Ken gives the market report every morning on WRCR 1300 AM Radio around 9:15 am. and is a daily guest on the Steve and Charlie Morning Show. www.wrcr.com
Ken is also on WHUD 100.7 Fm every Tuesday morning around 8:10 am on the very popular Mike & Kacey morning show on WHUD. www.whud.com
The Markets:
For the fourth straight week the major indices ended negative, this time mostly because of European geopolitical concerns. Although deep into earnings season, it was the credit concerns in Portugal , Italy , Ireland , Greece , and Spain that shook investor confidence. Wall Street's concern is that they may begin to default on some of their debt, and this sent investors looking for less risky investments like the U.S. Dollar and U.S. Government bonds. By the time the closing bell shut down markets for the week, the S&P 500 index lost 0.7% and the Dow average was down 0.6%, even after the markets rebounded from steep losses Friday afternoon.
So far, the S&P's decline of 7.57% since January 19th is the steepest of the four corrections since the bull market began last March. The other three were 5% in May, 7.1% in July, and 5.6% in October.
The losses for the week didn't tell the whole story though, with profits beating expectations, and a drop in unemployment also grabbing the headlines. With 314 companies, or 63% of the S&P 500 companies having reported 4Q numbers, earnings are on track to have risen 206% versus a year ago and revenue to have gained 7%. That being said, if you strip out the financial sector, earnings are up only 16% versus a year ago, and revenue is expected to have risen just 2%. Still, the results so far have been mostly positive, with 74% of companies beating earnings estimates and 71% beating revenue estimates.
As far as unemployment, the news was mixed with the household survey's headline unemployment rate dropping to 9.7% while, at the same time, the US Labor Department showed a loss of 20,000 jobs for January against consensus expectations of a small increase. On a positive note, the average workweek increased slightly which is commonly viewed as a precondition of future employment growth as employers get more out of current workers before hiring others.
Key things we'll be watching this week:
Tuesday - Wholesale Inventories
Wednesday - Treasury Budget
Thursday - Initial Unemployment Claims, Retail Sales
Highlights:
Investors are pulling cash out of Europe at a record pace as central banks slow euro purchases, jeopardizing its status as a substitute to the dollar as the world's reserve currency. Traders have spurned European stocks in favor of shares elsewhere for a record 19 straight weeks, "clearly hurting" the currency by draining a net $13 billion from the market, said Geoffrey Yu, a UBS AG analyst.
Toyota Motor Corp. is making "field remedy" kits to fix flawed accelerator pedals that caused a recall of 2.3 million U.S. vehicles and aims to deliver them to dealerships in the nation starting late this week.
The Recovery Board reported late Saturday that from October through December, 599,108 jobs had been directly created by stimulus money. The jobs come from money awarded through contracts, grants and loans. For perspective, these jobs are derived from about $54 billion in spending, according to the Administration, and as the White House pointed out Saturday, that is "only" about one-fifth of all spending and tax relief doled out in 2009.
The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War II as a share of the economy, a congressional source told Reuters on Sunday.
Please feel free to call me at 845/371-0101 or email me at kmahoney@auroracapital.com.
And don’t forget to visit my blog for additional articles and comments –
http://kenmahoney.blogspot.com
Mr. Mahoney is a registered broker with Aurora Capital, LLC, an SEC registered broker-dealer and member FINRA and SIPC. Aurora Capital Brokerage, trades cleared by Legent Clearing.
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