Fri June 4 – Weekly Recap & The Week Ahead
We are back after 2 weeks of R&R.
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria” — Sir John Templeton
The major indices continued to sell-off after a 2-day bounce. Below are the major events which occurred this week.
1. Jobs, Jobs, Jobs — reported numbers came in at 431,000 jobs; However 90% were census workers.
2. Hungary — in “grave situation”; Spokesman Peter Szijjarto for PM Viktor Orban said “default is not out of the question. Hungary ‘s problem came out of no-where to compound to the PIIGS problem.
3. Euro Currency — dropped to a low of 1.19 – a 4-year low. Major support for the the Euro is around 1.15 or 1.16 area.
4. Oil Spill Continues — BP tried to cap the well; However, oil is now spreading to Northern FL;
5. M3 Growth Collapsed — M3 measures bank lendings. As noted in the chart below, the M3 dropped since 11/09 as banks raise capital asset ratios and reduce their lendings.
6. S&P lowered Spain’s Credit Rating to AA+ from AAA (May 28) — Spain is the EU’s 4th largest economy.
The week ahead:
1. Treasury Dept $36 Bil 3-year note auction — Tues 6/9
2. Fed ‘s Beige Book & Bernanke & Lacker speak — Wed 6/10;
Treasury Dept $21 Bil 10-year note auction — Wed 6/10;
3. Trade Deficit (April) — Thurs 6/11
Treasury Dept $13 Bil 30-year bond auction
4. May Retail Sales & Prelim Consumer Confidence — Fri 6/11
We remain cautious since Apr 23, 2010 posting; Going forward, we believe the next shoe to drop will be the pension funding and retiree healthcare problems to surface as a result of lower tax revenues from home sales, sales taxes and lower income taxes.
M3 — Money Supply
NASDAQ — support at 200-SMA
DOW JONES — broke support at 200-SMA
S&P500 — broke support at 200-SMA
