TIAA-CREF Bullet Points

Roger W. Ferguson,CEO of pension fund manager TIAA-CREF,has a number of bullet points on his mind for investors.With regard to financial reforms,there needs to be:
1.More emphasis on risk
2.More emphasis on liquidity
3.Capital,capital,capital
4.Dedication to serving the consumers.
As for retirement,investors should:
1.Start saving earlier,setting aside 10-14% of income for a safe nest egg
2.Have a good,diversified portfolio that reflects their risk appetites,selected from 10-20 options
3.Seek out objective advice from non-commission advisors
4.Realize that with living for 20-30 years in retirement,you will need guaranteed income in the form of an annuity.
TIAA-CREF is regarded as one of the most painstaking money managers active in the market today.CEO Roger W. Ferguson was Vice-Chairman of the Federal Reserve from 1999-2006.

Fed Has Done Well

Roger Ferguson,former Vice Chairman of the Federal Reserve and current CEO of TIAA-Cref,feels that the challenge of the financial crisis is the absence of credit availability and confidence.The financial rescue plan is designed to address that.I do not think there is a magic bullet,Mr.Ferguson said.I give my former colleagues at the Federal Reserve quite high marks.They've been flexible and used a number of tools.We may have several months to go before we can blow the all-clear signal,Mr.Ferguson cautioned.Keep the long view;don't panic;seek objective advice,the chief executive counseled.

Highest 12-month Yields

The two money market funds with the highest 12-month yields through March 31 were Vanguard Prime MMF/Investor(4.83%) and TIAA-Cref Instit MMF/Retail(4.82%).

Red Flags From Factories

As soon as Christmas was over,investors sat down and reviewed economic reports.The first to be scrutinized was the U.S. Commerce Department's Durable Goods report.Orders for these costly items,which are expected to last at least three years,rose just .1%,when they were expected to rise 2.2%.The factories report was down .7%-the second straight monthly decline.Capital goods ex-aircraft fell .4%,while business capital spending dropped .9%.These figures all indicate that businesses are being more cautious in capital spending.They aren't investing as much in the equipment that helps them grow.Next to be reviewed were the Institute for Supply Management's Purchasing Managers surveys.The Manufacturing Index fell to 47.7 in December from 50.8 in November.A number below 50 indicates the sector is contracting.It was the worst reading in five years.New orders plunged to 45.7 from 51.9.Production fell to 47.3 from 51.9.These results show that even strong exports aren't working anymore.Factories are feeling the credit crunch and flattening profits due to higher costs,as domestic businesses cut back on investments or put them off.Indeed,according to Morgan Stanley(MS),global manufacturing fell .8 to51.4-the lowest level in more than four years.Manufacturing was down in Canada,the U.K. and the Euro Zone.Finally,the busy investors pored over the U.S. employment report that was released last Friday.Unemployment rose to 5% in December from 4.7% in November-the steepest increase since the recession of 2001.An uptick of that magnitude is characteristic of recessions.New jobs created totaled a mere 18,000-the least since 2003.Small wonder that the investors saw red flags on the factories,or that many of them looked to bond funds such as Vanguard's Total Bond(BND) and iShares Lehman Brothers TIPS fund(TIP),or the TIAA-Cref Instit MMF/Retail,which offered the highest 12-month yield for a taxable money market fund in 2007,at 5.19%.

Wary Sentiment Wells Up

For the past several days,a wary mood has been expressed by Wall Street analysts.David Greenlaw of Morgan Stanley(MS) notes a powerful flight to the safety of government bonds.Banks are still tightening credit,which will slow the economy over the next several quarters.Peak foreclosure on homes will not occur until mid-2008.Jack Ablin of Harris Private Bank thinks the world has changed now.There is the high price of oil coupled with the weak dollar.The trend has changed.As the Federal Reserve lowers interest rates,the price of commodities spikes.Fifteen of twenty commodities have gained over the past six months.Billionaire Wilbur Ross of W L Ross and Company says we are in the fourth or fifth inning of the crisis.It will be at least a few more years until foreclosures and write-downs end.More credit card and loan delinquencies are being recorded,which suggests that consumers are tapped out.Oppenheimer's Michael Metz feels we are in for a period of very slow growth.This will last for about two years,as we've been in a leveraged economy.The big growth wasn't real.Now we will see a period of 1-1.5% growth.To Joe Battipaglia of Stifel Nicolaus,we are in a contraction from housing,and consumption will be weak for some time.It will take years to work this out.Housing prices are just beginning to fall.The biggest consumer asset is losing its value.Credit is harder to get,so the market is properly going down.We've only dropped 5% in home prices so far.The clock is ticking on 600 billion of mortgages,so he is staying in a lot of cash and some multinational stocks.Cash has been pouring into money market funds,sending them to record levels.Oppenheimer offers its customers the Advantage series of funds.Other stable funds are TIAA-Cref Instit MMF/Retail and Vanguard Tax-Exempt MMF.Procter and Gamble(PG) and Johnson and Johnson(JNJ) are favored multinational stocks.