As flat as Nebraska
Well…the major U.S. indexes moved just about half a percentage point last week except for on Friday in response to the Fed Chairman’s comments. On the other side of the world, 11 of 12 major foreign indexes were down for the week with the German DAX composite matching the Nebraska like flatness we saw here during the majority of the week. It is difficult to imagine that there will not be some form of substantial easing by the European Central Bank after Draghi’s stated commitment to “do whatever it takes.” This week brings meetings of the ECB and Bank of England. While the BOE is unlikely to move the markets, the ECB meeting could be a significant turn for European situation. With all the chatter coming from Europe, I’m led to think that some significant program is in the works. We shall see.
Treasury yields fell sharply on Friday, particularly the five-year note, which closed at .59 basis points. The 10-year note closed to yield at 1.56%, while the 30 year bond ended the week at 2.68. TIPS, and corporate bonds participated in the rally, but municipals kept quiet for the most part. One thing from last week I have to mention, the moronic stance the Republican Party’s presidential platform took in regards to Gold. You would think they would do the simple math to discover that there isn’t enough gold in the world to return the U.S. to a gold standard. Good grief, ridiculous nonsense. But hey, when you live in imaginary fantasy land you had best expect ignorance on an epic scale. Pathetic pandering at its worst makes me wonder what the Democrats have tucked into their bag this week. Where are the adults in the American political process hiding?
I remain optimistic. Positive numbers regarding a recovery in the housing markets, factory orders showing a year over year increase of nearly 3%, corporate earnings continue to be reasonably good and the Fed seems to be positioning itself to be on their side of the market bulls. That little bit of growth, however lackluster, is keeping the economy out of recession. We’ll see how the unemployment numbers register this week beginning on Thursday. The consensus view after the Jackson Hole symposium seems to be that some form of monetary accommodation is all but certain. On the negative side, expect the morons in Congress to expel more hot air and accomplish absolutely nothing to solve our problems. A pox of both chambers of Congress, they are utterly pathetic. I am not expecting a strong employment report unfortunately, but I remain optimistic for the week ahead.