That Was The Week That Was – 2nd Week August

• Last Monday was lackluster with investors waiting for Tuesday’s Fed policy statement. The Dow +45 for the session.
• KKR drops plans for stock offering – not in this market, they say. The firm needs capital to finance expansion. It has IPOs in the offing namely Toys ‘R’ Us and HCA, Inc.
• Tuesday markets were lower waiting for the Fed’s analysis of the economy and any plans to jump start the slowing domestic apple cart. The Fed obliged by reiterating we’re in a slow down (Surprise!), promising to keep rates low for an extended period of time (Surprise), and a plan to buy more U.S. government debt. This news lead to the market recovering off its lows to finish down 54 points and yields on the 10-year falling to 2.779% (remember dear reader, it was at 4% in April). Technically, according to MarketWatch.com’s Michael Ashbaugh, we are still in a slightly bullish level.
• Wednesday the markets collapsed on no confidence and the Fed’s lukewarm response to the economy. All indices fell except gold. It was up slightly, although the gold ETF was down as investors redeemed shares for safer waters. Gold can move up while the ETF falls because of massive redemptions. Treasuries were the lifeboat everyone wanted to be in.
• Cisco reported after the market close Wednesday a 79% profit increase and the street rewarded the stock with a punishing 10% haircut. Macy’s reported a stronger outlook for the rest of 2010 and Nestlé's profit jumped 7.5%. The Dow was off 265 points for the session. As a friend said, it’s one step forward and two back with this market.  
• A wider trade gab signals weak growth. In late July the Commerce Department estimated growth at 2.4% but in about to revise that lower this month. Kevin Cummins, an economist at UBS, estimates second quarter growth at 1.25%.
• Ethan Harris, Chief Economist Bank of America Merrill Lynch said in MarketWatch, ‘Businesses have begun to reinvest and to hire, cautiously. But, lack of confidence is holding back a full blown recovery. CNBC reports that the Administration is simply having a tough time getting their accomplishments out to the public.
• Thursday markets off but no blood. Gold ETF still not connecting with price of gold.
• Friday morning Germany is Europe’s engine without a doubt. GDP rose 2.2% has NEVER been recorded before in unified Germany since 1990.
• Barrons reports good news is brewing at Starbucks ever since founder Schultz returned. Ask Apple, HP and Ford ‘cause they know it boils down to leadership.
• Wall Streeters whisper about the ‘Hindenburg Omen’, a technical indicator designed by Jim Miekka in 1995 and the correlation with his theory and actual market crashes. Seems some folks are nervous as some of the data used by the Omen were tripped this past week making September a very scary month. Then there are other investors such as Andrew Brenner at Guggenheim who said to his clients when he heard of the impending crash, ‘Seems like people are starting their weekend drinking early.’
• Firms issue record junk bonds for yield thirsty investors. The past week saw $15.4 billion sold.
• The Dow ended the week down 3.3%.
• Finally, Ben Quayle, son of the former VP. is running for Congress in AZ and sent campaign literature picturing him, his wife and two young girls with the heading, ‘We are going to raise our family here.’ The problem is Ben has no children and the girls were his nieces. (That’s okay, Ben, this simply shows your conservative values -renting kids is a heck a of a lot cheaper then bringing up your own.)  

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