“Go Ahead, Make My Day!” may have applied equally this week to “Dirty Harry’s” performance at the Republican Convention and the attitude of traders awaiting Uncle Ben’s comments at Jackson Hole.
We’ll get to Clint Eastwood’s over the top act in a bit.
As for Ben Bernanke, we’ll let his faithful scribe, Jon Hilsenrath of the New York Times, provide the summary here:
“A defiant Ben Bernanke sought to shoot down criticism of the Federal Reserve's easy-money policies and strengthen the case for new efforts by the central bank to bring down what he described as gravely high unemployment…It is a high-stakes moment for the Fed. The Fed's next policy meeting is Sept. 12 and 13. Other Fed statements in recent weeks have signaled that some action at the meeting is likely—either new assurances of low interest rates for a long time, new bond purchases or a combination of actions. Mr. Bernanke didn't say which course he would choose, but strongly defended the merits of the tools he might employ.”
Bernanke himself said, "Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation and it is important to achieve further progress, particularly in the labor market. “
(Bill Gross, co-chief investment head of PIMCO said Pacific Investment Management Co., manager of the world’s biggest bond fund, said in a Twitter post this weekend more stimulus is a “near certainty,” CNBC reported. “It will be open-ended, but increasingly impotent.” )
Those comments and others created a somewhat volatile trading session on FrIday, with a big push up in the pre-market, then some hard selling immediately when it was realized nothing concrete was being announced, and then a rebound as the remarks sank in. The market now feeling like a good chance of something coming in mid-September, but of course Europe, the ECB and the German courts still stand out there ready to hit the newswires with headlines of their own.
Bloomberg summarized, “Treasuries also gained this week amid concern European leaders are struggling to contain the euro bloc’s debt crisis. The European Central Bank meets next week amid speculation that its president, Mario Draghi, may unveil details of an effort to lower borrowing costs of Spain and Italy, which may include the central bank buying sovereign debt. Bond buying is opposed by Germany’s Bundesbank.”
Friday’s market action helped the indices recover a great deal of weekly losses. The S&P ended the week -0.3%, the Dow off -0.5%, and the NASDAQ close to breakeven at -0.09%. For the month, however, the S&P +2.0%, the Dow +0.6%, and the NASD +4.3%, for quite a spread in performance between the indices, with AAPL a major factor leading the techs up. (AAPL made another new all-time high this week at $680.87, before settling back in for a modest gain on the week but up +8.9% on the month).
Besides the FOMC and European continuing drama what else was out there? Certainly the Republican Convention and Hurricane Isaac dominated much of the news. Facebook (FB) made new all-time lows again and closed the week just on them at $18.06. GLD, the gold ETF, had a huge price action and volume day on Friday (check out the chart) and is at its highest level since March, adding credence to the expectations of further QE.
Some other quotes of the week:
“I Would Rather Shower At Penn State Than Root For The Wolverines”. –unauthorized, totally unofficial T-shirt created by an Ohio State football fan which has gone viral and rightly drawn criticism from all quarters. (USA Today) (As you likely know, Penn State opened at home with a rare 24-14 loss to Ohio University, which is not a half bad team returning a lot of upperclassmen).
“I just tend not to watch it.” –Michelle Obama on David Letterman on the Republican Convention, although she did encourage voters to watch both conventions. (CBS/Reuters). Rep. Ryan had a pretty good line in his speech which likely the Obamas did pay attention to: “College grads should not have to spend their 20’s living in their childhood bedrooms at home and staring at faded Obama posters.”
“If this market continues to track history — and to date nothing has been a better guide — we could see 1,500 before year end. (But) the potential for adverse events not only exists but is increasing.” -- Bloomberg quoting Laszlo Birinyi, president of Birinyi Associates Inc. (that’s pretty bold and committed)
“We have been subjected to more recitations of almanac-style seasonal tendencies (the ever before).” --Barron’s StreetWise this weekend, on the repetition in the business press of the well-known fact that Septembers are generally the worst performing of all months.
“Now Presenting The Pastor In Chief” –Democrat political strategist and Professor Donna Brazile referring to the appearance at the convention of Romney’s fellow church-goers (is raising the issue of “Pastors” really wise again for the Obama campaign? and is playing the “religion card” a smart tactic?) (Twitter)
“If you get there and the Waffle House is closed, that’s really bad. That’s where you go to work.” FEMA Administrator Craig Fugate, who is credited with developing the “Waffle House Index” for gauging the extent of a natural disaster. (Hmm, that may explain the response to Katrina). (WSJ)
“AAPL is lower Thursday on what seems like the only thing that can slow down the red hot stock – component supply issues.” –StreetInsider (seems like a bit of a reach excuse for a market reaction after AAPL’s huge recent run and perhaps the market had some inkling of the Japanese court ruling which was announced Friday favoring Samsung in the same basic suit won here in the U.S. by AAPL).
Right now, the (movie) industry as a whole is up. That’s a positive.” — Nikki Rocco, president of domestic distribution for Universal (the year as a whole showing an increase versus last year in revenues, but the summer has been a bummer, with far fewer $100 million winners and summer ticket sales down 100 million over the past decade). (Globe and Mail)
“Yes, sadly it’s true. This upcoming season of Jersey Shore will be our last. But it was fricken INSANE. I will always love my roomies” –Snooki tweet on “Jersey Shore” being cancelled (but we still will have the retrospective titled “Gym, Tan, Look Back.” (Yahoo)
“Perhaps it is time for Harvard to change its motto from Veritas to Copytas?” –Zero Hedge on the Harvard cheating scandal where over 100 students being investigated
“I can’t do that to myself either.” –Clint Eastwood referring to a vulgar expression in a mock discussion with Pres. Obama in his crowd-pleasing speech at the convention. The “liberal media” has been all over this with a definite tilt toward ridicule of Eastwood’s performance, which ran long, was supposedly “not vetted” beforehand, and reminded some of a “slightly crazy old Uncle’s ramblings”. (That seems a bit harsh and we actually enjoyed it quite a bit, whether “on message” or not. We thought lines like "When somebody does not do the job, you've got to let 'em go.” and “The people own America” were effective in rousing the base in an otherwise pretty predictable convention)
But a Forbes.com editorial, hardly the liberal press, said:
“I felt that Clint Eastwood’s hijacking of the most crucial hour of the Mitt Romney presidential campaign, the candidate’s most precious opportunity to get himself across, with a bizarre, off-color improv speech directed at an empty chair, ultimately reflected badly on the leadership of the candidate himself. It simply shouldn’t have been allowed to happen.”
Putting Eastwood aside, and we will close it here, Romney and the convention itself were generally given better than expected grades. (InTrade, however, still had Obama favored after the convention at 56.8% winning odds, according to Barron’s).
And Romney scored some points with both his wife’s address and his own, with lines like “What is needed is not complicated or profound. What America needs is jobs, lots of jobs.”
But the Romney campaign still needs to do many things, not the least of which is avoiding the all too frequent image reminder that Romney comes from a stratospheric, 1%’er “elitist” atmosphere,”simple family man” protestations aside:
“Gov. Mitt Romney’s campaign toasted its top donors Wednesday aboard a 150-foot yacht flying the flag of the Cayman Islands.” –ABC News, with other reports of staffer heads possibly rolling after the very public gaffe.
Be sure to follow David on His New Forbes Blog.
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