Permanent Value

Weekly Update: March 15- 19, 2010

Michael La Salle
March 19th, 2010

Stocks Higher Despite India Rate Hikes

Stocks closed out the week higher for the third consecutive week as the S&P 500 gained 0.86% and the Dow Jones Industrial Average gained 1.10%.  This comes in a week where the news was dominated by eleventh hour campaigning by President Obama to get the newest version of the Health bill passed on Sunday.  As of Friday afternoon, only six votes are needed to pass the bill.   In economic news, the Consumer Price Index remained unchanged for February after it rose by 0.2% in January, besting economists’ estimates of a rise of 0.1%.  The Reserve Bank of India, on the other hand, unexpectedly raised interest rates by a quarter of a percent for the first time since July 2008.  Housing starts also surprised on the upside as February’s annualized pace of 575,000 units beat estimates of 565,000 units. 

In earnings news, Fedex Corporation topped analysts’ expectations of 72 cents per share as the U.S. air courier posted earnings of 76 cents per share.  Nike, Incorporated also beat expectations as the company posted earnings of $1.01 per share, 13.5% higher than the expected 89 cents per share.

What opportunities lay ahead?

Greece announced today that they may be forced to borrow money from the International Monetary Fund if European leaders cannot come up with a bailout plan next week.  The worries over Greece and their debt troubles have been affecting the global economy as a whole for nearly two months now, and it does not look as if things are getting better.  We continue to see positive news in the United States, but it seems as if every time news about Greece comes out, it causes a worldwide selling frenzy that pushes stocks down around the globe.

Although the troubles in Greece are not a good thing for the global economy, there are always investment opportunities somewhere.  In the case of Greece and their debt issues, this creates opportunities in the dollar as a currency.  As the Greek situation progresses, other economically weak European countries like Spain, Portugal, and Ireland, will look towards the European Union for support.

As the situation in Europe continues to get worse, investors around the globe will begin to move more money into the dollar and away from weaker currencies like the euro.

Market Returns

  This Week Year to Date Last Year Last 5 Years
S&P 500 0.86% 4.02% 47.94% -2.50%
Dow Jones Industrial Average 1.10% 3.01% 45.15% 1.06%

 

Next Week’s Economic Releases

March 23 – Existing Home Sales

March 24 – Durable Goods Orders

March 26 – Gross Domestic Product