For the Rich, Diamonds are the New Stocks - CNBC For the Rich, Diamonds are the New Stocks - CNBC

Wednesday, May 16, 2012

For the Rich, Diamonds are the New Stocks - CNBC

For the Rich, Diamonds are the New Stocks - CNBC

New studies show that the wealthy are pulling back from stocks and stashing more of their money into real estate, art and even diamonds.

A recent survey from Harrison Group and American Express Publishing found that the wealthy have cut back their allocations to stocks dramatically since the economic crisis. In 2007, the top one-percenters (by income) invested 76 percent of their savings into stocks and financial investments. Now, it’s closer to 46 percent.

That may not sound like an important drop. But the wealthiest one percent own more than half of the individually held stocks in the U.S. When they stop buying, it matters.

All that cash on the sidelines may continue to grow. Harrison Group’s Jim Taylor predicts that total savings stashed away by the affluent could grow to $12 trillion by 2014, about double today’s levels.

A second study from Spectrem Group finds that millionaires are also pessimistic about stocks. The survey found that investor confidence among those with $1 million or more in investible assets  dropped in April for the first time since last summer, when the U.S. debt crisis and Euro crisis started weighing on markets.

The main concerns for millionaire investors were (in order) the prolonged economic downturn, the political environment and national debt.

Investors with $5 million or more have become the most conservative. The Spectrem study showed that 84 percent of the $5 million-plus crowd is now taking a moderate or conservative investment posture. That compares with 79 percent in 2009 – in the middle of the economic crisis.

So what are the wealthy doing with their money?

Increasingly, they’re looking for hard assets, collectibles and real-estate.  Just consider the headlines from the past week. Two trophy apartments in Manhattan sold for more than $50 million.

Yesterday, Sotheby’s sold $108 million worth of collectible jewelry in Geneva. The chart-topper was a the $9.7 million sale of the Beau Sancy diamond, a 34.98 carat diamond that was first worn by Marie de Medici in 1610 at her coronation as as Queen Consort of Henry IV.

Wealth experts say that while diamonds, mansions, art and wine may not appreciate as quickly as stocks, these less liquid assets are also unlikely to crash in value as quickly. And wearing the Beau Sancy or looking at a Picasso on the wall  is a lot more pleasurable than watching the ticker.

Where do you think the wealthy will put their money this year?

-By CNBC's Robert Frank
Follow Robert Frank on Twitter:
@robtfrank




Stocks get a boost from U.S. economic data - Click2Houston.com
NEW YORK (CNN Money) -

U.S. stocks turned mixed Wednesday afternoon, as investors weighed strong U.S. economic data against ongoing uncertainty about Greece's political situation.

The Dow Jones industrial average rose 20 points, or 0.2%, the S&P 500 added 1 point, or 0.1%, and the Nasdaq slipped 2 points, or 0.1%.

Investors were encouraged as U.S. housing starts rebounded from a five-month low and industrial production posted its fastest growth in over a year.

Meanwhile, Greece's political future remains fragile. After politicians in Greece failed to agree on a coalition government, President Karolos Papoulias called for all parties to set up a caretaker government that will conduct new elections next month.

The instability in Athens raises questions as to whether the country will be forced to leave the eurozone and what such a move would mean for other troubled European economies.

"We're not at a tipping point yet, but there's concern that we could get there if the Greek election on June 17 goes the way of the previous one -- with an inconclusive result," said Michael Hewson, analyst at CMC Markets in London.

Despite the uncertainty, comments from European leaders helped stem some pressure. German Chancellor Angela Merkel reiterated that her country wants Greece to remain in the eurozone and will make every effort to help the nation get on solid footing. She said she agreed with France's newly elected president Francois Hollande to consider measures to spur growth in Greece.

Spanish Prime Minister Mariano Rajoy also said it would be 'a very big mistake' if Greece were to exit.

Investors' worries were also soothed after the European Central Bank said it would continue funding banks following news that Greeks were withdrawing hundreds of millions of euros from the country's banks.

Borrowing costs initially surged, with Spain's 10-year yield jumping to 6.5%, before pulling back to 6.3%. Italian bond yields also jumped to 6% before easing to 5.8%.

While Europe's debt crisis remains a broad concern for U.S. investors, hope are high that U.S. financial institutions have had ample time to protect themselves from the effects of contagion.

"The U.S. banks have been taking many more steps to deal with delinquent loans and against European sovereigns, something that European leaders have been extremely bad at," said Hewson.

While the 27-nation European Union and the 17-nation eurozone are teetering on the edge of recession, the U.S. economy continues to grow, albeit at a slow pace.

U.S. stocks closed at three-month lows Tuesday as the eurozone debt crisis continued to take a toll on the markets.

World markets: European stocks closed mixed. Britain's FTSE 100 rose 0.1% and France's CAC 40 added 0.3%, while the DAX in Germany slipped 0.3%.

Asian markets ended lower. The Shanghai Composite fell 1.2% and Japan's Nikkei dropped 1.1%, while the Hang Seng in Hong Kong plunged 3.2%.

Economy: Housing starts jumped to an annual rate of 717,000 in April, from the revised level of 699,000 in March. Analysts surveyed by Briefing.com had expected a rate of 680,000.

Meanwhile, building permits fell to an annual rate of 715,000 in April, from the revised figure of 769,000 in March. Analysts expected permits to fall to 730,000.

April's reading "supports our view that housing is in recovery mode," said Paul Diggle, property economist at Capital Economics. "We expect housing starts to rise further later this year."

Diggle also added that he doesn't expect the latest escalation in Europe to derail the U.S. housing recovery.

"After all, the fallout for the U.S. banking system from a Greek exit will be relatively limited," he said. "The flow of credit to homebuilders, institutional buyers and households therefore shouldn't become materially tighter, allowing the volume of housing starts to continue rising."

The Fed's reading on the nation's factory output was also better than expected. Industrial production rose 1.1% in April, rising at the fastest pace since December 2010. Economists were forecasting that industrial production rose 0.5% in April after being unchanged the previous month.

The minutes from the April meeting of the Federal Open Market Committee will be issued at 2 p.m. ET.

Companies: Facebook boosted the size of its IPO by 25%, seeking to raise up to $16 billion, according to an SEC filing.

Shares of retailer JC Penney tumbled after it reported a much bigger than expected loss for the most recent quarter. The company also discontinued its dividend.



Stocks turn mixed despite U.S. housing, factory data - USA Today

The market's gains are being held back by continuing worries that Greece's political deadlock could fracture the European Union and roil global markets.

Home builder stocks rose after the Commerce Department said builders started work on new homes at an annual pace of 717,000 last month, 2.6% more than in March.

Also, the Federal reserve reported that factory production increased 0.6% in April, helped by a gain in auto production.

Target stock (TGT) rose after a strong earnings report. Target said revenue at stores open at least a year rose 5.3%, strongest performance in six years for that period.

But all the positive news wasn't enough to get investors excited enough to start buying stocks in earnest.

"We're in a period where there's little conviction to buy," said Richard Cripps, chief investment officer at broker Stifel Financial. "The road ahead is too uncertain because of European concerns and the Presidential election later this year."

As signs of a global economic slowdown persist, prices of commodities have come off their highs. Crude oil continued its march downward from $105 at the beginning of the month and was trading at $93 at midday, down $1 on the day. Gold prices fell $10 to $1,547, the lowest since December. The dollar continued its two-week climb against the euro.

In Europe, a potentially chaotic situation was developing in Greece, where power-sharing talks collapsed Tuesday and new elections were called for next month. There is already concern in other European countries about how a possible Greek exit from the euro would affect the rest of the continent.

On Wednesday, Spain's prime minister warned that the country, which is trembling under a 24.4% unemployment rate, could be locked out of international markets due to problems in the EU.

Financial pressures extend well beyond Europe too. The Indian rupee hit an all-time low against the dollar as investors seek safe places to put their money. The rupee sank to 54.49 against the dollar Wednesday, surpassing the prior low of 54.39 on December 15.

Among other stocks making big moves:

— JC Penney (JCP) plunged 17%, the most in the S&P 500 index, after the retailer reported a bigger-than-expected first-quarter loss. Sales plummeted as shoppers are rejecting the retailer's new plan of getting rid of big sales throughout the year in favor of everyday low pricing.

— Abercrombie & Fitch (ANF) fell 13% after reporting that its first-quarter net income shrank 88% because of higher costs and declining sales in established stores and in Europe.

— General Electric (GE)rose 4%, the most of the 30 stocks in the Dow, after the company said its finance unit will pay a special dividend of $4.5 billion to the parent company this year. It had suspended the payments in 2009 during a freeze in credit markets.



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US Stocks Pare Gains As Worries Over Greece Weigh - NASDAQ



--US stocks trade nearly flat, having pared gains as worries over Greece pull down global markets

--DJIA has fallen in nine out of last 10 sessions

--GE leads DJIA higher after capital unit resumes dividend

By Chris Dieterich and Jonathan Cheng

OF DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- U.S. stocks were trading little changed Wednesday as confusion over Greece's political future and the role of the European Central Bank tamped down early gains.

The Dow Jones Industrial Average was up six points, or 0.1%, to 12638 in afternoon trading Wednesday.

The Standard & Poor's 500-stock index slipped one point, or 0.1%, to 1329 while the Nasdaq Composite was down 14 points, or 0.5%, to 2880.

Consumer-staples and industrial stocks rose. General Electric, up 4.3%, led the Dow components after announcing two acquisitions and encouraging news at its finance unit.

Materials and technology stocks fell, with Microsoft slipping 1.2%.

Blue chips have fallen for three straight sessions and nine out of the past 10. The Dow Tuesday was at its lowest close since Jan. 19.

European markets were bumped around by concerns about Greece. The Stoxx Europe 600 finished a rocky session down 0.6%. It had fallen as much as 1.4% earlier in the session.

In a sign of rising anxiety among Greeks, depositors withdrew EUR700 million ($891 million) from local banks Monday. Chancellor Angela Merkel tried to soothe investor fears by saying in an interview on CNBC that Germany was determined to keep Greece in the euro zone.

Reports suggesting the ECB could stop operations with some Greek banks compounded the confusion.

"We're seeing all these statements coming out of Europe, particularly with Merkel saying there's a strong commitment to keep Greece in the euro zone," said John De Clue, chief investment officer of U.S. Bank's Private Client Reserve.

"Unfortunately, I think markets may go sideways, though it will feel like it's going sideways at 1,000 miles per hour because of the volatility," he said.

Asian markets were sharply lower on the worries about Greece. China's Shanghai Composite slid 1.2% and Japan's Nikkei Stock Average shed 1.1%.

In U.S. economic news, home construction in April increased 2.6% from the previous month. However, the number of new housing permits, an indication of future construction, fell. Industrial production, meantime, rose in April, though a downward revision to the previous month's number tempered investor optimism.

Wednesday's surge in GE came after the company's finance unit, GE Capital, said it would resume paying a quarterly dividend to its parent company. Separately, GE said it would buy Australia mining-equipment maker Industrea, as well as the privately held equipment maker Fairchild International.

J.C. Penney fell 18% and led the S&P 500 decliners after the department-store chain reported a wider-than-expected first-quarter loss and revenue that missed estimates, and said it will discontinue its quarterly dividend of 20 cents a share.

Abercrombie & Fitch slumped 15% after the apparel retailer reported revenue that missed estimates, citing challenging sales trends in Europe, and provided a downbeat sales outlook for the year.

Target inched up 0.6% after the discount retailer reported better-than-expected earnings and provided an outlook above current projections.

Home builder Lennar rose 1% after the strong reading on housing starts.

Deere & Co. fell 2.9% after the maker of farming equipment reported sales that came in lower than the company predicted in February, though earnings exceeded forecasts.

Arena Pharmaceuticals slid 7.4% after the biopharmaceutical company said it is planning a public offering of common stock.

OraSure Technologies surged 15% after the company said a U.S. Food and Drug Administration committee recommended approval of the company's in-home HIV test.

-By Chris Dieterich, Dow Jones Newswires; 212-416-2611; christopher.dieterich@dowjones.com

    (END) Dow Jones Newswires   05-16-121426ET   Copyright (c) 2012 Dow Jones & Company, Inc. 



Stocks mixed amid ongoing Greece worries - KSAT 12
NEW YORK (CNN Money) -

U.S. stocks turned mixed Wednesday afternoon, as investors weighed strong U.S. economic data against ongoing uncertainty about Greece's political situation.

The Dow Jones industrial average rose 20 points, or 0.2%, the S&P 500 added 1 point, or 0.1%, and the Nasdaq slipped 2 points, or 0.1%.

Investors were encouraged as U.S. housing starts rebounded from a five-month low and industrial production posted its fastest growth in over a year.

Meanwhile, Greece's political future remains fragile. After politicians in Greece failed to agree on a coalition government, President Karolos Papoulias called for all parties to set up a caretaker government that will conduct new elections next month.

The instability in Athens raises questions as to whether the country will be forced to leave the eurozone and what such a move would mean for other troubled European economies.

"We're not at a tipping point yet, but there's concern that we could get there if the Greek election on June 17 goes the way of the previous one -- with an inconclusive result," said Michael Hewson, analyst at CMC Markets in London.

Despite the uncertainty, comments from European leaders helped stem some pressure. German Chancellor Angela Merkel reiterated that her country wants Greece to remain in the eurozone and will make every effort to help the nation get on solid footing. She said she agreed with France's newly elected president Francois Hollande to consider measures to spur growth in Greece.

Spanish Prime Minister Mariano Rajoy also said it would be 'a very big mistake' if Greece were to exit.

Investors' worries were also soothed after the European Central Bank said it would continue funding banks following news that Greeks were withdrawing hundreds of millions of euros from the country's banks.

Borrowing costs initially surged, with Spain's 10-year yield jumping to 6.5%, before pulling back to 6.3%. Italian bond yields also jumped to 6% before easing to 5.8%.

While Europe's debt crisis remains a broad concern for U.S. investors, hope are high that U.S. financial institutions have had ample time to protect themselves from the effects of contagion.

"The U.S. banks have been taking many more steps to deal with delinquent loans and against European sovereigns, something that European leaders have been extremely bad at," said Hewson.

While the 27-nation European Union and the 17-nation eurozone are teetering on the edge of recession, the U.S. economy continues to grow, albeit at a slow pace.

U.S. stocks closed at three-month lows Tuesday as the eurozone debt crisis continued to take a toll on the markets.

World markets: European stocks closed mixed. Britain's FTSE 100 rose 0.1% and France's CAC 40 added 0.3%, while the DAX in Germany slipped 0.3%.

Asian markets ended lower. The Shanghai Composite fell 1.2% and Japan's Nikkei dropped 1.1%, while the Hang Seng in Hong Kong plunged 3.2%.

Economy: Housing starts jumped to an annual rate of 717,000 in April, from the revised level of 699,000 in March. Analysts surveyed by Briefing.com had expected a rate of 680,000.

Meanwhile, building permits fell to an annual rate of 715,000 in April, from the revised figure of 769,000 in March. Analysts expected permits to fall to 730,000.

April's reading "supports our view that housing is in recovery mode," said Paul Diggle, property economist at Capital Economics. "We expect housing starts to rise further later this year."

Diggle also added that he doesn't expect the latest escalation in Europe to derail the U.S. housing recovery.

"After all, the fallout for the U.S. banking system from a Greek exit will be relatively limited," he said. "The flow of credit to homebuilders, institutional buyers and households therefore shouldn't become materially tighter, allowing the volume of housing starts to continue rising."

The Fed's reading on the nation's factory output was also better than expected. Industrial production rose 1.1% in April, rising at the fastest pace since December 2010. Economists were forecasting that industrial production rose 0.5% in April after being unchanged the previous month.

The minutes from the April meeting of the Federal Open Market Committee will be issued at 2 p.m. ET.

Companies: Facebook boosted the size of its IPO by 25%, seeking to raise up to $16 billion, according to an SEC filing.

Shares of retailer JC Penney tumbled after it reported a much bigger than expected loss for the most recent quarter. The company also discontinued its dividend.



CANADA STOCKS-TSX rallies on U.S. data, Greek hopes - Reuters

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NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.



MIDEAST STOCKS-Dubai at 15-week low, most Gulf markets retreat - Reuters UK

DUBAI | Wed May 16, 2012 3:49pm BST

DUBAI May 16 (Reuters) - Dubai shares ended at a 15-week low on Wednesday and most other Gulf markets retreated, as slipping oil prices and concerns over a debt crisis in Europe worsening kept investors away.

Fears that a Greek exit from the euro zone will worsen the debt crisis facing other European nations gripped global financial markets, sending shares and other riskier assets lower.

Dubai's index fell 1.4 percent, tracking global stocks, its lowest close since Feb. 2. Shares of all but two companies declined.

Bellwether Emaar Properties dropped 1.7 percent, Arabtec shed 1 percent and Deyaar lost 4.3 percent. Dubai Islamic Bank dropped 2.1 percent.

"Dubai's performance in coming days will clearly depend on the global conditions and volatility in the commodities and international markets," said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.

There was no indication of commitment from investors who are wary of adding to the risk by holding on to shares, he said.

"This is not a major selloff ... it's just the market losing ground due to lack of commitment from international and regional investors," Shurrab added.

Around 61 million shares traded on the Dubai bourse, much lower than the peaks seen during an early-year rally.

Neighbouring Abu Dhabi's bourse also retreated, falling 0.3 percent to its lowest finish since Feb. 13.

Egypt's bourse retreated for a second day as investors took safe positions ahead of a presidential election that is unlikely to clear up an uncertain economic outlook.

The index dropped 1 percent, with all shares of all but two shares declining.

Saudi Arabia's bourse recovered from a 12-week intraday low, but ended slightly lower with petrochemical and banking stocks weighing as investors cut their exposure.

"There's still a lot of selling pressure. The correlation between the crude price fall and the Saudi market is also much higher now," said a trader who declined to be identified.

Bellwether Saudi Basic Industries Corp. dropped 0.5 percent to its lowest close since Feb 19.

Oil prices slid with world shares and the euro on Wednesday as investors fled from riskier assets due to the Greek crisis, while a surprise build in U.S. crude inventories helped send the WTI benchmark to a more than six-month low.

In Qatar, the index lost 0.3 percent. Kuwait's index eased 0.06 percent, with telecoms operator Zain dropping 2.7 percent.

Logistics firm Agility slipped 1.2 percent after it reported an 8.1 percent drop in first-quarter profit.

Meanwhile, Oman's index bucked the trend, climbing 1 percent.

"Oman saw a small bounce-back after a sharp fall," said Kanaga Sundar, head of research at Gulf Baader Capital Markets.

"Local institutions are supporting and that's one of the key reason for the rally today."

WEDNESDAY'S HIGHLIGHTS

DUBAI

* The index dropped 1.4 percent to 1,466 points.

SAUDI ARABIA

* The index slipped 0.06 percent to 7,100 points.

ABU DHABI

* The measure slipped 0.3 to 2,467 points.

EGYPT

* The benchmark dipped 1 percent to 4,955 points.

QATAR

* The index dipped 0.3 percent to 8,468 points.

OMAN

* The measure rose 1 percent to 5,644 points.

KUWAIT

* The index dropped 0.06 percent to 6,438 points.

BAHRAIN

* The benchmark inched up 0.04 percent to 1,156 points. (Editing by Firouz Sedarat)


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