August 14, 2010
Weekly Market Wrap: The markets pulled back this week as the S&P 500 retreated 3.8% to close at 1,079. Oil plummeted and Gold rose slightly on the week. Oil finished the week down 6.7% at $75.39 per barrel and Gold finished up almost 1% at $1,215 per oz. The dollar was stronger this week against other major world currencies finishing up 2.8% to $82.54. For the year the S&P 500 is now down 3.21%.
The week started on a positive note as many traders were anticipating additional stimulus from the fed to spur job growth. From there the markets slid downward through the remainder of the week. Tuesday the losses were minimal on the fed’s meeting and their confirmation of current economic recovery slowdown. In economic news worker productivity dropped and small business confidence was lower. On Wednesday the market dropped 3% as the fed statement was dissected and the sustainability of the recovery was questioned. Thursday and Friday brought two more small drops in the markets as unemployment claims rose more than expected and retail sales gains were smaller than expected. Improving consumer sentiment on Friday was not enough to get the market to close on a positive note, although it did trade in positive territory for much of the day.
All in all I think this is nothing more than a pause in the recovery rather than a contraction in the economy. Although much of the economic news is not as positive as we would like, for the most part it is still positive growth. Unemployment remains the wildcard that needs to improve before any major rally in the market can begin. I am glad that not much came out of the fed meeting this week. I do not believe that more stimulus (i.e. government spending) is what we need now. The best case scenario is for the government to basically get out of the way and let this market move itself. They need to finish up the business at hand including a tax plan to provide some clarity for the next 5 years or so and then business can have a level certainty to make projections and start hiring people.
Mortgage rates moved slightly higher on the week. The Schwab Bank 15-year rate is now at 4.16% and the 30-year rate is at 4.69%. These rates are as of 8/13/2010 and assume no points, no origination fee and a $250,000 mortgage.
The Week at AAM (to highlight what I do for clients and how I am different than most advisors):
Some of the highlights of my last week include:
- Met with the daughter of a client to put a plan in place to pay for her assisted living care.
- Reviewed planning with a few clients and showed them how to meet their goals including staying on track for retirement.
- Met with a client to help them fund their newly formed revocable trust.
- Attended the Chamber of Commerce Speed Networking meeting at Red Lobster on Friday and met some new prospects who may be able to use my services.
- Worked on a letter to my clients to update them on the markets and what I am doing at AAM to do a better job for them and to build the business.
I hope you had a great week as well. Please let me know if there is ever anything I can do for you or if something has changed in your financial situation to warrant a meeting or a change of investment policy.