Market Commentary
John Steele, CFP®, CRPC Presents
Weekly Economic Update for the Week of May 12, 2008
Quote of the week.“In many cases, the more you try to compete, the less competitive you actually are.” – Kathy Sierra
How high can oil go? Crude prices climbed above $126 per barrel on Friday, marking an advance of nearly $10 on the week. Retail gasoline prices averaged $3.67 a gallon on Friday.1 Tuesday, Goldman Sachs analyst Arjun N. Murti spurred price gains with his view that oil prices may reach $150-200 per barrel by 2010.2Signals that the European Central Bank will hold interest rates steady also kept prices high last week, boosting the euro versus the dollar.3
Deal on housing rescue plan? The White House may seek a compromise on the housing relief bill conceived by Rep. Barney Frank (D-Mass.), approved in the House but not yet in the Senate. The Bush administration had stated it would veto the bill; it favors its proposed regulatory overhaul of Freddie Mac and Fannie Mae and higher limits for FHA-insured mortgages, but it does not think taxpayers should bear costs of up to $2.7 billion to support the program.4
Trade deficit shrinks. Americans bought fewer imports in March than they had in six years, the Commerce Department reported Friday. The trade gap shrank to $58.2 billion, below the $61 billion median forecast of 71 economists polled by Bloomberg News.5
Fed sees less emergency borrowing. On Thursday, the Federal Reserve released a report noting that Wall Street investment firms had averaged $16.5 billion in daily borrowing from the Fed’s new emergency lending program during the past week, as opposed to $18.6 billion the week before.6
Winning streak ends. Thoughts that the commodities rally might cool acted to cool down the markets. The S&P 500 declined 1.8% for the week.7
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% Change
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Y-T-D
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1-Year
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5-Yr Avg
|
|
DJIA
|
-3.91
|
-4.84
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+9.63
|
|
NASDAQ
|
-7.80
|
-5.35
|
+12.17
|
|
S&P 500
|
-5.45
|
-8.95
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+9.75
|
(Source: USAToday.com, CNNMoney.com, 5/9/08) 8, 9
Indices cannot be invested into directly.
These returns do not include dividends.
Riddle of the week. What is the longest pair of English words that are pronounced the same but share no common letter?
Contact my office or see next week’s Update for the answer.
Last week’s riddle: Anne and Bonnie each have several dresses. Bonnie says to Anne: “If you give me one of your dresses, I will have twice the dresses you have remaining.” Anne replies: “If you give me one of your dresses, we will have exactly the same number of dresses.” So, how many dresses do Anne and Bonnie each have?
Answer: 5 and 7 dresses.
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The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the "NYSE") and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. These views are those of Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.
Citations. 1 cbsnews.com/stories/2008/05/09/business/main4082518.shtml
2 bloomberg.com/apps/news?pid=20601087&sid=a4h.MKqPWqn8&refer=home
3 bloomberg.com/apps/news?pid=20601087&sid=a4h.MKqPWqn8&refer=home
4 news.yahoo.com/s/nm/20080509/pl_nm/usa_housing_congress_dc_10;_ylt=AlcnAGky4nv9EQogQm6pr9az1g4B
5 bloomberg.com/apps/news?pid=20601012&sid=aQRO_W5YWiiw&refer=commodities
6 usatoday.com/money/economy/2008-05-08-fed-emergency-borrowing_N.htm
7 bloomberg.com/apps/news?pid=20601103&sid=aW3wbGAV1lS4&refer=news
8 usatoday.com/money/default.htm
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%2F07&mode=add&symb=DJIA
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%2F03&mode=add&symb=DJIA
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%9F07&mode=add&symb=NASDAQ
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%2F03&mode=add&symb=NASDAQ
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%2F07&mode=add&symb=SPX
9 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F9%2F03&mode=add&symb=SPX
Securities offered through Securities Service Network, Inc., Member FINRA/SIPC. Fee based advisory services offered through SSN Advisory, Inc., A Registered Investment Advisor
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