Money Watch: Weekly Wrap
Last week was a busy one in the financial world. In no particular order:
- Tax Cut Bill: The $858 billion tax cut bill is now law (here are the tax cut winners and losers). After securing large majorities in the Senate (81-19) and the House (277-148), President Obama signed the bill into law Friday.
- FOMC: The last Federal Reserve policy meeting of the year was uneventful-short-term interest rates will remain at 0-0.25 percent for "an extended period" and there will be no change in the Fed's $600 billion bond buying plan.
- Across the Pond: The ECB will nearly double its capital to 10.76B euros ($14.15B) to defend against the debt crisis in the weakened "PIGS" (Portugal, Italy, Greece and Spain).
- $7.2B Madoff Settlement: The estate of Madoff investor Jeffrey Picower will repay $7.2B to Madoff fraud victims. Madoff trustee Irving Picard has now recovered nearly 50% of the funds lost in the scam.
The big story of the week was in the bond market, where the price of the 10-year treasury plunged and the yield climbed to 3.56 percent (from 2.38 percent in October), the highest level since May, before finishing the week at 3.33 percent. The rate spike has roiled the mortgage market, where the average 30-year fixed rate mortgage has gone from 4.25 percent in October to 5 percent on Friday.
- DJIA: 11,491, up 0.7% on week, up 10.2% YTD
- S&P 500: 1243, up 0.3% on week, up 11.5% YTD
- NASDAQ: 2642, up 0.2% on week, up 16.4% YTD
- January Crude Oil: $88.02, up 0.2% on week
- February Gold: $1379.20, down 0.4% on week
FACTOIDS OF THE WEEK:
- SELL LOW, BUY HIGH: US stocks are UP 83% since March 2009 low. Since that low point for stocks, investors pulled $111B from US stock funds and invested more than $609B in bond funds
- US stocks are up 19% since Bernanke first hinted at more bond buying
- Stocks are up over 10% this year
- Since WWII, there have been only 10 back-to-back double digit advances in stocks-this year would make the 11th. Only twice (1951 and 1994) did the double-digit streak run to a third year
- The Dow closed at 11,491 Friday-the first time it breached that level was 12 years ago
IN THE WEEK AHEAD: It should be a quiet, holiday-shortened week. Highlights include the final reading of Q3 GDP, which is expected to be revised up to 2.8% from 2.5%. Existing and new home sales should increase slightly, while personal income is like to rise 0.2% and spending up 0.5%.
Mon 12/20:
Tues 12/21:
First set of census data will be released
Weds 12/22:
8:30 Final Q3 GDP
10:00 Existing Home sales
Thurs 12/23:
8:30 Weekly Claims
8:30 Durable Goods
8:30 Personal Income and Spending
9:55 Michigan Consumer Sentiment
10:00 New Home Sales
2:00 Bond Market - early close for Christmas
Fri 12/24: ALL US MARKETS CLOSED FOR CHRISTMAS
