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Asset Preservation Advisors


State: GA

APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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News Analysis for May 2, 2011

Americans rejoice as news of Osama Bin Laden's death brings both citizens and journalists to tears.



Oil prices have dropped, gold prices have dropped, the dollar has strengthened and markets are up across Asia and Europe based on the news about Bin Laden, according to the Financial Times.


Commodity prices are falling in some cases


The Wall Street Journal reports that cotton has fallen 17% since its peak in March and sugar has also fallen 34% from its peak in February.  Other commodities that are falling include lead, zinc and copper.  Earlier economists were concerned that rising prices would lead to inflation risk.  There are still some important commodities, however, that continue to rise, including oil, gold and silver.


Another hot commodity is wheat.  Many large U.S. companies such as Sara Lee, Kellogg and Kraft will be accompanying "crop measurers" this week to predict the Kansas wheat harvest.  Kansas supplies 16% of the nation's wheat.  It is feared that dry conditions will impact the harvest this year in Kansas as well as other states,  The Wall Street Journal indicates that the major companies relying upon wheat need to change their own economic forecasts based upon the outcome of the crop measurements to be completed this week.


Chinese growth moderating


Bloombergindicates that Chinese economic growth may moderate in the near future based upon a decline in the manufacturing index released in April.  This declines supports the initiatives the Chinese government is incorporating in order to slow growth and reduce inflation.


Hybrid debt invades Asia


The use of hybrid securities are gaining in popularity in Asia, excluding Japan.  This year $5.01 billion of hybrid debt has been issued, with more than half of that amount issued in the last month.  These securities allow companies to lock in low interest rates on their debt yet the equity part of the security can boost capital on the corporate balance sheet.  These securities also do not dilute shareholder interest which is important to Asian companies which are generally family owned.


Small banks want to protect Fannie Mae/Freddie Mac


Nine out of ten U.S. mortgages are currently guaranteed by federal agencies or by Fannie Mae or Freddie Mac, the behemoths that have received $134 billion from the U.S. taxpayers in the last two years.  Both parties in Congress hope to eliminate Fannie Mae and Freddie Mac, but small banks claim this will force most mortgages to be taken from the top four banks.  The top four banks, Wells Fargo, Bank of America, JP Morgan Chase and Citibank, provided 60% of the mortgages in 2010, up from 35% in 2007. Small banks claim that their ability to sell their loans to only large banks will inordinately increase their costs.



Baby Boomers aging strong


In an AP LifeGoesStrongPoll reported in USA Todaysixty one percent of Baby Boomers say age is not an issue for them in the workplace.  Twenty-five percent believe it is an asset.  Seventy-one percent are satisfied with their jobs.