It’s been quiet on Wall Street…almost too quiet. Investors are busy today saying “bye-bye” to that Hamptons timeshare and getting one last annual use out of a “Six-Minute-Abs” DVD with the markets closed for Labor Day. Although the Fed made some big splashes, stocks drifted down most of last week as trading activity dropped to yearly lows during the unofficial end of summer.
Since Monday the focus was on Wyoming, a fun-less state where horses outnumber cars. Investors globally awaited the Fed Reserve Chairman Ben Bernanke’s state-of-the-economy speech on Friday morning to conclude the annual 2-day symposium of the world’s central bankers. Many Krugman-like economists are downright on their knees praying to the Lord for a hint of stimulus to juice up the economy. With 4 long trading days to wait Big Ben’s speech, investors were offered their pick at the econ buffet…
…but they weren’t interested. Econ news was surprisingly positive but went mostly unnoticed. For instance, take a closer look at Sugar Ray’s hit 90’s single ‘Every Morning’ and it’s clear he’s singing about the Case-Shiller Home Price Index – “Every quarter there’s a number hangin’ from the corner of my father’s 4 bedroom home.” – homeowners can feel a bit wealthier as average home prices rose for the 5th straight month. And you know that feeling when your teacher admits she made a mistake and everyone gets 2 extra exam points? Well the Commerce Dep’t upgraded the economy’s score in the 2nd quarter of this year from 1.5% GDP growth to 1.7% (it’s welcome news, but mom is still going to be pissed by the crappy grade).
Corporate news was mostly quiet except for the Apple-Samsung patent battle controlling headlines. Like a bad-ass leather jacket-clad high school punk, Samsung got caught cheating on the final exam by a U.S. Federal Court – copying answers/original smartphone designs from class nerd Apple. Instead of detention, Samsung has to pay Apple $1 billion for stealing sexy designs from the iPhone, sending Apple shares to a record high & slamming Samsung down (we assume Apple CEO Tim cook will now scold the competitor to “be wary to eat the forbidden fruit from the tree iTree of knowledge”). Now Apple is looking to tear down Samsung’s house by stripping the shelves of all smartphones guilty of the patent infringement. Apple was hitting record high stock prices like they just tried on Michael Phelps’ full body speedo for the first time. $665 bucks for Apple paper.
Meanwhile, a Billy-Madison-repeating-5th-grade level of enthusiasm for the Back-to-School “holiday” season helped retailers as Gap (sales up 6%) and Macy’s (net profit up 16%) reported surprisingly good earnings. And Citigroup shelled out $590 million to angry shareholders for selling collateralized debt obligations (“CDOs”) based on faulty mortgages during the ’08 financial crisis. That’s the biggest payout/fine for any Wall Street firm since the crisis.
The x-factors of the week? Europe and goddam hurricanes, man. The European debt crisis hasn’t shown its face most of August as US stocks rallied, but rising German unemployment and Spain’s decision to delay receiving another bailout smacked markets on Thursday. As for commodities, Category 1-rated Isaac also came out of nowhere – Gas futures jumped, pumping up record gas prices for Labor Day weekend as oil refineries in the Gulf closed, cutting supply. World leaders are asking oil rich countries to pump out more to ease the increasing price pressure but Saudi Arabian oil princes don’t like to be told what to do.
Friday finally came and Ben Bernanke interrupted the Federal Reserve’s central bank summit at a Jackson Hole, Wyoming resort, tore off his hiking boots and read some prepared remarks on plans for his baby, the U.S. economy. Although he announced no new policies to stimulate the economy, he sure set the stage for a big announcement at the next policy meeting in September. He built a case for the benefits of quantitative easing and played down the potential risks. He also claimed responsibility for some major job growth over the past few years from the Fed’s low interest rate policies. Easy credit has allowed business to take on debt and consumers to buy up home mortgages…and Bernanke wants more. Investors can see it coming – the 3rd round of quantitative easing to reduce interest rates…”QE3″…and they’re already salivating. Markets finished up big on Friday to send investors into the big Labor day weekend.
So on those positive notes, go enjoy a final grill sesh today in your white apron before next week’s hefty load of econ data (especially Friday’s major government employment report).
The Dow Jones Industrial Average finished down .51% for the week and is up 7.2% year to date. The S&P 500 sank .32% this week and is up 11.9% in 2012
Links Worth Snacking On:
- Wall Street Oasis – For our college seniors, how to deal with bad interviewers (like when they forget your name)
- Financial Times – A little more color, a lot more pics and one great headline from Bernanke’s Jackson Hole summit
- Bloomberg – Holders of Soviet bonds want their money back from Russia…all $700 billion of it
- Reuters – The tech wars continue…Apple and Google CEOs in patent talks
- Google – Why Warren Buffett has so much money…and decided to stay in Nebraska
- CNBC – Enjoying a wheat beer this Labor Day? How MillerCoors diversified its holdings with Blue Moon years back
- Mail Online – Damn the Burritos! Chipotle stealing pennies/making millions by rounding up your receipts
- Charts – Get your artistic eye on…which brand colors are the most successful for public companies
- Monday – MARKETS CLOSED FOR LABOR DAY
- Tuesday – July Construction Spending, August Vehicle Sales, ISM Manufacturing Index
- Wednesday – 2nd Quarter Productivity
- Thursday – ADP August Jobs Report, Weekly Jobless Claims, European Central Bank policy meeting
- Friday – The Labor Department’s Major August Employment Report
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