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NOTE: This week’s report is appearing late and in shortened form as a result of of the Holidays. It will return to its original form next Sunday.
Recap of last week
By Steve Romasko
Despite the amount of horrid headlines that surfaces on newspapers this week, equities managed to finish the week on a positive note with the S&P 500 giving a 0.4% gain. Wall Street got off to a good start on Monday, following President-Elect Barack Obama’s comments over the weekend—where he supported the need for a massive stimulus package when he takes office to jumpstart the economy and put fiscal prudence on the back burner. The stimulus, as it seems, will be put toward an infrastructure plan, and will potentially create 2.5 million jobs— something not seen since the Reagan era, which led to the development of the US highway system. The market took the announcement as a sign of the incoming administration’s willingness to do whatever it takes to solve the current crisis and rallied as such—closing up 3.8% for the day.
However, this particularly good news was overshadowed by a wave of poor earnings guidance, economics, and emerging scams. Tribune filed for Chapter 11; 3M, FedEx, Texas Instruments, Kroger, and Electronic Arts to name a few issued downward earnings guidance—suggesting that the crisis has officially spread from a few concentrated sectors to the broad market. Onward, economics were poor with Jobless Claims touching a 26-year high, 573,000, and continuing claims hit 4.43 million; November retail sales fell 1.8% in October—the 3-month trend to month-end November is down 4.7% from 3-month-end August. As a sign of current times, yields on the 1-3 month Tbills turned briefly negative—meaning that some investors actually were ready to pay the government to hold their money. Read the rest of this entry »
