, but loves bonds!  Shorting the 10yr bond is our favorite strategy right now.  Shorting an ETF is our recommendation, but be careful when you execute, as some ETFs are volatile.  FredCast also recommends not buying at the market, but rather setting your execution price and controlling your cost.  The same holds true on the exit side of this trade.  Volatility is your best friend and your worst enemy, so pay careful attention to this trade.  So set your GTC orders to execute at your desired exit price.

FredCast likes the US LargeCap Growth sector, especially the technology, agriculture, and financial ETFs and indexes.  There are still some excellent values here if you are a stock-picker.  For our more conservative readers we still like the steady Eddie dividend payers, reinvesting all dividends.  We believe that its a great time for these giant companies.  FredCast thinks we will see solid single digit top and bottom line growth for the next decade. 

Well that's it for now.  Check in or sign up for notification of new FredCasts posts.

What now Mr. Romney?

With housing on the rise, a falling unemployment rate, and an economy obviously recovering, what is left for the right to focus on?  Maybe they can focus on the debt, but they helped create that problem with the two wars and the mortgage/banking crisis, so that's out..... I know!  they can just create their own facts and lies and just keep repeating them until people start believing them!  Pure genius!  Just count on the masses of blind faith believers who now make up the conservative right!  

Really?  Is that the strategy Mr. Romney?  To my surprise, it is actually working and the folks over at Fox News are running with it.  But it won't last.  Americans in the center and the left are not going to stand for such nonsense.  To the right's dismay, the facts will not and cannot be ignored.  The American economy is recovering and Obama's policies have us on the right track. The conservative movement has lost the grip it thought it had by pointing to the slow recovery and making people think that the economy was not recovering.  Now we, the people, have the facts; and they are undeniable.  Still, the republicans continue to pursue a course of denial.  I don't understand it...

Where has the republican party gone?  They have all but disappeared behind a gang of ultra conservatives that have hijacked an entire party.  The demise of the republican party can be likened to the Taliban in Afghanistan/Pakistan.  The Muslim people and culture is being hijacked by the Taliban and the only way out is to suppress this radicalism from within.  The republican party needs to do the same, because, like the Taliban, they cannot win.  While this radicalism is tolerated in our free society, it is quelled through our election process.  It may be time to start a third party in this country.  A party that embraces conservative ideas yet is not racist, exclusionist, radical or filled with hatred.  

Lastly, Mr. Romney.....Your disrespect for our current President will not go unnoticed.  During the second debate, your lack of respect for President Obama was apparent.  While you may have impressed the ultra conservative haters, you turned off the reasonable American.  Black, white, right, left and center.  For me, it shows what kind of person you are.  You're a bully Mr. Romney.  You talk over people to be heard, you interrupt, and believe that you make the rules and the rest of us follow a different set of rules.  Your "binders" response made me laugh and your questioning of Mr. Obama's response to the "act of terror" in Benghazi was so disrespectful and Mr. Obama handled you like a gentleman, whereas I would have punched you in the face.  I guess that's why I am not a politician, despite my degree in Political Science.  My New Jersey culture. like Gov. Christie's, is not kind or patient when it comes to liars, cheats, bigots and thugs. You are out of touch Mr Romney.  Worse than that, you are a liar, a cheat, a bigot, and a disrespectful thug.  I don't like you very much Mr. Romney.  I do however like Mr. Obama and the spirit he brings to the White House and the world.  The United States of America deserves a leader that is liked and respected around the globe.  We deserve a leader who is compassionate, honest, and accepts the facts.  We need an economy to grow properly, from the middle, with a strong base of middle income wealth, not an economy that is top heavy, based in inequity and record income disparity.  Our economy is fine Mr. Romney, just admit it.  Admit that you made a mistake in regard to GM and Detroit.  Admit that you are a tax cheat, a liar, and a bigot.  Or maybe just by stating you are our republican nominee is inclusive of those ideals. 

And to President Obama.  Thank you for your honesty and integrity.  Your candor does not go unnoticed or unappreciated.  Your fight for the middle class is a good one that continues to be misunderstood.  We need healthcare for all Americans and we need improved wealth distribution otherwise we are in for a major failing of the greatest country on earth...

Unemployment down to 8.6%....

At 830am this morning the unemployment figures were released and the September and October numbers were revised up bringing the unemployment rate to 8.6%.  As FredCastNews reported in the Halloween post, we saw change on the horizon and for the first time in more than a year, changing our forecast for 2012.  We are still sticking to our slow growth, slow job creation story, but we feel that the tide is turning, and that the risk is lower to jump in and invest in equities.  FredCast has liked high dividend equities and still does.  The story for these stocks only strengthens as the economy strengthens so hold on to your profits in the REITs and utilities and put a good portion of your cash back to work now.  As FredCast said months prior, buy the blue chip companies that are multinational.  Is it possible that good times are ahead?  At FredCastNews we believe in making early calls from a macro economic point of view that will maximize your profitability.  FredCast likes the trends that are forming and highly recommends putting your cash to work before others do.  We track M1 and M2 money flows and know that there is a lot of cash on the sidelines.  When this cash moves in equities, the end result is a major move higher in the indexes.  FredCast has not been wrong for many years and we think the time to jump in with both feet is now.  Yes, this is a big call to action for our readers and we do not take this call lightly.  Stay tuned for a major change at FredCastNews as well.  Since FredCastNews thinks we are in for  multi year bull market, we will begin to examine individual equities that we like and will be reviewing companies that our readers should consider for their portfolios.  A video Blogcast for each review is being considered as well.  Happy investing....

What to do now?

My apologies.  I know it has been a little while since I last posted, but as always, FredCast only posts when we think something significant is occurring in the markets.  What we see right now is opportunity for investors looking for longer term investments, specifically retirement.

With the EU addressing and most likely solving its debt crisis over time, FredCast feels that world markets will begin to stabilize and some of the high quality multinational companies like CAT, MSFT, INTC, GE an many more can be purchased on the cheap for the longer term.  FredCast likes the thought of US troops coming home in an election year when the economy seems to be bottoming.  Hopefully Obama will grow a pair and start to get tough on an energy 
policy and jobs program to re-create our deplorable infrastructure.  Many a soldier have been involved in the country building process and helped create the military infrastructure we have setup in both Iraq and Afghanistan over the past ten years.  Therefore, we have a skilled labor force in search of work that can be paired with an infrastructure program to modernize our cities.  Despite what the right says, Government needs to buck up and stimulate this economy under the guise of modernization.  This is when we need government to act and not debate, filibuster or vote down proposals in the spirit of partisanship.  It will most likely take the election to get the right to realize that we are fed up with the political wrangling that has literally stalled any progress or proposal that comes from the Obama government.  FredCast predicts that the democrats will not only take the White House, but gain a controlling number of seats in the house and a majority of the 10 Republican Senate sets that will be available and maintaining most of their 23 seats, giving the democrats a 55/45 majority.  If FredCast is right, we will get the Obama presidency we thought we were gonna get the first go around!  FredCast also predicts that we will also push though a more complete Healthcare reform bill and that a good recovery will happen and last throughout the next four years. 

So feel free to buy a home, and purchase quality stocks.  Stay away from bonds that you do not plan on holding to maturity, as rates will be on the rise.  I'd recommend staying clear of the commodity markets unless you have a professional handling your trading.  Gold has made its big move, speculating now is just that, speculating.  Invest in the US, buy US good and services, and demand quality.  FredCast believes that we could be in for a decade prosperity with the rise of a new middle class that will have real power in their vote.  This new middle class will be non partisan, cohesive, and educated.  Made up of a people with a sympathetic ear for the tea party and Occupy Wall Street movements, they will seek social equality and break down the inequities that threaten our top-heavy democratic system. 

If you are a "Have" and are reading this, don't worry, you'll still be rich.  Your circle of friends will not be nearly as expansive and growing as it once was in the heyday, but you are still rich.  Our system doesn't work without you and those like you, so don't worry.  As much as we've heard the term "job creators" tossed around in the past few years, it will be the next few years where we can all define who the job creators are.  I think we will all be very surprised to learn the results from that study........ With that, I am off to seek and glean knowledge to help our faithful readers figure out our economic and financial world.

9-11 Remembered

I sit with coffee in hand, tears running down my face, and a heart filled with memories of that beautiful blue skied day in September of 2001.  As the children, wives, parents, uncles, aunts, brothers and sisters read the names of their fallen loved ones, with their shaky voices, it brings back the awful memories and feelings from that unforgettable day.  I am still emotionally shaken and still not over it.  I am one of the lucky people that just happened not to be in the World Trade Center on September 11th.  On any given day, I traveled from my office in Newark that connected to the World Trade Center via the Path Station.  That day, I was going to NYC by car to meet co-workers at the Chrysler Building for an appointment in New Jersey.  I remember turning my car around when the first plane struck and being home when the towers fell.  My children were very young at the time, but still recall hearing Daddy screaming "NO....NO....NO...." and being frightened by my horror.  I did not leave my house for a week.

I remember trying to reach my best friend, Michael, who worked for Merrill Lynch in the World Financial Center, across the street from the twin towers.  Phone lines were all down and cell phones didn't work either.  His wife called me worried about him and I lied to her, telling her not to worry because he had a morning meeting in Mid-town.  After an hour of trying to locate him, he responded via Blackberry.  He was safe and hiding in a building close by with other survivors.  Getting word to Mike's wife that I had made contact was the bright spot of 9-11 for me.  I knew several other people who were not so fortunate that day, one of them was Bill Mehan, who I had met and spoke with just a few times while working in NYC at Prudential Securities.  Bill was a really nice man and had left our firm to take a big job at Cantor.  I remembered seeing him on CNBC, and thinking "wow, he really made the big time".  I knew one other former Pru cohort that also moved to Cantor that perished on that day too.  Michael McCabe, who was opening a Jersey Shore office for Cantor.  My recollection was that the office opening was delayed and Michael was in temporary space at WTC.  So many unfortunate stories from that day....

They are still reading the names of the victims and are now the "Gs".  So, I am going to go back and listen to the rest of the names, and watch the loved ones who are not as lucky as Michael and I were on that day.  To all the victim's families, please know that we will never forget them....

FredCast Economic Update

In about an hour the Senate will vote and pass to raise the debt ceiling.  Partisan politics have made this into a much bigger deal than it really is.  In our history we have raised the debt ceiling over 130 times.  Rarely does this news even make the headlines, except this time of course.  We are in a very dangerous place in this country.  Partisan politics and ideological differences have never been so far apart from each other.  Our government is at he point where the only thing they can pass are bills that represent dire situations where the government needs to act.  This anti-Obama coalition is strong and has really limited the effectiveness of the Obama government to do very much, making him look very weak.  The right has won most of the battles and until this next election both our government and our economy will be stalled.  FredCast sees no good reason to invest in stocks or bonds, and still is bullish on Real Estate, especially multi-family homes and apartment buildings.  The average American consumer is spending less, and continues to worry about job security, while the rich are getting richer, continuing down the path of a divided nation.  While FredCast is all for Capitalism, there is a delicate balance of avoiding the destruction of our middle-class.  The only reason our system has worked so well is because our middle class has seen continual improvements to its lifestyle for over 100 years.  For the first time in many generations, the standard of living for the middle class is falling and our nation's population of poor is growing at a pace that can grow to levels that will eventually lead to a land of the haves vs. the have-nots.  While this may be unavoidable, FredCast warns all of you that are haves.  Step outside the bubble world that you live in and spend some time with the millions of less fortunate people in this country.  Joe six-pack was your friend.  Do you think he is your friend now?  He comes to your big home and sees the life you live.  He sees the multiple cars in your driveway and the multitude of "things" that you possess.  Joe six-pack used to think you were lucky; he used to think that someday he too will have these things if he worked hard.  But Joe six pack has come to realize that this dream is not attainable.  He has learned that he now needs you to survive in this economy.  He knows how it has effected his friends and neighbors, and the impact that it has had on his own family.  It is harder to make a buck, harder to maintain a middle class standard of living.  His small business is having to deal with insurances and healthcare costs that are rising rapidly, and a competitive marketplace that won't allow price increases.  So, while Joe may be working steady, he is working for less and less every day.  So the next time Joe-six pack is in your home, don't wonder why he looks so bad or looks like he hasn't slept.  He is busy around the clock trying to please you, his valuable customer.  He's working twice as hard for half as much as his father did, when you adjust the numbers for inflation.  The super rich in this country don't feel this pain.  For the rich, things have never been better, nor has there ever been more disparity of income, free time, or standard of living.  While Joe six-pack did not go to Harvard Business School, he is no fool.  He slowly grows angry with the rest of his peers, who will eventually figure out that they have been fooled into thinking that the problem is on the left.  Joe is still hanging on to the American dream that the right is still selling to his kind.  The problem the right faces is that eventually Joe six-pack figures out that the American dream lives only in his head and that it really is just that, a dream, for folks like him, that have continued to fuel the wealth of the rich.  We have not gotten to that point yet, but we are dangerously close.  Joe is too busy trying to make ends meet to figure all of this out right now and he still has something to lose.  Should that change, look out!  If this economy takes another turn for the worse, the middle class is going to get with the poor and revolt, and it will not be pretty.  So wake up rich people!  Figure out how to bring back the middle-class before its too late.  Just think about all the people that have done work to your home......alarm guy, painter, plumber, electrician, landscaper.....the list goes on for people that know how your home works, better than you might!  Do you really want to make this army of people your enemy?  Will it cost you less to figure out the problem now?  The answer is YES......

The right needs to become more passionate about being compassionate.  Throw the poor and middle-class a bone.  I promise that you can remain very wealthy and provide healthcare for every American.  Pay a little more into the system than you do.  You've certainly benefited more than most have by being born into a family that is wealthy, in most cases.  If not, try to remember the struggle, and then imagine how much harder it would be to get there today......Compassion needs to prevail over the greed that is plaguing this country today.  Does anyone recall the fall of Rome in 1099A.D.?  The similarities are scary.  We are not learning from the mistakes of history.  This really scares FredCast.......

Back to our real mission......helping investors understand the economic environment for investing in plain English.  FredCast is unhappy with the prospects of 2011 and is starting to fear that 2012 may be slightly worse, especially due to the fight that this election will bring.  This will be an important election for America.  Until that time, FredCast suggests buying a AAA-Rated corporate bond with a one year duration.  Collect 4-5% in these uncertain times and be happy.  FredCast sees real downside risk in the equity markets, despite the fact that they are 5% off their YTD very careful and treat your nest-egg as Golem would treat his "precious"......keep it secret, keep it safe!

The world we live in today....

From natural disasters in Japan to revolutions in the middle east to demonstrations in Wisconsin....Change is everywhere.  One thing that markets really don't like is turmoil and volatility.  So, we are seeing a lot of serious money on the sidelines waiting for some stability.  With that said, FredCast is of the opinion that this is not a short term issue, but something that is going to be the theme for 2011.  Again, we think that Real Estate is the place to be right now, not bonds and/or treasuries.  With all of the change abound at FreddieMac and FannieMae, it is clearly going to be harder for folks to obtain a mortgage unless they have a significant down payment and excellent credit.  In this economic downturn we have millions of credit impaired people who will not be able to qualify for a mortgage for many years.  These very same people have steady income and employment, just no significant savings and damaged credit.  This will create an entirely new population of renters, good quality renters!  So, if you have enough money for a 25% down payment, you should seriously consider purchasing an investment property right now.  Stay tuned to FredCast and look for another update as things start to settle down out there.......That's all for now folks.  Thanks for reading!

FredCast, Bullish now?

Gov't Bonds are becoming less attractive due to investors who seek safety with yield.  Blue chip companies are very healthy from a financial perspective and yields on many of these companies are attractive, safe, and sustainable for many years.  Investors who seek some upside/growth to their portfolio balance, yet need dividend/interest/yield, should gravitate away from gov't bonds and into these solid dividend players.  This will provide the bond market with higher yields eventually, but not for months, as the US Govt will continue to purchase its own bonds, artificially keeping the yield low for a period of time.  This will prolong the coming of the 7% mortgage until such time that the economy is strong enough and confident enough to swallow that pill.  Bernanke and company continue to play this recovery like a world class orchestra plays Mozart, making the complicated appear natural and easy.  It all comes down the one guy waving that little wand, the conductor......That's FredCast's new moniker for Bernake, "The Conductor".  Obama and his policies aside, The Conductor is who will lead us out of this period of recession and back to a sustainable recovery over the next five years.  So, to our FredCast readers who are investors, it is our opinion that you sell your treasuries now and reallocate to high quality blue chip global leaders paying solid dividends.  If you don't need the current income, reinvest those dividends back into the  stock until you need the income.  FredCast thinks that you will be handsomely rewarded over the next ten years.  For our Mortgage brokers, FredCast recommends that you lock in your deals as you get them.  Rates will continue to bounce around in a tight range, so don't play the market, get out there and look for new clients.  The purchase market is the market you want to focus on for the next five years.  Make sure that you are FHA/VA approved as this will continue to be vehicle of choice for your customers.  Many serviceman will be coming back home and looking to purchase homes because they are the only segment of the market that can get a loan with NO MONEY DOWN!  FredCast's opinions have also expanded to include the Real Estate Markets.  FredCast is bullish on Real Estate for those who can qualify for a mortgage right now.   We like Multi-Family properties most, especially for those buyers who are somewhat handy.  It has been many years since we've seen positive cash flow properties on the market and they can be found right now.  Being a landlord is not always a walk in the park, but for those of you who are willing to be a live-in landlord, take advantage of this short-term opportunity.  

Fall 2010

FredCast News is seeing signs of recovery albeit slow.  As FredCast has stated in the past, this recovery will be slow and jobless.  We are seeing Fortune 500 companies earning record profits, inventories are healthier, and the stock market is moving higher.  So, how is this happening?  One of the greatest American business successes is our ability to consistently improve efficiency and productivity.  This has come at the expense of the American worker in the manufacturing sector because we can produce more without hiring additional workers.  Our productivity gains and quality goods are what will eventually pull us out of this mess.  Our friends to the south and east of us love our products and have economies that are demanding our products, which is what is driving the success we are seeing in company profits.  These countries are the answer to our own recovery so dismiss all this right wing chatter about turning inward.  We are truly in a global economy and for the first time it will help the good old USA recover from this difficult time.  Again, I will stress to all FredCast followers who are in a position to purchase multi-family now!  Sell your gold, sell your treasuries and your CDs and move into real estate.  We are bottoming in the RE market and foreclosures are available and the banks are recognizing that they have appreciating assets on their books and will not be selling on the cheap for much longer as the recovery takes hold on our own soil......There is a lot of cash on the sidelines.  Beat the cash to the next housing run-up.....

Double Dip Ahead?

So, there is an awful lot of talk about this double dip recession.  What does FredCast think?
I see an economy with many mixed signals, which allows economists much room to speculate on what is going to occur in the next few years.  It will also separate the good from the bad forecasters out there, which we can only assume that FredCast will continue to guide you correctly.  These mixed signals indicate an economy on the verge of recovery, but very slow recovery I'm afraid.  I think that we are in the business of increased productivity and profits, but not jobs.  If the government gets it right and starts to focus our tax dollars on our own country vs. wars and short-term stimulus programs, we could have a boom in renewable energy related jobs, health care related jobs, and a revived auto industry.  With little inflation and low rates these jobs could mean a recovery in the housing industry, which will get us on the right path once again.  I fear that we are just five to seven years away from seeing this really start to happen.

So what to do now?  Buckle down.  Pay off all your debt and accumulate cash.  If you can buy a multi-family property on the cheap, do it.