Market Wrap-Up for Nov.3 (ANF, ROST, KFT, QCOM, WFM, EL, more)

There were a couple of events earlier in the day that triggered investor buying. One was the headline out of Europe indicating that Greece would scrap its previously-announced referendum and simply accept the agreed-up bailout from the EU. The second was news that the ECB had lowered its own interest rates this morning to 1.25% (while the U.S. is at just 0.25%). Both items were seen as bullish by investors and it was off to the races.

On the first Thursday of every month, many retailers report monthly sales figures. Some of today’s better-than-expected figures came from the likes of Macy’s (M), Kohl’s (KSS), Ross Stores (ROST) and TJX Companies (TJX). However, on the other end of the spectrum, we saw shares of Abercrombie & Fitch (ANF) fall nearly $15 (-20%) on disappointing sales data.

Meanwhile, earnings results helped push stocks like Qualcomm (QCOM), Kraft Foods (KFT), and Estee Lauder (EL) nicely higher. On the flipside, stocks like Kellogg (K), Cimarex Energy (XEC), Hartford Financial (HIG), Whole Foods (WFM), and Transocean (RIG) all traded in the red. It was an unusual rally day with yet many earnings-related disappointments. That said, it was good to see some actual strong volume during today’s rally.

Art Market Forecasting Spending Cutbacks for the Rich?

Some analysts like to look at how the rich spend their money as a gauge of the economic climate. The art market is a popular indicator used in this capacity.

Well, a recent Christie’s modern art auction could be “painting” (pun intended) a gloomy picture. Christie’s sold nearly $141 million at its Impressionist/Modern art show Tuesday evening, well below the company’s estimate of $212-$304 million. Some attendees argued the auction had unreasonably high reserve prices for several pieces, but the lack of fervor for spending big dollars by some of the wealthiest people in the world could still be seen as a negative economic sign.

“Low Rates Are Good for Savers,” Says Fed Reserve Chairman Ben Bernanke

As we were reading some of the commentary from yesterday’s Federal Reserve meeting, we ran across the gem in the headline above. Apparently Mr. Bernanke is pushing the idea that low rates are for the “greater good” of the economy. He believes savers won’t receive decent returns on their savings until the economy is doing better anyway, because the best investments are investments that are made in an economy that’s growing (I know, that doesn’t make any sense to me, either).

Although mostly spin, part of Bernanke’s statement has some credence. Low rates can help people that are struggling to pay their bills and stay in their homes. However, it doesn’t make much sense to stay in a home one can’t afford.

During normal economic cycles, people make mistakes. They buy things (in many cases, homes) that they can’t afford. The remedy for the problem is simple: they must sell the item and take a hit on it. Consequently, investors and more responsible consumers swoop in and acquire these items (homes, cars, etc.) at a discounted price. The economic decline, on the whole, eventually remedies itself.

Many investors have made savvy financial decisions over the years when faced with these situations. People are always willing to step up and take a shot on items when prices are discounted. Where they stay away, however, is when regulators step in and try to put false bottoms on markets.

Despite what the government would have you believe, the bailout of the banks is still an ongoing process. That’s why we continue to see extremely low interest rates and plenty of help for homeowners who are under water.

Anyway, getting back to savers who choose not to invest in things like real estate, and stick to the basics (money markets, bank CDs), there is no answer to when they will be able to see any sort of decent returns on their savings. Fortunately, many have decided to put their money in high quality dividend-paying stocks like those on our Best Dividend Stocks List.

At some point, I believe we will eventually see less intervention and there will be a normal lift for the economy. In the meantime, we simply make the best possible investment decisions based on the cards being dealt.

New Watchlist Article Out Today

Be sure to check out our weekly Top 50 High-Yield Watchlist Names post that is out today, only for Premium members.

Thanks for reading, and I’ll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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