Newsletter of Economic and Market Events
Month of December 2008
Dow: 8,776
Dow month: -0.60%, 6 mo: -28.94%, ytd: -33.84%
S&P 500: 903
S&P 500 month: 0.78%, 6 mo: -29.45%, ytd: -38.49%
NASDAQ: 1,577
NASDAQ month: 2.74%, 6 mo: -31.20%, ytd: -40.54%
FOMC easing stance - December 16 - Fed Funds rate cut of 0.75%-1% to 0%-0.25% from 1.00% the Discount rate is cut to 0.50% from 1.25%. "The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity."
10yr Treasury trades 2.035% (12/18) rallying from 4.32% (Jun 13) up 52.8% in 6 months - the lowest yield in its 46-year history. 3 month Treasuries traded below 0%, Dec. 9 - first time since the U.S. began selling them in 1929. U.S. Treasuries return 14.7% highest since 1995 (Merrill Lynch & Co.'s U.S. Treasury Master Index) - while the Standard & Poor's 500 Index is poised for its biggest yearly drop since 1931.
U.S. unemployment rate rises to 6.7%.
Oil trades $32.40 (Dec 19) down from an all-time high of $147.27 (Jul 11) - down 77.2% in 4 months.
EESA begins assigning second $350 billion in other financial institutions awaiting Congressional approval: GMAC, American Express, CIT, Discover Financial Services, GM and Chrysler.
President Bush and the Treasury intercede extending $13.4 billion in loans to GM and Chrysler (another $4 billion in February - Ford did not seeking government assistance) - Paulson is the "president's designee". Wages to auto workers must match the compensation of foreign auto company plants in the U.S.. Paulson's Treasury requests the remaining $350 billion TARP funds from Congress. GM and Chrysler also receive $3.3 billion in government loans from Canada and the province of Ontario. Federal Reserve approves GMAC's request to become a bank holding company.
CRB futures trade $327.50 (Dec 5) down from an all-time high of $618 (July 2) - down 47.0% in 4 months.
European Central Bank cut interest rates 75 bps to 2.5%. Bank of England cuts rates 100 bps to 2% - lowest since 1951. The Swedish, Danish and New Zealand central banks also lowered their rates. Bank of Japan lowers interest rate to 0.1%, increases purchases of government debt and announces plans to buy commercial paper for the first time as Japan's recession starves worsens.
Treasury announces the Credit Union Homeowner Affordability Relief Program a $41 billion lending facility where retail credit unions could borrow up to $2 billion at favorable rates - about 8,400 U.S. credit unions with $775 billion in assets.
Federal Reserve increases its balance sheet to $2.2 trillion from $924 billion (9/10) in 2 months. The Federal Reserve, CFTC and SEC announce that a central clearinghouse for the $33 trillion credit-default swap market will be running by December 31.
Japan expands $270 billion package to $385 billion - Y10 trillion of stimulatory spending to save job cuts and Y13 trillion to protect the banking system.
Canadian BCE's $35 billion deal, the largest leveraged buyout in history, led by the Ontario Teachers Pension Plan Board abandoned.
SEC charges Bernard L. Madoff with securities fraud for a $50 billion dollar Ponzi scheme.
Banks and securities firms (Citigroup, UBS, Merrill, etc.) report over $1.012 trillion of mortgage-related writedowns from subprime securities - while raising over $750 billion of new capital.
Month of November 2008
Dow: 8,829
Dow month: -5.32%, 6 mo: -30.14%, ytd: -33.44%
S&P 500: 896
S&P 500 month: -7.44%, 6 mo: -36.00%, ytd: -38.96%
NASDAQ: 1,535
NASDAQ month: -10.76%, 6 mo: -39.14%, ytd: -42.12%
U.S. & International Markets set new lows Global Markets fall from $62.6 trillion [10/31/07] to $27.6 trillion [11/20/08] losing $35 trillion: DJIA falls 48.2% from 14,279 to 7,392.27 [10/11/07 - Nov 21], S&P 500 falls 52.9% from 1,576 to 741.02 [10/11/07 - Nov 21] and NASDAQ falls 54.7% from 2,861 to 1,295.48 [10/31/07 - Nov 21].
MSCI Europe Index falls 54.7% from 1,388 to 628.89 [7/13/07 - Nov 21].
S&P Latin America 40 falls 68.2% from 5,862 to 1,862.84 [5/20/08 - Nov 20].
France's CAC Index falls from 6,168 [6/1/07] to 2,838.50 Nov 21 - a 53.9% fall.
Canada's TSX Index falls from 15,154 [6/6] to 7,647.11 Nov 21 - a 49.5% fall.
2008 Panic facts
World leaders summit (G20) in Washington DC (November 15) "to discuss the financial markets and the global economy" and "agree on a common set of principles" to reform global regulation of the markets: United States (George W. Bush, gdp $45,800), Canada (Stephen Harper, gdp $38,600), Australia (Kevin Rudd, gdp $37,300), United Kingdom (Gordon Brown, gdp $35,000), Germany (Angela Merkel, gdp $34,100), Japan (Tara Aso, gdp $33,500), France (Nicolas Sarkozy, gdp $32,600), Italy (Silvio Berlusconi, gdp $30,900), South Korea (Lee Myung-Bak, gdp $25,000), Saudi Arabia (Abdullah Bin Abdul Aziz, gdp $19,800), Russia (Dmitry Medvedev, gdp $14,800), Argentina (Cristina Fernandez de Kirchner, gdp $13,100), Mexico (Felipe Calderon, gdp $12,400), Turkey (Recep Tayyip Erdogan, gdp $12,000), South Africa (Kgalema Motlanthe, gdp $9,700), Brazil (Luis Inacio Lula, gdp $9,500), China (Hu Jintao, gdp $5,400), Indonesia (Susilo Bambang Yudhoyono, gdp $3,600), India (Manmohan Singh, gdp $2,600) and an European Union representative.
Barack Obama defeats John McCain to become 44th President of the United States.
Federal Reserve announces $200 billion of support for debt backed by consumer and small-business debt (credit-card, auto, student and SBA loans) and the Fed will purchase up to $100 billion of debt from Fannie Mae and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Freddie Mac, Fannie and Ginnie Mae - the Treasury will initially provide $20 billion of "credit protection" to these Federal Reserve GSE lending programs from TARP.
FDIC guarantees $1.4 trillion of bank-to-bank lending for more than 3 years as part of the EESA.
Fannie Mae and Freddie Mac (own or back 31 million U.S. mortgages) modify mortgages: resident homeowners 90 days or more late, owe at least 90% of current value, have not filed for bankruptcy - payments would not exceed 38% of their monthly household income through interest rate adjustments and/or longer repayment schedules. Citigroup will modify 500,000 borrower's mortgages.
U.S. unemployment rate rises to 6.5%.
European Central Bank cuts rates to 3.25% from 3.75%, Bank of England cuts to 3% from 4.5% (lowest level since 1955) and the Swiss National Bank cuts to 2% from 2.5%.
Britain announces a £25.6 billion ($38.8 billion) stimulus package spent in 2009-10 - tax cuts and spending increases to avert the U.K.'s first recession since 1991.
China announced a $586 billion (4 trillion yuan) economic stimulus package (almost 20% of China's 2008 gdp) - the plan bolsters low-rent housing, infrastructure in rural areas, roads, railways, airports, subsidies for farmers will be raised and tax deductions for purchases of fixed assets (machinery) to stimulate investment.
Japan promises $100 billion in loans to IMF raising their funding capacity to $250 billion - IMF provide a loan to Pakistan.
American Express (and AmEx Travel Related Services) becomes a bank-holding company.
Citigroup receives $20 billion (in addition to the initial $25 billion) from TARP to protect $306 billion of troubled mortgages and assets - Citigroup assumes losses on the first $29 billion the Treasury will absorb 90% of the remaining losses and $27 billion of preferred with an 8% dividend.
EESA invests $125 billion in smaller regional banks: AIG ($40 billion and $60 billion credit facility, 52.5 billion MBS & CDO purchased), Federal Home Loan Mortgage Corp. ($13.8 billion), PNC ($7.7 billion), U.S. Bancorp ($6.6 billion), Capital One ($3.55 billion), SunTrust ($3.5 billion), Regions Financial ($3.5 billion), Fifth Third Bancorp ($3.4 billion), BB&T Corp. ($3.1 billion), KeyCorp ($2.5 billion), Comerica Inc. ($2.25 billion), Marshall & Ilsley ($1.7 billion), Northern Trust Corp. ($1.5 billion), Huntington Bancshares Inc. ($1.4 billion), Zions Bancorporation ($1.4 billion), Synovus Financial ($973 million), Popular Inc. ($935 million), First Horizon National Corp. ($866 million), ETrade Financial ($800 million), Colonial BancGroup ($550 million), Associated Banc-Corp ($530 million), Webster Financial ($400 million), City National Corp. ($395 million), Fulton Financial ($375 million), TCF Financial ($361 million), South Financial Group ($347 million), Wilmington Trust ($330 million), East West Bancorp ($306 million), Sterling Financia ($303 million), Whitney Holding Corp. ($301 million), Susquehanna Bancshare ($300 million), Valley National Bancorp ($300 million), Citizens Republic Bancorp ($300 million), UCBH Holdings Inc. ($298 million), Cathay General Bancorp ($258 million), Wintrust Financial ($250 million), First Merit Corp. ($248 million), SVB Financial Group ($235 million), Trustmark ($215 million), Umpqua Holdings Corp. ($214 million) and Washington Federal ($200 million) - and 88 banks borrowing less than $200 million.
Month of October 2008
Dow: 9,325
Dow month: -14.06%, 6 mo: -27.26%, ytd: -29.70%
S&P 500: 968
S&P 500 month: -16.98%, 6 mo: 30.11%, ytd: -34.06%
NASDAQ: 1,720
NASDAQ month: -17.74%, 6 mo: -28.69%, ytd: -35.14%
See chart
U.S. & International Markets set new lows - DJIA falls 44.8% from 14,279 to 7,882.51 [10/11/07 - Oct 10],
S&P 500 falls 46.7% from 1,576 to 839.80 [10/11/07 - Oct 10] and
NASDAQ falls 47.8% from 2,861 to 1,493.79 [10/31/07 - Oct 24].
MSCI Pacific Index falls 56.8% from 173.1 to 73.11 [11/1/07 - Oct 28] and
Japan's NIKKEI Index falls from 18,297 [6/20/07] to 6,994.90 Oct 28 - a 61.7% fall.
Germany's DAX Index falls from 8,131 [6/20/07] to 4,014.60 Oct 24 - a 50.6% fall.
Britain's FTSE Index falls from 6,754 [7/13/07] to 3,665.20 Oct 27 - a 45.7% fall.
Brazil's BOVESPA Index falls from 73,920 [5/29] to 29,435 Oct 27 - a 60.1% fall.
Russia's RTS Index falls from 2,498 [5/19] to 549.06 Oct 28 - a 78.0% fall.
India's Bombay SENSEX Index falls from 21,113 [1/9] to 7,697.39 Oct 27 - a 63.5% fall.
Shanghai Composite falls 72.8% from 6,124 (Oct 16 '07) to 1,664 (Oct 28) in 1 year - last year the Shanghai Composite was the best performer up 161%.
2008 Panic facts
FOMC easing stance - October 29 - Fed Funds rate cut of 0.50% to 1.00% from 1.50% the Discount rate is cut to 1.25% from 1.75%.
US GDP for 3Q was -0.5% the worst since 3Q01 of -1.4%.
Emergency FOMC inter-meeting (Oct 8) Fed funds cut of 0.50% to 1.50% from 2.00% the Discount rate is cut to 1.75% from 2.25% - ECB (European Central Bank) cuts by 0.5% to 3.75%, Bank of England cuts by 0.5% to 4.5 central banks of Switzerland, Canada, Sweden, China, Hong Kong, Taiwan, South Korea and Australia also cut rates.
Emergency Economic Stabilization Act of 2008 (EESA) a $700 billion rescue of financial institutions by purchasing devalued mortgage-linked assets (Paulson's Treasury Dept. will administer the Troubled Asset Relief Program, or TARP) - protection and tax beaks for taxpayers (equity positions in the financial institutions participating), limits on executive's compensation, independent oversight and transparency, help to prevent home foreclosures (modifying troubled loans), raises FDIC to $250k from $100k and an insurance option into which banks would pay. Federal Reserve receives authority to pay interest on reserves, the SEC receives the power to change mark-to-market accounting rules and the FDIC supports interbank lending.
EESA invests $125 billion in 9 large banks (10/26): $25 billion in each Citigroup, J.P. Morgan, Wells Fargo and Bank of America/Merrill Lynch, $10 billion in each Goldman Sachs and Morgan Stanley, $3 billion in Bank of New York Mellon and $2 billion in State Street. - with preferred stock (5% dividend for the first 5% years and then convert to 9%), warrants (right to buy common stock equal to 15% of the total investment in the firm) and compensation limitations.
Federal Reserve increased currency swaps with foreign central banks to unlimited amounts (up from $620 billion) and increased the Term Auction Facility, the Fed's emergency loan program, to $900 billion - to easy liquidity problems. Federal Reserve begins to purchase U.S. commercial paper from U.S. companies and Money market funds - a $1.8 trillion market (90-day unsecured at 1.88% plus a 1% credit surcharge and 90-day secured asset-backed rate at 3.88%, 10/27).
Federal Housing Finance Agency orders Fannie Mae and Freddie Mac (FHFA is their new regulator) to purchase $40 billion a month of underperforming mortgage bonds - to promote greater stability and liquidity in the U.S. mortgage market.
Bank of America modifies (cuts interest rates and/or principal) 265,000 mortgages and 400,000 of acquired Countrywide's mortgages - the largest predatory lending settlement, $8.6 billion. J.P. Morgan Chase will modify 400,000 borrower's mortgages from their acquisition of Washington Mutual.
G7 (United States, Japan, Germany, France, Italy, the United Kingdom and Canada) agrees to recapitalizing banks with public and private funds, insure depositors and unfreezing credit markets. G20 (G7 plus China, Brazil, Russia, India, Mexico, South Korea, Saudi Arabia, Argentina, Australia, Indonesia, South Africa and Turkey) commits to "using all the economic and financial tools to assure the stability and well functioning of financial markets" - they account for about 90% of global gross domestic product. IMF's 185 member nations endorse a commitment to "use all available tools" to prevent systemic failure. World Bank agrees to help developing countries strengthen their economies, bolster their financial systems and protect the poor against the financial turmoil in international markets.
IMF provides loans to Iceland, Ukraine, and Hungary - Britain was the last European country to receive an IMF loan in 1976.
15 leading European nations commit $2.3 trillion and agree to a 14pt plan to aid troubled banks by adding capital through investment and by guaranteeing inter-bank lending. European governments (Germany, Ireland, Sweden, Austria, Denmark, Iceland and Greece) guarantee all private savings accounts. European Union countries raised minimum guarantees for bank deposits to €50,000 while the ECB raised overnight lending to $250 billion. The United Kingdom (£50 billion and £450 billion in loan guarantees), Spain (€100 billion), Russia ($36 billion), Portugal (€20 billion), Norway ($55.4 billion), Sweden ($205 billion), German (€500 billion), Netherlands (€200 billion), Austria (€85 billion), Switzerland ($60 billion) and France (€360 billion) establish plans to support their domestic banking systems. Japan's package includes government guarantees for loans to businesses is $270 billion.
Gold trades $681 (Oct 27) down from an all-time high of $1033.90 (Mar 17) - down 34.1% in 7 months. U.S. dollar rallies to $1.23 (Oct 23) from $1.60 (Jul 15) - up 22% in 3 months.
SEC extends short selling ban of Financial stocks protecting 950 financial companies - through Oct 8.
VIX (volatility index, fear) new record high of 89.53 spiking 32% from 67.80 (Oct 24) - spiked 22% to 81.17 (Oct 16), spiked 19% to 76.94 (Oct 10) and spiked 29% to 58.24 (Oct 6). TED spread (3-month Treasuries and 3-month Eurodollars) trades at 4.64% and the Libor-OIS spread (3-month London interbank offered rate and Overnight indexed swap rates) trades at record 3.64% on October 10.
Wachovia will be purchased by Wells Fargo (as Citigroup exits) in an $12.7 billion all-stock offering.
Lehman's bankrupcy sets their credit-default swap liability to counterparties at $0.91375 creating $270 billion in payments. Washington Mutual's credit-default swap liability to counterparties is $0.43.
CERN lauches the GRID to analyze data from the Large Hadron Collider (LHC) a computer network that links more than 100,000 processors at 140 global institutes - in 1990 CERN invented the World Wide Web allowing access to information over the Internet.
Earnings season for 3Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 3Q08 was negative -19% for the fifth consecutive quarter.
Month of September 2008
Dow: 10,850
Dow month: -6.00%, 6 mo: -11.52%, ytd: -18.20%
S&P 500: 1,166
S&P 500 month: -9.05%, 6 mo: -11.80%, ytd: -20.57%
NASDAQ: 2,091
NASDAQ month: -11.66%, 6 mo: -8.25%, ytd: -21.15%
FOMC neutral stance - September 16 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
FHFA (Federal Housing Finance Agency) places Fannie Mae (with Herb Allison of TIAA-CREF) and Freddie Mac (with David Moffett of U.S. Bancorp) into conservatorship - dividends on both the common and preferred shares will be eliminated. Interest and principal payments will continue to their companies' securitized bonds and subordinated debt. The Treasury will 'backstop' both agencies with up to $100 billion (each) of a special class of stock - the Treasury through senior preferred stock and warrants will own 79.9% of each agency. Their portfolios "shall not exceed $850 billion as of 12/31/09, and shall decline by 10% per year until they reach $250 billion" - Fannie's is $758 billion and Freddie's is $798 billion.
U.S. 10yr Treasuries rally from 4.32% (Jun 13) to 3.25% (Sep 16) - up 24.7% in 9 weeks.
Short selling by Hedge funds of $100 million must now report positions to the SEC. SEC halts short selling of Financial stocks (Sep 19, effective immediately) protecting 799 financial companies - through Oct 2. SEC issues rules for short sales requiring delivery of securities by the settlement date, effective Sep 18. Britain's Financial Services Authority (& other Global exchanges) banned short-selling of financial stocks from Sep 18 - Jan 16, 2009.
Federal Reserve approves Goldman Sachs and Morgan Stanley to become bank holding companies - ending independent investment banks. Paulson's Treasury Dept. protects US money market mutual funds with insurance (using a $50 billion fund, through April 30, 2009) - as some of the $3.6 trillion of funds 'broke the buck'. Federal Reserve broadens eligible collateral - previously, only Treasury securities, Agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.
U.S. unemployment rate rises to 6.1%.
Lehman Brothers, the fourth-largest U.S. investment bank, files for the largest U.S. bankruptcy - listed total debts of $613bn.
Merrill Lynch, the third-largest U.S. investment bank, is purchased by Bank of America for $19.4 billion.
AIG ($1.1 trillion assets and 74 million clients in 130 countries) receives an $85 billion Federal Reserve loan in return for relinquishing 79.9% percent ownership in the company.
Washington Mutual is seized by federal regulators and sold to J.P. Morgan Chase for $1.9 billion - the largest bank failure in U.S. history, $307 billion in assets.
The nationalisation of Bradford and Bingley (joins Northern Rock as U.K.'s 2nd mortgage lender) and rescues for European lenders Fortis (Benelux's banking and insurance group), Hypo Real Estate (Germany's real estate firm), Glitnir (Iceland's third-largest lender) and Dexia (Franco-Belgian's bank, world's biggest lender to European local governments).
Hurricane Gustav (Sep 1) made landfall in Louisiana (near New Orleans) and Hurricane Ike (Sep 13) made landfall on Galveston Island causing 145 deaths and $31.5 billion of damage - the 3rd most destructive U.S. hurricane (behind Katrina 2005 and Andrew 1992).
U.S. home prices fell for the ninth consecutive quarter by 17.4% (compared to 3Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 161.56.
Largest U.S. securities fraud settlement - Enron shareholders and investors will share $7.2 billion: payments from CIBC ($2.4 b), JPMorgan Chase ($2.2 b), Citigroup ($2 b) and approximately $600 million from Arthur Andersen, Lehman and Bank of America.
Month of August 2008
Dow: 11,543
Dow month: 1.45%, 6 mo: -5.59%, ytd: -12.97%
S&P 500: 1,282
S&P 500 month: 1.18%, 6 mo: -3.61%, ytd: -12.67%
NASDAQ: 2,367
NASDAQ month: 1.81%, 6 mo: 4.23%, ytd: -10.75%
FOMC neutral stance - August 5 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
UBS agrees to buy back $18.6 billion in failed auction-rate securities, Merrill Lynch agrees to $12 billion, Wachovia $9 billion, Citigroup $7.3 billion, Morgan Stanley $4.5 billion, Bank of America $4.5 billion, JPMorgan Chase $3 billion and Royal Bank of Canada $850 million - about $330 billion of auction-rate securities are outstanding.
U.S. unemployment rate rises to 5.7%.
Genentech rejects Roche Holding's $43.7 billion offer.
2008 Beijing Summer Olympics begins with 100 heads of state in attendance, 204 nations participate (87 nations win medals) - Michael Phelps wins a record eight Olympic gold medals (totaling 14 career golds), Natalie Coughlin wins 6 medals and Usain Bolt wins three golds. The United States takes a total of 110 medals while China takes the most golds, 51. Great Britain takes 47 medals 19 are gold heading into the 2012 London games.
Month of July 2008
Dow: 11,378
Dow month: -7.87%, 6 mo: -10.06%, ytd: -14.22%
S&P 500: 1,267
S&P 500 month: -1.02%, 6 mo: -8.06%, ytd: -13.69%
NASDAQ: 2,325
NASDAQ month: 1.44%, 6 mo: -2.68%, ytd: -12.33%
Markets set new lows - DJIA falls from 14,279 to 10,731 (Oct 11 - July 15, 23.6%) S&P 500 from 1,576 to 1,200 (Oct 11 - Jul 15, 22.4%). Bombay Sensex falls 41% from 21,206 (Jan. 10) to 12,514 (July 16).
2008 Panic facts
The Fed allows GSEs (government sponsored enterprises) Fannie Mae and Freddie Mac access to their discount window - they guarantee $5.4 of $12 trillion of U.S. mortgages.
SEC issues an emergency rule (July 21 - August 12) to limit naked short selling in 19 major financial firms - the 'tick test rule' was repealed on July 6, 2007.
Housing bill signed into law: creating the FHFA (Federal Housing Finance Agency, GSE's regulator) for Fannie Mae and Freddie Mac (increasing limits to $625,500 from $417,000), modernizes/authorizes the FHA to insure up to $300 billion in refinanced mortgages, creates an affordable housing trust fund and $15 billion of home buyer's tax credits (States can offer an additional $11 billion to refinance subprime loans while increasing down payments to 3.5% from 3%) and grants $3.9 billion to buy and rehabilitate foreclosed homes.
U.S. Dollar trades an all-time low of $1.6038 (July 15) to the Euro - falling from $0.8228 (October 26, 2000) a 95% decline.
Oil trades $147.27 an all-time high - July 11. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $618 - July 2.
ECB raises interest rates to 4.25% - the 9th increase for the Euro since 12/05.
IndyMac Bancorp is seized from imminent failure by the Office of Thrift Supervision (FDIC, second only in size to Continental Illinois, 1984).
Federal Reserve's new regulations for mortgage lenders: banning repayment penalties, prohibiting lenders from issuing loans to borrowers that cannot repay while requiring the verification of their incomes and assets, and requiring escrow accounts for property taxes and homeowner's insurance, as well as: actual appraisal of a home's value and good faith lending practices.
InBev buys Anheuser Busch for $49.9 billion to become the world's biggest brewer.
Earnings season for 2Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 2Q08 was negative -22.1% for the fourth consecutive quarter - without financials 4.5%.
Month of June 2008
Dow: 12,350
Dow month: -2.28%, ytd: -6.89%, 6 mo: -6.89%
S&P 500: 1,280
S&P 500 month: -8.57%, ytd: -12.81%, 6 mo: -12.81%
NASDAQ: 2,292
NASDAQ month: -9.12%, ytd: -13.57%, 6 mo: -13.57%
FOMC neutral stance - June 25 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
U.S. unemployment rate rises to 5.5%.
U.S. 10 yr. Treasuries fall 31% from 3.29% (Mar 17) to 4.32% (Jun 13) - in 3 months.
Federal Reserve, Regulators and 17 banks agreed to changes in the clearing of credit-default swaps, a $62 trillion market - insuring against the failure of any one bank.
Treasury Secretary Henry Paulson recommends an overhaul of Financial Regulation: designating the Fed as the primary regulator for market stability (including oversight of investment banks), creating one bank regulator by combining the Office of Thrift Supervision to the Office of the Comptroller of the Currency, merging the Securities and Exchange Commission with the Commodity Futures Trading Commission, and creating a national regulator for insurance companies.
U.S. home prices fell for the eighth consecutive quarter by 15.9% (compared to 2Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 167.69.
Month of May 2008
Dow: 12,638
Dow month: -1.42%, ytd: -4.72%, 6 mo: -5.48%
S&P 500: 1,400
S&P 500 month: 1.08%, ytd: -4.63%, 6 mo: -5.47%
NASDAQ: 2,522
NASDAQ month: 4.56%, ytd: -4.90%, 6 mo: -5.19%
Yahoo rejects Microsoft's offer of $44.6 billion to challenge Google.
Myanmar/Burma Cyclone Nargis on May 2, 2008 is responsible for over 134,000 fatalities.
2008 Sichuan, China earthquake (8.0) on May 12, 2008 is responsible for over 69,000 fatalities.
Month of April 2008
Dow: 12,820
Dow month: 4.55%, ytd: -3.35%, 6 mo: -7.97%
S&P 500: 1,385
S&P 500 month: 4.77%, ytd: -5.65%, 6 mo: -10.59%
NASDAQ: 2,412
NASDAQ month: 5.84%, ytd: -9.05%, 6 mo: -15.63%
FOMC Easing move - April 30 - Fed Funds rate to 2.00% from 2.25% and the 'discount rate' to 2.25% from 2.50%.
Bank of England (BOE) follows Fed's lead with $100 billion swap of mortgage securities for BOE government bonds - the move is to encourage credit markets and bank lending.
U.S. Dollar trades $1.60 to the Euro - falling from $0.82 (Oct '00) a 95% decline in little more than 7 years.
Earnings season for 1Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 1Q08 was negative -17.5% for the third consecutive quarter - without financials 7.2%.
Month of March 2008
Dow: 12,262
Dow month: 0.29%, ytd: -7.55, 6 mo: -11.75%%
S&P 500: 1,322
S&P 500 month: -0.60%, ytd: -9.95%, 6 mo: -13.37%
NASDAQ: 2,279
NASDAQ month: 0.35%, ytd: -14.06%, 6 mo: -15.62%
Markets set new lows - S&P 500 from 1,576 to 1,256 (Oct 11
- Mar 17, 20.3%), NASDAQ from 2,861 to 2,155 (Oct 31 - Mar 17, 24.7%), and MSCI
Pacific Index from Oct 31 to Mar 17 (23.0%).
2008 Panic facts
Emergency FOMC inter-meeting (Mar 16) Discount rate cut of 0.25% to 3.25% from 3.50% - 25 basis points above the Fed funds rate of 3.00%. The Fed allows the 20 primary dealers of U.S. Treasury securities (non-commercial / investment banks) access to their discount window.
FOMC Easing move - March 18 - Fed Funds rate to 2.25% from 3.00% and the 'discount rate' to 2.50% from 3.25%.
U.S. 10 yr. Treasuries rally 38% from 5.32% (Jun 13) to 3.29% (Mar 17) - in 9 months.
Gold trades $1033.90 an all-time high - Mar 17. Platinum trades at all-time high of $2308.80 - Mar 4. Silver trades $21.44 (Mar 17) matching its highest level, December 1980. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $579.95 - Mar 5.
Bear Stearns is purchased by JP Morgan Chase for $10 (down from $172, 2007) - the Fed intervenes (non-recourse loan of $29 billion) in the protection of investment banking for the first time since the 1930s.
U.S. home prices fell for the seventh consecutive quarter by 14.4% (compared to 1Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 172.16.
VISA becomes the largest U.S. IPO ever at $17.86 billion - surpassing the $10.62 billion record held by AT&T in 2000.
Month of February 2008
Dow: 12,226
Dow month: -3.35%, ytd: -7.83%, 6 mo: -8.47%
S&P 500: 1,330
S&P 500 month: -3.48%, ytd: -9.40%, 6 mo: -9.71%
NASDAQ: 2,271
NASDAQ month: -4.94%, ytd: -14.37%, 6 mo: -12.52%
$168 billion Stimulus plan signed into law - Tax rebates (to over 130 million Americans), Business tax breaks and Housing provisions (Fannie Mae and Freddie Mac may temporarily purchase mortgages up to $793,000 up from $417,000 while the FHA can insure loans for up to $729,000).
U.S. Dollar trades $1.52 to the Euro - falling from $0.82 (Oct '00) a 85% decline in little more than 7 years.
NASDAQ OMX Group becomes the world's largest exchange - operations of over 60 exchanges in 50 countries.
Month of January 2008
Markets fall most since 9/11 - DJIA falls from 14,279 to 11,508 (Oct 11 - Jan 22, 19.4%), S&P 500 from 1,576 to 1,270 (Oct 11 - Jan 23, 16.3%), NASDAQ from 2,861 to 2,202 (Oct 31 - Jan 23, 23%), MSCI Europe Index from Oct 31 to Jan 23 (23.3%),
MSCI Pacific Index from Oct 31 to Jan 22 (22.1%) and Latin American from Oct 31 to Jan 22 (26.2%).
Emergency FOMC inter-meeting (Jan 22, first since Sept. 17, 2001) Fed funds rate cut of 0.75% to 3.5% from 4.25% - biggest rate cut by the Fed since October 1984.
FOMC Easing move - January 30 - Fed Funds rate to 3.00% from 3.50% - first time since 1914 that the Fed made 2 rate cuts in 10 days.
U.S. unemployment rate rises to 5%.
Oil trades above $100 for the first time, $100.09 - Jan 3.
Countrywide Financial is purchased by Bank of America for $4.1 billion.
NYSE Euronext agrees to buy the American Stock Exchange.
CME Group (Chicago Mercantile Exchange and Board of Trade, merged July 2007) bid $11 billion for Nymex (NY Mercantile Exchange) the world's largest physical commodity futures exchange, 130 years old and went public in Nov '06.
Earnings season for 4Q07 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 4Q07 was negative -25.1% for the second consecutive quarter - without financials 12.1%, the worst quarterly performance since 1991.
Month of December 2007
Dow: 13,264
Dow month: -0.80%, 6 mo: -1.07%, ytd: 6.43%
S&P 500: 1,468
S&P 500 month: -0.88%, 6 mo: -2.33%, ytd: 3.53%
NASDAQ: 2,652
NASDAQ month: -0.30%, 6 mo: 1.88%, ytd: 9.81%
FOMC Easing move - December 11 - Fed Funds rate to 4.25% from 4.50%.
Federal Reserve announces an agreement with the European Central Bank, Bank of England, Bank of Canada and the Swiss National Bank creating a (temporary) auction facility (establishing temporary swap arrangements) providing reserves for up to 6 months - to "help promote the efficient dissemination of liquidity" when other lines of credit are "under stress."
European Central Bank (ECB, Dec 17) injects a record €348.6 billion ($501.5 billion) lending (unlimited) to all banks submiting bids of at least 4.21% for 2-week funds at its weekly refinancing auction.
Wheat trades at all-time high above $10-a-bushel (Dec 17).
U.S. home prices fell for the sixth consecutive quarter 5.8% (NAR, compared to 4Q06) sixth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 185.03.
China adds gold (also aluminum and steel) becoming the world's largest producer - 276 metric tons of gold in 2007 overtaking South Africa (largest producer since 1905).
U.S. Mortgage lenders have agreed to freeze the interest rates on adjustable-rate (subprime) mortgages for 5 years for mortgages written between January 2005 and July 2007 - FHASecure also offers relief to borrowers.
Month of November 2007
Dow: 13,371
Dow month: -4.01%, 6 mo: -1.88%, ytd: 7.29%
S&P 500: 1,481
S&P 500 month: -4.39%, 6 mo: -3.20%, ytd: 4.44%
NASDAQ: 2,660
NASDAQ month: -6.96%, 6 mo: 2.15%, ytd: 10.14%
U.S. 10 yr. Treauries rally 27.8% from 5.32% (Jun 13) to 3.84% (Nov 26) - in 23 weeks.
Oil trades at an all-time high of $99.29 - up over 43% in 10 weeks.
Gold trades $848 - highest in 27 years when it traded 2 days above $800 (1/18/80, $835 and 1/21/80, $850). Silver trades $15.90 matching its highest level (December 1980).
Shanghai Composite Index loses 21.9% from its high of 6,124 (Oct 16) to 4,778 (Nov 28) and Hong Kong Hang Seng Index loses 19% from its high of 31,958 (Oct 30) to 25,861 (Nov 22). PetroChina becomes the first $1 trillion company (as it debuted on the Shanghai exchange, 11/5) - Exxon Mobil is valued at $475 billion.
Month of October 2007
Dow: 13,930
Dow month: 0.25%, 6 mo: 6.65%, ytd: 11.77%
S&P 500: 1,549
S&P 500 month: 1.51%, 6 mo: 4.52%, ytd: 9.24%
NASDAQ: 2,859
NASDAQ month: 5.85%, 6 mo: 13.23%, ytd: 18.39%
FOMC Easing move - October 31 - Fed Funds rate to 4.50% from 4.75%.
Uranium falls from an all-time high of $136 to $75 - a 45% drop in 4 months.
Royal Bank of Scotland offers $101 billion for ABN Amro ($3.1 trillion of assets) - in the largest bank takeover ever.
Earnings season for 3Q07 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 3Q07 is -4.5%, negative for the first time since Q401-Q102.
Month of September 2007
Dow: 13,895
Dow month: 4.03%, 6 mo: 12.47%, ytd: 11.49%
S&P 500: 1,526
S&P 500 month: 3.60%, 6 mo: 7.46%, ytd: 7.62%
NASDAQ: 2,701
NASDAQ month: 4.04%, 6 mo: 11.57%, ytd: 11.84%
FOMC Easing move - September 18 - Fed Funds rate lowered 50 basis points to 4.75% from 5.25% and the 'discount rate' to 5.25% from 5.75%.
U.S. 10 yr. Treauries rally 18.4% from 5.32% (Jun 13) to 4.30% (Sep 10) - in 12 weeks.
U.S. home prices down -2.0% in 3Q07 (NAR, compared to 3Q06) fifth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 195.68.
73,000 UAW workers strike General Motors for 2 days (first nationwide strike since 1970) - GM removes a $51 billion health care obligation to a UAW-run VEBA trust (funded with $35 billion).
Month of August 2007
Dow: 13,357
Dow month: 1.11%, 6 mo: 8.88%, ytd: 7.17%
S&P 500: 1,473
S&P 500 month: 1.24%, 6 mo: 4.77%, ytd: 3.88%
NASDAQ: 2,596
NASDAQ month: 1.96%, 6 mo: 7.45%, ytd: 7.49%
Federal Reserve cut (inter-meeting, 8/17) the 'discount rate' to 5.75% from 6.25% citing tighter credit and shaken financial markets. Central banks in the U.S., Europe and Asia had injected more then $400 billion (Aug 9-16) into the banking system providing liquidity to global credit markets. Libor trades up to 95bp over 3-month Fed funds rate.
Chinese stock market ($4.72 trillion) overtakes the Japanese market ($4.7 trillion) in capitalisation - Shanghai Composite Index rallies from below 1000 (Jun 6 '05) to 5,235 (Aug 31) more than 423%, in little more than 2 years.
Month of July 2007
Dow: 13,211
Dow month: -1.47%, 6 mo: 4.67%, ytd: 6.00%
S&P 500: 1,455
S&P 500 month: -3.19%, 6 mo: 1.18%, ytd: 2.61%
NASDAQ: 2,546
NASDAQ month: -2.19%, 6 mo: 3.37%, ytd: 5.42%
CME (Chicago Mercantile Exchange) purchases the CBOT (Chicago Board of Trade) consolidating futures and options trading in a $11.9 billion merger.
People's Bank of China raised interest rates to 3.33% from 3.06% and the lending rate to 6.84% from 6.57% - in order to cool inflation (5th increase in 15 months). Additionally, the government reduced the tax on interest income (5% from 20%, effective 8/15) and raised bank reserve requirements to 12% from 11.5% to encourage savings and curb possible asset bubbles.
Ontario Teachers' Pension Plan agreed to purchase a 52% interest in Canada's largest phone company, BCE Inc., in the largest buyout ever, $48.5 billion. Also, Canadian's Alcan agrees to Australia's Rio Tinto bid of $38.1 billion.
J.K. Rowling releases her 7th and final Harry Potter book becoming the first billion dollar author.
Earnings season for 2Q - the growth rate for the S&P 500 index was 7.7%.
Month of June 2007
Dow: 13,408
Dow month: -1.60%, 6 mo: 7.58%, ytd: 7.58%
S&P 500: 1,503
S&P 500 month: -1.76%, 6 mo: 5.99%, ytd: 5.99%
NASDAQ: 2,603
NASDAQ month: -0.04%, 6 mo: 7.78%, ytd: 7.78%
ECB raises interest rates to 4% - the 8th increase for the Euro since 12/05. Bank of England to raise rates to 5.75% next month (5th increase since 8/06).
U.S. home prices down -1.5% in 2Q07 (NAR, compared to 2Q06) fourth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 199.44.
BRIC emerging markets - Brazil becomes the last member to reach $1 trillion in overall stock market value. Russia surpassed $1 trillion in September of 2006, then China (1/07) and India (5/07).
Blackstone Group becomes the first large U.S. private equity firm to go public - valuing the firm at $33.5 billion.
U.S. inverted yield curve ends Jun 7 '07 it began on Dec 27 '05 (75 weeks) - the last U.S. Bond yield inversion was from Feb 24, '00 - Dec 22, '00, 8th time since 1980. Investors shied away from shorter U.S. Treasury maturities impacting global debt markets (10 yr typically exceeds 2 yr yields by apr. 90 bps). Inversions had averaged 30 weeks (9 to 59 weeks) and -46 bps (-8 to -133 bps). The "carry-trade" (borrowing in low-interest rate countries) fuels M&A activity worldwide.
Month of May 2007
Dow: 13,627
Dow month: 4.33%, ytd: 9.34%, 6 mo: 11.50%
S&P 500: 1,530
S&P 500 month: 3.24%, ytd: 7.90%, 6 mo: 9.29%
NASDAQ: 2,604
NASDAQ month: 3.13%, ytd: 7.83%, 6 mo: 7.12%
S&P 500 closes above its all-time closing high - despite the fact that Technology (60% lower) and Telecom (44%) sectors still remain lower than their March 2000 high.
Daimler sells 80.1% controlling interest in Chrysler to private-equity firm Cerberus Capital Management for $7.4 billion.
Shanghai Composite Index rallies 100% in 113 trading days (200% in the past 12 months) - from below 2,000 (Nov 29) to above 4,000 (May 9) as some of $2 trillion of Chinese savings (earning less than 3%) flood into stocks (more than 100 million brokerage accounts are now open, 25 million opened ytd).
Month of April 2007
Dow: 13,062
Dow month: 5.73%, ytd: 4.81% 6 mo: 8.13%
S&P 500: 1,482
S&P 500 month: 4.37%, ytd: 4.51%, 6 mo: 7.63%
NASDAQ: 2,525
NASDAQ month: 4.30%, ytd: 4.55%, 6 mo: 6.72%
U.S. Dollar trades $1.37 to the Euro - falling from $1.17 (12/05) a 17% depreciation in 17 months. British pound hits a 26-year high trading above $2 to the dollar.
Europe (24 markets, including Russia and eastern Europe) at $15.7 trillion passes US in stock market value ($15.6 trillion) for the first time since WWI.
Toyota overtakes General Motors (2.35m cars and trucks sold to 2.26m units) in the first quarter of 2007 - ending GM's 76 year reign as the world's largest carmaker.
Earnings season for 1Q - the growth rate for the S&P 500 index was 7.9%. The 1Q07 marks the end of 3.5 years of double-digit earnings growth. In U.S. corporate history 14 quarters of consecutive double-digit earnings growth for the S&P 500 index was a record.
Month of March 2007
Dow: 12,354
Dow month: 0.70%, ytd: -0.87% 6 mo: 5.78%
S&P 500: 1,420
S&P 500 month: 1.00%, ytd: 0.14%, 6 mo: 6.37%
NASDAQ: 2,421
NASDAQ month: 0.21%, ytd: 0.25%, 6 mo: 7.22%
U.S. home prices down -1.4% in 1Q07 (NAR, compared to 1Q06) third consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 201.01.
Federal Reserve (and other Federal agencies) propose new guidlines for subprime mortgage loans (7.5 million and aproximately 5 million Alt-A or nontraditional loans) because of growing delinquencies, foreclosures and bankruptcies.
European Central Bank (ECB) raised interest rates to 3.75% from 3.50% (7th time since 12/05) for 13 European nations.
Month of February 2007
Dow: 12,268
Dow month: -2.80%, ytd: -1.56% 6 mo: 7.79%
S&P 500: 1,406
S&P 500 month: -2.23%, ytd: -0.85%, 6 mo: 7.90%
NASDAQ: 2,416
NASDAQ month: -1.91%, ytd: 0.04%, 6 mo: 10.67%
Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $414. Uranium trades $85/lb, Nickel and Lead trade at new record highs.
Bank of Japan raises interest rate from 0.25% to 0.50%.
TXU, the largest power producer in Texas, goes private in largest leveraged buy-out & private equity deal in U.S. corporate history at $45 billion.
Fortress Investment becomes the first U.S. hedge fund to be listed and traded publicly.
The Blackstone Group buys Equity Office Properties Trust for $39 billion - surpassing the HCA deal for $33 billion (Nov '06).
Month of January 2007
Dow: 12,621
Dow month: 1.27%, ytd: 1.27% 6 mo: 12.84%
S&P 500: 1,438
S&P 500 month: 1.41%, ytd: 1.41%, 6 mo: 12.70%
NASDAQ: 2,463
NASDAQ month: 1.99%, ytd: 1.99%, 6 mo: 17.79%
Oil futures trade below $50 for the first time since May '05.
Earnings season for 4Q - the growth rate for the S&P 500 index was 11.6%. The 4Q06 will mark the 14th consecutive quarter of double-digit earnings growth for the S&P 500 index. In U.S. corporate history 14 quarters (of consecutive double-digit earnings growth) is a record.
Month of December 2006
Dow: 12,463
Dow month: 1.98%, 6 mo: 11.78%, ytd: 16.29%
S&P 500: 1,418
S&P 500 month: 1.29%, 6 mo: 11.65%, ytd: 13.62%
NASDAQ: 2,415
NASDAQ month: -0.66%, 6 mo: 11.19%, ytd: 9.52%
Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $409.
U.S. home prices down -2.7% in 4Q06 (NAR, compared to 4Q05) second consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 203.33.
Bank of New York (N.Y.'s oldest bank, founded by Alexander Hamilton in 1784) agrees to buy Mellon Financial for $16.5 billion. It will manage $1.1 trillion in assets and safeguard $16.6 trillion - world's largest Asset managers: Barclay's $1.8, State Street $1.7, Fidelity $1.3 and JPMorgan Chase $1.3 trillion; world's largest Custodian banks: BONY $16.6, JPMorgan Chase $14.0, State Street $11.9 and Citigroup $9.6 trillion.
European Central Bank (ECB) raised interest rates to 3.5% from 3.25% (6th time in 12 months) for 12 European nations.
China chooses Westinghouse (Toshiba) for $5.3 billion nuclear reactor contract (26 by 2020) - China is the 3rd largest nuclear power generator in Asia after Japan & South Korea.
AT&T and Bellsouth merger in $86 billion deal.
President Gerald Ford dies at 93 (longest-lived); 38th President of the United States from 1974-77. Ford replaced Richard Nixon as the only non-elected President is U.S. history. Ford oversaw the withdrawal of American forces from Vietnam and the pardoning of Nixon for the Watergate scandal which was credited for Ford's lose to Jimmy Carter in 1976.
Month of November 2006
Dow: 12,221
Dow month: 1.17%, 6 mo: 9.43%, ytd: 14.03%
S&P 500: 1,400
S&P 500 month: 1.67%, 6 mo: 10.24%, ytd: 12.18%
NASDAQ: 2,431
NASDAQ month: 2.75%, 6 mo: 11.62%, ytd: 10.25%
U.S. unemployment rate falls to 4.4%.
Russia ($1 trillion economy) invited to join the World Trade Organisation (WTO) of 149 members - China joined the WTO in 2001.
HCA completes largest leveraged buy-out in U.S. corporate history at $33 billion - surpassing KKR's 1989 purchase of RJR Nabisco Inc. for $31.3 billion.
Freeport-McMoRan agrees to buy Phelps Dodge for $25.9 billion.
Month of October 2006
Dow: 12,080
Dow month: 3.43%, 6 mo: 6.27%, ytd: 12.72%
S&P 500: 1,377
S&P 500 month: 3.15%, 6 mo: 5.11%, ytd: 10.34%
NASDAQ: 2,366
NASDAQ month: 4.78%, 6 mo: 1.89%, ytd: 7.30%
U.S. population exceeds 300 million (China, 1.32B and India, 1.10B) 100 million reached in 1915 and 200 million in 1967.
European Central Bank (ECB) raised interest rates to 3.25% from 3% (5th time in 10 months) for 12 European nations.
Industrial and Commercial Bank of China (ICBC) launches the world's largest IPO ever - surpassing NTT DoCoMo, $18.4 billion in 1998. Oversubscribed by more than 7 times and bringing in $21.9 billion.
U.N. Security Council adopts resolution to impose sanctions on North Korea for a suspected nuclear-bomb test on Oct 9. Countries with nuclear weapons: United States, Britain, Russia, China, France, India, Pakistan & Israel (unacknowledged).
Michael Schumacher retires as the world's first billionaire athlete - Formula One driver. Schumacher, 7-time world champion, 91 race wins & 154 podium finishes - brought wins to Ferrari (2000-04) for the first time since 1979.
Earnings season for 3Q - the growth rate for the S&P 500 index was 18.7%. The 3Q06 will mark the 13th consecutive quarter of double-digit earnings growth for the S&P 500 index. In U.S. corporate history 13 quarters (of consecutive double-digit earnings growth) has only been achieved once before, 4Q92 - 4Q95.
Month of September 2006
Dow: 11,679
Dow month: 2.62%, 6 mo: 5.13%, ytd: 8.98%
S&P 500: 1,335
S&P 500 month: 2.46%, 6 mo: 3.17%, ytd: 6.97%
NASDAQ: 2,258
NASDAQ month: 3.44%, 6 mo: -3.46%, ytd: 2.40%
U.S. 10 yr. Treauries rally 13.5% from 5.24% (Jul 5) to 4.53% (Sep 25) - in less than 12 weeks. European and Asian funds pour into U.S. debt as global investors anticipate further rate increases by the European and Asian central banks.
U.S. home prices down -1.7% in 3Q06 (compared to 3Q05) the first quarter of price declines in national home prices since 1991 (NAR) - S&P/Case-Shiller Home Price Index falls from a high of 206.52 (7/06) to 205.8.
China's foreign currency reserves have surpassed $1 trillion eclipsing Japan's $900 billion - more than 70% were held in U.S. Treasuries which has fallen to less than 35% as China diversifies.
Alcatel SA and Lucent Technologies Inc. merge in $13.4 billion share swap.
Oil trades below $60 down 24% since its July 10th high - as Americans reduce their "miles driven" (year over year) for the first time since 1981. OPEC looks to cut output from 29.5 million bpd by at least 1m barrels a day - first cut since April 2004.
Month of August 2006
Dow: 11,381
Dow month: 1.75%, 6 mo: 3.53%, ytd: 6.20%
S&P 500: 1,303
S&P 500 month: 2.12%, 6 mo: 1.80%, ytd: 4.41%
NASDAQ: 2,183
NASDAQ month: 4.40%, 6 mo: -4.30%, ytd: -1.00%
NASA awards Lockheed Martin a $3.9 billion contract (part of a $122 billion effort through 2018) to build a spacecraft that will return U.S. astronauts to the moon.
Pension Reform bill signed into law.
Anadarko Petroleum Corp. $23.3 billion acquisition of Kerr-McGee Corp. and Western Gas Resources approved.
European Central Bank's governing council increased their target rate to 3% from 2.75%, - Great Britian, Denmark & Australia also raise rates. People's Bank of China raises the one-year lending rate to 6.125%.
Month of July 2006
Dow: 11,185
Dow month: 0.31%, 6 mo: 2.95%, ytd: 4.37%
S&P 500: 1,276
S&P 500 month: 0.47%, 6 mo: -0.31%, ytd: 2.24%
NASDAQ: 2,091
NASDAQ month: -3.73%, 6 mo: -9.28%, ytd: -5.17%
Oil closes $77.03 an all-time high - intraday high of $78.40.
Bank of China freezes North Korean bank accounts assisting the US-led crackdown of North Korea's alleged counterfeiting and money-laundering.
Bank of Japan raises interest rate to 0.25% up from 0.0%. BOJ's 0.0% rate policy has been in force (except 8/00-2/01) since Mar '99 - 14 other central banks also raise rates.
S&P/Case-Shiller Home Price Index (20-city) rises to a high of 206.52 - rising from 100 (Jan 1, 2000).
Earnings season for 2Q - the growth rate for the S&P 500 index was 16.3%. The 2Q06 will mark the 12th consecutive quarter of double-digit earnings growth for the S&P 500 index. There has only been 1 other instances of at least 12 consecutive quarters of double-digit earnings growth, 4Q92 - 4Q95.
Month of June 2006
Dow: 11,150
Dow month: -0.16%, 6 mo: 4.04%, ytd: 4.04%
S&P 500: 1,270
S&P 500 month: 0.00%, 6 mo: 1.76%, ytd: 1.76%
NASDAQ: 2,172
NASDAQ month: -0.28%, 6 mo: -1.50%, ytd: -1.50%
FOMC Tightening Cycle - Jun 29 - Fed Funds rate increases to 5.25% (17th consecutive increase).
U.S. unemployment rate falls to 4.6%.
European Central Bank's governing council increased their target rate to 2.75% from 2.5%, - India, Denmark, South Korean, Thailand, Turkey & South Africa also raise rates.
Warren Buffett gifts 10 million of Berkshire Hathaway (B shares - over $31 billion) to the Gates Foundation - surpassing Bill and Melinda Gates' endowment of $25.9 billion.
Phelps Dodge acquires Inco (which merges with Falconbridge) for $40 billion. Arcelor merges with Mittal Steel for $38.3 billion.
NYSE Group reaches deal to acquire Euronext. NYSE counterbids (Deutsche Borse) $10.2 billion for the pan-European Stock Exchange - Euronext's price rises from €21.70 (Jan 5, 05) to €79.15 (May 9) 364% in 17 months.
Month of May 2006
Dow: 11,168
Dow month: -1.75%, ytd: 4.21% 6 mo: 3.36%
S&P 500: 1,270
S&P 500 month: -3.05%, ytd: 1.76%, 6 mo: 1.68%
NASDAQ: 2,178
NASDAQ month: -6.20%, ytd: -1.22%, 6 mo: -2.42%
FOMC Tightening Cycle - May 10 - Fed Funds rate increases to 5% (16th consecutive increase).
$70 Billion Tax cut (extension) bill signed into law.
Platinum $1335 and Copper $4.03/lbs trade at all-time cash highs. Gold trades $732 - highest since February 1980, when Gold spent 3 weeks above $700. Silver trades $15.21 - highest since February 1983. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $399.
Wachovia Corp., the 4th largest U.S. bank, pays $25.5 billion for Golden West Financial Corp.
Corporate fraud verdicts returned on Ken Lay, Jeffrey Skilling and Andrew Fastow (Enron). Enron's collapse caused the closing of Arthur Andersen. Five years and the implementation of Sarbanes-Oxley saw John J. Rigas (Adelphia), Sam Waksal (ImClone), Bernie Ebbers (WorldCom), Dennis Kozlowski (Tyco), Martha Stewart, Global Crossing, Qwest, HealthSouth, Rite Aid, Fannie Mae, AIG and others litigated, convicted, fined and/or imprisoned.
Medicare (Part D) Prescription Drug benefit (coverage began Jan 1, 2006). Over 37 million of Medicare's 43 million beneficiaries have enrolled as of May 15 (next open enroll begins Nov 15, 2006). Estimated to cost $724 billion over 10 years, it is the biggest expansion of Medicare since its creation in 1965. The voluntary program is designed to promote competition among private insurers in the marketplace. By entering your individual information at www.medicare.gov your best choices (prescription drug plans) are provided - average monthly premium is about $24 a month.
Month of April 2006
Dow: 11,367
Dow month: 2.32%, ytd: 6.07% 6 mo: 8.88%
S&P 500: 1,310
S&P 500 month: 1.24%, ytd: 4.97%, 6 mo: 8.53%
NASDAQ: 2,322
NASDAQ month: -0.73%, ytd: 5.31%, 6 mo: 9.53%
China increases interest rates in order to cool domestic economy growing at 9-11%. China's Three Gorges dam approaches completion (May 20) - the $25 billion project is the world's largest. Beijing-Lhasa Express begins (July 1) the 710-mile link to the Tibetan capital climbs to over 16,640 feet, oxygen-assisted - $4.2 billion, 5 years.
Boston Scientific acquires Guidant in a $27 billion buyout.
NASDAQ purchases a 25% interest in the London Stock Exchange (1566-1698 in the Royal Exchange, New Jonathon's in 1773 and officially founded on March 3, 1801) - LSE's price rises from 341p (Oct 20, 04) to 1280p (Apr 19) 375% in 18 months.
Earnings season for 1Q - the growth rate for the S&P 500 index was 14.9%. The 1Q06 will mark the 11th consecutive quarter of double-digit earnings growth for the S&P 500 index. There has only been 1 other instances of at least 11 consecutive quarters of double-digit earnings growth, 4Q92 - 4Q95.
Month of March 2006
Dow: 11,109
Dow month: 1.06%, ytd: 3.66% 6 mo: 5.12%
S&P 500: 1,294
S&P 500 month: 1.09%, ytd: 3.69%, 6 mo: 5.37%
NASDAQ: 2,339
NASDAQ month: 2.54%, ytd: 6.08%, 6 mo: 8.74%
FOMC Tightening Cycle - Mar 28 - Fed Funds rate increases to 4.75% (15th consecutive increase).
NYSE, the world's largest stock market, demutualizes and mergers with Archipelago Holdings Inc. (and Pacific Exchange). After 213 years, as member-owned (1,366 members), the NYSE goes public.
Bank of Japan ends over 7 years of deflation fighting, Mar 9 - BOJ's ultra-loose monetary policy (0% since Mar '99) is over; removing excess liquidity and managing interest rates is now the policy.
European Central Bank (ECB 12-nation Euro zone) 18-member governing council increased their target rate to 2.5% from 2.25%.
DP World (United Arab Emirates) will divest itself of 6 U.S. port operations in its acquisition of British owned P&O - facing national securities opposition by Congress.
Month of February 2006
Dow: 10,993
Dow month: 1.19%, ytd: 2.58% 6 mo: 4.89%
S&P 500: 1,280
S&P 500 month: 0.00%, ytd: 2.56%, 6 mo: 6.31%
NASDAQ: 2,281
NASDAQ month: -1.04%, ytd: 3.45%, 6 mo: 7.39%
U.S. unemployment rate falls to 4.7%.
U.S. 30yr Treasury bonds auctioned - Reissued on Feb 9, $14 Billion at 4.53% (lower than the Feb '99 low yield of 5.298%) - last 30yr Treasury issued Aug 2001 (discontinued for 4.5 years).
India, the world's 2nd largest Emerging market economy ($3.6 trillion), SENSEX index closes above 10,082 (Feb 7) - rallying from 6,118 (Apr 18) to 10,422 (Feb 28), over 70% in the past 10 months.
Ben Bernanke (Federal Reserve Governor, Aug '02 - Jun '05 and former Chairman of the White House Council of Economic Advisers) succeeds Alan Greenspan as Chairman of the Federal Reserve. Bernanke delivered his first Federal Reserve semi-annual policy report to Congress, Feb 15 - affirming continuity of policy. Kevin Warsh (Stanford University) a White House economic aide and Randall Kroszner (University of Chicago) a former White House adviser have been appointed to fill two vacancies on the Federal Reserve Board. Donald Kohn (senior Governor of Fed) to be nominated as vice Chairman of the U.S. central bank.
2006 XX Olympic Winter Games Torino, Italy where German, American, Canadian, Austrian, Russian & Norwegian athletes scoop up medals. Joey Cheek (US) after winning 500 meters (silver 1000 meters) speed skating announces donating his $40,000 (all U.S. athletes receive $25k, $15k or $10k from the U.S.O.C.) to "Right to Play" - founded by Norwegian superstar Johann Olav Koss (who won 3 gold medals in the 1994 Olympic Games, Lillehammer) inspiring Cheek. Over $500,000 have been pledged by athletes - U.S. athletes chose Cheek to carry U.S. flag in closing ceremony.
Month of January 2006
Dow: 10,864
Dow month: 1.37%, ytd: 1.37% 6 mo: 2.11%
S&P 500: 1,280
S&P 500 month: 2.56%, ytd: 2.56%, 6 mo: 3.73%
NASDAQ: 2,305
NASDAQ month: 4.54%, ytd: 4.54%, 6 mo: 5.54%
FOMC Tightening Cycle - Jan 31 - Fed Funds rate increases to 4.50% (14th consecutive increase).
Canada, U.S.'s largest trade partner, Stephen Harper (Conservative Party) defeats Paul Martin (Liberal Party) ending a 12-year Liberal rule to become Canada's next prime minister. TSX Composite Index rallies from 10,519 (Nov 10) to close at an all-time high above 11,999 (Jan 31) more than 14% in less than 3 months.
Bill Ford, chairman and great-grandson of the founder of the Ford Motor Co., announces Ford will no longer provide quarterly and annual guidance - the lifeblood of Wall St. investment analysts - Ford's restructuring will focus on a new CEO & building the cars their customers buy. GM faces similar or greater restructuring challlenges including selling GMAC and troubles with Delphi.
Alan Greenspan, Chairman of the Federal Reserve (world's most powerful central banker), retires after 18.5 years. He started his tenure on August 11, 1987 (just weeks before the October 19 crash, 508.32 points) - DJIA fell from 2,746 (Aug 25) to 1,616 (Oct 20) a 41% decline (in 40 trading days). Greenspan oversaw nearly two decades of U.S. prosperity with only 18 months of moderate recessions (less than 8.2%). His Federal Reserve tenure was the second-longest (William McChesney Martin, nearly 20 years) as he steered the U.S. economy through numerous challenges. Greenspan replaced Chairman Paul Volcker, who was appointed in 1979 and is remembered for cutting inflation from 14.8% (CPI, the Misery Index included unemployment at 20.6%) to 2.5% (in 1983). Volcker conquered stagflation by raising interest rates, while encouraging fiscal restraint, trade and productivity gains.
Iran (pop. 68 million, Islamic republic) moves its foreign exchange out of European banks in advance of referral to the U.N. Security Council and possible imposition of economic sanctions over its nuclear program. Iran is OPEC's second largest oil producer (after Saudi Arabia) and holds 10% of the world's proven oil reserves. Iran also has the world's second largest natural gas reserves (after Russia).
Earnings season for 4Q - the growth rate for the S&P 500 index was 14.4%. The 4Q05 will mark the 10th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 2 other instances of at least 10 consecutive quarters of double-digit earnings growth, 2Q72 - 3Q74 and 4Q92 - 4Q95.
Month of December 2005
Dow: 10,717
Dow month: -0.81%%, 6 mo: 4.31%, ytd: -0.61%
S&P 500: 1,248
S&P 500 month: -0.08%, 6 mo: 4.79%, ytd: 3.06%
NASDAQ: 2,205
NASDAQ month: -1.21%, 6 mo: 7.25%, ytd: 1.24%
FOMC Tightening Cycle - Dec 13 - Fed Funds rate increases to 4.25% (13th consecutive increase).
Reuters-CRB Index of 17 commodities trades a (non-adjusted) all-time high above $351 (Nov '80 high, $337.60). Gold futures trade $544 (a 24.5 year high) breaking the March 1981 high of $540 as gold fell from its all-time peak of $850 reached in January 1980.
Bank regulators (Federal Reserve, Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision and the National Credit Union Administration) issue new guidelines on mortgage loans ($11 trillion outstanding - stronger risk management by lenders warrant tighter standards on unconventional mortgages. Interest-only & Payment Option ARM's in 2001 made up 4% of loans they have risen to over 40% in 2005.
World Trade Organization (WTO) 149 members (DOHA) approved a ministerial declaration in which the European Union sets an end date (2013) for farm export subsidies - help to the world's poorest developing countries.
Iraqi people vote in first regional parliamentary General elections - Dec 15 - the Council of Representatives, a 275-member body, will shape Iraq's future democratic government.
European Central Bank (President Jean-Claude Trichet and the 12-nation ECB currency policy makers) - Dec 1 - raised rates from 2% to 2.25%. The 2% point gap (2% Euro vs. 4% U.S. Dollar) had been the widest since September 2000. The ECB has managed the Eurozone's (311 Milion Europeans) Monetary policy since the Euro's launch in 1999. Interest rates had been at 2% (since June '03), when the ECB cut rates from 2.5% to 2%. The DJ Euro Stoxx 50 trades at a 3.5 year high.
Month of November 2005
Dow: 10,805
Dow month: 3.50%, 6 mo: 3.23%, ytd: 0.20%
S&P 500: 1,249
S&P 500 month: 3.48%, 6 mo: 4.87%, ytd: 3.14%
NASDAQ: 2,232
NASDAQ month: 5.28%, 6 mo: 7.93%, ytd: 2.48%
Oil trades $55 down from $70.85, a 21% fall since Aug '05.
Dollar trades $1.16, strongest in 2 years - rallying from an all time low of $1.36 (15% appreciation since Jan '05) purchases a Euro.
Bank of America merges with MBNA for $35.8 billion.
Canada, U.S.'s largest trade partner, government of Prime Minister Paul Martin, Liberal Party, fell Nov. 28 when opposition parties united to topple Martin. Canada with 33 million people share a $1/2 Trillion (NAFTA) trade with the U.S. which accounts for a third of Canada's economy (85% of Canadian exports). TSX Composite Index rallies from 5,678 (Oct 10, '02) to 11,118 (Sep 28, '05) over 95% rally in 3 years (283 pts shy of the Sep 5 '00 high of 11,401).
2005 Hurricane season ($47.5 billion in insured losses and over $200 billion in U.S. government outlays) with 27 named storms (14 became hurricanes) exceeds 1933 (22) for the most storms since record keeping began 154 years ago. The Galveston Hurricane of 1900 remains the deadliest U.S. natural disaster - estimated loss of life was between 6,000 to 12,000. Hurricane Katrina in August, Hurricane Andrew (Florida in 1992) and the Okeechobee Hurricane (Florida in 1928) make up the top four most destructive Hurricanes in U.S. history.
Month of October 2005
Dow: 10,440
Dow month: -1.21%, 6 mo: 2.43%, ytd: -3.18%
S&P 500: 1,207
S&P 500 month: -1.71%, 6 mo: 4.41%, ytd: -0.33%
NASDAQ: 2,120
NASDAQ month: -1.44%, 6 mo: 10.36%, ytd: -2.66%
FOMC Tightening Cycle - Nov 1 - Fed Funds rate increases to 4% (12th consecutive increase).
Hurricane Wilma recorded as most intense (lowest barometric pressure, Rita was the 4th & Katrina the 6th recorded in U.S. history) leaving 6 million Floridians without electricity.
China's first televised manned space launch of two astronauts. It is only the third country to launch a human into orbit on its own, after Russia and the United States. The mission lasted five days; the 2003 "secret" flight, which carried one astronaut lasted just 21.5 hours.
Iraqi people vote and adopt first democratic constitution in their country's history.
Kashmir earthquake strikes on October 8 - registering 7.6 it killed between 85,000 - 95,000 and left over 3.5 million Pakistanis homeless for the harsh winter.
Delphi files for bankruptcy, the world's biggest auto-parts supplier, spun off from General Motors in 1999. About half of Delphi's business comes from GM.
Chicago White Sox win their first World Series title since 1917 (when "Shoeless" Joe Jackson and the "Black Sox" threw the 1919 Series against Cincinnati), beating the Los Angeles Angels and then the Houston Astros in 8 straight games.
Earnings season for 3Q - the growth rate for the S&P 500 index was 16.0%. The sectors expecting the weakest growth are materials (-5%) and consumer discretionary (1%). The 3Q05 will mark the 9th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 3 other instances of at least 9 consecutive quarters of double-digit earnings growth: 2Q72 - 3Q74, 2Q87 - 2Q89, and 4Q92 - 4Q95.
Month of September 2005
Dow: 10,568
Dow month: 0.83%, 6 mo: 0.62%, ytd: -1.99%
S&P 500: 1,228
S&P 500 month: 1.99%, 6 mo: 4.07%, ytd: 1.40%
NASDAQ: 2,151
NASDAQ month: 1.27%, 6 mo: 7.60%, ytd: -1.24%
FOMC Tightening Cycle - Sep 20 - Fed Funds rate increases to 3.75% (11th consecutive increase).
Hurricane Rita strikes along the Texas-Louisiana border on Sep 24. Over 2.8 million residents evacuate the 500 mile coastal area (largest U.S. evacuation ever), damages estimated between $10-20 billion.
Chief Justice William Rehnquist dies at 80; 16th in U.S. Supreme Court history 1972-2005. John Roberts is confirmed as 17th Supreme Court Chief Justice. At 50 years old Roberts is the youngest Chief Justice in over 200 years.
United Nations celebrates its 60th Anniversary founded in 1945 by the Allies of World War II: United States, Great Britain, Russia, China & France as a forum for all Nations to engage in peaceful resolutions.
Japan, world's second largest Developed economy, Prime Minister Junichiro Koizumi wins landslide reelection and a popular mandate to push through market reforms. Notably, privatizing Japan Post (Koizumi was Minister of Posts and Telecommunications from 1992-95) into separate businesses for mail delivery, banking services and insurance. Japan Post with 400,000 employees, runs 24,700 post offices and is the nation's largest employer. With $3.3 trillion in assets it is also the world's largest financial institution.
Nikkei 225 trades over 13,617, over a 79% rally in 2.5 years. Japan's Nikkei 225 passed 10,000 for the first time on Jan 10, 1984, trading up to within 43 points of 40,000 on Dec 29, 1989 (325% rally, 6 yrs), before falling to 7,603 on April 28, 2003 (80% fall, a 20 yr low). The Bank of Japan has held borrowing costs near 0% since 2001 in an effort to combat over 7 years of deflation.
Germany, world's third largest Developed economy, Christian Conservative Angela Merkel (Iron Frau) defeats 7 year incumbent Social Democrat Chancellor Gerhard Schroeder - Angela Merkel becomes the first female German Chancellor. DAX 30 rallies 21% in past 5 months anticipating change in leadership. The DAX 30 has rallied from 2,188 (8 yr low on March 12, 2003) to over 5,004 (September 7, 2005) 128% rise in 2.5 years. Germany still digesting unemployed from former East Germany (over $1 Trillion spent on German reunification, 15th Anniversary on Oct 3, 2005) has the world's 2nd largest government deficit behind the U.S. and unemployment over 12% (18% in former East Germany).
Month of August 2005
Dow: 10,481
Dow month: -1.49%, 6 mo: -2.65%, ytd: -2.80%
S&P 500: 1,204
S&P 500 month: -2.43%, 6 mo: 0.08%, ytd: -0.58%
NASDAQ: 2,124
NASDAQ month: -2.75%, 6 mo: 3.56%, ytd: -2.48%
FOMC Tightening Cycle - Aug 9 - Fed Funds rate increases to 3.50% (10th consecutive increase). Federal Reserve announces that it will begin reissueing the 30 yr Treasury bond beginning on February 9, 2006 (discontinued on Feb 18, 2002).
Oil trades above $70 to $70.85 for the first time a 600% rally in 6.5 years - up from $10 in Dec '98.
Energy Bill signed into law - pressured by rising consumer gasoline prices.
Transportation Bill ($286 billion) signed into law.
Conoco Phillips buys Burlington Resources for $35.6 billion.
National Home prices stall - pressured by rising mortgage rates and rising home prices.
China takes the first step toward decoupling the Yuan from the Dollar. The Yuan will no longer be pegged directly to the U.S. dollar but to a basket of currencies. China holds the second largest inventory of U.S. Treasuries after Japan. China's $8.8 trillion Emerging economy compares to the U.S.'s $13 trillion economy.
CNOOC (Chinese "government") withdraws bid for UNOCAL after Congress strongly opposes acquisition as a threat to U.S. national security interests (purchase of U.S. energy resources). China ($8.8 trillion) and India ($3.6 trillion) emerging economies have the greatest increases in energy consumption for nearly half of the world's population.
Hurricane Katrina hits the Gulf Coast on Aug 29 (just East of New Orleans) ravaging Louisiana, Mississippi and Alabama. Flooding by levee breaks of over 215,000 properties in New Orleans initiates the largest domestic airlift & dislocation of Americans (2 million, since the Civil War). Damage covers a 90,000 sq. mile area - an area greater than the entire states of New York (47,223), Florida (53,997), Michigan (56,809), or Utah (82,168). The widest natural disaster in U.S. history takes the lives of over 1,800, over 500,000 jobs are lost, it will cost taxpayers $150 billion and the Gulf Coast years to rebuild. 115 Nations & 12 International Organizations pledge assistance to Katrina recovery. Over $1.3 billion of donations flow into non-government recovery organizations, the largest charitable collections ever.
Month of July 2005
Dow: 10,640
Dow month: 3.56%, 6 mo: 1.44%, ytd: -1.33%
S&P 500: 1,234
S&P 500 month: 3.61%, 6 mo: 4.49%, ytd: 1.90%
NASDAQ: 2,184
NASDAQ month: 6.23%, 6 mo: 5.92%, ytd: 0.28%
U.S. unemployment rate dropped to 5.0%, its lowest level since August 2001, before 9/11.
Dollar trades below $1.19 rallying from an all time low of $1.36 (Jan '05) to the Euro.
Lance Armstrong wins Tour de France for 7th consecutive victory (1999-2005); after being diagnosed with cancer in 1996 and given a 50% chance to live. No other cyclist had won more than five: Jacques Anquetil, Eddie Mercks (Belgium), Bernard Hinault, Miguel Indurain (Spain) - Greg Lemond was the first and only other American, he won 3 times.
London terrorist bombings on 7/7 kills 52 on subways and one bus - the deadliest attack in Britain since World War II. Prime Minister Tony Blair introduces new laws in Parliament curbing "hate mongering, inciting terrorism".
Earnings season for 2Q - the growth rate for the S&P 500 index was 11.7%, estimates started at 8.8%. The 2Q05 will mark the 8th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 3 other instances of at least 8 consecutive quarters of double-digit earnings growth.
Month of June 2005
Dow: 10,274
Dow month: -1.84%, 6 mo: -4.72%, ytd: -4.72%
S&P 500: 1,191
S&P 500 month: 0.00%, 6 mo: -1.65%, ytd: -1.65%
NASDAQ: 2,056
NASDAQ month: -0.58%, 6 mo: -5.60%, ytd: -5.60%
FOMC Tightening Cycle - June 30 - Fed Funds rate increases to 3.25% (9th consecutive increase).
Oil trades above $60 for the first time a 500% rally in little over 6 years.
10 yr U.S. Treasury trades trades 3.80% (Jun '05) lowest since Mar '04 (3.65%) and 3.07% on Jun 16 '03 - Federal Reserve began it's current tightening cycle from 1% in June of '04.
London wins the 2012 Olympics which will follow Beijing in 2008.
European Union constitution rejected by France.
Greenspan warns that the long U.S. Treasury bond yield is unusually low "a conundrum". A voracious appetite for our long bonds by Asian ecomomies (they are buying our bonds as we buy their goods and services), Non-U.S. global savings and U.S. real estate speculation (securitization of mortgages).
Month of May 2005
Dow: 10,467
Dow month: 2.70%, ytd: -2.93%, 6 mo: 0.37%
S&P 500: 1,191
S&P 500 month: 3.03%, ytd: -1.65%, 6 mo: 1.53%
NASDAQ: 2,068
NASDAQ month: 7.65%, ytd: -5.05%, 6 mo: -1.34
FOMC Tightening Cycle - May 3 - Fed Funds rate increases to 3% (8th consecutive increase).
GM and Ford - Two of the Big Three U.S. automakers - debt is downgraded to "junk" status by S&P.
Month of April 2005
Dow: 10,192
Dow month: -2.96%, ytd: -5.48%, 6 mo: 1.65%
S&P 500: 1,156
S&P 500 month: -2.03%, ytd: -4.54%, 6 mo: 2.30%
NASDAQ: 1,921
NASDAQ month: -3.90%, ytd: -11.80%, 6 mo: -2.68
Bankruptcy Bill signed into law.
Pope John Paul II (Karol Wojtyla, 1978-05 the first non-Italian in 455 years) had visited 129 countries, delivering more than 2,000 public addresses and influencing the collapse of communism in Eastern Europe - 5 million people visited Rome along with 4 kings, 5 queens, at least 70 presidents and prime ministers and more than 14 leaders of other religions to mourn the pope, who died at 84. Cardinal Joseph Ratzinger (German) oversaw the ceremonies later to become Pope Benedict XVI - the 265th reigning pope.
Earnings season for 1Q - the growth rate for the S&P 500 index was 13.9%. Consumer discretion sector is expected to have the sharpest decline in earnings (-7%).
Month of March 2005
Dow: 10,503
Dow month: -2.44%, ytd: -2.60%, 6 mo: 4.20%
S&P 500: 1,180
S&P 500 month: -1.91%, ytd: -2.56%, 6 mo: 5.92%
NASDAQ: 1,999
NASDAQ month: -2.54%, ytd: -8.22%, 6 mo: 5.43%
FOMC Tightening Cycle - March 22 - Fed Funds rate increases to 2.75% (7th consecutive increase). To remove policy accommodation at a pace that "...is likely to be measured...pressures on inflation have picked up in recent months and pricing power is more evident...with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal."
P&G buys Gillette for $57.2 billion.
U.S. unemployment rate unexpectedly rose to 5.4% from 5.2%.
U.S. 10 yr Treasury trades 4.69% - the highest yield in 10 months (4.90%). The 10 yr U.S. Treasury had their worst losses, 34%, in over 20 years when yields rose from 3.65% (Mar 17, '04) to 4.90% (May 14, '04) in just 2 months - preceding the Fed's current tightening cycle from 1%.
Month of February 2005
Dow: 10,766
Dow month: 2.64%, ytd: -0.16%, 6 mo: 5.83%
S&P 500: 1,203
S&P 500 month: 1.86%, ytd: -0.66%, 6 mo: 8.97%
NASDAQ: 2,051
NASDAQ month: -0.53%, ytd: -5.83%, 6 mo: 11.59%
FOMC Tightening Cycle - February 2 - Fed Funds rate increases to 2.5% (6th consecutive increase). Fed retained its reference to a "measured" pace of adjusting the funds rate higher.
Oil trades above $50 for the first time a 400% rally in less than 6 years.
Greenspan warns about the unusually flat U.S. bond yield curve calling it "a conundrum". The FOMC was forced in 2003 to drive Fed funds rate down to 42 year lows (1%) to allay the consequences of the "possibility" of deflation.
Q404 GDP was revised higher to a 3.8% rate from the 3.1% earlier reported. In 2004 GDP advanced 4.4%, its best performance since 1999, when GDP rose 4.5%. GDP expanded 3.0% during 2003 and 1.9% in 2002.
Month of January 2005
Dow: 10,489
Dow month: -2.73%, ytd: -2.73%, 6 mo: 3.45%
S&P 500: 1,181
S&P 500 month: -2.48%, ytd: -2.48%, 6 mo: 7.27%
NASDAQ: 2,062
NASDAQ month: -5.33%, ytd: -5.33%, 6 mo: 9.27%
Fed Funds rate at 2.5% after 1 year at 1% (Fed Funds was 6.5% from May 16, '00 - Jan 3, '01).
Gold starts the year at $440 up from $250 in April of 2001.
Oil starts the year at $42. Oil started last year at $27 then traded just below $50 at Halloween. In December 1998 oil was $10.
Dollar begins the year at an all-time low of $1.36 to the Euro. Dollar has fallen from $0.8228 (October 26, 2000)
to $1.36 in the past 4 years (a whopping 65% decline) to the Euro. The Euro began trading on Jan 1, 1999 between European banks at $1.17.
According to Thomson Financial Q404 growth rate for the S&P 500 index came in at 20.4%. Last year Q403 earnings growth was 28.3%, which was the highest quarterly growth rate recorded in the last 10 years. With earnings finishing at or above 20%, it will mark only the 8th time this has happened since 1950. The last year the annual growth rate for the index was 20% or greater was 1993 (23.3%).