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For the week ending Friday, February 08, 2008 all major US Indexes ended down over 4% driven by weak economic data, a contractionary ISM Services number - the worst since 2001, Fed Speak, and the ECB holding rates steady.
-The Senate approved the $168M Stimulus Package to aid the economy.
-Global Insight's February U.S. Executive Summary states that we are now "over the edge" and that the U.S. economy has entered a mild recession for the first half of the year.
**Global Insight forecasts GDP declines of 0.4% in Q1 and a decline of 0.5% in Q2.
**Global Insight forecasts GDP growth of 3.4% in Q3 and growth of 2.7% in Q4 when "monetary and fiscal stimulus kick in."
-Volatility continued as the Dow fell 370.03 points to close at 12265.13 on Tuesday, its biggest point drop since January 17th. The Dow, S&P and NASDAQ all fell close to 3% on the ISM Services data.
-On Wednesday, 2/6/08, the Nasdaq Composite entered bear market territory, off more than 20% from its closing peak of 2859.12 hit on Oct. 31, 2007.
-All S&P Sectors ended the week in negative territory led by Financials with a loss of -8.59%. Consumer Staples brought in the strongest performance with a loss of only -2.14%
-The dollar rallied this week and is on track for its biggest gains since June, 2006 as the U.S. slowdown is expected to drag on other economies.
*The dollar gained 2% against the euro this week after dim comments from President Trichet of the ECB, which voted to keep the ECB rate unchanged at 4.0%, still wary of Eurozone inflation.
**The Bank of England lowered rates by a 1/2 point to 5.25%.
-The US Dollar Index (.DXY) moved off 2-month lows and is up 1.60% on the week
*The Dollar Index measures the performance of the Dollar against a basked of 6 currencies (EUR, JPY, GBP, CAD, CHF, SEK)
-Commodities were on fire: The RJ CRB Index hit a record high and is up almost 24% over the last 12 months (The CRB measures a basket of 19 commodity futures, including crude)
*Oil for March delivery is up 3.16% for the week closing at $91.77 per barrel, off -7.88% from its record close of $99.62 per barrel hit on January 2nd.
*Platinum for April delivery set new record intraday high of $1,892.8 on Friday, and is up 6.37% for the week closing at 1884.0
*Spring Red Wheat used for bread and pasta hit new highs for the third straight day up 10% for the week, and all wheat contracts hit highs
*Rough Rice hit a new record high of $15.775 before closing at $15.65, up 12.87% in 2008
The Dow ended down -561.06 or -4.40% for the week
-Friday, the Dow closed at 12,182.13 down -64.87 or -0.53%
-The Dow is Negative YTD down -8.16%
-The Dow is off by -1,982.40 or -14.00% from the market peak on October 9th of 14,164.53
The NASDAQ ended down -108.51 or -4.50% for the week
-Friday, the NASDAQ Composite closed at 2,304.85 up 11.82 or 0.52%
-The NASDAQ is Negative YTD down -13.10%
-The NASDAQ is off by -554.27 or -19.39% from the market peak on October 31 of 2,859.12
The S&P 500 ended down -64.13 or -4.60% for the week,
-Friday the S&P 500 closed at 1,331.29 down -5.62 or -0.42%
-The S&P is Negative YTD down -9.33%
-The S&P is off by -233.86 or -14.94% from the market peak on October 9th of 1,565.15
Continuing from Companies You will Love this Valentine's , here are more companies to watch this Valentine's Day
3) Perfume Manufacturers:
4) Specialty Retailers:
High Energy Costs Cut Into Farming Profits, Especially in Hawaii:
Hawaii runs at a trade deficit -- in 2006 the state exported $16 billion in goods and services, while importing $24 billion. Oil imports totaled $3.4 billion or approx 15% of total imports.
**93% of the energy used in Hawaii is imported which is why focus on bio-diesel and biofuels is so prominent. www.hawaiisenergyfuture.com
The Discover Card’s Third Annual Valentine’s Day Shopping Survey Reveals the Way to Someone’s Heart is Through Their Stomach.*
*73% of the respondents are satisfied with the gift they receive
Based on these survey results, here are some companies that may share the love this Valentine’s Day.
Today is the one year anniversary of HSBC's first subprime meltdown related write-down. HSBC was amongst the first to actually increase write offs due to the subprime mess.
HSBC is down over 22% since Feb 8, 2007.
Here are some 1 year stats since Feb 8 2007:
Top 5 Biggest S&P % Gainers since Feb 8, 2007:
Top 5 Biggest S&P % Losers since Feb 8, 2007:
While the US equities markets are down substantially this year, most commodities continue to rise. Wheat which was last year's winner (up 77% in 2007) continues to soar, is already up another 20% YTD and trading near its 52 week high. Oil, on the other hand, is down 8% YTD after gaining 57% last year.
Here is a table of some leading commodities and how they have performed on a YTD basis, in 2007 and since their 52 week high.
Will Valentine's Day help Hershey? According to the Discover Card survey 49% plan to buy their Valentine candy or chocolate, and 33% of women hope to receive chocolate for Valentine's Day.
Will a surge in sales for Valentine's Day help Hershey? Hershey reported lower earnings on January 24th missing by a penny, and broke a 14-year trend bullish short term trend due to higher energy and commodity costs.
Historically, from Jan, 1993 - Jan, 2006, Valentine's is a good time to buy Hershey stock for a short term hold (slightly more than 3 weeks). It is up 100% of the time by an average move of 6% in that time period (Q4 earnings report in Jan - Valentine's Day) based on data from LIM and MarketEdge.
Hershey has raised the wholesale price of its candy twice in the last year on rising costs of cocoa and milk and stating that it is more exposed to these price increases than competitors Mars and Nestle (NSRGY).
Cocoa is at near 5-year highs, and it is up nearly 15% in 2008 alone, and 44% over the last 12 months. Sugar is up almost 11% in 2008, and is up over 15% over the last 12 months.
The ECB decided to hold its main rate at 4% today, while the US Federal Reserve and the Bank of England have been cutting rates. Like the Fed, the European Central Bank is caught between inflationary pressures and a slowing global economy.
In January, the Fed cut rates to 3.0%. Today the Bank of England lowered its rate to 5.25%, while the ECB kept its rate at 4%. Here is a chart of the ECB vs. the Fed for the past 10 years. Notice that the ECB tends to lag the Federal Reserve both in easing and tightening. It also has kept within a tighter range than its US counterpart.
CISCO SYSTEMS (CSCO)
Dominant maker of computer networking equipment. Bellwether tech company.
The U.S. dollar showed strength on Tuesday against almost all major currencies as the currency market absorbed the dismal ISM data and looked towards a slowdown in Europe. There are increasing indications that the ECB may follow the U.S. Fed and also cut rates, if not Thursday, than possibly in the 2nd quarter.