That Was The Week That Was- 1st Week October

 

• The day after a super-stupendous September  caution was in the air although there was action in the bank stocks. Citi was a prime mover as the government began to reduce its position. The financials did not participate in the September rally. Very interesting.
• Manufacturing slowed in August but the consumer seemed to open wallets and purses a bit more. Could have been back to school purchases but we’ll wait and see what comes of the holidays.
• Car sales were double digit up for all the majors for the month of September. This in the face of whispers that predicted bad news for the industry.
• It was an algorithm that set off the ‘flash-crash’ last May. Seems algorithms like bedbugs are difficult to manage. 
• It’s a dollar driven market. Oil pops to over $80 due to the dollar lower. As dollar falls, driven many say by the Fed, stocks go up and Treasury yields down. For continued clues watch the dollar index DX-Y.
• The Ye- Old- Melt-Up Theory arrives at Barrons.com. Fund managers have to chase performance and as they do ye old customers come along for the ride till the end of the year or S&P 1300. Or, you can call it what it is- a market chase.
• Ford CEO was misunderstood in Italy, as most Americans are. ( I said ‘no anchovies!’) What the Italians reported Mulally as saying was the Ford company would be debt free by 2011. What he really said was that the company would have more cash than debt. He also expects to get back the investment grade rating by next year. Ford also expects to reduce its stake in Mazda.
• Question: Who had/has the most sound banking system and economy during the economic depression crisis? Answer: Canada. Now they want to export their expertise as a global hub of risk management. Eh? (I thought their best export was the old television program, ‘Corner Gas’.)
• How has the market gone up while jobs are scarce and housing is in the tank? Traders have been betting on a cheap dollar and especially on ‘Quantitative Easing’ by the Fed. Translation – buying US debt and keeping rates low, which in turn is good for stocks. 
• Monday last markets off as nervous traders await Fed decision to buy Treasuries.
• Congress investigated, again, opportunity to tax life insurance proceeds. The argument is that life insurance has morphed into a benefit for the rich.
• Bank of Japan cut rate range…now 0 to 0.1%, Honest!
• Dollar has gotten strength later in the week but, according to Barrons.com technical analyst Michael Kahn, this but a brief moment. He reports that the immediate term dollar strengthens, intermediate it falls and long-term remains flat, or moves sideways for an extended period of time. (Bodes well for stocks).
• JP Morgan upgraded Ford saying investors are missing the message.
• Bond yields fall as the Fed game is well afoot.
• Who’s to blame-game for the ‘flash-crash’? Waddell and Reed the mutual fund powerhouse who are keeping mum.
• AMEX fighting DOJ over fees that Visa & MA both rolled over and agreed to go along with. This agreement allows merchants to steer customers to less expensive credit arrangements. Merchants have complained they lose money on transactions and were forced by contract to use either V or MA no matter the amount or loss. AMEX fights DOJ and some predict opportunities with AMEX.
• Apple keeps rolling and new iPhone being prepped for Verizon in January 2011. ATT no longer has monopoly.
• From ‘Are You Kidding Me?’, 30-year mortgage rate at the end of the week of October 7th at 4.27%.
• Former Bush economic advisor Sumerlin told CNBC last Thursday that the Fed has to pump an additional $6-$7 trillion dollars into the economy to get it moving. Also, he said if the Bush tax cuts were allowed to expire it would throw the country back into the recession.
• Thursday dollar strengthened, gold off highs.
• Friday jobs report came out worse than expected so expect Fed to begin aggressive quantitative easing, or buying of Treasuries, reducing yields, crushing the dollar against other currencies and making stocks and commodities (oil!!!) more expensive. The good news in the Friday jobs report was that hourly income increased %0.01 and the average workweek remained unchanged.
• Let’s not forget that factories still cranking out product and corporations have huge cash on hand. M&A is alive and well and that doesn’t spell bad news just caution going forward. Companies are still unsure of Administration policy and tax increases. Uncertainty the key.
• 131 Banks shuttered year to date.

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