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The Markets
Despite all of the negative news, the
stock market's "default
position" seems
to be that it wants to go up. It reminds me of the old stock
market maxim that says, "Don't
fight the tape." Right now, the tape seems to be moving
in fast forward as evidenced by the double-digit gain in
the Dow Jones Industrial Average so far this year.
Last Thursday, the Dow exploded
for a 284-point gain that was its largest one-day gain
in nearly four years, as reported by The Wall Street Journal.
Experts tried to explain the rise by pointing to better than
expected retail sales reports from a couple retailers as
well as more corporate
buyout deals. There was some good news that day but enough
to explain a 284-point rise? As humans, we want explanations
for what happens in
life and the stock market is no exception. However, try as
we may, we’ll
never know for certain what causes the market to rise or fall on any
given day. Perhaps this uncertainty is what makes the market so alluring—and
at times —so frustrating.
Another story worth mentioning is the renewed decline
of the dollar. Tuesday the DXY (dollar index)
fell through the important 81 level, and currently sits
at 80.53. This is the lowest level since December, 2004.
80ish represents the level
that even equity people watch, and the all-time low in the
index is 78.19 set in 1992. Generally,
there's
been a correlation between a falling dollar and rising US
assets in the past few years, but the question becomes when
do our foreign lenders,
namely China and Japan, take action because they're concerned
about diminishing real value of their US bonds? The dirty
little secret that everyone knows
is it's just a matter of time before China and Japan stop
supporting the dollar by purchasing endless amount of US treasuries.
Articles of Interest:
 Iran Asks Japan to Pay Yen for
Oil, Start Immediately
Iran asked Japanese refiners to switch to the yen to pay for all crude
oil purchases, after Iran's central bank said it is reducing
holdings of the U.S. dollar. - Bloomberg.com
A
Who's Who of Awful Times to Invest
"What I do know is that certain factors have reliably identified
egregiously bad times to accept market risk, and that every historical
instance similar to the present has been a disaster." - John P. Hussman, Ph.D.
| Returns through 07/13/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
2.2 |
11.6 |
29.5 |
9.9 |
9.5 |
5.6 |
| Nasdaq Composite |
1.5 |
12.1 |
32.9 |
11.3 |
14.0 |
5.8 |
| Standard & Poor's 500 |
1.4 |
9.5 |
25.6 |
11.1 |
10.8 |
5.2 |
Source: Yahoo! Finance, Barrons
Past performance is no guarantee of future results. Indices
are unmanaged and cannot be invested into directly. Three-,
5-, and 10-year returns are annualized. Assumes dividends
are not reinvested.
Top Headlines:
- S&P announced it was putting
600+ subprime mortgage-backed issues on negative credit
watch. Moody's responded in
a panic, downgrading around 400 subprime mortgage
issues 8 minutes before the closing bell on Tuesday.
- Home Depot (HD) lowered profit outlook saying the negative
effects of the housing markets are hurting more than
anticipated by management. The company also announced
a tender to buyback
250 mln shares between $33 and $44 a share.
- The Commerce Department reported a 0.9% drop in retail
sales for the month of June, the largest drop in nearly
two years.
- Consumer credit rose 6.4% during May thanks to a surge
in credit-card debt of 9.8%.
- The group of firms behind the $25 bln
buyout of Sallie Mae (SLM) announced that proposed
legislation in front of the U.S. Congress could prevent
the deal from
going through.
- The Labor Department reported jobless
claims fell last week to 308,000 the lowest level since
May 12.
- Investors are looking to Bernanke's Congressional
testimony on Wednesday and Thursday for clues on how
worried the
Fed is about the troubled subprime mortgage sector.
They also want to know whether the Fed decided to switch
its
focus away from core inflation numbers and onto the
higher headline figures which include food and energy
prices --
both of which have risen strongly of late.
AS BABY BOOMERS BECOME INCREASINGLY
RESPONSIBLE for funding their own retirement, including the
rapidly increasing cost of health insurance, more Boomers
over age 55 are choosing to stay in the workforce. A recent
article by the Employee Benefit Research Institute (EBRI),
based on U.S. Census Bureau data, finds three notable trends:
- The labor force increase for ages
55–64
is driven almost exclusively by more women working.
Labor force participation for women increased from 57.1
percent in 1993
to 66.7 percent in 2006; for men, participation
dipped from 78.3 percent in 1993 to 77.7 percent in 2006.
- More
men and women age 65 and above are working. In this
age group, participation among men rose from 14.8
percent in 1993 to 20.3 percent in 2006 and for women
from 8.1 percent in 1993 to 11.7 percent in 2006.
- Workers with more education tend
to work longer. Among those ages 55–64 without a high school diploma,
the labor-force participation rate trended downward from
1987 to 2005. In contrast, among those ages 55–69
with some college, the participation rate trended upward.
In 2005,
62.2% of those over age 55 with a graduate or professional
degree worked compared to just 21.5 percent of those
without a high school diploma.
What are your plans? Today, retirement grants more options
than ever before. However, your ability to choose your
lifestyle depends on the choices you make today.
Each of the clues below describe a 70's
American TV show. Can you name each show?
1. Ruffles, Pringles,
Frito-Lays
2. 911 !
3. The aeronautically capable, habit wearing female
4. A
four wheeled vehicle, driven by a person whose job it is
to take passengers and their luggage where
they want to
go in exchange for a fee
5. More than seven, nine is too
much
6. Small abode on the treeless tract of land
7. Mixture
of the sodium salts of various fatty acids of natural oils
and fats
Click here for the answers.
Best Regards,
P.S. Please feel free to forward
this newsletter to family, friends, or colleagues.
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