A BANK WORTH A LOOK

We've written about HBAN, Huntington Bank, before. It's a midwest regional bank, like many other banks, has had its troubles.

The stock changes hands around $7.50. An insider recently bought 100,000 shares at a cost of just over $700,000. One insider buying is not significant. In this case, however, it's at least a sign.

Most of its branches are in middle America, an area hard hit by the manufacturing decline. And that's part of the story we like, the dull, prosaic Midwest where oil and gas discoveries are helping to fuel the economy. You can do your own research on the region and decide accordingly.

One well-known market strategist when asked recently for her favorite emerging market replied, the Midwest.  Full disclosure: We own the stock and continue to accumulate it. Without putting a number on it, if economic recovery becomes what many MSM cheerleaders hope, the shares have good upside potential.

It pays a small dividend, trades at about 10x earnings and short interest, now about 10 million shares, is down 11% since mid-April, some of it no doubt due to the market rally
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BRIEFS

There's been much talk so far this year about bonds, starting with all the babble abuot a so-called "great rotation."

Now Pimco's Bill Gross, the noted bond guru, some are saying made it offical recently when he pronounced bonds DOA.

Gross specifically mentioned the 30-year bond bull market that started in the early 1980s, actually the same time the stock market took off. 

But as we wrote about recently the real tipping point came in junk bonds now offering below 5% yields on average for the first time in  the history of these securities.

There are two thing to consider here, risk premium and yield. Yields may be at historic lows for junk, but risk premiums are not. And that tells an important tale.

What all the central bank easing going on around the globe should tell you is the old for-every-action-there-is-a-reaction.  Similar to what the administration is trying to do with its chain CPI index--screw the COLA folks--cutting interest rates to revive economies is putting the screws to all and any looking for yield.

And that goes way beyond just the COLA crowd.

But its a two-way fare. One fine day these yields will prove less attractive than a three-day old hotdog sitting in the fridge.
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FRIDAY READS

Fewer Own Stocks
http://money.cnn.com/2013/05/09/investing/american-stock-ownership/index.html

You Read You Decide
http://libertystreeteconomics.newyorkfed.org/2013/05/are-stocks-cheap-a-review-of-the-evidence.html

UK Rates Unchanged
http://www.futuresmag.com/2013/05/09/british-pound-consolidates-after-rate-decision?ref=hp

Couple Of Interesting Charts
http://www.dailyspeculations.com/wordpress/?p=8365

Dollar Strength Or Yen Weakness?
http://www.marketwatch.com/story/dollar-holds-high-ground-after-topping-100-2013-05-09?dist=lbeforebell

More On The Yen-Dollar
http://www.marctomarket.com/


Another Point Of View
http://news.investors.com/ibd-editorials-perspective/050913-655537-free-market-texas-outperforms-big-government-obama.htm#comments

WHAT HAPPENS NEXT?

When is stubborn stubborn?

How about when your a commodity-based or emerging market currency shows some glimmer of strength. Central banks in Asia and New Zealand are trying to cool off their currencies as capital continues to flow to those areas.

Despite concerns about a global slowdown, Asia in the minds of many investors is where whatever growth exists is. Horace Mann may have said to go west, but it's by all indications now east, China, Thailand, Australia and the Philippines.

The Thai baht is approaching levels not seen since 1997 when it moved around 25 baht to the U.S. dollar. Though it's early this is another form of what some might call reverse currency debasing. 

As these currencies strengthen those of some of their trading partners weaken. That could end up making products from these strong currency nations less marketable putting a damper on exports. 

When a similar situation among the so-called Asian Tigers developed in the 1990s, central banks tried to stem the tide by intervening in the markets. And we all know how that came out. Fooling around with currencies is like fooling around with Mother Nature. You might get away with it for a while.

According to reports Asian emerging markets have attracted nearly $7 billion to bond funds so far this year. Last time that happened was 2010. This is at least in part a higher return thing. Yield hungry investors searching for more income. 

The message is also clear. Money looking for higher returns will travel. It reads like a good telegram: Have money. Need higher returns. Will travel.

What happens after it gets there determines whether the trip was worth it.

BRIEFS

Canadian housing prices jumped over 90% in the last 10 years.

At the same time the country rode a natural resources boom that with all the deflationary concerns around the world that's beginning to go snap, crackle and possibly slump. The Loonie, Canada's dollar, so far this year dropped 1.2% against its American counterpart, according to the WSJ.

Home sales have slowed with home prices yet to follow, but many investors believe they will. Canadian household debt figures are estimated at 165% of of disposable income, not far from what U.S. consumers were carrying before the subprime balloon burst. That's a trend that tracks the country's rise in housing prices.

Demand for homes pushes up not only home prices but demand for things that go in them. Consumption and debt result.

Lower oil prices knocked nearly 0.5% off economic growth during the last half of last year in an economy that  managed to grow only 1.8% in 2012. And don 't forget what's happen so fart this year to the yellow stuff--gold.

With commodities tanking, many expect Canada will do the same.
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We've written about PIK bonds before. Payment in kind paper that was popular back in the early 1980s when interest rates were 14-15% and higher. Now with interest rates 30 years or so later at the other end of the spectrum, PIKs are making an apparent comeback.

So what does that tell you, if anything?

http://online.wsj.com/article/SB10001424127887324744104578470812182691622.html
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THURSDAY READS

Be Careful What You Wish
http://www.zerohedge.com/news/2013-05-07/art-cashin-warns-bernanke-fans-be-careful-what-you-wish-deficit

The UK Sterling And BOE http://www.marctomarket.com/2013/05/the-boe-and-sterling.html

All Empires Crash http://t.ritholtz.com/bigpicture/#!/entry/all-empires-crash-soon-after-they-reach-their-peak,518b3493da27f5d9d0bfc005

Big Banks Push Back http://online.wsj.com/article/SB10001424127887324244304578471312603346762.html?mod=ITP_pageone_0

What's The Real Cost?
http://www.businessinsider.com/heritage-immigration-cost-63-trillion-2013-5?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

Berkshire's Munger Speaks
http://money.cnn.com/video/news/2013/05/08/n-charlie-munger-europe-japan-economy.cnnmoney/index.html

SUNDAY READS

Confidence Lags
http://wealthmanagement.com/research-amp-tools/advisor-confidence-plunges?NL=WM-10&Issue=WM-10_20130503_WM-10_575&YM_RID=rleasset01@hotmail.com&YM_MID=1391235&sfvc4enews=42

Cost-cutting Coffee Choices
http://www.moneytalksnews.com/2013/05/03/the-best-cheap-coffee/?utm_source=newsletter&utm_campaign=email-2013-05-03&utm_medium=email

Apple Anyone?
http://www.fool.com/investing/general/2013/05/01/apple-stock-it-gets-worse.aspx

Predicting: How Accurate Is It?
http://tech.fortune.cnn.com/2013/04/26/nate-silver-what-big-data-cant-predict/?iid=SF_F_River


Can You Afford It?
http://www.moneytalksnews.com/2013/05/03/study-growing-number-of-people-cant-afford-to-buy-or-rent-their-homes/?utm_source=newsletter&utm_campaign=email-2013-05-04&utm_medium=email

THE SNIFFING AROUND RULE

Seven out of 30 is a pretty disturbing number.

That's an eye-catching low of 23%, hardly a respectable number for any industry. But in 2012 only seven of the 30 largest shipping firms made money.

Since 2007 excess capacity has been the industry's worse nightmare. The global downturn added to the problem. It's one of the oldest economic dilemmas, too much capacity and too little demand.

 Europe and Asia, key shipping routes, slowed and high fuel costs didn't help. And it's tough to raise rates in such an environment. Over capacity and decreased demand, according to industry sources, caused freight rates to take a hit, falling by nearly 7%.

According to a WSJ article, the cost of a 20 foot container going from China to Europe that cost $1200 at the first of this year now runs about $800.

The high fuel costs led to building more fuel efficient freighters, adding to an already over supply of vessels some estimate that is at least 10% above current needs. There is also fears about another price war like the one in 2011 breaking out.

In our Thursday Reads we posted a link: Shipping Next. It's worth a look. The whole industry passes the sniffing around rule.

http://www.cnbc.com/id/100697092

WEEKEND READ

Forget Saints. It's preferreds that are marching in now.
Bank preferreds.

With interest rates lower than low, a niche' is being fulfilled, according to the WSJ.

Financial firms so far this year have unloaded nearly $14 billion of these preferred shares in the U.S. It's the fastest such an amount has sold this early since 2008.

In the hierarchy of stocks preferreds usually stand in front of common shares should something go shake, rattle and broke. Preferreds are like bonds, however, and when interest rates rise share values sink. Just the reverse is also true.

Right now the ducks are quacking--in this case, they're two sets of ducks, the yield starved public and big banks that seek to repair or bolster their balance sheets.

Now the Journal article says this allows banks to help themselves without hurting shareholders. But you might want to add a "Not so fast!" to that.

The yield might look appetizing now in this low-interest rate scene, but when rates start back up--and they will--these gems could belly flop. The surprise might be higher rates than anyone foresees. It wouldn't be the first time.

So if you're thinking about them read the fine print carefully. Are they callable, putable, accumulative are just a few of the things you want to know.

It remains to be told if they turn out to be Saints.

WE'RE ALL GONNA SEE

There is, as one might expect, no shortage of quotes about today's announced job numbers.

We thought it might be fun and perhaps instructive to list a few. These are from Market Watch.

• “Jobs [numbers] more good news on top of consumer confidence, lower deficit, $35B debt paydown, housing recovery. Only cloud on horizon: sequester.” — Rep. Gerry Connolly, Democrat of Virginia. @GerryConnolly.

• “Now is not the time for Washington to impose self-inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.” — Alan Krueger, chairman of President Barack Obama’s Council of Economic Advisers.

• “Today’s jobs report showed some signs of hope for the thousands of people who found a job in April. However, this growth is way behind our nation’s potential. We must focus on job creation more than one day a month.” — House Majority Leader Eric Cantor, Republican of Virginia.

• “Like: Biggest rise in temp hiring in 13 months. Don’t like: Zero [manufacturing] job gains, and first decline in construction since last May.” — Ian Shepherdson, chief economist, Pantheon Macroeconomic Advisors Inc. @IanShepherdson.

• “The latest jobs report shows that we are a long way from a true resurgence in American manufacturing. We strongly believe that we won’t see real growth in manufacturing jobs without the right policies from Washington, DC.” — Scott Paul, president of the Alliance for American Manufacturing.

• “The Fed will view this with some relief. The better job numbers will diminish some of the near term risks to growth and in principle diminish some of the angst accumulating with the roll over in the inflation data.” — Eric Green, Global Head Rates, FX & Commodity Research, TD Securities.

• “This month’s abysmal jobs number – 165,000 new jobs in April, barely enough to cover new people coming into workforce – is a self-inflicted wound. Government austerity – tax hikes and spending cuts – is suffocating the economy, just when it needs air. And the perversity will get worse. The sequester cuts are only now beginning to hit.” — Robert Borosage, co-director of the Campaign for America’s Future. 

There's a line in an old Don Williams song: "I guess we're all gonna be what we're gonna be." It's probably just as likely we're all gonna see what we want to see.