November 06, 2010
Weekly Market Wrap: A big week in the markets led the S&P, Gold and Oil significantly higher. The S&P 500 index closed the week up 3.6% to 1,226. Gold surged 2.7% to close at $1,394 per oz. Oil exploded up 7% to close at $87.07 per barrel and the dollar closed slightly lower against other major world currencies closing at $76.58 down less than 1%. The S&P index is now at 2010 high’s, up almost 10% on the year. The index is up 21% from its July 1st low of 1,012. Oil and Gold are also surging to their highs of the year and the dollar to its low.
The market moved up every day this week. Monday began strong but ended up only 1 point as a late sell-off signaled caution moving into the Fed meeting and elections. On Tuesday America voted and the markets moved 10 points higher in anticipation. Wednesday’s economic news was mostly positive as the markets showed little enthusiasm by gaining only 4 points indicating that the election results and the Fed’s decision to purchase $600 Billion of assets were already baked into the system. The ADP jobs report and factory orders were better than expected on Wednesday. On Thursday the rally picked up steam as the market gain 23 points on better 3Q productivity and reduced labor costs, impressive retail sales numbers and despite an increase in initial jobless claims. On Friday the market continued its ascent rising another 5 points as a better than expected jobs report and an increase in consumer credit use offset a decline in pending home sales.
Major gains in the markets this week as stocks and commodities all gained after the fed announced their plan to purchase $600 billion of assets to provide additional liquidity known as QE2 or Quantitative easing. Basically, the fed prints money in order to purchase assets back out of the markets.
As we saw this week QE2 will cause the US market to rise as well as commodity prices and the dollar will fall. Good for manufacturers who sell products overseas, bad for US consumers who wish to purchase products from overseas companies. Good for you and me when we look at our investment statements, bad for you and me when we fill up at the pump.
Short-term this can work to stimulate the economy by moving assets out of “safe” investments and into “risk” assets to create capital movement and growth. If it does not work monies will eventually move out of the US due to the falling dollar and give us less capital to work with.
The best news of the week came on Friday when the jobs numbers were released for October and $151,000 new jobs were created. That is the kind of number that will begin to impact the labor markets, get people back to work, increase consumer confidence and get us out of this mess.
Mortgage rates eased some more this week. The Schwab Bank 15-year rate is now at 3.73% and the 30-year rate is at 4.31%. These rates are as of 11/05/2010 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 a number of clients to help them plan out their cash flows, review their year-end tax planning and update their investment portfolios.
- Began financial plans for two new clients.
- Hosted a Linked-In webinar co-sponsored by the Grandville-Jenison Chamber of Commerce in my office. Two more webinars the next two Wednesdays!
- Attended the grand re-opening of The Candle Experience. They are celebrating their new addition. What a great store!
- Delivered a financial plan to a new client and met with another new potential client along the way. I enjoy showing clients how to achieve their goals and then helping them get there.
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.
Ronald J. VanSurksum, CFP®
Advanced Asset Management, LLC