Durable Goods Orders Soar on Surge in Aircraft Demand

Bruce Smith/APWorkers assemble a Boeing 787 Dreamliner at Boeing's plant in North Charleston, S.C. WASHINGTON -- Orders for long-lasting U.S. manufactured goods posted their biggest gain on record in July on strong international demand for aircraft, but the underlying trend remained consistent with a steady pace of economic growth. Durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, jumped 22.6 percent last month after an upwardly revised 2.7 percent increase in June, the Commerce Department said on Tuesday. Transportation orders rose a record 74.2 percent as bookings for civilian aircraft more than tripled. Boeing (BA) had said earlier it received a record 324 aircraft orders in July. Many of the orders, including 150 planes by the Dubai-based airline Emirates, were for expensive models, some still under development. It will take at least 10 years for the resulting increase in production to filter through to U.S. gross domestic product. Outside of transportation, demand was decidedly softer. Still, upward revisions to the data for June as well as rising shipments and orders backlogs showed the factory sector remained on firm ground. "This report reinforces the message that manufacturing growth is picking up and is likely to support stronger GDP growth in the second half of the year," said John Ryding, chief economist at RDQ Economics in New York. U.S. stocks traded higher, with the S&P 500 index near an all-time high. Boeing was little changed. Prices for U.S. Treasury debt were up, while the dollar was flat against a basket of currencies. Separately, the Conference Board said consumer confidence hit its highest level in nearly seven years in August. A gauge of households' perceptions of the labor market touched its best level since July 2008. That also boosted views that the economy remains on a solid growth path, even though another report showed a deceleration in house price growth in June. The S&P/Case Shiller's broader house price index rose 6.2 percent in the 12 months to June, the smallest gain since November 2012, compared to a 7 percent rise in May. Strong Orders for Automobiles While the outsized order increase from Boeing dominated the surge in durable goods orders last month, orders for autos increased 10.2 percent after declining 1.3 percent in June. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.5 percent in July. The decline, however, followed an upwardly revised 5.4 percent advance in June. Core capital goods orders were previously reported to have increased 3.3 percent in June. Core capital goods shipments increased 1.5 percent last month. Shipments of core capital goods are used to calculate equipment spending in the government's GDP measurement. "That suggests that capital spending ended the second quarter on solid footing, with that positive momentum carrying over to start the third quarter," said Omair Sharif, senior economist at RBS in Stamford, Connecticut. Other details of the report also favor manufacturing in the months ahead. Unfilled orders for core capital goods increased 1.1 percent last month after rising 1.7 percent in June, showing a steady pipeline of work that will keep the nation's factories busy for a while. Durable goods inventories rose 0.5 percent in July, matching the gain in the prior month, suggesting inventory accumulation could add to third-quarter growth after helping to boost output in the second quarter.

Is Now the Right Time to Sell Your Bonds?

Source: Flickr.

Should you sell your bonds and move your funds into stocks? This is the age-old question (sometimes reversed) when it comes to investing. Companies issue stocks and bonds to raise cash for their operations (or to pay shareholders), yet they are so fundamentally different that investors place them in separate asset class categories.

Investors basically like stocks when economic growth suggests companies will increase their earnings in the future and they can benefit from higher dividends down the road.

Conversely, investors like bonds when an economy is heading into recession. By buying quality bonds -- that is, bonds issued by companies with investment grade-ratings -- investors hope to lock in yields that are likely to drop as the economy contracts and interest rates correspondingly decline.

Whether you should sell your bonds right now depends on how you see the overall economy playing out over the next couple years, as well as on your expectations for interest rates.

Are we heading into a boom?
The latest economic data gives credence to my belief that the U.S. economy is heading into a boom. U.S. gross domestic product rose 4% on an annual basis in the second quarter, unemployment can still improve, interest rates and inflation are low, and home construction is going strong.

Stocks already have done well for investors for the better part of the last five years. While a consolidation can happen at any moment, stocks could have even more potential in the coming years as earnings growth accelerates and interest rates normalize.

The influence of interest rate movements
The interest rate cycle has a profound influence on the price and yields of bonds.

As interest rates increase, bond prices head south. Why?

If interest rates rise investors reduce the price of an existing bond because new bond issues will now have to offer higher yields (or coupons) in order to reflect the higher interest rates prevailing in the economy. In other words: Higher interest rates cause the price of an "old bond" to fall because investors now have higher-yield choices along the bond spectrum, making the old bond less attractive.

The return from bond investments can come from changing prices (that isn't the case if you hold your bonds until maturity, as you will recoup your principal) and from coupon income. In an environment of increasing interest rates, bonds are not preferred investments.

Since interest rates are still near zero and may stay low for a little longer, they really can only head north and, in the process, will exert a lot of pressure on bond investments.

High risk or low risk
If stocks are generally too risky for you, then bonds are probably the right way to go. But they are not risk-free investments. Companies can default on their debt obligations, which is more of an issue in contracting markets when the economy does poorly.

If you select a bond investment due to your risk aversion, make sure the company issuing the bonds has an investment-grade rating, which indicates a comparably low default risk.

Long-term performance record favors stocks, not bonds
Whether you own a few bonds or a portfolio packed with them, know this important fact: Over very long performance measurement periods, stocks have outperformed other asset classes such as bonds or T-Bills.

Consider the chart below, which compares the returns of stocks, bonds, and T-Bills from 1926-2013. It becomes clear that stocks are hard to beat.

Though bonds can surely outperform in certain years or markets, stocks are the preferred choice for long-term investors. The performance record suggests that equity investments should continue to deliver good results, on average, in the coming years.

Source: Martin Capital Advisors, LLP.

The Foolish takeaway
In its most simple form, the question of whether to sell your bonds can be broken down to whether you believe the economy will continue to grow. Given the current state of the economy and its growth potential, equity investments appear to have a better reward opportunity than bonds for long-term investors.

But If you generally don't classify yourself as a risk-taker, and/or rely on recurring income to fund your living expenses, quality bonds are a great bet for you.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Despite risk, most Californians don't have earthquake insurance

Northern California was awakened by a 6.0 earthquake early Sunday morning. NEW YORK (CNNMoney) Despite living in a state known for its active fault lines, most Californians don't buy earthquake insurance.

The 6.1 magnitude earthquake that rattled Northern California early Sunday morning shocked a populated area, damaging buildings, sparking fires, rupturing utility lines and injuring at least 176 people.

Experts say it is too early to fully put a dollar figure on the damage, and the U.S. Geological Survey said the earthquake's economic impact is likely more than $1 billion.

Only about one in ten Californians have insurance to cover the damage to their homes and property, according to the California Earthquake Authority. It estimated the numbers are even lower in some of the areas that were affected Sunday, such as Napa, where as few as 6% have coverage.

Surveys show the percentage of homeowners who have earthquake insurance is declining across the country.

The Insurance Information Institute in May found that 10% of homeowners in the western United States have coverage, down from 22% a year ago. Nationwide, just 7% carry coverage, a drop of 3 percentage points in the last year.

People with higher incomes are more likely to buy coverage than those who make less, the surveys reported.

California does not require homeowners, renters or building owners to buy such insurance, and earthquake damage is usually excluded from other homeowner insurance policies.

  The mansion that measured earthquakes

The cost of coverage varies, including by location and what the home is made of, but on average it costs California homeowners about $860 per year.

More people would carry earthquake coverage if not for misperceptions about what policies do and do not cover, said California Earthquake Authority CEO Glenn Pomeroy. The length of time between major earthquakes may also "lull people into a false sense of security." His group is a nonprofit insurer created by the state legislature after the 1994 Northridge earthquake, ranked the most expensive in U.S. history.

Earthquake insurance generally covers the home itself and personal propert! y inside it. Some plans offer cash for emergency repairs and fund temporary living arrangements if a home is badly damaged or destroyed.

Those who do have coverage "should call their agent immediately and get the process going," Pomeroy said.

Have you decided against buying earthquake insurance? Please tell us your story in an email to gregory.wallace@cnn.com.

3 Stocks Under $10 Moving Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Read More: Warren Buffett's Top 10 Dividend Stocks

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Read More: 10 Stocks George Soros Is Buying

Paragon Shipping

Paragon Shipping (PRGN) provides shipping transportation services worldwide. This stock closed up 2.6% to $5.43 a share in Thursday's trading session.

Thursday's Range: $5.17-$5.49

52-Week Range: $4.52-$9.40

Thursday's Volume: 213,000

Three-Month Average Volume: 139,217

From a technical perspective, PRGN jumped higher here and moved back above its 50-day moving average of $5.35 with above-average volume. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $4.57 to its recent high of $5.50. During that uptrend, shares of PRGN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PRGN within range of triggering a near-term breakout trade. That trade will hit if PRGN manages to take out some near-term overhead resistance at $5.50 with high volume.

Traders should now look for long-biased trades in PRGN as long as it's trending above Thursday's intraday low of $5.17 or above more support at $5 and then once it sustains a move or close above $5.50 with volume that hits near or above 139,217 shares. If that breakout materializes soon, then PRGN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $6.05 to $6.14, or even $6.40 to $7.

Read More: 7 Stocks Warren Buffett Is Selling in 2014

Quiksilver

Quiksilver (ZQK) designs, develops, markets and distributes branded apparel, footwear, accessories and related products primarily for men, women and children. This stock closed up 5.7% to $3.29 a share in Thursday's trading session.

Thursday's Range: $3.11-$3.29

52-Week Range: $2.77-$9.29

Thursday's Volume: 1.74 million

Three-Month Average Volume: 4.01 million

From a technical perspective, ZQK ripped sharply higher here right above some near-term support at $2.96 with lighter-than-average volume. This strong move to the upside on Thursday is quickly pushing shares of ZQK within range of triggering a near-term breakout trade. That trade will hit if ZQK manages to take out some near-term overhead resistance levels at $3.30 to its 50-day moving average of $3.35 and then above more resistance at $3.46 with high volume.

Traders should now look for long-biased trades in ZQK as long as it's trending above Thursday's intraday low of $3.11 or above more near-term support at $2.96 and then once it sustains a move or close above those breakout levels with volume that hits near or above 4.01 million shares. If that breakout materializes soon, then ZQK will set up to re-test or possibly take out its next major overhead resistance levels at $3.71 to $3.91, or even $4.32. Any high-volume move above $4.32 will then give ZQK a chance to re-fill some of its previous gap-down-day zone from June that started near $6.

Read More: 10 Stocks Carl Icahn Loves in 2014

Arotech

Arotech (ARTX), together with its subsidiaries, provides defense and security products and services. This stock closed up 3.4% to $3.87 a share in Thursday's trading session.

Thursday's Range: $3.63-$3.95

52-Week Range: $1.63-$6.61

Thursday's Volume: 882,000

Three-Month Average Volume: 635,659

From a technical perspective, ARTX bounced notably higher here right off its 200-day moving average of $3.61 with above-average volume. This sharp move to the upside on Thursday is quickly pushing shares of ARTX within range of triggering a major breakout trade. That trade will hit if ARTX manages to take out its 50-day moving average of $3.94 to some more key overhead resistance at $4.10 with high volume.

Traders should now look for long-biased trades in ARTX as long as it's trending above its 200-day at $3.61 or above more near-term support levels at $3.45 to $3.25 and then once it sustains a move or close above those breakout levels with volume that hits near or above 635,659 shares. If that breakout triggers soon, then ARTX will set up to re-test or possibly take out its next major overhead resistance levels at $4.73 to $5, or even $5.23.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Social Security Q&A: Would Switching to Non-Covered Employment Exempt Me from the Earnings Test?

Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.

I've been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR's website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company's site, www.maximizemysocialsecurity.com, and click More Press below the WSJ quote.

Today's question is about whether moving from covered to non-covered employment after 62 but before FRA would mean that the earnings test (ET) would not be applied to earnings from the new job. It also points to the adjustment of the reduction factor (ARF) that will counteract reductions to your retirement benefits that you didn't receive because of the ET.

Question: I am 62 years old and have worked and contributed to Social Security for over 35 years. I have applied for employment at a state university, whose website tells me that it does not participate in Social Security. If I accept employment with them and opt to start collecting my Social Security benefits when I turn 63, will the income limit of $15,000 still apply? Since I would no longer be contributing to Social Security, my benefits would not increase beyond what was in my fund when I stopped working for my previous employer in October, right?

Answer: The earnings test would still apply even though you are working in non-covered employment. The Social Security Act of 1935 made retirement a criterion for receiving benefits. The country was, of course, in the middle of its Great Depression and the goal of this aspect of the legislation was to get people to retire and, thereby, free up jobs for the unemployed. Over time, the government realized that the economy doesn't produce a fixed number of jobs and getting people to retire early wasn't a smart move, either for the people involved or for the economy.

Today's earnings test applies only through full retirement age, and any months of retirement benefits you lose due to the earnings test prior to full retirement age are compensated by providing you larger benefits starting at full retirement age. This occurs through what's called the "adjustment of the reduction factor." However, not all benefits received based on your earnings record will be readjusted at full retirement age to make up for their being lost due to the earnings test. Specifically, child and spousal benefits, while being subject to their earnings test, will not be incremented at full retirement.

Ferguson's economy: Tough times, but with signs of progress

The headquarters of Emerson Electric, the Fortune 500 company based in Ferguson, Mo. NEW YORK (CNNMoney) Economic conditions in Ferguson, Missouri, are far more complex than the scenes of violence over the killing of a black teenager might imply.

Things are tough for many residents of the city just outside St. Louis' Lambert International Airport. But it's also home to the bucolic campus headquarters of a Fortune 500 company: Emerson Electric (EMR).

Despite the economic problems, Ferguson's housing stock is in relatively good shape. The vacancy rate is modest, in line with the rest of Missouri and far lower than many troubled inner cities.

There has been recent investment and renovation in the business district, with new restaurants, retail and other buildings developed in recent years, according to Rebecca Zoll, CEO of North County Inc., the regional economic development association.

"Ferguson's downtown area has actually become a model for redevelopment in older downtowns," she said.

"I think the entire community leadership is concerned. Our hearts are broken," Zoll added. "But I think that once the community begins to heal, we have confidence that the customer base will return."

Many Ferguson residents live in poverty -- about one in five, according to the most recent government estimates from two years ago. The median household income of $37,000 was about $10,000 less than Missouri as a whole.

African-Americans make up two-thirds of the population. And, on average, they're much worse off economically, with a 25% poverty rate that's more than twice that of whites. Their median income is only about 60% of their white counterparts.

The mayor, James Knowles, lives in a home he bought out of foreclosure and is renovating. But the foreclosure rate has plunged even faster than the rest of the nation since the worst of the housing crisis six years ago.

In 2008, the rate was about 1 in every 118 homes in Ferguson, according to RealtyTrac, which follows foreclosures. That was about four times the national rate. Today, one in every 1,283 homes is in foreclosure, close to the national average.

  Why Anonymous released Ferguson police name

E! merson, with more than 1,000 employees at its headquarters in the south part of town, is one of the two largest employers in the city, The other is a campus of St. Louis Community College.

But there are also many growing employers nearby due to the close proximity to the airport. Drug benefits provider Express Scripts' (ESRX) headquarters and fulfillment center are just outside of town, and the company is adding another building to its complex. Boeing (BA) also does some manufacturing near the airport.

How a Market Correction Could Turn Into a Market Meltdown

Instead of the healthy correction that many market watchers have been expecting, several hard-to-see cracks in the market infrastructure could instead give us a full-blown stock market crash in 2014.

A 317-point drop in the Dow Jones Industrial Average July 31 - as well as a 140-point drop Tuesday and 75-point fall yesterday - seemed to confirm that we're on the verge of, if not in the middle of, a market correction.

Money Morning Capital Wave Strategist Shah Gilani is not surprised, as he has been predicting a 20% stock market correction for weeks.

To Gilani, the signs were clear to see.

"Everybody sees the divergence between the market and the economy - the market was trading near its highs, while the economy hasn't been doing nearly as well. That needs to correct at some point," he said.

Among the reasons the markets have been out of synch with the economy are the Federal Reserve-engineered low interest rates that have kept borrowing incredibly cheap for such activities as paying out dividends and buying back stock.

The stock buybacks result in fewer shares, and have given the illusion that companies are delivering more earnings per share. And, as artificial as it may be, higher EPS numbers have played a big role in driving stock prices higher, Gilani said.

And as the Fed gradually has let the air out of the balloon of its bond-buying program (officially known as quantitative easing, or QE) - another factor that has propped up the markets - the psychology of an increasingly jittery market has started to shift.

"Any kind of existential threat to the market could trigger a large round of profit-taking," Gilani warned. He said the Fed lacks the tools to act as market savior now that it has committed to ending QE.

But that's not even the biggest risk lurking in the markets...

Gilani, a former hedge fund manager who understands the mechanics of how Wall Street works, said there are problems with the structure of the markets themselves that could escalate an ordinary correction into a bigger market crash...

How a Stock Market Correction Becomes a Stock Market Crash

"Fundamentally, the markets are not sound because of the mechanisms that the markets are built upon these days," Gilani said. "There are so many moving parts. And any number of these parts could end up seizing up."

For example, he pointed to the parent company of Portugal's Banco Espirito Santo SA, which touched off fresh fears about the health of the banking system after it missed some short-term debt payments.

"This is Portugal's second-biggest lender," Gilani said. "This happened even after all the stress tests. Where were the regulators? How could no one see this coming?"

He finds the episode disturbing because it comes so long after a 2008 financial crisis that was supposed to be in the rear view mirror, and because it may not be an isolated case.

"It could happen here," Gilani said. "What is being hidden from us in terms of the health of our banks?"

Then there's HFT - high-frequency trading, an issue that Gilani has been speaking out against for years.

High-frequency traders use computers to send out thousands of buy and sell orders each second to "feel out" the market and then execute only the fraction of those trades that will earn a profit for the HFT operator.

Gilani worries that the false liquidity the HFT operators provide would dry up in a major market correction and greatly amplify the plunge.

He recalled the "flash crash" of 2010 when the HFT operators shut down their computers when they sensed trouble, draining the markets of most of its liquidity and sending the Dow Jones Industrial Average down 1,000 points within minutes.

He's also worried about something that one would not believe all that troublesome: Exchange-traded funds (ETFs).

How ETFs Could Help Fuel a Stock Market Crash

"ETFs play a much larger role in the market than people realize," Gilani said, and that they have a built-in risk few consider.

He worries that in a stock market crash, the way ETFs are structured could add more fuel to the selling momentum. That's because the ETF price at any given time doesn't always match the precise value of the securities it holds, unlike a mutual fund, which recalculates its net asset value (NAV) at the end of each trading day.

This can become a problem in a stock market crash as investors start selling large numbers of shares of the ETF, Gilani said. Since the amount of securities that an ETF holds needs to correlate to its shares - it's not a stock, there's no fixed float - the ETF must start selling shares of the underlying securities.

That feeds the overall market sell-off, which drives more selling of the ETF, amplifying the stock market crash.

Add in what the HFT operators will most likely do in this scenario - pull the plug on their computers and suck out most of the market liquidity - and it's easy to see where real panic could set in.

"There are ghosts in the machine," Gilani said. "We've already caught glimpses of them."

So what does this mean for investors?

What Investors Should Do Now

While Gilani says a correction is coming soon and that the market has structural flaws that could make it worse, he knows that the long-term outlook is still strong as we're in a "generational bull market."

While preparing for any kind of stock market crash is a challenge, Gilani says dumping everything is a bad idea.

"I'm a strong believer that you have to be in it to win it," he said.

The most important thing for investors to do, Gilani said, is to always have a plan: "You need to know when you're going to get out, or add more if stocks go down."

As for specifics, he recommends big cap, high-dividend stocks.

"They'll hold up in a big sell-off, and will go back up when the market recovers," he said. "And in the meantime, you'll get the dividend income."

For those comfortable with options, Gilani also recommends buying puts, which he likens to buying insurance.

One policy endorsed by all Money Morning experts is the use of trailing stops, which limit losses. Even then investors need to keep an eye on the market so they can get back in at bargain prices.

"Stocks need to clean out some of the dead brush," Gilani said. "But you need to stay in because after that there's nowhere to go but up."

Are you ready for a stock market crash, or sharp correction of 20%? What are you doing to prepare? Let us know on Twitter @moneymorning or Facebook.

UP NEXT: If you listen to the central bankers of the world, deflation, not inflation, is the worst fate that can befall a currency. They whip up false fears of deflation to defend their inflation-feeding policies while ignoring critical lessons from the past. But these lies could trigger another market collapse...

Target-Date Funds Boost Assets But Underperform in Q2: Morningstar

The average target-date fund posted returns of close to 4% return in the second quarter of 2014, according to Morningstar. The funds were buoyed by U.S. large-cap, emerging market and real estate equities, the research firm says in a report released Wednesday.

“During the second quarter of 2014, the average target-date fund gained 3.8%, falling in between the returns of the S&P 500 and the Barclays U.S. Aggregate Bond Indexes,” explained Jeremy Stempien and Cindy Galiano in the report, which was compiled by Ibbotson Associates and tracks 451 funds from 50 fund families.

In the quarter, emerging market equities rose 6.7%. Real estate equities improved 7.1%

For the 12-month period, the target-date funds had average returns in the high-teens territory; these results were tied to strong equity gains in the period. The average return was 17% compared to 24.6% for the S&P 500.

The major U.S. equity categories have improved 22.5% and up over the past 12 months, while emerging market equities rose 14.7%. Large-cap growth equities, for instance, jumped 26.9%. During the period, high-yield bonds increased 11.7%.

Still, target-date funds continue to slightly underperform vs. their Morningstar Moderate Index counterparts; these indexes, though, have the advantage of not incurring expenses and have slightly above-average allocations to emerging markets.

“The higher the equity-to-fixed income ratio a target-date family held, the better it performed over the quarter,” the report authors noted, adding that fund families favoring large-cap and value names performed better than their peers. “On the fixed income side, fund families with higher allocations to high-yield bonds and TIPS performed better than those with a more basic allocation of government and securitized debt.”

The Morningstar/Ibbotson analysts also highlight two key industry trends.

First, target-date assets are continuing to shift to passively managed investments, “as both an underlying holding within a portfolio and as an overall investment approach. Actively managed strategies comprised almost 90% of target-date mutual fund assets in 2005, but they now only hold a 67% share.

As for fees and expenses, target-date funds’ average asset-weighted expense fell 7 basis points, to 0.84% from 0.91% from 2012 to 2013. In 2010, the average was 1.02%. 

Fund Flows

Total assets in retail target-date topped $690 billion at the end of June, a 27% increase from a year ago and a 6.5% from the prior quarter.

Estimated target-date net fund flows during the second quarter totaled nearly $15 billion, above the five-year historical quarterly average of $12 billion, according to Morningstar.

Vanguard, T. Rowe Price and JPMorgan had the largest net inflows during the quarter and captured 70% of inflows. Other fund firms that had impressive growth in assets during the quarter include MassMutual, PIMCO and American Funds; net inflows into target-date funds represented 10%–15% of their ending net assets.

In the second quarter, the target-date industry experienced several changes. Hartford liquidated the Hartford Target Retirement series, while Legg Mason acquired QS Investors and changed its target-date series to QS Legg Mason Target Retirement funds.

“Overall, target-date funds that had higher exposure to domestic equities and bonds with lower credit quality were rewarded over the last year,” said Stempien and Galiano. “Diversification into non-U.S. equities and alternative asset classes generated significant headwinds for many target-date funds.”

A Few Reasons To Consider Tyson Foods for the Long Run

The world's second-largest meat processor, Tyson Foods (TSN), released impressive results for the third quarter. The company reported fantastic growth in its top line and its results came in line with expectations. Greater demand for chicken and pork products were the main growth drivers for the company. There are many key points Tyson Foods is counting on, which can take its growth to a new level. With rising demand for meat products and the proposed selling of Latin American chicken operations, Tyson Foods is expected to get better in the future.

Doing well

Tyson is seeing a strong fiscal year so far. Its quarterly revenue improved by 11% to $9.63 billion. This topped analysts' estimates. Consensus had been modeling revenue of $9.5 billion. Chicken and pork products were the best sellers for Tyson, and they resulted in a solid improvement in its earnings. The earnings of the company grew by 9%, reporting EPS of $0.75 per share, which was more than $0.69 per share from last year's same quarter.

Tyson Foods, having delivered a commendable performance in the third quarter, is all set to accelerate to new highs. Management is optimistic about its growth prospects. Tyson is focusing on important growth drivers, and is planning to sell some of its less preferred units such as the Latin American chicken operations. Though it is performing well, Tyson thinks that company can even perform better without it so it plans to sell this operation to JBS.

Besides, Tyson is also focusing on its home market. It is selling off its international operations and plans to use the money to pay off the acquisition charges of Jimmy Dean sausage maker Hillshire Brands Co.

Making the business efficient

Further, it has confirmed the shutdown of three of its plants. With this, Tyson Foods is aiming at restructuring its utilities and becoming more focused about its operational excellence. However, this shutdown of the plants will result in $49 million as impairment charges, but the company isn't worried about this as the shutdown will ultimately improve its operational performance. This will lead to better revenue in the future. Moreover, in the long run, these initiatives are expected to drive better sales, as it will allow Tyson to shift its production units to better capacities.

Also, under its expansion moves, the acquisition of Hillshire is expected to help Tyson in expanding its area of operation, adding more customers to it. Also, with such a combination, management thinks that Tyson will reap benefits in terms of improvements in operations, purchasing, and distribution. In addition, management has also taken a strict decision to maintain a cost-efficient structure to improve its profit margins.

Beyond the weakness

Tyson did see some temporary disruptions as a result of a fire which broke out at one of its fully cooked processing plants. But now, the plant is back to its operations with new equipment installed. The company did face some unexpected loss as a result, and is expecting this event to impact its fourth quarter results by a small margin. But, Tyson sees better demand for beef and pork, which will lead to an improved performance going forward.

Seeing the growth momentum, management has come up with a strong guidance for fiscal 2015. Tyson is expecting overall growth to improve 10%. On the revenue front, the company is expecting its top line to improve by 11%.

Conclusion

Looking at the financials, Tyson Foods looks impressive and reasonable with a decent trailing P/E of 15.04. Management is also expecting synergies to come its way with the acquisition of Tyson and Hillshire by 2015, which will help the company grow. Taking a look at its earnings growth for the next five years, an impressive growth in Tyson's earnings by a CAGR of 19% is visible. So Tyson Foods is a good bet for the long run.

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5 Stocks Insiders Love Right Now

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons. 


They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share. 


But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

Read More: Warren Buffett's Top 10 Dividend Stocks

The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, it's institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity but twice as important to make sure the trend of the stock coincides with the insider buying.


Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look five stocks whose insiders have been doing some big buying per SEC filings.

Read More: 8 Stocks George Soros Is Buying

eHealth

One insurance broker that insiders are loading up on here is eHealth (EHTH), which provides online health insurance services for individuals, families, and small businesses in the U.S. Insiders are buying this stock into major weakness, since shares are down 53% so far in 2014.

eHealth has a market cap of $412 million and an enterprise value of $339 million. This stock trades at a fair valuation, with a forward price-to-earnings of 58.68. Its estimated growth rate for this year is -22.2%, and for next year it's pegged at 428.6%. This is a cash-rich company, since the total cash position on its balance sheet is $70.38 million and its total debt is zero.

A beneficial owner just bought 329,540 shares, or about $6.55 million worth of stock, at $19.04 to $20.99 per share.

From a technical perspective, EHTH is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply lower from $31.92 to $18.70 a share with heavy downside volume. Following that gap, shares of EHTH have started to rebound higher off that $18.70 low and it's quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

If you're bullish on EHTH, then I would look for long-biased trades as long as this stock is trending above some near-term support at $20 or above that recent low of $18.70 and then once it breaks out above some key overhead resistance levels at $22.50 to its gap-down-day high of $23.50 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 427,520 shares. If that breakout materializes soon, then EHTH will set up to re-fill some of its previous gap-down-day zone that started at $31.92 a share.

Read More: These 5 Hated Stocks Could Pop When the S&P Drops

PNC Financial Services Group

Another banking player that insiders are active in here is PNC Financial Services Group (PNC), which operates as a diversified financial services company in the U.S. Insiders are buying this stock into modest strength, since shares are up around 5% so far in 2014.

PNC Financial Services Group has a market cap of $43 billion and an enterprise value of $67 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 10.9 and a forward price-to-earnings of 11. Its estimated growth rate for this year is -3.7%, and for next year it's pegged at 4.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $25.52 billion and its total debt is just $49.07 billion. This stock currently sports a dividend yield of 2.1%.

A director just bought 25,000 shares, or about $2.04 million worth of stock, at $81.86 per share.

From a technical perspective, PNC is currently trending below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares moving lower from its high of $89.51 to its recent low of $80.43 a share. During that move, shares of PNC have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of PNC have now started to bounce off its recent low of $80.43 a share.

If you're in the bull camp on PNC, then I would look for long-biased trades as long as this stock is trending above that recent low $80.43 and then once it takes out above some near-term overhead resistance at $83 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.99 million shares. If that move gets underway soon, then PNC will set up to re-test or possibly take out its next major overhead resistance levels at $84 to $85 a share, or even its 50-day moving average of $86.13 a share. Any high-volume moves above its 50-day will then give PNC a chance to tag $87 to $88 a share.

Read More: 5 Rocket Stocks to Buy for Correction Gains

Mallinckrodt

One health care player that insiders are snapping up a huge amount of stock in here is Mallinckrodt (MNK), which manufactures, markets and distributes branded and generic specialty pharmaceuticals, active pharmaceutical ingredients and diagnostic imaging agents worldwide. Insiders are buying this stock into modest weakness, since shares are down by 6.2% over the last three months.

Mallinckrodt has a market cap of $4 billion and an enterprise value of $6 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 63 and a forward price-to-earnings of 11. Its estimated growth rate for this year is 11.4%, and for next year it's pegged at 75.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $344.90 million and its total debt is $2.22 billion.

A beneficial owner just bought 275,000 shares, or about $19.13 million worth of stock, at $69.45 per share.

From a technical perspective, MNK is currently trending below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares sliding lower from its high of $83.20 to its recent low of $68.42 a share. During that downtrend, shares of MNK have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on MNK, then I would look for long-biased trades as long as this stock is trending above some near-term support at $68.42 and then once it breaks out above some near-term overhead resistance at $71.19 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 1.65 million shares. If that breakout gets underway soon, then MNK will set up to re-test or possibly take out its next major overhead resistance levels at $75 to its 50-day moving average of $75.79, or even $77.50 a share.

Read More: 4 Stocks Warren Buffett Is Selling in 2014

Intevac

One technology player that insiders are jumping into here in a big way is Intevac (IVAC), which provides process manufacturing equipment solutions to the hard disk drive and photovoltaic industries. Insiders are buying this stock into weakness, since shares are down by 12% so far in 2014.

Intevac has a market cap of $153 million and an enterprise value of $96 million. This stock trades at a cheap valuation, with a price-to-sales of 2.17 and a price-to-book of 1.28. Its estimated growth rate for this year is 33.3%, and for next year it's pegged at 48.1%. This is a cash-rich company, since the total cash position on its balance sheet is $58.23 million and its total debt is zero.

A director just bought 486,928 shares, or about $3.08 million worth of stock, at $6.30 per share.

From a technical perspective, IVAC is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last month, with shares moving lower from its high of $8.75 to its recent low of $5.98 a share. During that move, shares of IVAC have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of IVAC have now started to rebound off that $5.98 low and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on IVAC, then I would look for long-biased trades as long as this stock is trending above that recent low of $5.98 and then once it breaks out above some near-term overhead resistance at $6.69 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 204,202 shares. If that breakout triggers soon, then IVAC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $7.43 to its 200-day moving average at $7.48 a share.

Read More: 5 Big Stocks to Buy for Tactical Gains

Armstrong World Industries

One final stock with some monster insider buying is Armstrong World Industries (AWI), which designs, manufactures, and sells flooring products and ceiling systems worldwide. Insiders are buying this stock into modest strength, since shares are up by 6% over the last three months.

Armstrong World Industries has a market cap of $3 billion and an enterprise value of $3.9 billion. This stock trades at a reasonable valuation, with a trialing price-to-earnings of 29 and a forward price-to-earnings of 18. Its estimated growth rate for this year is 11.8%, and for next year it's pegged at 32.9%.This is not a cash-rich company, since the total cash position on its balance sheet is $152.60 million and its total debt is $1.13 billion.

A beneficial owner just bought 1 million shares, or about $49.10 million worth of stock, at $48.73 per share.

From a technical perspective, AWI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $48.35 to its intraday high of $55.49 a share. During that move, shares of AWI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AWI within range of triggering a near-term breakout trade.

If you're bullish on AWI, then look for long-biased trades as long as this stock is trending above some near-term support levels at $53 or above $52 and then once it breaks out above some near-term overhead resistance at $55.81 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.08 million shares. If that breakout kicks off soon, then AWI will set up to re-test or possibly take out its next major overhead resistance levels at $58 to $58.28 a share. Any high-volume move above those levels will then give AWI a chance to tag its 52-week high at $61.90 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Stocks Under $10 Moving Higher

>>3 Stocks Rising on Big Volume

>>5 Tech Trades Ready to Move

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

7 Costly Myths About Banking, Credit Cards Debunked

Banks and credit card companies find clever ways to make money. Fees are hidden. Rules are complex. And people often ask me, "can they really do that?" I made a list of the seven most common myths that I regularly hear from people. Here are the protections you think you have, and what you can do to make sure you really are safe. Yes they can. The CARD Act did get rid of the most outrageous abuse: they can no longer increase the interest rate on existing balances unless you go 60 days past due. However, you need to remember that: Most credit card interest rates are variable and are linked to the prime rate. Your high rate will only go higher when interest rates increase. Based upon risk, your credit card company can still increase your interest rate on all future purchases. Your existing balances are protected, but future purchases would be at the higher rate. And determining risk is not limited to your behavior on your existing card. If you miss a payment with another lender, that could lead to an increase on all of your credit cards. After 12 months, they can increase your rate for almost any reason. But the increased rate only applies to future purchases, and they need to give you 45 days notice.

Credit cards are incredibly expensive ways to borrow money. If you use a card, your goal should be to pay off the balance in full every month. Then, the interest rate doesn't matter. Bottom line: If you do have debt, you should never be paying the purchase APR. Look for a balance transfer, or get a personal loan to cut your interest rate. And take a long hard look at your spending to put more money towards paying off that debt.  

1. My credit card company cannot raise my interest rate

No, they are not. There is a big difference between a 0% balance transfer (where the interest is waived during the promotional period, discussed above) and 0% purchase financing offered at many stores (where the interest is only deferred). I regularly encourage people to use balance transfers to help them pay off their debt faster. With a balance transfer, interest is switched off or reduced during the promotional period. Once the promotional period is over, interest starts to accrue on a go-forward basis. This can take years off your debt repayment. But stores offer 0 percent financing at the checkout. With a lot of these programs, interest is charged from the purchase date if you do not pay off the balance in full during the promotional period. So, if you have a 12-month 0 percent offer -– and do not pay off the balance in 12 months -– then in month 13 you will be charged a full 13 months of interest. They retroactively charge interest, and it will be like you never had a 0 percent offer at all.  

This is a common practice. Online, Apple (AAPL) does this, via their partnership with Barclaycard (BCS). And stores like Walmart (WMT) do the same thing. Bottom line: I don't like deferred interest deals. Most people do not understand the difference between waived and deferred interest, and this practice feels deceptive. If you take one of these offers, make sure you pay off the balance in full before the promotion expires.  

2. All 0% offers are the same Not always. Credit card companies have different rates for different types of transactions. The interest rate charged on a purchase (high) is different from a balance transfer APR (low). Before the CARD Act, banks would apply your payment to the lowest APR balance first. Imagine you have a $1,000 balance. $500 is at 0 percent (balance transfer), and the other $500 is at 18 percent (purchase). If you make a $100 payment, banks would apply that to the balance transfer. That way, they reduce the balance transfer (at 0 percent) to $400, while protecting the $500 purchase balance (at 18 percent). The CARD Act changed that. Banks now need to apply payments to the highest interest rate first. But this only applies to payments higher than the minimum due. If you only pay the minimum due every month, your payment will still likely be applied to the lowest interest rate balance first. Bottom line: You should never spend and have a balance transfer on the same credit card. Banks can only "trap" balances when you have multiple balance types on one card. 3. My credit card payment always goes to the highest interest rate first Not exactly true. The CARD Act has stopped the handout of T-shirts on the steps of the school libraries, but they can still give sign-on bonuses. And they advertise on campus. For example, Citibank (C) has a "Thank You Preferred" card for college students. If you spend $500 in the first three months, you get 2,500 thank you points as a bonus. That is $25 of value.