That Was The Week That Was – 1st Week August

•  ‘I don’t know how anyone can not be gloomy in this outlook,’ said Dave Rovelli, managing director of equity trading at Canaccord Adams in last week’s WSJ about the week ending. ‘It’s horrible- everywhere you look the economic news is borderline horrible We’re two years into this recession, and we’re not getting any better – we can’t even add jobs.’
• The week started with strength. Bang! Pow! Zoom! Monday it was like Batman & Robin crushing the naysayers as the Dow started strong and never wavered ending the day up 208 points. It was good to see, especially after a week where there was much anticipation but little delivery. Gold was off slightly.
• 2 Canadian gold mining companies merged in a deal that could produce almost 4 million ounces of gold a year. Gold is off its highs but up 25% from one year ago. Kinross of Toronto agreed to acquire Red Back Mining of Vancouver in an all stock deal.
• Tuesday stocks opened lower on lackluster data. Seems people are not investing but saving what they got. I think that’s the same blue’s song I’ve heard before. The Dow closed down 38 points. Factory orders fell in June, which surprised traders. The markets are in a holding pattern waiting for the important Friday’s jobs report.
• J. M. Smuckers is more than jelly & jam – the company plans on increasing prices of its coffee line- 9% which include Millstone, Dunkin Donut and Folgers.
• MasterCard & Visa are down 20% since Congress rewrote the rules on debit cards. That’s all I am going to say…hint…
• Toyota raises outlook. 
• Wednesday a lackluster day with the Dow closing up 44 points and ending +2.5% for the year.
• The uber-rich are not bashful in spending your money. Both Warren Buffett and David Rubenstein believe ‘everyone’ should pay some Federal income tax. Currently about 50% of Americans do not pay any Federal income tax, according to Bloomberg Businessweek. (Wouldn’t you love to know what these same folk thought when they didn’t have 2 nickels to rub together? Money makes people think differently then you and I.)
• According to research firm iMoneyNet the percentage of foreign bank obligations in prime money-market funds rose to 11.5% in July 2010 from 7.9% in July 2008. The percentage of foreign issuers in the U.S. commercial paper market rose from about 21% in 2007 to about 40% this April. This happening along with the continuing concerns about the solvency of European banks.
• Mutual funds showed a net gain for last week, according to iMoneyNet, with $3.34 billion invested mainly in hybrid and bond funds. Assets at money markets have also grown as investors seek higher returns. Stock funds, according to the same source, are still experiencing net outflows.
• Thursday Dow off 5 points as jobless woes jitters markets. Post Office declares $3.5 billion loss and plans on additional postage increase. I remember 3 cent first class mail.
• A Friday bad jobs report may not trip the markets even though bad news becomes evident to investors. It’s another sign of market irrationality according to Nick Godts at MarketWatch.com.
• Social security losing assets faster than expected. The recession has accelerated the loss of new money and it’s estimated that by 2037 the bank will be exhausted.
• Anticipating a better jobs report the Fast Money and Morning crowd at CNBC were positively giddy about a strong opening Friday. I sat and watched all the futures rise like sprinters into their blocks before the gun sounded. When the bad news hit it was like someone ripped open the bottom of a lifeboat as futures crashed. The jobs report showed no decrease in the private sector as the government laid off its census workers and unemployment held at 9.6%. The Dow fell 165 points until a late rally brought it 22 points close to even.  Over a trillion dollars, according to CNBC, sets in corporate coffers and will not be invested or divested until the government leads with confidence. The Dow still finished up for the week 1.8%.
• According to Sunday’s WSJ the bond market has remained a picture of bearishness. The 10-year is at its lowest since April, 2009. According to Jonathan R. Laing in Sunday’s Barrons it is time for the Fed to ramp up the printing presses. It’s called quantitative easing. The idea is to buy long-term government bonds and corporate debt. According to experts this was a far more effective tool in ending the ‘Great’ Recession. We may see the Fed implement this as early as this September.
• Finally, 1 bank was shuttered Friday bring the ytd total 109. In the decade of the 1930s 9,000 banks closed and this was with no depositor FDIC.

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