The Week That Was – 3rd Week July

•  Monday markets opened acting cranky ala Paul and didn’t get chipper until the close, up 56 points on the Dow. IBM missed guidance after the close and experts predicted another day of grumpiness for the markets on Tuesday.
• Hello, gold! Lately the shiny stuff has fallen out of favor with talk of deflation. It now looks like there may be another trade coming as technical's suggest lower prices a-coming.
• Success makes some people believe they’re omnipotent.   
• Holy Moley, did you see the markets Tuesday? From the depths of despair the markets pulled itself up by its bootstraps as investors realized that this was earnings season and the numbers, while not stellar, were still very good. From almost triple digits down at the open because Big Blue didn’t make numbers the day before the markets pulled a U -turn and ended up 75 points.After the bell investors were treated to huge numbers from Apple and Yahoo. U.S. Steel and A.K. Steel Holdings both gained 7.5% and 6.7% respectively. Materials are tied to economic growth…hint…hint.
• Housing stumbles. The administration cancels incentives at precisely the worst possible time but they seem to have gotten very good at exactly that sort of thing. One million mortgage defaults while inventories climb. Worries about job security cancel some potential buyers thoughts of buying.
• AARP is about to liquidate its mutual funds. Yes, the old poop network that makes money recommending a plethora of services and products  is finally tossing in the towel trying to make a go in the fund business. Fund investors will get screwed on taxes for sure since AARP simply decided to close the doors and shareholders either can take a check or find another fund family to have assets sent. Look for a possible tax hit this year. Just one more reason I’m not a member.
• The Mistress of Disaster, Jamie Gorelick pops up representing….BP! Wherever there is a mega-crisis you are almost assured that Gorelick either has been there or is in the vicinity. Her talents at disasters knows no equals. Gorelick was Deputy Attorney General who drafted the separation or wall to prevent foreign intelligence and criminal investigative communities from collaborating leading to the 9/11 failure. After that fiasco in 2002 she was at Fannie Mae, getting paid millions, where she answered Businessweek’s inquiry into the health of the agency as, ‘ Fannie Mae is one of a handful of top-quality institutions.’ And, you know how well that turned out. It’s estimated she’s been at the center of two one-trillion dollar disaster events and now BP.
• Hey. you, start spending some of that dough! Experts contend that getting our financial houses in order is sending the country right down the toilet. The United States is a debtor nation and works well spending it like we got it. Retail spending accounts for one-third of the GDP. Got it?
• Wednesday, ahh, what a day. Markets percolated right from get with EBay profits up 25%, Starbucks chimed in with +37% profits, Netflix set a record, Wells Fargo profits up 12% and Morgan Stanley was up 13 fold over the year before. Thirteen fold! Then Dr. Doom Ben Bernanke started talking and before the day was over traders were slitting their wrists, hanging themselves from the nearest balconies and investors were sipping arsenic laced wine coolers. Depressed wasn’t the word. Anytime anyone in this administration opens their mouth it signals an end to anything good. It was criminal and Bernanke did not say anything we didn’t know but he killed a rally of the first order and sucked all the good news right out of the investor’s souls. The Dow fell 109 points.
• According to WSJ the interest rate futures markets now virtually eliminated any chance of a quarter point rate hike in March, 2011. It’s a bet that rates may stay as is until next summer.
• The first casualty of the new financial reform law: FoMoCo pulled a recent bond offer off the market because rating firms will not allow their ratings be published for fear of being sued. (This is currently being reviewed by policymakers).
• Target Date funds under pressure by the SEC to clean up their act. The need for more disclosure came about when the most conservative Target Funds tanked during the economic meltdown. Now the SEC is demanding funds disclose their asset allocations in all marketing materials. (I told you fund managers would start edging up risk to get performance, didn’t I?) 
• GM buys finance house as it gears up announcing their IPO next month.
• What a difference a day makes as the markets shook off Dr. Doom and surged to close 202 points on the Dow Thursday. Strong numbers and guidance from Cat and 3M trumped administration cynicism. We await European bank stress tests to see if cold water will kill this rally.
• Hold the phone, dear reader, Michael Kahn, technical analyst writing for Barrons Friday wrote,’…we see a mixed bag rather than group-think on one side or the other. …reactions to earnings reports have been poor.’ Bear warning.
• Laugh of the week. Ken Feinberg, Pay Czar, attempts to shame Wall Street by releasing report on the most ill-advised pay at 17 banks. Don’t kid yourself, Kenny, some investment bankers will have it framed.
• Friday the morn brought muddled market all awaiting the European bank stress test like an expectant grandparent and the news was anti-climatic as only 7 of the 91 banks failed the test. Domestic markets rocked soon after the news with GE announcing a partially restored dividend, Ford crushed numbers chiming in was Barrons gushing that the company shares have more to go and the DJIA ended up 3.2% for the week.
• Worries still cloud next week as small caps announce earnings along with AK Steel, Boeing, Eastman Kodak and Visa.
• Finally bank closings year to date 103.

If you have questions for Paul call 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.