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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 the Investor on November 15, 2012

US credit rating on the line

| BY Catherine McBreen


US credit rating could be downgraded again in 2013

According to CNBC, the battle over the fiscal cliff is just the first of a series of battles in Washington that could cause more downgrades to the US credit rating.   In interviews with Reuters since the election, all three primary ratings agencies acknowledged that a downgrade was likely if the budget process, the debt ceiling issues or failure to make budget cuts continues.  The agencies charge that the US does not have a sustainable coherent vision for the federal deficit that is over $1 trillion in each of the last four years.  In contrast, the US economy is expected to grow 2.2 percent in 2013 while the Eurozone’s projected growth rate is 0.3 percent.  European markets and Asian markets are both down on Thursday.  The Dow closed down 185 points on Wednesday, ending at 12,570.

Eurozone back in recession in Q3

The seventeen countries that use the euro fell back into recession for the first time in three years, according to Eurostat, who indicates the economy contracted by 0.1 percent.  The Associated Press reports that the Eurozone has dodged recession for the last three years primarily due to the strength of the German economy.  But even Germany is struggling now due to lack of demand from its neighboring countries.  Germany’s economy grew 0.2 percent in the third quarter.  Five Eurozone countries are in recession, including Greece, Spain, Portugal, Italy and Cyprus.  The rest of the Eurozone countries saw a growth rate of 0.1 percent in the third quarter.

FHA may need taxpayer bailout

The Federal Housing Administration is expected to report this week that its reserves are depleted and it may need taxpayer funding for the first time in its 78 year history.  The Wall Street Journal reports that the FHA does not make loans but insures lenders against losses.  It has played a critical role in backing mortgages of borrowers who have put down as little as 3.5 percent. Although it guarantees fewer loans than Fannie Mae or Freddie Mac, the FHA insured 739,000 loans that were more than 90 days overdue as of the end of September.  Because the FHA  has what is known as a “permanent and indefinite” budget, it does not need to ask for money, it just automatically receives the money from the Treasury. This issue could raise the potential issue of what the government’s role should be in the housing market.

Online becomes big for Black Friday retailers

Online shoppers accounted for nearly 40 percent of the $52.4 billion shoppers spent last year on Black Friday weekend compared to 26 percent of sales in 2006. The Wall Street Journal reports that some stores, such as Walmart, will be giving even deeper discounts to customers who download their app and then take the app into the store with them to find special deals.  Best Buy is offering early bird on-line specials to high spending customers who place orders on November 19th.  QVC indicates that its online Black Friday shopping has increased 60 percent over the last four years.

Facebook shares rise as lockup expires

Facebook shares jumped 13 percent on Wednesday, according to the Wall Street Journal, because the threat of a large sell-off by those employees with locked up shares never materialized.  Experts indicate that a pent up demand for the stock remained offsetting the potential sales.  While it was the second busiest trading day for the stock, it closed at $22.36, the highest in a month.  Third quarter earnings showed that its business had become more profitable on mobile devices.  Some experts are willing to believe that the worst is over for Facebook.

Foreclosures slowing

The Associated Press reports that fewer US homes are entering the foreclosure process than a year ago. Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period a year ago.  Banks actually repossessed 559,063 homes at the end of last month, down 19 percent from a year ago. The total estimated number of homes to be foreclosed this year is 650,000, down from 800,000 a year ago. Home sales are running ahead of last year, increasing prices and making it easier for homeowners to refinance.

About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.