Bartlett Market Week
Market Week: July 19, 2010
The Markets
After inching forward most of the week, domestic equities were felled Friday by a combination of options expirations, a surprisingly negative consumer sentiment report, and lackluster economic data.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- The devil is in the details: Congress gave final approval to what is being called the most sweeping financial reform legislation since the Great Depression. The legislation is designed to help prevent problems that led to the 2008 financial crisis from recurring. However, much of its impact will be determined by regulations that will be developed over the next year or so.
- Consumer inflation fell 0.1% in June, putting the annual inflation rate at 1.1%. The Bureau of Labor Statistics said energy costs, which fell 2.9%, were responsible for most of the decline.
- Inflation at the wholesale level also fell in June, for the third straight month, according to the Bureau of Labor Statistics. The drop of 0.5% followed declines of 0.3% and 0.1% in May and April respectively. Prices for raw materials fell the most, by 2.4%. Most of the 0.5% decline in finished products resulted from a drop in consumer food costs, which fell 2.2%.
- Despite falling oil prices, the U.S. trade deficit grew almost 5% in May, according to the Census Bureau. Increased imports from China accounted for a large part of that; the deficit with China alone rose more than 15% from April's figure. Though exports rose, imports rose even more.
- Retail sales were down for the second month in a row in June, according to the Commerce Department. However, if auto and gas sales are excluded from the total, sales actually rose 0.1% instead of falling 0.5%.
- The Federal Reserve Board lowered slightly its estimate of U.S. growth for the rest of the year to 3%-3.5% instead of the previous 3.5%-3.7%. Translation: don't look for higher interest rates in the near future.
- The Thomson Reuters/University of Michigan index of consumer sentiment fell dramatically in July, from 76 in June to 66.5. That's the lowest level since last August.
- Goldman Sachs agreed to pay $550 million to settle civil charges of fraud filed by the SEC. The company, which reported net earnings of $3.46 billion in Q1 2010, admitted its marketing materials for the securities in question "contained incomplete information." According to the terms of the settlement, $250 million will go to injured investors and $300 million to the U.S. Treasury. Goldman also agreed to review its business practices and training of employees.
Eye on the Week Ahead
Housing data will indicate the extent to which the first-time homebuyer's tax credit accelerated purchases. Second-quarter earnings reports from several consumer and tech bellwethers also are on deck, as are the results of the stress tests on European banks, scheduled to be released Friday. Finally, Fed Chairman Ben Bernanke will testify before Congress about the state of the economy.
Key data releases: Housing starts (7/20); home resales, leading economic indicators (7/22).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
For more information on this topic, please contact us. At Bartlett & Co, we assist high net worth individuals and their families in defining & reaching their life goals.