For the week ending 10/14, the S&P 500 increased 6.01%, the Dow rose 4.88%, and the NASDAQ was up 7.61%.  Foreign markets also rose with the MSCI EAFE up 4.49% and the MSCI EM up 5.84%.  The BarCap Agg Bond Index was down 0.18% and the DJ Real Estate Index was up 6.55%.

Minutes from the Fed's September meeting indicated "considerable uncertainty surrounding the outlook for a gradual pickup in economic growth" among the panel's participants.  Consumers' propensity to reduce leverage has muted the desired effects of past monetary policy actions, according to the transcripts, and the Fed's members overall believe the recovery is more vulnerable to adverse shocks.  While many participants saw significant downside risks to economic growth, they did not anticipate a downturn in economic activity.  Noted risks included the possibility of "more pronounced or more protracted deleveraging by households, larger-than-expected near-term fiscal tightening, and spillovers to the United States if the financial situation in Europe were to worsen appreciably."

European leaders are hinting at a resolution for the debt crisis, consisting of Greek debt and bank recapitalizations, while simultaneously cautioning observers not to be overly optimistic about an immediate cure-all.  Euro-zone leaders have been using the press extensively to gauge investor reaction to proposed measures in the past, so it will be interesting to see what begins to leak as we move closer to the October 23rd meeting.  European banks have been given three to six months to get their balance sheets in order, and reports regarding a list of the top-50..

The markets started the fourth quarter on a positive note.  For the week ending 10/7, the S&P 500 increased 2.21%, the Dow rose 1.84%, and the NASDAQ was up 2.68%.  Foreign markets also rose with the MSCI EAFE up 2.00% and the MSCI EM up 0.39%.  The BarCap Agg Bond Index was down 0.62% and the DJ Real Estate Index was down 2.04%.

According to Freddie Mac, the 30-year fixed mortgage rate fell below four percent last week for the first time in history.  The 30-year fixed rate averaged 3.94% last week following a sharp decline in 10-year Treasuries earlier in the week.  This should provide the impetus for many borrowers to refinance, with the restriction being the higher standards for qualification.  The number of consumers filing for bankruptcy protection was down 10% year-to-date as of last quarter, compared to the same period one year ago.

European Union leaders have delayed a summit originally scheduled for October 17th until the following Sunday to provide additional time to formulate a strategy for dealing with struggling banks and Greece.  On the ratings side, Fitch downgraded Italy and Spain and Moody's cut 12 U.K. banks and building societies.

The ISM Non-Manufacturing Index indicated expansion in September as the index remained above 50%; however, the index...

Domestic equity markets declined slightly last week to cap off a dismal third quarter.  For the quarter the S&P 500 declined - 13.87%, with the Dow finishing down -11.49%, and the NASDAQ down -12.70%.  Foreign markets were down even more dramatically with the MSCI EAFE off -19.60% and the MSCI EM down -23.19%.

The Bureau of Economic Analysis (BEA) revised the GDP growth rate for the second quarter up to 1.3% from 1.0%.  The upward revision comes on some positive economic news in the U.S. as of late, but these data points will not eradicate concerns of a possible upcoming recession.

European finance ministers met this week in Luxembourg and decided to delay aid to Greece.  Greece was expected to receive €8 billion based on the terms of the bailout that was agreed to earlier this year, but an inability to implement sufficient reforms continues to delay aid payments and spook investors.  Greece's Finance Minister Evangelos Venizelos said Greece...

Domestic equity markets experienced the largest decline of the year during the week ending September 23.  This decline follows the second-largest weekly gain in 2011 that occurred last week.  The S&P 500 fell 6.53%, the Dow declined 6.41%, and the NASDAQ lost 5.29%.  Foreign markets declines were even more dramatic with the MSCI EAFE down 6.83% and the MSCI EM down 11.80%.  The BarCap rose 0.68% and the DJ US Real Estate Index was down 8.49%.

The Fed announced Operation Twist at last week's meeting.  Operation Twist is a series of monetary policy actions that is designed to "twist" the yield curve.  The Fed's economic outlook was more pessimistic than expected, which was a primary contributor to the selloff that ensued following the conclusion of the Fed's meeting.

As of the latest indications, Europe seems to be backing Greece's bailout once again.  Mohamed El-Erian of PIMCO said the European leaders "finally get it."  European leaders have set a six-week deadline...

Domestic equity markets were up big during the week ending September 16, with the S&P 500 gaining 5.42%, the Dow rising 4.78%, and the NASDAQ increasing 6.27%.  Foreign markets were mixed with the MSCI EAFE up 2.19% and the MSCI EM down 1.56%.  The BarCap fell 0.51% and the DJ US Real Estate Index was up 3.87%.

The Fed's expanded FOMC meeting is taking place on September 20 and 21, and it is expceted that they will announce a plan dubbed "Operation Twist" at the meeting's conclusion.  Operation Twist refers to a strategy to replace shorter-term Treasury bonds in relatively close proximity to maturity with long-term Treasury bonds in an attempt to bend the yield curve.  This is an untested policy, and thus the ramifications in practice are unknown.  Expectations for another round of quantitative easing have been subdued by political division and inflation expectations.  The Bureau of Labor Statistics (BLS) reported a 0.4% increase in the CPI and a 0.2% increase in the Core CPI in August on a seasonally-adjusted basis.  The Cleveland Fed reported a 0.3% (3.6% annualized) increase in the Median CPI and a 0.3% (4.0% annualized) increase in the 16% Trimmed Mean CPI, both during the month of August.

Timothy Geithner's attempts to persuade the EU to follow a leverage strategy with the European Financial Stability Facility (EFSF), much like the strategy employed by the U.S. with TALF, was met with scrutiny by European leaders.  What is likely to come from last week's meetings is a set of stress tests for European banks, and sovereign debt exposure is expected to be included in the analysis this time.  Greece has pledged to make drastic spending cuts, including significant layoffs in the public-sector, in the face of the country's widening crisis.  Meanwhile, the President of the European Commission, Jose Manuel Barroso, is expected to propose a set of options for joint...

Domestic equity markets were down during the week ending September 9, with the S&P 500 falling 1.65%, the Dow losing 2.18%, and the NASDAQ declining 0.48%.  Foreign markets experienced more significant declines with the MSCI EAFE falling 5.52% and the MSCI EM losing 2.89%.  The BarCap rose 0.18% and the DJ US Real Estate Index was down 0.51%.

The President outlined a $447 billion proposal on Thursday night labeled the American Jobs Act.  The fiscal policy measures called for under the plan include $240 billion in payroll tax cuts for businesses and individuals alike, $60 billion in aid for states to retain teachers and modernize schools, $75 billion in infrastructure improvements, $49 billion for the extension of unemployment insurance benefits, and mortgage refinancing assistance for which details have yet to be released.  The Fed's September meeting will take place next week beginning on the 20th, and the finance community will certainly be paying close attention to Bernanke's comments at the conclusion of the meeting on the 21st.

Europe is becoming more divided by the day over the decision to continue to support Greece financially versus allowing the country to default.  A meeting among Euro-zone leaders is scheduled to take place on Friday at which Timothy Geithner will be in attendance.  Germany's Chancellor Merkel is facing opposition among Germany's populous as well as within her own cabinet regarding the decision to continue to provide bailout funding to Greece.  Meanwhile, G7 Finance Ministers released a joint statement expressing their commitment to...

The markets rallied for the first time in five weeks as the S&P 500 rose 4.78%, the Dow gained 4.36%, and the NASDAQ increased 5.91%.  The MSCI EAFE was down 3.50% and the MSCI EM lost 1.98%.  The BarCap fell 0.57% and the DJ US Real Estate Index was increased 3.27%.

Friday's Jackson Hole conference came and went without an announcement of further stimulus, but Bernanke's decision to extend September's FOMC meeting from the scheduled one day to two days attracted much attention.  Many are speculating that additional stimulus measures could be announced at the conclusion of the September meeting on September 21.  Bernanke was upbeat about the economy despite its recent struggles, and he advocated for the implementation of fiscal policies to help reignite the economy while maintaining that the Fed has the tools for action if necessary.

Greece's future looked very uncertain one week ago after Finland began requesting collateral in order to move forward with their portion of Greece's second bailout.  While Greece's bond yields remain extremely high, their stock market on Monday experienced its largest single-day gain in 23 years.  The Athens Stock Exchange rose nearly 15% after...

The markets experienced their fourth consecutive weekly decline last week as the S&P 500 fell 4.63%, the Dow lost 3.88%, and the NASDAQ declined 6.58%.  The MSCI EAFE was down 3.50% and the MSCI EM lost 1.98%.  The BarCap rose 0.36% and the DJ US Real Estate Index was fell 3.19%.

All eyes are focused on Bernanke's upcoming speech on Friday in Jackson Hole, Wyoming and the possibility of another round of quantitative easing.  It is not difficult to find opposing viewpoints on the subject of QE3.  The Fed has previously stated that both economic conditions needed to deteriorate and the risk of deflation must be present in order to move ahead with another round of Treasury purchases.  With deterioration in the ISM indices and Fed regional manufacturing surveys, as touched on below and in previous posts, it is clear that the economy has lost momentum and, based on GDP revisions, it is in danger of contracting.  While Bernanke has expressed uncertainty in the past regarding whether or not the slowdown is temporary, the main question mark seems to be future inflation expectations.  Given Bernanke's affinity for stimulus as a measure to avoid an economic downturn, it is likely that at the very least he will outline in greater detail the actions the Fed would take should the conditions warrant further stimulus.

While most bond yields in Europe remain at low levels relative to their peaks of a few weeks ago, Greece's two-year yield climbed more than 11% on Wednesday to over 44% after Finland threatened to withdraw bailout support...

For the week ending August 12, the S&P 500 decreased 1.64%, the Dow fell 1.37%, and the NASDAQ declined 0.95%.  The MSCI EAFE was down 0.97% and the MSCI EM lost 4.93%.  The BarCap rose 0.90% and the DJ US Real Estate Index gained 2.07%.

The market experienced four consecutive 4% moves in either direction last week, a trend only witnessed twice in the last 30+ years during periods in October 1987 and November 2008.  To calm markets, the Fed announced in its August 9 FOMC statement that the current interest rate level of 0-0.25% would be maintained through mid-2013.  The Fed left open the door for additional easing by reminding everyone that it has an arsenal of policy tools and is "prepared to employ these tools as appropriate."  Chairman Bernanke has maintained that a third round of quantitative easing is contingent upon continued economic decline and an increased risk of deflation.  Bernanke will be giving a speech on August 26 in Jackson Hole, WY, the same location where he announced QE2 nearly one year ago.

In addition to €22 billion in purchases of sovereign debt by the European Central Bank (ECB), several Euro-nations have been banning short-selling...

Despite a budget compromise among political leaders, the S&P 500 fell more than 2.5% on Tuesday and another 1.25% on Wednesday morning before paring losses during the afternoon.  Economic data, including the second quarter's dismal 1.3% growth in GDP, are beginning to confirm initial signs of a slowdown revealed as early as April; however, intensified discussions surrounding a possible QE3 and value opportunities in stocks may set the stage for a rally.  The battle of sovereign debt and unemployment vs. stimulus and low borrowing costs wages on.

Hosni Mubarak, the deposed Egyptian leader, is being tried for the killing of unarmed protesters during the 18-day revolt earlier in the year.  What is remarkable is that following the use social media, which helped spark the revolution, the trial is being televised as the ailing Mubarak is confined to a hospital bed inside a defendant's cage.  This is typical of the United States, but not Arab nations, and this pro-democracy event continues the success the demonstrators had in dethroning a nearly 30-year rule.  In Japan, the Fukushima Daiichi plant was found to contain areas with radiation exceeding 10 sieverts per hour, which is enough to cause death in a matter of seconds if a person is exposed.  The radiation reading, which was taken by long-range equipment, cannot be determined more precisely because the device's maximum reading is 10 sieverts.

It seems as though European leaders have finally accepted the inevitability of a Greek default amid the yield on Greek 2-year debt rising to close to 40% in mid-July.  Yields quickly fell below 30% after reaching the apex, but have since been on the rise and currently sit at... 

For the week ending July 8, the S&P 500 increased 0.35%, the Dow rose 0.65%, and the NASDAQ gained 1.56%.  The MSCI EAFE was down 0.53% and the MSCI EM was up 0.62%.  The BarCap rose 0.79% and the DJ US Real Estate Index moved higher by 2.09%.

Many people were caught off guard on Friday when the Bureau of Labor Statistics (BLS) reported nonfarm payroll only increased by 18,000 in June.  In the days leading up to the release, several notable forecasters were looking for the report to beat estimates of 110,000, including ADP which projected an increase of 157,000 jobs in June.  These conclusions turned out to be grossly inaccurate, and the market took a dive at the open on Friday when the BLS released its statement, which also included an uptick in the unemployment rate to 9.2%.  Earlier in the week, the National Federation of Independent Business (NFIB) accurately depicted the bleak employment picture as a “bust” in June, while also stating that plans to add new hires over the next three months turned positive.  In a separate report, the NFIB announced that small business optimism dropped 0.1% in June.  We are becoming trapped in a vicious cycle where high levels of unemployment lead to lower tax revenues, higher transfer payments from the government to its citizens, and a diminished capacity for raising tax rates because of the number of people struggling at the existing levels.   Lower inflows and higher outflows result in higher debt levels and spending cuts, which in turn lead to additional job losses. 

Ireland’s debt was downgraded by Moody’s to junk status with a negative outlook on Tuesday about half an hour before markets closed in New York, causing the S&P to decline after paring losses from the overnight futures session.  Italy and Spain have reemerged as major concerns in Europe with regard to financial stability, and the threat of contagion is being revealed by...

For the quarter ending June 30, the S&P 500 gained 0.10%, the Dow rose 1.42%, and the NASDAQ lost 0.04%.  The MSCI EAFE was up 0.33% and the MSCI EM was down 2.11%.  The BarCap rose 2.29% and the DJ US Real Estate Index gained 2.69%.

As the quarter approached its end and a deal was struck with Greece, the market sustained a nice rally.  However, European markets were hit hard following Moody’s downgrade of Portugal to junk with a negative outlook.  The 10-year yield on Portuguese debt skyrocketed the next day, rising over 18%.  Other Euro-zone yields have followed suit this week as well, although at a lesser pace.  Ireland is at risk of becoming the third Euro-zone nation to be downgraded to junk.  It currently holds a Baa3 rating, which is Moody’s lowest investment grade rating.

The Institute for Supply Management (ISM) reported a 1.8 percentage point increase to 55.3% for the June PMI Manufacturing Index.  The Kansas City Fed’s Manufacturing Survey indicated a solid rebound in after the index increased one point from May to 14 in June.  The Richmond Fed also signaled a pickup by moving back into positive territory after increasing 9 points to 3 in June.  These surveys hint that the severe decline in manufacturing was...

For the week ending June 24, the S&P 500 declined 0.22%, the Dow fell 0.58%, and the NASDAQ gained 1.40%.  The MSCI EAFE was down 0.80% and the MSCI EM was up 1.08%.  The BarCap rose 0.33% and the DJ US Real Estate Index lost 0.33%.

The Bureau of Economic Analysis (BEA) reported a 1.9% increase in Real GDP in the third estimate for the first quarter.  The growth rate rose slightly from the previous estimate of 1.8%.  Corporate profits increased $48.7 billion in the first quarter, compared with an increase of $38.2 billion in the fourth quarter, as companies continued to slash expenses.

The International Energy Agency (IEA) and its members agreed to release 60 million barrels of crude oil from emergency stocks, with 30 million barrels coming from the U.S. strategic reserve, to offset lost production from Libya.  This is only the third time in history that the IEA has intervened in this way, according to the Wall Street Journal.

Greece's Prime Minister George Papandreou succeeded in a confidence vote last week, and then proceeded to gain cabinet approval for an austerity budget as required by the EU.  This has outraged Greek citizens, who are also facing an additional "solidarity" tax.  Trade unions in Greece began a 48-hour strike that shut down airports, ferries, busses and trains.  Approximately 5,000 police were deployed and forced to use tear gas after rioters began throwing bricks from nearby buildings.  Another battle is under way...

For the week ending June 17, the S&P 500 rose 0.10%, the Dow gained 0.53%, and the NASDAQ lost 1.02%.  The MSCI EAFE was down 0.97% and the MSCI EM fell 2.22%.  The BarCap was flat and the DJ US Real Estate Index rose 1.67%.

The Bureau of Labor Statistics (BLS) reported a 0.2% increase in the Consumer Price Index for All Urban Consumers (CPI-U) in May (seasonally adjusted).  This index has increased 3.6% year-over-year (YoY).  The Core CPI (CPI-U less food and energy) rose 0.3% in May and is up 1.5% YoY.  The Cleveland Fed reported a 0.2% increase in both the Median CPI and 16% Trimmed-Mean CPI.  Over the last 12 months, the 16% Trimmed-Mean CPI has risen 1.9% and the Median CPI has risen 1.5%.  In the midst of declining Fed manufacturing surveys and European debt issues, several forecasts for Q2 GDP have been lowered and now generally range from approximately 2% - 2.5%.  In light of the recent market pullback, Chairman Bernanke has announced that the Fed may decide to prolong the stimulus known as QE2.

The Shanghai Composite has experienced a 14% correction over the last two months as concerns over a possible peak in China’s bustling real estate market have resurfaced.  Prices of new homes in Beijing have fallen more than 20% year-over-year as of May, according to The Chinese Post, and many analysts believe other cities in China will follow this trend during the remainder of the year.  Developers are being forced to offer discounts after the Chinese government implemented fiscal tightening in an effort to curb inflation.

Greece’s monthly €12 billion stimulus payment, which is part of the €110 billion aid package the country received last year, is being withheld by European finance ministers until the parliament in Athens decides to implement further austerity measures.  The issuance of the monthly installment, which Greece needs by mid-July to remain solvent...

For the week ending June 10, the S&P 500 declined 2.22%, the Dow fell 1.62%, and the NASDAQ lost 3.25%.  The MSCI EAFE was down 2.45% and the MSCI EM fell 2.31%.  The BarCap gained 0.10% and the DJ US Real Estate Index decreased 3.92%.

The Department of Commerce reported that the trade deficit decreased to $43.7 billion in April, which provided a boost to markets last week.  April exports totaled $175.6 billion versus imports of $219.2 billion.  The trade deficit declined by $3.1 billion from the previous month.

Despite an announcement by OPEC to maintain current production levels of oil after member countries failed to agree on an increase, Saudi Arabia's Al-Hayat newspaper reported that Saudi oil officials decided to raise production to 10 million barrels per day from 9.3 million barrels.  The 700,000 increase in production will cover just over half of the estimated 1.3 million barrels of lost production due to the ensuing battles in Libya.  Despite the fact that the report, which is coming from a closely-controlled Saudi publication, was not denied by Saudi officials, the old adage, "actions speak louder than words," should be heeded.  Meanwhile, Qaddafi is reportedly running short on cash...

The Bureau of Economic Analysis (BEA) refrained from revising the initial estimate of 1.8% annualized real GDP growth in the first quarter.  The BEA also reported a $46.1 billion, or 0.4%, increase in personal income and a $41.5 billion, or 0.4%, increase in personal consumption expenditures (PCE) in April.

As of Wednesday's close, TEPCO shares were down nearly 86% since the March 11 earthquake/tsunami disaster, which is a dramatic decline but pales in comparison to the 98% loss realized by Libya on specific bets with Goldman Sachs totaling $1.3 billion.  According to Reuters, the Libyan Investment Authority (LIA), run by Muammar Qaddafi, "paid $1.3 billion for options on a basket of currencies and on six stocks - Citigroup Inc., Italian bank UniCredit SpA, Spanish bank Banco Santander, German insurance giant Allianz, French energy company Electricite de France and Italian energy company Eni SpA."  Meanwhile, Libya has witnessed the defection of several senior members...

Greece continues to face international pressure amid ominous signs from the bond and swap markets.  Despite massive protests from its citizens, Greece approved the asset sales of stakes in Hellenic Telecommunications Organization SA, Public Power Corp SA, Hellenic Postbank SA, and the country's ports, according to Bloomberg.  Fitch downgraded Greece's debt to B+ from BB+, stating that the rating "incorporates Fitch's expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a 'soft restructuring' or 're-profiling' that would trigger a 'credit event' and default rating from Fitch."

According to Bloomberg, Tokyo Electric Power Co. confirmed core meltdowns in Reactors 1, 2, and 3.  Confirmation was obtained after workers gained entrance to and recover data from the plant.  Air strikes on Muammar Qaddafi's compound in Libya reached their heaviest point so far, and as a result a heavy cloud of smoke is emanating from the area.  The use of Apache helicopters is being debated.  The deployment of such attack helicopters would signify...

For the week ending May 6, the one-year anniversary of the Flash Crash, the S&P declined 1.68%, the Dow fell 1.29%, and the NASDAQ lost 1.56%.  The MSCI EAFE was down 2.32% and the MSCI EM decreased 3.38%.  The Barclays Capital Agg. Bond Index gained 0.57% and the DJ US Real Estate Index fell 2.06%.

Last Friday marked the one-year anniversary of the Flash Crash; meanwhile, the week marked a quick and deep commodities correction.  Silver's 27% decline last week makes it the largest weekly decline in the precious metal since March 1980 when Nelson Bunker Hunt and William Herbert Hunt's attempt to corner the silver market abruptly ended.  Silver's decline is primarily attributable to increased margin requirements set by the futures exchanges, which, along with buying restrictions, also contributed to the fall in silver futures in 1980.  When the Comex Board of Governors stopped accepting bids on the long side in March 1980, causing silver prices to fall 50% in one day, the Hunt brothers proclaimed, "the foxes are guarding the chicken coop," alleging that the board was acting in a self-serving manner because of short positions in silver held personally by several members of the board.  Over the last two weeks, the Chicago Mercantile Exchange rose required margins (the minimum dollar value used as collateral for a futures contract) four times, including 9% and 10% increases two weeks ago and 12% and 33% increases last week, resulting in an 80%+ increase over two weeks.  Another futures exchange, Think or Swim, doubled initial margins over this time period.  Crude oil futures fell 15%, but prices at the pump hardly budged.  Several weeks ago, Saudi Arabia's Oil Minister proclaimed an overabundance of crude oil.  Meanwhile, gasoline inventories have been in decline.  When the revolt in Libya began in mid-February, gasoline inventory totaled 241 million barrels.  That figure has declined 15% to 206 million barrels as of the end of April, and this decline has helped keep supply and demand in equilibrium despite a decrease in demand resulting from a dramatic rise in prices.  Furthermore, prices at the pump are typically slow to adjust to price changes in crude oil futures.

Workers entered Japan's Fukushima Daiichi nuclear plant for the first time since the earthquake occurred two months ago.  A team began installing six ventilation machines in the No. 1 Reactor to absorb isotopes from the air in an effort to lower radiation levels.  Tepco plans to add cooling equipment to Reactors 2 and 3 and begin stabilization of the plant over the next six months.  However, it could take years to completely deactivate the reactors.

Standard & Poor's lowered Greece's credit rating from BB- to B.  Greece has failed to meet projections necessary to reduce E.U.-mandated debt levels relative to GDP, and the Greek government is expected to need...

For the week ending April 29, the S&P increased 1.99%, the Dow gained 2.47%, and the NASDAQ rose 1.91%.  The MSCI EAFE was up 2.34% and the MSCI EM fell 0.16%.  The Barclays Capital Agg. Bond Index gained 0.63% and the DJ US Real Estate Index rose 2.54%.

The killing of Bin Laden on May 1 was received as one of the most significant events for Americans since 9/11.  Bringing the most wanted terrorist and a perpetrator of mass-murder on American soil to justice resolves many questions and brings renewed strength to Americans and citizens around the world struggling through the lingering effects of the recent recession.  Although uncertainty abounds regarding Bin Laden's successor in al-Qaeda and retaliatory attacks seeking to avenge his death, there is no doubt that this operation was an immense success that has weakened al-Qaeda and sent a clear message to all terrorist networks.  Additionally, a few coincidences are notable: Pope John Paul II was beatified earlier that morning; Hitler's body was found on May 1, 1945 (he committed suicide on the previous day); and George Bush announced "mission accomplished" in regards to Operation Iraqi Freedom from an aircraft carrier off the coast of California on May 1, 2003.

The results of a March 2011 Greenwich Market Pulse study suggest that "loan demand and actual borrowing activity among small businesses and all middle market companies is recovering actively."  The results of the Market Pulse study show...

For the week ending April 22, the S&P increased 1.35%, the Dow gained 1.36%, and the NASDAQ rose 2.01%.  The MSCI EAFE was up 2.02% and the MSCI EM gained 2.06%.  The BarCap gained 0.11% and the DJ US Real Estate Index rose 1.62%.

The Fed released their FOMC statement following the conclusion of two days of meetings on Wednesday, and Chairman Bernanke held a press briefing for the first time in the history of the Fed.  Compared to the Fed's previous meeting in January, expectations for 2011 GDP growth were revised down from 3.4-3.9 to 3.1-3.3; expectations for Core Inflation (ex-food and energy) increased slightly from 1.0-1.3 to 1.3-1.6, and expectations for overall inflation increased from 1.3-1.7 to 2.1-2.8.  The expected range for the unemployment rate dropped from 8.8-9.0 to 8.4-8.7.

Tepco successfully pumped 372,000 gallons of radioactive water from the second reactor's building to a storage unit.  Although more than 2 million more gallons of radioactive water still need to be removed, Tepco is moving in the right direction by not having to dump the water in the ocean.  Tepco's head of nuclear maintenance, Teruaki Kobayashi, announced that the six reactors are connected to power sources in pairs, and the company expects to complete the installation of additional cables to supply backup power.  Tepco President Masataka Shimizu is expected to resign over the coming weeks.  Meanwhile, supply chain disruptions continue to add uncertainty to companies' overall production capacity, including several car and computer hardware manufacturer.  Toyota expects production to make a full recovery by the end of the year.  The United States began using predator drones in missile attacks on Libya last week.  On Monday, one of Qaddafi's strongholds was demolished by a NATO air attack.  West Texas Intermediate crude resumed its advance to $112 per barrel.

Greece's yields continue to skyrocket amid increased speculation surrounding a potential default.  Greece's 10-yr yield reached 16.18% and the 2-yr yield was up to 25.4%.  According to the Financial Times, Greece has launched an investigation into widespread market speculation surrounding a potential default after an email by a Citigroup employee questioned the imminence of a "credit event" (i.e., default).  Portugal's yields have also been rising exponentially...

For the week ending April 15, the S&P decreased 0.63%, the Dow lost 0.31%, and the NASDAQ fell 0.55%.  The MSCI EAFE was down 1.10% and the MSCI EM declined 2.03%.  The BarCap gained 0.82% and the DJ US Real Estate Index rose 2.18%.

Standard & Poor's put a negative outlook on the long-term credit rating of the United States, which currently stands at the highest level of AAA.  S&P cited a "material risk that U.S. policy makers might not reach an agreement on how to address medium-and-long-term budgetary challenges by 2013."  S&P attributes a one-third probability that it will lower the U.S. rating in the next two years, while forecasting that the U.S. national debt will rise to 84% of GDP by 2013.

The Fukushima Daiichi crisis has caused nuclear officials to take a closer look at Chernobyl, which is reportedly still leaking radiation nearly 25 years to the day of the explosion.  A meeting, which was scheduled before the Japanese disaster, is being leveraged by Ukrainian President Viktor Yanukovych to seek international financing and support for a new containment shelter to encapsulate the Chernobyl site for the next 100 years.  The price tag of the sarcophagus is in the neighborhood of €1.75 billion, and the Ukraine estimates the total cost of the disaster at $12 billion thus far since the country gained independence from Russia in 1991.  The current shelter, whose collapsing western wall required two scaffolding towers to be built in 2008 for support, has five years left in its lifespan.  Meanwhile, protests in Syria have escalated after minor concessions offered by President Bashar Assad were dismissed.  The price of crude oil declined after Saudi Arabia's Oil Minister, Ail al-Naimi, said the global market for crude is "oversupplied."

Very little is standing in the way of a restructuring of Greek debt.  Multiple German officials have begun discussing the prospects of Greece's default, and unsustainable financing levels continue to get worse...

Investors took a breather during the week that ended April 8 after a tumultuous first quarter.  For the week, the S&P decreased 0.26%, the Dow rose 0.11%, and the NASDAQ fell 0.32%.  The MSCI EAFE was up 1.85% and the MSCI EM gained 1.76%.  The BarCap declined 0.29% and the DJ US Real Estate Index dropped 1.94%. 

Political grandstanding caused a scare among some market participants last week, but a budget deal was reached in the final hours and a government shutdown was avoided in the end.  Several doomsday scenarios were scattered across the newswire regarding a range of potential ramifications from a shutdown, but history shows the probability of such a stoppage is negligible.  Excluding two shutdowns in November and December 1995, which lasted five and 21 days, respectively, government shutdowns since 1980 have lasted three days or fewer.  Prior to 1980, government shutdowns often lasted a week or more, but on April 25, 1980, Attorney General Benjamin Civiletti issued a formal opinion which stated that maintaining nonessential operations in the absence of appropriations was not permitted under the Antideficiency Act.

Three aftershocks with magnitudes greater than 6.0 struck coastal Japan between April 7 and April 11.  These pale in comparison to the 9.0 magnitude quake on March 11, but they have caused workers at the Fukushima Daiichi plant to evacuate and temporarily cease containment and cooling operations.  In reality, hundreds of aftershocks have occurred around Japan and in other parts of the world over the last month, but their magnitudes are of minor significance and this phenomenon is not uncommon.  What is of significance is the fact that Japan raised the rating of its nuclear crisis from 5 to 7, which is the highest level and matches the rating assigned to Chernobyl's 1986 disaster.  Increasing radiation and the aftershocks prompted the government to widen the evacuation zone.

90 of Europe's largest banks will undergo a stress test overseen by the European Banking Authority (EBA) in June.  A stress test last year failed to restore confidence in Europe's banks due to a lack of rigorousness, and the EBA said this year's test is intended to circumvent such criticism.  Reuters reported that China, which currently holds $36 billion in Spanish sovereign debt, is considering...

During the quarter that ended March 31, the major U.S. equity indices were up between 5% and 10%.  During the first quarter, the S&P increased 5.92%, the Dow gained 7.07%, and the NASDAQ rose 5.05%.  The MSCI EAFE was up 2.67% and the MSCI EM gained 1.69%.  The BarCap rose 0.42% and the DJ US Real Estate Index rose 7.20%.

Recently released minutes from the March 15 FOMC meeting revealed an almost unanimous vote to continue with purchases of Treasury securities at the current pace with no desire to gradually wind the program down prior to its June ending date.  According to the minutes, inflation is expected to be "transitory," though the Fed will continue to watch trends and long-term inflation expectations closely.  The FOMC participants expected downside risks, including those from the "banking and fiscal strains in the European periphery, the continuing fiscal adjustments by U.S. state and local governments, and the ongoing weakness in the housing market," to be offset by upside momentum, including "improvement in labor market conditions" which may result in a more rapid increase in household spending and business investment than currently estimated.  Uncertainty surrounding federal government spending, economic implications resulting from the disaster in Japan, and oil production disruptions pose downside risks to growth.

The President of Softbank, Masayoshi Son, who is Japan's richest man, pledged to donate 10 billion yen ($120 million) and his remaining salary until retirement to victims of Japan's earthquake and tsunami.  This personal act of humanitarianism is representative of the Japanese citizens' commitment to their nation and its population and their sense of personal responsibility in leading the country forward.  TEPCO's lack of commitment is equally evident in their release of radioactive water into the ocean due to an apparent lack of alternatives.  The measure of last resort shows a absence of planning and foresight that mirrors last year's oil spill involving BP and Transocean in the Gulf of Mexico.  According to testimony by a Transocean equipment manager, the blowout preventer that failed in sealing off the pipe received regular inspections and replacement parts as needed, but it was four years overdue for a complete overhaul that was recommended after five years of service.  In both the Deepwater Horizon oil spill and Japan's nuclear meltdown, it seems as though the severity of the disasters could have been mitigated by following proper procedures and taking action to avoid previously identified risks.

Portugal requested a bailout from the E.U. on Wednesday following a dramatic advance in yields over the last several weeks.  The requested assistance is expected to be in the neighborhood of €80 billion.  Ireland reported the completion of its bank stress tests...

During the week that ended March 25, the major U.S. equity indices were up greater than 2.75%.  For the week, the S&P increased 2.72%, the Dow gained 3.05%, and the NASDAQ rose 3.77%.  The MSCI EAFE was up 3.41% and the MSCI EM gained 4.13%.  The BarCap declined 0.60% and the DJ US Real Estate Index rose 0.60%. 

The Bureau of Economic Analysis reported that the final estimate of real GDP in the fourth quarter was revised up to 3.1% at an annual rate from the 2.8% estimate given in the first revision provided last month.  Positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment were partially offset by detractions by private inventory investment and state and local government spending.  Imports, which detracted from GDP, decreased from the previous estimate, resulting in a net increase to GDP.  Personal income reportedly increased $38.1 billion, or 0.3%, in February, while personal consumption expenditures (PCE) increased $69.1 billion, or 0.7%.  The increase in real PCE of 0.3% was below expectations and will likely result in downwardly revised projections for GDP growth in the first quarter of 2011.

The hope that a nuclear meltdown would be avoided at the Fukushima Daiichi plant has deteriorated.  Increasingly high levels of radiation in amounts known to be deadly are being found in pools of water in and around the plant, and elevated levels have been found in soil and ocean water samples taken from areas in close proximity to the plant.  Shares of Tokyo Electric Power (TEPCO) are down 73% since March 11 when the earthquake and tsunami struck Japan.  At least a partial meltdown at the Fukushima Daiichi plant is widely suspected at this point, and ascertaining accurate radiation measurements is difficult due to the fact that high levels of lethal radioactive elements in and around the reactors preclude workers from entering the area for substantial periods of time.  Leaders around the world are already beginning to evaluate their own nuclear energy policies...

During the week that ended March 18, the major U.S. equity indices declined.  For the week, the S&P decreased 1.91%, the Dow lost 1.54%, and the NASDAQ fell 2.64%.  The MSCI EAFE was down 2.67% and the MSCI EM lost 0.90%, while the BarCap rose 0.40% and the DJ US Real Estate Index fell 1.22%.

The Federal Reserve announced the completion of its Comprehensive Capital Analysis and Review (CCAR), a study of capital plans at the 19 largest U.S. bank holding companies.  As a result of its findings, several banks, including J.P. Morgan, Goldman Sachs, and Wells Fargo, announced share buybacks and dividend increases on March 18.  Citigroup, trading at $4.50 as of Friday's close, reinstated a $0.01 dividend and announced a 1-for-10 reverse stock split.

Reports out of Japan are mixed regarding the progress in cooling the nuclear reactors and containing the nuclear materials to the Fukushima Daiichi plant.  Tokyo Electric Power Corporation (TEPCO) has prevaricated in its release of information to the public and to leaders of Japan.  A U.S. drone known as Global Hawk was deployed to acquire aerial surveillance of the plant and surrounding area.  Contrary to a 12-mile evacuation zone established by the Japanese government, the head of the U.S. Nuclear Regulatory Commission said the evacuation zone should encompass a 50-mile radius based on the agency's analysis of conditions at the plant.  A topic that has been given little attention, most likely due to the fact that everyone is focused on avoiding a nuclear meltdown, is how Japan's future energy needs will be satisfied.  The Japanese are highly dependent on nuclear energy due to their lack of natural resources.  Japan has 54 nuclear power plants, which ranks third behind the United States and France in total number of plants.  The Fukushima Daiichi plant was responsible for generating 10-12% of Japan's nuclear power production capacity in millions of watts of electricity (MWe), according to data from the International Atomic Energy Agency.  Due to the possibility that the plant will be permanently inoperable due to the corrosive effects of seawater, Japan will be required to generate this significant amount of power with other means until a new plant is constructed.  Japan is already the largest importer of natural gas, and this is expected to increase as natural gas will be one alternative to nuclear energy that will be relied upon by the Japanese.

The future of Japan's nuclear industry will no doubt be subjugated by increased scrutiny of current Japanese nuclear energy policies, and actions by the International Atomic Energy Agency (IAEA) and the global community...

During the week that ended March 11, the major U.S. equity indices declined.  For the week, the S&P decreased 1.21%, the Dow lost 0.92%, and the NASDAQ fell 2.46%.  The MSCI EAFE was down 3.42% and the MSCI EM lost 2.63%.  The BarCap rose 0.43% and the DJ US Real Estate Index gained 0.39%.

The Census Bureau released the trade deficit on Thursday morning following a sharp sell-off in the last hour of overnight futures trading.  The deficit was reported at $46.3 billion in January based on exports of $167.7 billion and imports of $214.1 billion.  The trade deficit was up from a revised figure of $40.3 billion in December.

The 8.9 magnitude earthquake off the coast of Japan on Friday has caused uneasiness among market participants.  Japan's broad index, the Nikkei, opened Monday morning's trading session down 6% and fell 10.55% on Tuesday.  Two explosions at a nuclear power plant have increased the risk of meltdown, and officials have struggled to pump cold water to cool the fuel rods...

During the week that ended March 4, the major U.S. equity indices rose slightly.  For the week, the S&P increased 0.12%, the Dow gained 0.33%, and the NASDAQ rose 0.14%.  The MSCI EAFE was up 0.82% and the MSCI EM gained 3.55%, while the BarCap decreased 0.05% and the DJ US Real Estate Index lost 1.05%. 

The Bureau of Labor Statistics (BLS) reported on Friday that 192,000 jobs were added in February and the unemployment rate ticked down to 8.9%.  The change in total nonfarm payroll for January was revised up to +63,000 from +36,000 and the change in December was revised up from +121,000 to +152,000.  The labor force participation rate was unchanged at 64.2% in February, which is the lowest level in over 25 years.  The employment-population ratio was also unchanged in February, coming in at 58.4%.  This report was slightly below expectations; however, the revisions to the prior two months were both positive.

Moammar Qaddafi intensified his assault on Libyan "rebels" this week, which correlates with increased support from international leaders for a no-fly zone over Libya.  Qaddafi ordered an air strike on Ras Lanuf, an oil port on Libya's coast, as he and his supporters continue their defense of Tripoli and Surt, Qaddafi's home town.  As a result of mounting fears of decreased oil production or even a supply shock, the price of West Texas Intermediate (WTI) crude has risen to $105 per barrel.

Moody's cut Greece's rating three notches to B1 and assigned a negative outlook to the country's debt, citing the government's difficulties with revenue collection and...

During the week that ended February 25, the major U.S. equity indices fell.  For the week, the S&P declined 1.67%, the Dow lost 2.03%, and the NASDAQ fell 1.85%.  The MSCI EAFE was down 1.56% and the MSCI EM declined 2.01%, while the BarCap increased 0.70% and the DJ US Real Estate Index lost 0.46%.

The Bureau of Economic Analysis revised their estimate of GDP in the fourth quarter of 2010 down to 2.8% at an annualized rate.  The initial estimate at the end of January showed GDP grew at an annualized rate of 3.2% in the fourth quarter.  The most significant reductions relative to the initial estimate came from an increase in imports and a reduction in spending by state and local government, followed by a decrease in personal consumption expenditures.

As civil war continues in Libya, several attempts have been made to put an end to the fighting.  The U.N. imposed an arms embargo on Libya on Saturday, referred its leaders to the International Criminal Court and imposed financial and trade sanctions on Moammar Qaddafi and his inner circle.  President Obama and his administration have been publicly calling on Qaddafi to step down, citing an illegitimacy to rule based on violence as the sole means of staying in power.

Ireland elected a new leader, Enda Kenny, who will travel to Helsinki on Friday to meet with the German chancellor and French president to renegotiate his country's bailout terms...

During the week that ended February 18, the major U.S. equity indices rose.  For the week, the S&P increased 1.10%, the Dow gained 1.08%, and the NASDAQ rose 0.83%.  The MSCI EAFE was up 2.04% and the MSCI EM gained 2.83%, while the BarCap increased 0.42% and the DJ US Real Estate Index rose 0.47%.

The FOMC's minutes for the January 25th meeting were released last week.  Revisions to projected economic statistics included an upward revision to projected Real GDP growth in 2011 and a downward revision to the projected unemployment rate in 2011 through 2013.  Minor revisions were made to projected PCE and Core PCE Inflation rates.

Colonel Muammar el-Qaddafi is the latest leader of an impoverished nation to witness an uprising focused on ending an oppressive regime.  Qaddafi has vowed to fight to the death, and violence perpetuated by the dictator on his country's citizens has drawn condemnation from German and French leaders and sanctions have been discussed by the EU.  Despite Qaddafi's tough talk, it appears as though the Libyan leader for the last 40 years is on his way out after losing control of Benghazi, Libya's second-largest city, and the breakdown of parts of the country's borders and defections by a significant portion of Libya's army.  Meanwhile, oil prices have continued to climb...

During the week that ended February 11, the major U.S. equity indices rose as investors showed a preference for riskier investments.  For the week, the S&P increased 1.46%, the Dow gained 1.62%, and the NASDAQ rose 1.47%.  The MSCI EAFE was up 0.02% and the MSCI EM fell 3.41%.  The BarCap experienced no gain for the week and the DJ US Real Estate Index rose 2.68%. 

The dominant story both domestically and abroad concerns the resignation of former Egyptian President Mohammed Hosni Mubarak.  After 18 days of protesting, which was organized in large part via social media and other technology, and despite defiant attempts by the former dictator to remain in power, Mubarak finally conceded and left the country with stealth.  Mubarak's Vice President, Omar Suleiman, announced that the former president was headed for his home in Sharm el-Sheik, a resort town on the Red Sea.  Mubarak's journey, presumably to live out his remaining days in isolation with his family, has only just begun.  The Swiss government froze his assets and those of his entourage in a continued effort to escape its reputation as a money-laundering destination for illegally-obtained funds.  The freeze will last for three years, according to the Wall Street Journal.  Global Financial Integrity, a Washington, D.C.-based group that tracks global corruption, estimates that approximately $57 billion in illicit assets left Egypt between 2000 and 2008...

During the week that ended February 4, the major U.S. equity indices rose greater than 2 percent with a slight preference for riskier investments.  For the week, the S&P increased 2.74%, the Dow gained 2.30%, and the NASDAQ rose 3.10%.  The MSCI EAFE was up 1.69% and the MSCI EM gained 0.30%.  The BarCap experienced a significant decline of 1.17% for the week and the DJ US Real Estate Index rose 1.13%. 

The Bureau of Labor Statistics (BLS) released its Employment Report for January on Friday.  The report indicated that nonfarm payroll employment increased 36,000 in January and the unemployment rate fell by 0.4 percentage points to 9.0 percent.  The number of unemployed persons decreased by approximately 600,000 in January to 13.9 million, while the labor force was unchanged.  The labor force participation rate was unchanged, while the number of job losers and persons who completed temporary jobs fell from 8.9 to 8.5 million.  The number of long-term unemployed (jobless for 27 weeks or more) edged down to 6.2 million and accounted for 43.8% of the unemployed.  Manufacturing and retail trade added jobs over the month, while employment declined in construction and transportation and warehousing.

The People's Bank of China raised both the one-year lending rate and the one-year deposit rate by 0.25% to 6.06% and 3.00%, respectively.  This is the third rate hike China's central bank has employed since mid-October as the country strives to keep inflation in check while simultaneously maintaining their currency's peg to the U.S. dollar.  With China's inflation rate above five percent, a savings rate at this level continues to incentivize consumer spending rather than curb inflation.

During the week that ended January 28, the major U.S. equity indices reversed the prior week's divergence as Mid-Caps and Small-Caps were up and Large-Caps were down.  Volatility increased last week, brunt of the losses occurred on Friday when the Dow, S&P, and NASDAQ were down 1.39%, 1.79%, and 2.48%.  For the week, the S&P declined 0.53%, the Dow fell 0.41%, and the NASDAQ lost 0.09%.  The MSCI EAFE was up 0.37% and the MSCI EM was down 0.91%.  The BarCap experienced a modest gain of 0.39% for the week, large compared to weekly gains over the last four months, and the DJ US Real Estate Index rose 1.44%. 

The advanced estimate of GDP in the fourth quarter was reported by the Bureau of Economic Analysis.  GDP reportedly increased at 3.2% in Q4:2010 compared to the previous quarter.  Although better than the 2.6% growth rate in the third quarter, GDP came in below expectations for an increase of 3.5%.

Egypt has become a major global concern since protests began in the streets on January 25th, a national holiday in Egypt celebrating the police force, which have been key to Honsi Mubarak's 30-year reign as president.  Protesters organized well in advance using social media and other technology.  Any long-term upheaval is feared to have similar effects in other proximate countries, just as Tunisia's uprising that resulted in its president being overthrown was a catalyst to the situation in Egypt and Egypt was a catalyst for protests that are ongoing in Yemen.  The effects these uprisings are having on the price of oil is of particular concern to investors, and crude oil futures are up over 7% since January 25th.

During the week that ended January 21, the major U.S. equity indices experienced declines with the exception of the Dow.  For the week the S&P 500 decreased 0.75%, the Dow rose 0.78%, and the NASDAQ lost 2.39%.  International indices suffered less severe losses as the MSCI EAFE declined 0.70% and the MSCI EM fell 0.02%.  The BarCap U.S. Agg. Bond Index lost 0.25% and the DJ US Real Estate Index declined 0.09%.

The Fed reported in the release of the Beige Book that data from the twelve Federal Reserve Districts "suggest that economic activity continued to expand moderately from November through December."  Activity in residential real estate and new home construction remained slow across all Districts as "high levels of existing home inventories continue to damp the pace of new home construction in most Districts reporting on construction."  Eight of the twelve markets "characterized local housing markets as weak and sluggish with little change from the previous reporting period."  Four of the Districts, including New York, Chicago, and San Francisco, mentioned distressed properties as putting downward pressure on prices.  Commercial real estate markets displayed mixed results across the Districts, as leasing markets exhibited increasing signs of recovery and nonresidential construction remained weak.

China's National Bureau of Statistics reported the preliminary estimation of GDP was up 10.3 percent in 2010 compared with a 9.2 percent increase in 2009.  Speculation is mounting regarding a potential third rate hike in three months by the People's Bank of China...

During the week that ended January 14, the major U.S. equity indices rose across the board.  For the week the S&P 500 increased 1.72%, the Dow rose 0.96%, and the NASDAQ gained 1.94%.  International indices experienced strong gains as the MSCI EAFE gained 2.70% and the MSCI EM rose 1.12%.  The BarCap U.S. Agg. Bond Index increased 0.11%, making this the third consecutive weekly gain, and the DJ US Real Estate Index increased 1.32%.

With state and local governments already at the center of attention due to budget deficits and difficulties meeting their obligations, the first interest payment is coming due to the federal government for financial assistance during the downturn.  A collective $1.3 billion is due from the states that borrowed a total of $41 billion used to help pay unemployment benefits.  While some states such as New York and California, which owe $115 million and $362 million in interest and borrowed $3.2 billion and $9.7 billion, respectively, intend to impose tax surcharges and borrow from existing funds to meet the demand, Texas generated $2 billion through a bond auction to repay their entire borrowed amount after determining this to be the cheapest option.

Chinese President Hu Jintao met with President Obama on Wednesday in Washington, D.C.  President Obama called for a continuation in cooperation with the Chinese that has been evolving over the last 30 years.  House Speaker John Boehner, Senate Majority Leader Harry Reid, and Senate Minority Leader Mitch McConnell were all absent from a State Dinner with President Hu on Wednesday evening citing "scheduling conflicts."  Dan Mahaffee, an expert on China at the Washington-based Center for the Study of the Presidency and Congress said their absences...

During the week that ended January 7, the major U.S. equity indices rose with investors favoring large-caps and tech over mid- and small-caps and foreign.  For the week the S&P 500 increased 1.16%, the Dow rose 0.91%, and the NASDAQ gained 1.91%.  International indices declined as the MSCI EAFE fell 0.83% and the MSCI EM lost 0.37%.  The BarCap U.S. Agg. Bond Index increased 0.02%, its first consecutive weekly gain since early-October, and the DJ US Real Estate Index declined 0.33%.

Gene Sperling was named the Director of the National Economic Council, succeeding Larry Summers.  Mr. Sperling also held this position under President Clinton during his two presidential terms.  The Fed's Beige Book, released on Wednesday, stated that "reports from the twelve Federal Reserve Districts suggest that economic activity continued to expand moderately from November through December.  The report also indicated high levels of existing home inventories continued to depress the pace of new home construction, while commercial real estate markets displayed mixed results across the Districts.  The Illinois House passed tax hikes, increasing the individual income-tax rate from 3% to 5% and the corporate tax from 4% to 7%.

U.S. Treasury Secretary Tim Geithner addressed the U.S.-China economic relationship in Washington, D.C. on Wednesday.  He called for China to implement measures to strengthen the "substantially undervalued" yuan due to the competitive disadvantage it has been causing for other countries.  President Obama is scheduled to meet with Chinese President Hu Jintao on January 19.  The yuan has gained 6% annualized since June, but Geithner pointed out...

During the week that ended December 31, the major U.S. equity indices were mixed as investors had a slight preference for higher-quality investments over riskier issues.  For the week the S&P 500 increased 0.09%, the Dow rose 0.05%, and the NASDAQ declined 0.47%.  International indices advanced as the MSCI EAFE increased 0.68% and the MSCI EM gained 2.18%.  The BarCap U.S. Agg. Bond Index increased 0.58%, its first significant gain in eight weeks, and the DJ US Real Estate Index rose 1.69%.

The Fed released the FOMC Minutes from the December 14 meeting, which indicate that a decision to change their QE2 policy was not imminent.  The minutes state, "while the economic outlook was seen as improving, members generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase program, and some noted that more time was needed to accumulate information on the economy before considering any adjustment."  The three main concerns included housing sector weakness, fiscal positions of U.S. states and localities, and the banking and financial strains in Europe.

The British media have coined the term, "Peking Pound," signifying...

During the week that ended December 24, the major U.S. equity indexes rose.  For the week the S&P 500 increased 1.07%, the Dow rose 0.72%, and the NASDAQ gained 0.87%.  International indexes also rose, as the MSCI EAFE increased 1.58% and the MSCI EM gained 1.02%.  The BarCap U.S. Agg. Bond Index fell 0.20%, its sixth decline in seven weeks, and the DJ US Real Estate Index rose 2.57%.

The Bureau of Economic Analysis released its third estimate of GDP for Q3 on December 22.  Third-quarter GDP was revised up slightly to 2.6% from 2.5%.  Corporate profits were revised down to $1.64 trillion from $1.659 trillion.  The previous estimate exceeded the high of $1.655 trillion set in 2006:Q3; however, the previous estimate is now irrelevant.

Hungary's yields have been rising slightly since it was downgraded by Fitch last week to BBB-, the agency's lowest investment-grade rating.  Hungary's Prime Minister, Viktor Orban, is bringing private pension funds under state control and has already imposed special taxes on banking, energy, telecommunications and retailers in an attempt to reduce the country's debt-to-GDP ratio, which is currently estimated at 79%...

During the week that ended December 17, the major U.S. equity indexes rose.  For the week the S&P 500 increased 0.31%, the Dow rose 0.75%, and the NASDAQ gained 0.22%.  International indexes were mixed, as the MSCI EAFE fell 0.10% and the MSCI EM rose 0.06%.  The BarCap U.S. Agg. Bond Index rose 0.08%, its first gain in six weeks, and the DJ US Real Estate Index declined 0.93%.

The Hindenburg Omen was signaled once again on December 15.  This technical trading signal, which is credited to James Miekka, provides an indication of market confliction when significant advancers and decliners coexist concurrently with a negative McClellan Oscillator in a rising market with a limited number of new highs relative to new lows.  The indicator last showed up...

During the week that ended December 10, the major U.S. equity indexes rose.  For the week the S&P 500 increased 1.32%, the Dow rose 0.32%, and the NASDAQ gained 1.80%.  International indexes were mixed, as the MSCI EAFE rose 0.35% and the MSCI EM fell 0.62%.  The BarCap U.S. Agg. Bond Index fell 0.85%, and the DJ US Real Estate Index declined 1.23%.

The Senate passed a tax legislation bill that is expected to cost the United State's $857 billion in foregone tax revenue over the next 10 years.  The projection for the majority, $801.3 billion of foregone revenue, is attributed to the extension of the Bush tax cuts.  The remaining $56 billion is attributed to...

How many of you intend to review your portfolio allocation at the end of this year? Odds are, you’ll look at it but not make any changes. Why not? Status quo bias. When making decisions under uncertainty, we prefer our current situation to any alternatives. The pain of loss, of making the wrong decision, overrides the potential gain from switching.

When deciding how to allocate our retirement accounts, we don’t know what the future holds. We have some idea from past performance of how different asset classes and funds have performed but we don’t know for sure...

During the week that ended December 3, 2010, several major U.S. equity indexes were up greater than 3%. For the week the S&P 500 increased 3.02%, the Dow rose 2.71%, and the NASDAQ gained 2.27%. International indexes also increased, with the MSCI EAFE and MSCI EM gaining 3.06% and 3.77%, respectively. The BarCap U.S. Agg. Bond Index fell 0.50%, and the DJ US Real Estate Index rose 2.07%.

The situation in Europe has dissipated slightly from the frenzy of a few weeks ago, as yields on Irish and Portuguese 10-year Treasury securities have declined by approximately 1% from their peaks. Greek and Spanish yields remain elevated and are within 50 basis points of their highs from last month. Yields on German bunds have been rising and are now over 3%, up from 2.2% in September. German Chancellor Angela Merkel rejected calls for an increase to the...

During the week that ended November 26, 2010, U.S. Large-Cap indices declined while Mid- and Small-Cap indexes realized modest gains.  For the week the S&P 500 fell 0.82% and the Dow lost 0.96%, while the NASDAQ increased 0.67%.  International indices declined, with the MSCI EAFE and MSCI EM losing 3.46% and 2.78%, respectively.  The BarCap U.S. Agg. Bond Index was flat for the week, and the DJ US Real Estate Index gained 0.94%.

An €85 billion bailout for Ireland was agreed upon on Sunday despite protests from Irish citizens who filled the streets in Dublin.  Greece was also given somewhat of a reprieve, as the country's finance minister announced an extension until 2021 to repay the €110 billion bailout Greece received in May.  In exchange for the extended repayment period, Greece agreed to...

During the week that ended November 19, 2010, U.S. equity indices realized small gains.  For the week the S&P 500 rose 0.10% and the Dow gained 0.22%, while the NASDAQ increased 0.08%.  International indices declined, with the MSCI EAFE and MSCI EM losing 0.32% and 0.82%, respectively.  The BarCap U.S. Agg. Bond Index fell 0.25%, and the DJ US Real Estate Index lost 2.03%.

Bailout talks between the EU, IMF, and Ireland have intensified over the last week.  The proposed bailout has been gaining momentum since November 1 when Ireland's Central Bank reported a rise in borrowing from the European Central Bank on behalf of the country's banks.  Total borrowing reached €130 billion in October, representing a 7.3% increase from the previous month.  The Bank of Ireland (BKIR), Ireland's largest bank, and Allied Irish Banks (ALBK), Ireland's second-largest bank, have both fallen greater than 60% YTD in terms of their share prices, including declines in excess of 19% on Tuesday.  Allied Irish Banks has lost about €13 billion in deposits, representing 17% of total deposits, this year according to the Irish Times.  Complicating Ireland's recovery is the fact that 65,000 people left Ireland last year, with some estimates projecting the exodus to be around 120,000 this year, according to the NY Times.  Yields on 10-year Irish Treasury securities have declined somewhat from the peak that was reached a couple weeks ago, but focus is already spreading to other countries, including Portugal and Spain.

During the week that ended November 12, 2010, U.S. equity indices experienced their worst decline since mid-August.  For the week the S&P 500 and the Dow both declined 2.10%, while the NASDAQ fell 2.34%.  International indices declined as well, with the MSCI EAFE and MSCI EM falling 2.42% and 3.01%, respectively.  The BarCap U.S. Agg. Bond Index lost 0.79%, and the DJ US Real Estate Index declined 4.82%.

We have been mentioning Ireland's bond yields for several weeks now, and their solvency has become the focus of investors and headlines as of late.  The yield on the 10-year Irish Treasury rose to a record of just under 9% last week. Whispers of a possible bailout crescendoed and the yields have since declined by a percentage point as of Monday.

A battle of sorts is underway as a result of the passage earlier this year of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Section 914 of the Act requires the SEC to review and analyze the need for enhanced examination and enforcement resources for investment advisers.  In conducting its study the SEC must consider whether it should seek Congressional authorization “to designate one or more self-regulatory organizations to augment the Commission’s efforts of overseeing investment advisers.” The SEC is instructed to submit a report of its study to Congress including recommendations for regulatory or legislative action by January 21 of next year.

Two distinct sides have emerged with vastly differing views of how and by whom regulation should be promulgated and enforced. The well respected Investment Adviser Association (IAA), whose members include many prominent investment advisory firms, takes one position and the Financial Industry Regulatory Authority (FINRA) takes a totally different position.

A battle of sorts is underway as a result of the passage earlier this year of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Section 914 of the Act requires the SEC to review and analyze the need for enhanced examination and enforcement resources for investment advisers.  In conducting its study the SEC must consider whether it should seek Congressional authorization “to designate one or more self-regulatory organizations to augment the Commission’s efforts of overseeing investment advisers.” The SEC is instructed to submit a report of its study to Congress including recommendations for regulatory or legislative action by January 21 of next year.

Two distinct sides have emerged with vastly differing views of how and by whom regulation should be promulgated and enforced. The well respected Investment Adviser Association (IAA), whose members include many prominent investment advisory firms, takes one position and the Financial Industry Regulatory Authority (FINRA) takes a totally different position.

U.S. equity indices moved higher during the week that ended 11/05 after a significant gain on Thursday followed the Fed's announcement of their decision to purchase $600B in longer-term Treasury securities.  For the week the S&P 500 rose 3.64%, the Dow rose 2.98%, and the NASDAQ rose 2.89.  Foreign indices were up as well with the MSCI EAFE and MSCI EM gaining 3.41% and 4.54%, respectively.  The BarCap U.S. Agg. Bond Index rose 0.28%, and the Dow Jones US Real Estate Index rose 4.94%.

The long-anticipated announcement regarding QE2 came on Wednesday afternoon, and the market reacted with a small sell-off before quickly rebounding to close in positive territory for the day.  The market rallied from the open on Thursday and never looked back.  The Fed is in charge of maintaining a low unemployment rate and low, stable inflation through its implementation of monetary policy.  With the unemployment rate looming at 9.6% and increased concerns over deflation in the months leading up to the Fed's decision to engage in a second round of quantitative easing, the FOMC chose to purchase $600B in longer-term Treasury securities between now and June 2011 with the expectation that this move will stimulate the economy to levels consistent with expansion.

U.S. equity indices were mixed during the week that ended 10/29, while the S&P 500 rose 0.04% in the final week of October.  Foreign indices were also mixed, as the MSCI EAFE was up 4 bps and MSCI EM was down 0.45%.  The BarCap U.S. Aggregate Bond Index declined 3 bps, and the Dow Jones US Real Estate Index declined 1.88%, offsetting the 1.85% gain from the prior week.

Trepidation about European sovereign debt issues reappeared in the bond markets last week, as yields on 10-year Greek bonds rose over 1.2% and yields on Irish debt continued their climb to new highs.  10-year Irish bonds, which yielded under 6% at their peak in May, are now above 7%.

The majority of U.S. indices closed slightly higher for the week that ended 10/22, despite broad intraweek swings.  Foreign indices, including the MSCI EAFE and MSCI EM, were down 0.46% and 1.45%, respectively, last week.  Fixed Income, as measured by the Barclays Capital U.S. Aggregate Bond Index, rose 30 bps.

Economic indicators were mixed last week, with the bright spot being the American Institute of Architects' Architectural Billings Index's increase to 50.4, which marks expansion and is the first increase in the index since January 2008.

The S&P 500 rose 0.96% last week amid a couple intraday trend reversals.  Volume was extremely low on Monday (Columbus Day) and Tuesday, but picked up and finished higher than the 6-month average in each of the final three trading days.  The NASDAQ rose 2.8% last week, and its 1.2% gain on Friday was accompanied by a 10% rise in Google after the tech giant reported better-than-expected Q3 results on Thursday evening.  The company's stock closed back above $600 per share for the first time since January.  The Dow rose just 51 bps as it was subdued by financials and industrials, while Fixed Income experienced a weekly decline for the first time in over a month.

Last week the Dow broke the 11,000 mark for the first time since May and Fixed Income rose for the fourth consecutive week.  As of Friday, 87% of stocks in the S&P 500 were trading above their 50-day moving averages.

The S&P's 8.92% gain last month is the largest of any September since 1939, but the economic data published in September was mixed.

For the week ending 9/24, the S&P 500 posted a gain of 2.07%.  Fixed Income rose along with the S&P for the second consecutive week.

As the September rally was in its infancy, we wrote about the discomforting results of the European banks’ stress tests.  The problematic situation in Europe was reintroduced on Friday afternoon by the Wall Street Journal, with little attention from investors.  This type of reaction from the market is typically interpreted as a bullish sign (shrugging off bad news), which indicates that equity investors do not consider the possibility of sovereign default to be a major concern or the risk has already been priced in by the market.  This might make for a compelling argument to jump on board with this market rally, but the credit market is telling a different story and could give investors room for pause.  Yield spreads between Irish and Portuguese debt are at new highs compared to...

For the week ending 9/17, the S&P 500 posted a gain of 1.5%.  The market started the week off with a 1% gain on Monday's open, and experienced modest intraday price swings throughout the remainder of the week before closing at 1125.59.  Fixed Income posted its first gain in four weeks, rising 0.24%.

Yesterday, the National Bureau of Economic Research (NBER) officially announced that the recent recession, which began in December 2007, ended in June 2009.  This has been the consensus viewpoint for several months, but the NBER stated they were waiting for "revisions in the National Income and Product Accounts, released on July 30 and August 27, 2010," for clarification on the path of the two broadest measures of economic activity, real GDP and real GDI.

For the week ending 9/10, the S&P posted a gain of 0.49%. Intraweek the market declined just over 1% on Tuesday following Monday's Labor Day hiatus; however, throughout the remainder of the week the index regained Tuesday's losses.  Fixed Income declined for a third consecutive week, a first since February 2009.The September rally has come on very light volume, with no instances of volume on the NYSE exceeding the 6-month moving average.  Aside from the issues we've discussed recently such as slowing growth and European banks' balance sheets, housing is still in the doldrums with no recovery in sight.

The market started off the month of September with a bang as the S&P rose 31 points on the 1st - this is reminiscent of the 24 point gain on the 1st of August.  The market finished the week with a 14 point gain on Friday, bringing its weekly return to 3.80%.  Fixed Income, as represented by the BarCap U.S. Agg. Bond Index, lost ground for a second consecutive week, closing down a meager 0.07%.

The Wall Street Journal ran a story on Sunday night confirming the notion that Europe’s bank stress test results were anything but stressful.  According to the author, some large European banks substantially underreported holdings of sovereign debt.  

The market experienced low volume (even for August) combined with relatively high volatility, finishing the week down 0.62%. Fixed Income, as represented by the BarCap U.S. Agg. Bond Index, experienced a calendar-week loss last week for the first time since early July.

Tuesday's 1.5% decline in the S&P coincided with news that existing home sales experienced the lowest monthly total since 1996, causing months worth of supply to jump from 9 to 12.5.  Meanwhile, Friday's 1.5% gain occurred after the U.S. GDP estimate for the second quarter was revised down 0.8%, which was less than the expected 1.0% downward revision.