McIntyre, Freedman & Flynn

This has been another quiet week for stocks which closed at their highs for the year. The Dow Jones Industrial Average even closed above 16,000 for the 1st time.

There were several news surprises to trade around last week, but when the music ended stocks were mixed as the charts above illustrate. The Dow Jones Industrial Average gained nearly 1 percent while the NASDAQ Composite was virtually flat.

A very quiet week for stocks as earnings season kicked into high gear at last.

Financial markets have now become a function of how investors are guessing the drama in Washington DC will play out.

Financial markets have found out the answer to important questions in the last week. While there have alternatively been both positive and negative reactions, the net result is lower interest rates and higher stock prices.

Stocks rallied last week as military options in Syria no longer look likely given the disapproval of the American people and Congress. Additionally, this embarrassing agreement reached with Russia is an admission that the USA will not intervene.

Stocks finished higher last week, but August was a down month as worries about monetary policy including who will lead the Federal Reserve next year, along with the confusion surrounding the Obama administrations Syria decisions have put a damper on things for now.

Stock prices declined modestly last week. A shrinking trade deficit caused 2nd quarter GDP estimates to increase (over 2% now annualized), thus renewing fears that the Federal Reserve would commence tapering at their September meeting.

Stock averages were nearly unchanged last week as earnings reports are being reported mostly in line albeit with the usual concerns about the pace of economic activity. This is reflected once again by a lack of revenue growth for many industries.

Stocks got a boost last week from Fed Chairman Bernanke who decided (as predicted here) he needed to reset market expectations about the economy and Fed policy.

All markets came under pressure last week (and this morning) over the dual concerns of a slowing global economy coupled with the Federal Reserves suggestion that things are improving and thus tapering might start by the end of the year.

Stock prices came under pressure last week over the strength of the Japanese Yen versus the dollar which led to a large decline in stock prices there as well as the misplaced fears domestically that the Federal Reserve Board will pull forward its timetable for tapering its quantitative easing policy.

The last few weeks have seen volatility emerge as concerns about the Feds policy of quantitative easing and the timing of changing it have taken center stage.

Once again stock prices moved higher last week despite mostly poor economic data and a background in Washington DC of multiple scandals. The latter begging the question as to whether substantive policy actions are now off the table for the year.

Stocks moved higher again last week as the data continues to reflect an economy that continues to trudge along to the consternation of many.

Financial markets got the news they wanted last week as Europe cut interest rates, while here at home the Federal Reserve hinted they might do even more when it comes to money printing. To top it off, Fridays employment report showed improvement from March although the details caused most to discount the excitement.

Stocks rebounded from the previous week. Earnings were not bad, and investors now appear to be focusing on this weeks Federal Reserve and European Central Bank meetings.

Stocks moved up nicely last week despite poor economic data and a huge decline in precious metals and other commodities.

Stocks were slightly lower last week as the troubles in Europe, Asia (Japan & North Korea) dovetailed with a really lousy employment report here at home on Friday.

Stocks were flat last week as investors were mesmerized by the goings on in Cypress and the European Union.

Stocks had a very quiet week with volumes reaching levels that one associates with holiday trading.

Stocks rose each day last week as the notion of a ho-hum global economy was reassuring to those who fear either a recession or a surge in economic activity.

Stocks drifted last week, buffeted by concerns over Europe due to the Italian elections and worries here at home as the "dreaded" sequester begins to take effect.

Earnings continued to roll in which combined with higher dividends in many cases continued to support stock prices.

Earnings have come in pretty well, but the news on the economy remains dreary despite the cheerleaders in the financial media.

Last week saw the markets continue to trade off of concerns over Apple, and just what might happen in Washington DC concerning the debt limit negotiations. Earnings season will hit high gear this week.

Another quiet week in early January as the earnings season is about to gear up.

The stock market has started the New Year in fine shape, relieved that President Obama's threat to raise taxes to the moon on capital gains and dividends were thwarted with the deal agreed to on New Year's Day.

The stock market has gone into a trance as we approach the end of the year. The uncertainty around fiscal policy, along with concerns over Apple and the economy at large have caused institutions to wait for the dust to clear.

The stock market continues to have one eye on Washington DC and the other on the various global concerns of slowing growth and European disintegration. The net result was another quiet and slow week of trading.

Stocks continued to bounce back from their post-election sell off. In fact for the entire month of November the popular averages were virtually unchanged. For the past week one can see from the charts above that the Dow Jones Industrial Average was flat and the NASDAQ Composite gained 1.5% as Apple starts to regain some of the ground it has lost since September.

Stocks continued their post-election selloff. The usual concerns about future tax increases and retrenchment by both consumers and business weighed heavily upon investor sentiment.

The election results were no sooner determined when stocks started selling off. Hard to believe it is coincidence, but it is also hard to believe the markets were caught off guard either.

A storm shortened trading week saw virtually no movement in the popularly followed stock market indices.

Stocks remained sluggish last week as earnings guidance more than last quarter's reports put a damper on stock prices. In addition, the European summit was a failure and investors remain hesitant before the November elections.

Stocks advanced last week as the impact of the Fed's monetary easing combined with some better economic data persuaded traders to continue to buy.

Stocks finally fell back last week. Weak economic data combined with concerns over Apple's new phone release hurt investor confidence.

The stock market was flat on low volume last week. In other words little of consequence happened. Oil prices fell back somewhat after rumors that a release from the Strategic Petroleum Reserve were floated by our government in an attempt to influence the market of yet another asset class. One wonders where the stock market, interest rates and the price of commodities would be if the government both at home and elsewhere was not manipulating prices to the extent they do.

Last week the stock market got all it wanted from the Central Banks of Europe and here at home. The money presses have been put on full power. The result was a continuation of the stock market rally along with commodities while bonds suffered a setback as investors swapped out.

Stock prices have been supported by strong profits permitting buybacks and rising dividends as well as the absence of negative news from Europe. In fact, with all the leaders there taking vacations it has allowed rumors and leaks of possible steps, which have produced lower borrowing costs in Spain and Italy. This has allowed for a reflex rally there that has served as a catalyst for the continued rally in our domestic markets.

The rally in stocks which no one seems to believe in continued again last week. With Europe on vacation or celebrating the Olympic Games the macro background remained quiet and allowed stock prices to advance even as investor pessimism continues to grow.

Last week gave us quite a bit of information, but on balance the stock markets did not seem fazed one way or the other. Disappointment at a lack of policy initiative from the world's Central Bankers was offset by an employment report, which was very confusing at best, but certainly did not indicate a meltdown in the economy.

Stocks bounced last week on the heels of earnings which were not so bad, and perhaps more importantly, indications that the European Central Bank was ready to take the plunge as lender of last resort.

Stock prices recouped their early week losses, as earnings reports were not as bad as feared. Fridays session, and again today though, have seen investors reminded that Europe is a broken economic zone which cannot be repaired using the current European Monetary Union framework.

A strong day last Friday salvaged the week for stocks despite continuing evidence of a global slowdown related to the sovereign debt crisis which shows no sign of improving in Europe. It was kind of a quiet week from the European leaders. There werent any concrete developments, of course, just a few confusing new twists and turns. The most important one is that Germanys highest court must now rule as to whether it is constitutional to agree to what was supposedly agreed to previously.

Stocks around the world have spent the past two weeks reacting to various announcements from government leaders and central bankers. Additionally, the economic news has certainly been found wanting both here and around the globe.

Stocks were mixed last week as the news from Europe remains difficult, while here at home the Fed told us things were not going well but decided to do very little about it (maybe because they cannot).

Stock markets continued their cautious advance last week as hopes for a victory by the New Democracy party in Greece strengthened throughout the week. At the same time the cross currents of elections in France and Egypt kept the trading rather quiet.

Stock markets rebounded last week on the perception (which turned into reality over the weekend) that Europe would find some sleight of hand method of rescuing the Spanish banking system.The reality this morning is that Spains sovereign debt (which this bailout money will be added to) is trading down and its credit default swaps are trading higher. This is not a very good sign for the bailout at this point. On top of that, now Ireland and Greece (which votes again this weekend) want similar and more lenient terms to their previously negotiated bailouts. Thus, Europe remains a total quagmire.

Between the problems in Europe and the disappointing news on jobs and economic growth at home, stock markets globally have taken a tumble albeit with the USA doing much better than everyone else. For some reason investors finally opened their eyes these past couple of weeks. They did not like what they saw. As we have commented endlessly here over the past six months, there never has been a recovery in our employment category, and the growth rate of the economy has never shown any inclination to rise above 2% on an annualized basis.

Last week saw the worst week for stocks of the year, caused by the continued fears over the impending break-up of the European Monetary Union as well as the colossal flop of the IPO of Facebook, and the burgeoning horror at the trading losses at JP Morgan. Sad to say that the fears of the past several months, as expressed in these weekly commentaries, seem to be materializing. The circus act known as Europe is back in recession, as political leadership is simply not possible given the pressures of seventeen sovereign nations.

Stocks have endured a rough couple of weeks as it has finally become obvious to everyone that the socalled recovery in the US has been a mirage while the difficulties in Europe have never been addressed. The latter problem is due to the flawed structure of the European Monetary Union, while our problem has to do with an incorrect mixture of policy choices from Washington and in many of our larger states such as California and Illinois. Last week saw a decline of 1.7% for the Dow Jones and .76% for the NASDAQ Composite. These declines were very modest compared to the carnage in Europe and Asia.

Last week was a seesaw affair, with the macro news being a negative, while corporate earnings served to support stock prices. The charts above illustrate that the Dow Jones Industrial Average gained 1.4% last week as the blue chips reported pretty good earnings and outlooks. The NASDAQ Composite though fell .36%, mainly because of concerns and some confusion developing in the shares of Apple, which reports tomorrow evening.

Stock prices rallied here in America last week as discouraging (but predictable) economic news at home along with the worsening situation in Europe were more than offset by positive earnings from Apple, dividend increases, and buybacks from countless other corporate names. As the charts above illustrate, the Dow Jones Industrial Average gained 1.5% and the NASDAQ Composite which is heavily influenced by the price of Apple improved by 2.3% last week.

Stocks were subdued last week, as concerns about the growth prospects of the economy overtook the recent trend in the media to portray everything as being on the upswing. As the charts above illustrate, the Dow Jones Industrial Average fell by 1.2% while the NASDAQ Composite held forth with a marginal gain for the week.

The stock market continued to meander last week as concerns over Greece have now been replaced by a growing consensus that growth in the United States is slowing. For the week the stock market was mixed as indicated by the above charts. The Dow Jones Industrial Average declined slightly while the NASDAQ Composite gained slightly on the week.

Stocks continued to mark time last week as concerns increased over slowing global growth and rising international tensions as evidenced by the price of oil. All in all though, the combination of low interest rates, high profit growth and rising dividends all combine to support stock prices and continue to make the stock market virtually the only investment game in town. As the charts above illustrate, the Dow Jones Industrial Average was flat last week, while the NASDAQ Composite (aided by Apple) moved fractionally higher.

The stock market paused last week in its 2012 rally over concerns about what might happen in Greece. As the charts above illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite fell fractionally for the week, but certainly showed underlying strength given the urge of many to take short-term gains.

Stocks moved higher last week in anticipation of a deal over Greek sovereign debt, as well as evidence the economy is not falling into a double-dip recession. As the charts above illustrate, the Dow Jones Industrial Average gained over one percent, while the NASDAQ Composite moved higher by 1.65% led by Apple, Inc.

Despite the agreement to bail out Greece again, the financial markets concluded a very quiet week. Prices were virtually unchanged (see the charts below) as the underlying economic data continued to show a mixed outlook.

The New Years rally continued last week. Solid earnings reports, for the most part, along with the belief that the Federal Reserve Board will offer up some policy changes this week served to support stock prices across the board. As the charts above illustrate the Dow Jones Industrial Average gained 2.4% and the NASDAQ Composite jumped 2.8% last week to extend their early year gains.

Last week featured continued excellent earnings reports (see our comments below on Caterpillar and Boeing) along with mixed economic news. As a result the stock market overall was flat to positive. As the charts above illustrate, the Dow Jones Industrial Average dropped by about one-half a percent while the NASDAQ Composite gained just over one percent largely due to a stellar report from Apple.

The first full week of trading in the New Year was uneventful but positive as the market awaits corporate earnings and next weeks Federal Reserve Board Meeting. As the charts above illustrate, the Dow Jones Industrial Average extended its gains for the year by an additional half of one percent last week, while the NASDAQ Composite jumped nearly 1.4% on excitement in many of the technology shares.

Happy New Year to everyone and it was for stock investors. The stock market, at least here in the United States, ended on a positive note last year and has started on a positive note this year. As the charts above illustrate, the New Year saw a first week gain of over one percent for the Dow Jones Industrial Average. while the NASDAQ Composite jumped 2.65% in the first four trading days of 2012.

Stock markets here in the USA and Europe are ending the year on a positive note. The concerns of the European sovereign debt issue have been put aside for now as the European Central Bank is essentially embarking on a quantitative easing policy. The Dow Jones Industrial Average gained 3.6% last week and is positive for the year while the NASDAQ Composite jumped by 2.5% and is more or less break even for the year with a few trading days left in 2011.

Markets continue to be whipsawed by headlines out of Europe which much of the time are confusing and contradictory. Overall, however, the stock market here in the United States continues to outperform other global markets, and as evidenced by the charts below showed gains for the week. Last week saw the Dow Jones Industrial Average gain 1.4% while the NASDAQ Composite moved higher by three quarters of a percent.

The past few weeks have seen a rollercoaster ride for stocks. Despair over the European sovereign debt crisis has been replaced, for now, with optimism that the authorities there have finally decided to act. Both the Dow Jones Industrial Average and the NASDAQ Composite had stellar weeks. Both indices gained more than 7 percent for the week. Of course, this just reclaimed the losses from the previous couple of weeks, but the averages are once again positive for the year and given the level of pessimism and uncertainty supports our notion of just how undervalued this stock market is.

Despite generally improving economic data, the stock market continues to be held hostage to the circus over in Europe. As we warned last Monday, replacing two elected but misbegotten leaders with two technocrats who developed the modern day Europe and who lack political support, was a recipe for disappointment. Europe is nothing if not disappointing. They simply cannot muster the courage to either take apart their 50-year experiment run amuck or alternatively take the actions necessary to rescue the sovereigns in trouble.

News from Europe continued to roil markets on a daily basis, but when all was said and done there were new governments in Greece and Italy (same governments just different leaders), and the stock market advanced on the week as economic data and earnings continued to impress investors. As the charts above illustrate the Dow Jones Industrial Average gained 1.4% while the NASDAQ Composite was flat as concerns over Apple held back that average.

The stock market took a breather last week given the number of so-called macro issues to deal with as well as the usual stuff such as Federal Reserve Board meetings and employment reports, etc As the charts above illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite dropped around 2 percent for the week, but remain positive for their year to date performance.

Stocks continued to advance as stellar earnings reports continue to overshadow the macro worries. These include the European crisis as well as many of our domestic problems such as the protests in the streets, And the confusion caused by President Obama starting his reelection campaign so early. This has created total grid lock in Washington DC. The Dow Jones Industrial Average gained 1.4% last week while the NASDAQ Composite fell slightly due to confusion around Apple Computers earnings release. I doubt the disappointment for Apple will prove to last for long.

The stock market is on the verge of completing its best month since 1974. Who would have thought that just five weeks ago? The ostensible reason given for the upswing is some resolution of the European debt issues. Forget that; the reason stocks recovered is the reason they always bounce back and that is higher earnings, higher dividends and a lack of alternative asset choices. The Dow Jones Industrial Average and the NASDAQ Composite gained almost 4 percent each last week. Shorts were covering and hedge fund managers were caught underinvested into the end of the month. Too bad.

Stocks rebounded last week and are off to a very strong start this morning as the economic data shows few indications of recession and because Europe is beginning to disclose their intentions as to how to deal with their sovereign debt crisis. As the charts above illustrate, the Dow Jones Industrial Average gained 1.7% last week while the NASDAQ Composite did even better with a jump of 2.7%.

Stocks were mixed last week as global growth concerns trumped the continuing mix of ok economic reports and on-balance good corporate news at least in terms of dividends and so on. As the charts above illustrate, the Dow Jones Industrial Average gained 1.3% last week while the growth centered NASDAQ Composite fell by 2.7% as concerns about a double-dip recession moved further onto the front burner.

Stocks jumped higher last week as the central bank took steps to ease the European sovereign debt crisis which relieved the concern about a short-term run on the European banking system. The week was a very strong one for stock prices with the Dow Jones Industrial Average moving higher by 4.7% while the NASDAQ Composite (a more growth oriented index) jumped 6.3%.

Stocks ended the week once again on a sour note over the problems looming in Europe and the non-reaction to President Obamas annual jobs speech. As the chart above illustrates the Dow Jones Industrial Average dropped over two percent last week while the NASDAQ Composite was relatively calm with a decline of just one half of one percent.

Stocks finished the week on a sour note due to the weak employment report last Friday. For the week over all, however, stocks were flat. The Dow Jones Industrial Average was down slightly while the NASDAQ Composite showed a fractional gain for the week.

The volatility in share prices was quite extraordinary last week on a daily basis. However, when the week was over and as the charts below indicate the Dow Jones Industrial Average had declined by just 1.5% while the NASDAQ actually fell by less than one percent. Given this mornings strong opening (Europe is quiet due to a religious holiday), all of last weeks losses have now been reversed, which is hard to believe.

The volatility in share prices was quite extraordinary last week on a daily basis. However, when the week was over and as the charts below indicate the Dow Jones Industrial Average had declined by just 1.5% while the NASDAQ actually fell by less than one percent. Given this mornings strong opening (Europe is quiet due to a religious holiday), all of last weeks losses have now been reversed, which is hard to believe.

Markets around the world fell last week as Europe crumbled over the bankruptcy of Italy and what to do about it. As the charts above illustrate, the Dow Jones Industrial Average fell 5.8% while the NASDAQ Composite dropped an astounding 8.1% last week on both sovereign debt issues as well as global growth concerns.

Concern over the debt ceiling debate had the stock market down each and every day last week despite stellar earnings reports. The Dow Jones Industrial Average fell by 4.2% while the NASDAQ Composite dropped 3.58% last week as Washington dithered. Today is a new week, and with the erstwhile deal announced last night, the stock market should enjoy a very sharp snap back. Fears about the financial system not being able to function normally should dissipate despite some worry that the deal will not be approved in the House of Representatives.

Stellar earnings reports, as well as the apparent success in throwing good money after bad in Greece, allowed for a decent rally in the stock market last week. As the charts above illustrate, the Dow Jones Industrial Average gained 1.6% while the NASDAQ Composite surged 2.4% on the back of Apple Computer and Google.

Last week saw the stock market fall for the usual reasons of government incompetence here and especially in Europe. This was offset by merger news in the energy patch, which dramatically helped our holdings there. Thus I remind everyone that the stock market ultimately prices in fundamentals and not sound bites from either politicians or billionaires who cannot find an interview they dont want to give. Last week saw the Dow Jones Industrial Average drop 1.4% while the NASDAQ Composite, despite stellar earnings from Google, dropped by 2.5% over the outlook for future economic growth.

Another week of watching the Europeans deal with their flawed common-currency union as the financial media focus on all things Greek. The stock market was able to shrug off the bankruptcy of Europe as well as the continued soap opera here at home, as our government cannot find a way to trim the annual 1.6 TRILLION dollar deficit. The result was a fractional loss for the Dow Jones Industrial Average, while the NASDAQ Composite jumped out to a 1.4% gain for the week.

The stock and other financial markets were focused on Greece - as opposed to the other bankrupt European nations of Ireland, Portugal & Spain. As such the currency, interest rate and stock markets all traded on the back and forth of news headlines, which proved to be without substance. Stocks in the absence of earnings or other specific news just went along as the futures markets dictated. The result was that the Dow Jones Industrial Average broke its six-week losing streak by gaining .44% while the NASDAQ fell just over one percent as earnings warnings and slowdown fears took their toll.

Last week the market continued its reaction to the indisputable evidence of a global slowdown, as well as the farcical leadership being shown in Europe, as to how to deal with their various sovereign debt problems. As the charts above illustrate, the Dow Jones Industrial Average dropped 1.6% while the growth-oriented NASDAQ Composite fell 3.3% on the week and is back to even for the year.

As we warned last week and over the past couple of months, the poor quality of the economic expansion finally has caught up to the economic statistics. Last Friday?s dismal report showing a jump in the unemployment rate to 9.1% left all of the cheerleaders from Warren Buffet to the Secretary of Labor scrambling for explanations. Given the lack of earnings or merger news, the stock market recorded its fifth straight weekly decline. As the charts illustrate, both the Dow Jones Industrial Average and the NASDAQ Composite dropped around 2.3% last week in response to the now obvious slowdown.

Four straight down weeks for the stock market, albeit last week?s was quite small. Once again the month of May has proven difficult for stock prices. As the charts above illustrate, the Dow Jones Industrial Average and the NASDAQ Composite fell by much less than one percent last week.

The market showed its third consecutive weekly decline as the concerns over Europe?s sovereign debt issues and the now convincing evidence of a global slowdown has traders taking some short-term profits. As the charts illustrate, the Dow Jones Industrial Average dropped .7% last week while the NASDAQ Composite declined an even larger .9%.

Overall the stock market was quiescent last week but underneath the surface a dramatic sector rotation was taking place. As the charts above illustrate, both the Dow Jones Industrial Average as well as the NASDAQ Composite barely moved from their previous weeks closing level. This apparent peaceful trading though came as the defensive sectors benefited as money raced out of financials or any commodity related including the economically sensitive sectors.

A spike down in commodity prices including oil and a jump in the dollar over European sovereign default worries combined to send the overall stock market lower last week. the Dow Jones Industrial Average fell 1.34% while the NASDAQ Composite.

Strong earnings and a benevolent report from the Federal Reserve Board combined to keep the stock market rally roaring ahead despite scant media coverage. The Dow Jones Industrial Average gained 2.44% led by our shares in Boeing and Caterpillar while the NASDAQ Composite reached multi-year highs and gained 1.84% on the week.

Last week started with concern over the US government?s finances, but the holiday-shortened week ended positively as earnings once again overwhelmed the negative macro headlines. The Dow Jones Industrial Average gained 1.33% while the NASDAQ Composite jumped by 2% led by our own shares of Biogen (see our comments below) which surged better than 20% for the week.

Last week saw the stock market drop slightly over ongoing European default concerns as well as the sting of high oil prices feeding through into inflationary pressures. The Dow Jones Industrial Average fell just .3% while the NASDAQ Composite dropped .57%. The few earnings announcements also caused some investors to lock in some trading profits.

As we expected last Monday the stock market did nothing but tread water last week. Hesitation before the earnings season begins this week, along with the pause, while our national government debated whether to shut down, were the two dominant reasons for the peace and quiet. the Dow Jones Industrial Average as well as the NASDAQ Composite were flat for last week.

Stocks continued their recent rebound despite a lack of resolution of any of the issues dominating not only the business news but the global headlines as well. The Dow Jones gained 1.3% on the week, which was exceeded by the gains seen in the NASDAQ Composite of 1.7%. Much of last week focused upon two things: The first was the price of oil and our involvement in Libyal. Secondly, the focus was on what, if any, fallout would be seen in last Friday?s employment data for March. This was important especially in light of the recent severe drops in consumer confidence and the price of gasoline.

Stocks rebounded strongly last week as the sell-off of the previous week provided investors with a good entry point. the Dow Jones Industrial Average gained 3% while the NASDAQ Composite jumped by 3.76%. The reason for this quite simply is strong corporate profits last year and the strong outlook for the same this year overtaking the many problems that dominate the news these days.

Last week had the financial markets dealing with the headline risks associated with the nuclear reactor crisis in Japan, the uncertainty associated with what would be the outcome in Libya and of course the usual issues of inflation, budget deficits and monetary policy in general. In essence, the markets just had too much to concern themselves with. The Dow Jones Industrial Average fell 1.5% while the NASDAQ Composite dropped 2.7% as concerns about technology supply issues dominated the worries about future growth.

Last week?s financial markets reflected the uncertain outcome of the various mid-east conflicts, as well as the horrific news from Japan that an earthquake of unimaginable intensity has rocked that country, both of which have global economic implications. Overall, the stock market was calm. The Dow Jones Industrial Average fell just one percent while the NASDAQ Composite dropped 2.5% as fears of slower growth were compounded late in the week by news of the earthquake in Japan, which is home to many technology supply-parts manufacturers.

Last week was dominated by continued good economic data, which supported stock prices, even as concern mounts about supposed inflation and the ability of the Federal Reserve Board to come up with a believable exit strategy from its current policy of quantitative easing (read that to mean the FED is buying treasuries from the government to finance this year?s $1.6 trillion deficit).

The stock market fell last week, but is still doing quite well on the year. Ongoing concerns over the uprisings in Libya and elsewhere, combined with the protests over cutbacks in state budgets, served as the excuse for the market to pullback.

No one knows what the longer-term direction of the Egyptian state will be, and as a consequence the investment outlook now has an additional source of uncertainty. As far as the global economy is concerned, the failure of the European leaders to agree on to how to handle future sovereign debt crises has cast a shadow once again over Portugal and even Ireland. The problem that Ireland poses is that the elections to be held shortly will bring about a new government who may wish to renegotiate their bailout agreement.

Perversely, while only 36,000 new non-farm payroll jobs were reported, the unemployment rate fell to 9%. I say perversely because everyone knows that our economy needs to create upwards of 150,000 net new jobs on a monthly basis just to keep the unemployment rate from falling. So, what is going on here? The government is constantly changing its estimate of who is unemployed. In this way you can lower the unemployment rate without creating net new jobs and that is what is occurring.

In addition to strong corporate earnings being reported last week, there was also the government?s estimate of GDP growth for the fourth quarter of last year. The headline number showed a growth rate of 3.2%, which was lower than expected. The reason though was a rundown in inventories and an improving trade deficit. These are inherently positive developments, which perversely count against growth in the calculation.

Earnings are coming in at a very strong pace. The problem is that stock prices in many cases have risen in anticipation of these results. As far as the economy is concerned the bulk of the evidence released last week was encouraging, but the impact of higher oil prices is really starting to be interpreted as a negative for future consumer spending and corporate hiring plans.

Last week saw the continuation of upward movement in stocks. In fact, the S&P 500 index has now gained ground for seven consecutive weeks. Just think back upon all the scary headlines during this time which had no impact on the direction of the stock market.

The outlook for the future of the economy remains upward. The latest from the Economic Cycle Research Institute shows the highest level of year over year growth rate since last May (see chart below). Consequently, the economy is improving, but not quickly enough to fundamentally lower the unemployment rate.

The stock market has begun the New Year with a growing consensus that the economy is improving. Even the banks are starting to show some signs of life and they have become the most hated group as well as the most dependent upon an upturn in the economy and employment. Having said this, the market, while off to a fast start this morning, has been discounting this improving news (as well as the presumptive upcoming deadlock emerging from Washington DC). Thus the sentiment towards stocks has improved to pretty high levels and this concerns many of those who are contrary in their trading.

The big news last week was the final passage of the extension of the tax rates first enacted under President Bush some ten years ago. Mind you, there are no income tax cuts for anyone as the media seems bent on convincing people. Obviously, we are heading into the holiday season. This week will see the financial markets closed on Friday in honor of the Christmas federal holiday. European markets tend to take even more time off, so this week should be very quiet.

The impact of the tax deal on the economy is positive. The absence of wide spread tax hikes is good but not sufficient to cause our economy to grow. For this we need more trade agreements, less regulation and a reduced presence in the private sector by the US government.

Frankly, there are many cross currents and news items floating around today. The bailout of Europe and presumably other European countries continues to be a headline risk that impacts the currency markets greatly which heavily determine the daily direction of stock market futures. Tomorrow?s vote in the Irish parliament to ratify the conditions of the bailout package will be another reminder of the unpredictable nature of the overnight headlines.

Despite high profile news items such as the bail out of Ireland (and soon to be other nations in the Euro zone), the monetary tightening occurring in China and the high profile campaign to attack our country?s monetary policy, the stock market was as flat as a pancake last week which did not sit well with the many prognosticators calling for a significant pullback.

The stock market succumbed to profit taking last week. The reasons are many, but revolved around a poor earnings report from Cisco Systems, a growing skepticism of the Fed?s announced plan to goose the money supply, and finally what the mainstream media is reporting as a rather disappointing trip to Asia by President Obama even as he tried to put his electoral defeat here at home behind him.

Overall, the market has largely anticipated this week's midterm election results and Federal Reserve quantitative easing announcement. The possibility exists that some break in the rally could ensue. Such a disruption, however, is doubtful to last long. The race to the end of the year is upon us and barring a terrorist event - the easiest path for stock prices, for now, is higher.

The economy continues to throw off some outstanding corporate profit reports. Profits are what the stock market is all about. While the pundits and politicians talk endlessly about jobs and how to create them (like they would have a clue,) the market is most looking forward to profit growth. In that sense the lower dollar, strength in emerging markets and strong expense control are reaping huge rewards for global companies who lead their industries.

Concern over the state of the economy continues, as well as the disconnection between the lagging employment picture and housing sector versus the rallying stock market. The money supply will continue to expand, and new money is starting to flow into equities. Investors can look forward after the election for Congress to retreat from both the rhetoric and the reality of raising anyone's taxes in 2011. This too will be another positive market event. The economy itself continues to muddle through. Retail sales are better than expected, but consumer sentiment is at recessionary levels.

Investors should continue to watch the political tea leaves for indications of how important policy issues will play themselves out. In the near term the outlook is for strong profits, but subpar overall economic growth. This is not the best combination, but it is also not the worst, and certainly the Federal Reserve Board has made it crystal clear that deflation will not be allowed to take hold in the United States - but this too has its downside longer term.

The economy continues to show signs that it is not getting worse, and perhaps, led by global opportunities and strong corporate profits, is improving at the margins. Last week's reports on second quarter GDP and August personal income and spending certainly support the notion that a double-dip has a much lower probability than it did before. This notion is confirmed by the results of the Economic Cycle Research Institute's weekly report on leading economic indicators.

Clearly, investors understand that earnings will be decent when they are released in late October, that the Fed will be printing money starting in November and that a more business-friendly election change is just a few weeks away. These developments are all supportive of stock prices. As a result, for the next few weeks it seems that only an event out of left field could meaningfully upset the stock market apple cart.

Unemployment claims have leveled off at a very high level and the Economic Cycle Research Institute's leading indicators has shown improvement. The year-over-year level, though, suggests slow and anemic growth ahead. Thus government policy must focus not on spending which simply raises the nation's debt levels but on growth. Read that to mean lower taxes and a smaller government sector supported by a growing private sector.

Last week's trading was heavily influenced by the so-called better-than-expected employment report for the month of August. The market had really discounted a very bad outcome and so when that scenario failed to materialize, the stock market was prepared to rally. Thus, the month of September has already reversed much of the damage that was done during the month before. Should Congress vote to extend cuts for all taxpayers for the next two years, then the rally just might have the justification to continue.

Investors, despite all of the uncertainties our government is presenting businesses with, are anticipating future policy changes. The result has been a stalemate on Wall Street. Corporate profitability remains excellent, as witnessed by global bellwethers Caterpillar and Boeing, but employment gains are subpar and likely to get worse.

While earnings remain quite good, the macro news on the economy warrants a more defensive stance as we head into the fall midterm elections. Clearly, the economy is not in the kind of trouble it was two years ago, but just as clearly, the policies emanating from Washington D.C., whether they be tax increases, healthcare mandates, oil drilling moratoriums or the recently concluded financial regulation monstrosity, are stifling business plans.

For some time we have been discussing the twin factors of a truly jobless recovery versus very strong corporate profits. While much of the media focuses upon the jobs issue because of its political impact, the stock market is mostly concerned with profits and productivity trends of those working. Corporations simply will not expand or hire under the uncertainty of changing tax, healthcare and energy policies. As a result, the economy is now being held hostage to the upcoming mid-term elections as an indication of just what direction the central planning policy of Washington D.C. will take.

There is now a considerable debate brewing between those who think the economy is sputtering out, versus those who remain impressed with the high level of corporate profits being reported and forecast. The month of July showed gains of 7 percent overall, so recently, those who focus on profits and not headlines, have come out ahead. On the other hand it would be foolish to ignore the problems emanating from a growing public sector, which is causing us to run budget deficits of around 14 percent of GDP.

Doom and gloom is featured prominently in the news what with the budget deficit of 1.5 trillion dollars and the seemingly hopeless outlook for many second tier European countries, but the stock market discounts corporate earnings. Perversely, cost cutting (high unemployment) and growing use of technology (the emergence of the mobile web for example) is creating the odd occurrence of huge gains in productivity. When you combine this with the fear amongst corporations over government policy you have a situation where everyone is watching their expenses and their investment opportunities.

The skepticism from investors both individual and institutional remains quite high as the aforementioned concerns about an economic slowdown continue to persist. The good news though, is that profit margins remain strong and interest rates will stay near zero for quite some time. Thus equities are the only game in town for investors whether they want to admit it or not. In that regard, we shall see what, if any, opportunities in individual company names present themselves during the upcoming earnings season.

The market looks likely to be in a trading range until the fall as the excellent earnings are offset by the political uncertainties and the threat of one last attempt to micro-manage our $14 trillion economy. For now, the bulls have the upper hand after a lousy May and June. As a result the earnings season, which really gets underway this week, could serve to catapult stock prices higher by Labor Day especially given the thin summer trading that we have observed.

?The stock market registered its concern for a slowing economy by falling nearly every day last week, at least in terms of the Dow Jones Industrial Average,? explains Tom McIntyre. Between the Gulf oil spill, the housing market, increased costs on business and tax hikes, investors are on their heels. Yet, these factors also produced a very strong dollar, record low interest rates and energy costs. McIntyre agrees with ECRI predictions that it is too early for a double dip, however a slowdown will occur and advisors will respond by the composition of their portfolios.

The Economic Cycle Research Institute's year-over-year growth rate has turned negative. Their interpretation is that the growth rate will slow soon, but it is too soon to conclude whether or not a new recession is in the cards for 2011. The market is pleased with the stability in the currency exchange rates, while the lower interest rate outlook is helping many sectors of the economy along with lower gasoline prices for the summer driving season. So the news is mixed, but it looks like the next move for the stock market will be up.

The year-over-year advance in current indicators is at a 50-week low and could be ready to turn negative soon. This has happened 12 times in the past and it produced only 3 recessions. Consequently, it is too early to predict a double dip for this year, but clearly a slowing down is in the cards and this along with the absence of temporary census workers will make for several months of disappointing employment numbers. President Obama needs to get some better advice from his advisers as to how to handle this situation.

Our domestic economy, while still growing, is in the process of slowing down. This does not mean a double dip by any means. It just means that a meaningful reduction in the unemployment rate is almost certainly out of the question. Businesses simply will not expand payrolls if they determine that growth is slowing down. Corporate profits and the immediate outlook remain fine, however. Interest rates are near historic lows and any attempt to change that policy is so far into the future that it will not concern investors any longer.

Financial markets are reacting to the concern that Europe simply cannot put its house in order. Bonds have rallied and produced the lowest mortgage rates anyone can remember. Oil has fallen, which will lead to a decline in gasoline prices in time for the summer driving season. And the dollar has rallied strongly, once again proving conclusively that it remains the global reserve currency of choice. On the other hand, the loss of confidence in the Euro and subsequent attempt to rein in government spending has called future prospects for global growth into question.

The euro represents one currency, backed by 19 countries with various fiscal policy problems that range from bad to hopeless. The runaway government spending that dominates the euro area is now calling the future of the monetary union into question. One would hope that the Obama administration would look at Europe and wonder whether deficits in the U.S. at the federal, state and local levels could cause problems there. So far it is business as usual.

The concern in Europe is justified. Their one currency with multiple fiscal policies has led to this disaster. The Euro is now doomed to second tier status and may soon be out of existence altogether. The prospect of this scenario caused the European authorities to cobble together a rescue package (complete with huge support from the U.S. taxpayer via the International Monetary Fund) that sent world markets soaring. Meanwhile, the outlook for our economy remains solid. High unemployment rates will keep interest rates low, which will be very good for the stock market.

Last week's GDP report showed inflation in the U.S. at the lowest levels since the 1950s. The Federal Reserve understands this and promised last week to keep interest rates near zero for 'an extended period of time.' Thus, once we get past these conflicting and depressing headline stories, the investment climate remains good. Corporate profits are surging, interest rates are very low and trillions of dollars sit on the sidelines watching every scary news report and missing out on one of best stock rallies in a century.

The stock market continues to move higher even as investor and consumer sentiment remain depressed. So many investors have missed this rally that they are afraid and/or mad at themselves. At the same time the message coming from Washington and around the world is one of continued focus on increasing the role of the central government to solve all of our financial ills. Congress will hold hearings this week in an attempt to blame Wall Street for everything that has ever gone wrong, but this sad act will solve few problems.

Last week continued the narrative of an improving economy, but not a surging one, with corporate profits vastly exceeding estimates. Doubts continue to persist, however. The number of people claiming initial unemployment benefits continues to rise and the Business Cycle Dating Committee declines to state that the recovery has started. With unemployment around 10 percent, McIntyre wholeheartedly agrees. The leading economic indicators show a robust outlook which suggests that the market has been able to shrug off the Goldman Sachs problem for now.

The economic data and outlook continue to be a mixed bag. The weekly tally of new unemployment claims jumped last week and certainly gives no indication of a surge in employment. On the other hand, very few if any earnings preannouncements were made, thus implying that the earnings season that starts in earnest this week will be a good one. It will take very good news indeed to keep prices from doing some profit-taking.

The unemployment report for March showed that employers added 162,000 nonfarm payroll jobs last month, but the unemployment rate stayed steady at 9.7 percent. The economy needs to add 200,000 jobs per month just to stay even given population growth and new entrants into the labor pool, including immigrants and college graduates. From an investor's perspective, however, the news remains encouraging. The data shows conclusively that economic activity is advancing despite the sluggish job market. Higher activity without higher costs spells higher profits.

The stock market shrugged off the passage of Obamacare and moved higher last week based on the resolution of the debt crises in Dubai and Greece, as well as definite signs that corporate profits remain strong. Both the Dow Jones Industrial Average and the NASDAQ Composite gained around 1 percent, even as Treasury yields started to move higher. This week's employment report should see gains of 200,000 jobs or more. While the impact will be overstated, job creation this large could change perceptions.

Last week was quiet as concern over the Obamacare vote caused investors to head to the sidelines. The economic news remains mixed, but profits are doing fine. As a result, the market held up overall. Unfortunately, the federal health care plan will present investors with a number of long-term issues by increasing taxes on investments, increasing regulation, and raising the cost of labor. This could make a negative impact on employment. McIntyre also examines recent hopeful signals from Boeing and Pioneer Drilling.

The conventional wisdom seems to be that the worst is over and a slow but self-sustaining recovery is taking place. A very quiet and slow week of trading produced yet another advance in the stock market. Concerns over Greece and other sovereign debt issues receded, while evidence on the global economy was mixed. The Dow Jones Industrial Average gained 1.5 percent while the NASDAQ gained 1.8 percent over excitement generated by the new product line by Apple.

Stocks rallied last week as evidence continued to show that even though unemployment is lagging, the rest of the economy is doing better. While the unemployment rate stayed constant at 9.7 percent, falling labor costs allowed companies to increase profit margins, and thus buoy stocks through solid fundamentals. If interest rates stay low, conditions will be perfect for stocks, because stock markets respond to prospects for profits and interest rates. McIntyre also examines the possible impact of health care reform, and the recent performance of Dow Chemical and Boeing.