A New Pharaoh?

IN SPITE OF ECONOMIC CONCERNS, THE PUBLIC MARKETS continue to do well. By the numbers, for the two weeks ended Friday, February 4, 2011, the Dow Jones Industrial Average closed at 12,092, up 221 points, or 1.8%. The Standard & Poor’s 500 closed at 1310, up 27 points, or 2.1%, and the NASDAQ Composite closed at 2769, up 80 points, or 2.9%.

As noted, the DJIA has closed above 12,000 for the first time since June 2008, and the S&P 500 above 1300 for the first time since August 2008. Many are suggesting the market is overpriced. At the same time, Jeremy Siegel recently told an audience that the equity markets are still 20% below their long term trend lines. Professor Siegel tracks the domestic equity markets to the beginning of the 19th century. Our observation is that there is still much fear and concern regarding the stock market. This fear and concern is usually a good omen for the markets.

Intel disclosed a design error in a chip component that will cost the company about $300 million in lost sales, according to an Intel spokesman. ExxonMobil reported a 53% increase in quarterly profits, to $9 billion, its best numbers since Q3 2008.

Egypt is in the middle of determining a new direction. How the U.S. responds, and which leaders the U.S. supports, can have an impact on the outcome of these decisions. It can also impact the stability of the Middle East, and the safety of millions. President Carter chose not to throw the full weight of American opinion behind the Shah of Iran. The results over the last thirty years haven’t been pleasant. Are we taking the same approach now, with Mubarak?

The official unemployment rate fell to 9% in January, a 21 month low, though just 36,000 non-farm jobs were added. Consumer spending increased in December by 0.7%, and factory orders were up 0.2%. According to the ISM, the manufacturing reading stood at 60.4, and the service sector figure stood at 59.4, both at their highest in more than six years.

According to a recent AARP article, the five states with the biggest budget shortfalls for FY2011 were Nevada, Illinois, New Jersey, Arizona, and Maine. Alaska, Arkansas, Montana, and North Dakota were in the black.

Quote of the week: 

“Character is the ability to carry out a good resolution long after the mood in which it was made has left you.”
                                                                               Cavett Robert