The latest in a series of reports evaluating the future of the energy markets, especially in the context of the increasingly inevitable Iranian conflict, may just be the best and most comprehensive one (not just because it looks at the commodity from an "Austrian" angle). In 82 pages, Austrian Erste Group has extracted the key aspects and variables for the world oil market and come up with a simple conclusion: "nothing to spare." To wit: "We see the risks for the oil price heavily skewed to the upside. At the moment, the market is well supplied, but the smouldering crisis in the Persian Gulf could easily push oil prices to new all-time-highs should it escalate. We believe that new all-time-highs can be reached in H1, at which point we could see demand destruction setting in. We forecast an average oil price (Brent) of USD 123 per barrel between now and March 2013…The latently smouldering Iran crisis seems to be close to escalation. The most recent manoeuvres, ostentatious threats, sanctions, embargoes and the shadow war currently ongoing, have heated up the situation further. It seems we may soon see the last straw that breaks the camel’s back. Even though Iran could probably only maintain a blockade of the Straits of Hormuz only for a very limited period of time, the consequences would still be dramatic. The oil price would definitely set new all-time-highs and could reach levels of up to USD 200." Enjoy those price dips while you can.
Wednesday, March 7, 2012
NEW YORK (MainStreet) -- How much of your retirement savings can you withdraw each year – 7% or 1.8%? Or something in between?
The answer, of course, will make a huge difference in your lifestyle. Fortunately, if you need a smaller withdrawal to keep your nest egg going, it may not have to be permanent, and people in or near retirement can consider some attractive short-term lifestyle changes to keep life interesting on a reduced budget.
The key: Keep flexible by avoiding big long-term commitments like a second home, a large mortgage, oversized car payment or owing a pricey, unsalable condo with big association fees.
Since the early 1990s, many financial advisers have recommended starting retirement with a 4% annual withdrawal rate, or $40,000 for a $1 million nest egg. If you start there, you can increase the annual withdrawals by enough to offset inflation, and keep going for 30 years.
That was the theory, anyway. But recent research says that as conditions change the withdrawal figure could be as high as 7% and as low as 1.8%. That impressive $1 million nest egg could therefore generate a tidy $70,000 a year, or a stingy $18,000 -- before taxes.
The first thing to note is that unless you can live on a very, very low withdrawal rate, your fund would have to include some stocks and long-term bonds as well as cash. After all, a 5-year certificate of deposit yields only 1.157%, according to the BankingMyWay.com survey. But stocks obviously have risks, and you could face lengthy downturns. (more)
IBM (IBM) is firing on all cylinders lately and its share price reflects its staying power by closing above $200 a share this week. IBM's super computer Watson is going to work for Citigroup (C) and its why the Masters want in now.
Last week we recommended buying IBM shares in 3 Stocks to Buy at 12 Month Highs. IBM was trading just under its 12 month high and this week it made the $200 roll hitting $201.19.Citigroup (C) is hiring Watson to do what no man can do. The AWESOM-O like computer will help analyze customer needs and process financial, economic and client data to advance and personalize digital banking.
Watson already does work for its health-care clients WellPoint Inc. and Seton Health Family by analyzing data to improve care. IBM executives say Watson’s skills -- understanding and processing natural language, consulting vast volumes of unstructured information, and accurately answering questions with humanlike cognition -- are also well suited for the finance industry.Watson may add $2.65 billion in revenue in 2015, adding 52 cents of earnings per share, Ed Maguire, an analyst at CLSA in New York, estimated in a November research note (source: bloomberg via fa-mag.com)
MASTERY Bottom line:
Need another reason to buy IBM?
Mastery expects IBM to continue to prosper in 2012.Our 12 month target price for IBM is now $250.
Today’s selloff is the first major drop that 2012 has seen. Surprisingly, traders seem to have forgotten that we had 1% moves almost daily throughout 2011.
Its too soon to say whether this is a one off or an early look to economic slowing.
We can, however keep our watch on these three charts — these are the ugliest charts in the universe of basic economic data. If they begin to turn up, it will be clear the economy is fully on the mend. So far, they have shown no signs of improvements.
- Well-known stock commentator Laszlo Birinyi sees more than a rising stock market. The market bull told CNBC Monday he sees signs of a U.S. economy that may be doing far better than others expect. “This year the bet is GDP of 2 percent to 2.5 percent,” he said. “When I look at the market I see stocks like Cummins and Salesforce.com, Microsoft, General Motors up 20, 30 and 40 percent. That makes me question, maybe the market’s saying something about a good economy. “I just wonder if we’re prepared for a 3 percent to 4 percent GDP? If it does [reach that level] I think we can again have a mirror of 1995 where the market surprised everybody on the upside.”
- The head of Birinyi Associates, who has long stressed picking strong individual stocks that can resist market volatility, last week released a robust forecast for a Standard & Poor’s 500 spiking to 1,700 this year, up over 20 percent. He based the forecast on market patterns showing this year’s rally is remarkably similar to what happened in 1995, when expectations were low for both stocks and bonds.
- “What happened was just the opposite. Interest rates went down, the market went up 35 percent” and had the best year in 50 years, Birinyi told CNBC. “As I’ve often said, the negative case is always more articulate, it’s always more rational, more reasonable because we see it,” Birinyi said. “The market is looking ahead, and I contend what stocks are telling us is a possibility, and I think a fairly good possibility, that something positive is going to develop [and] perhaps we’re underestimating the economy. Don’t disregard the possibility of something good happening.”