Weekly Market Review

02/04/08

The US stock market rallied last week, producing its best 1-week performance since mid-March 2003 (up +4.9% on the S&P 500).  In spite of the comeback, the S&P 500 still dropped 6.0% (total return) for January, its worst single month since September 2002 and its 3^rd consecutive down month (source: BTN Research). 

The hopes of equity investors for a bottom to the stock market swoon were boosted by another Fed rate cut on Wednesday, its 5^th in just over 4 months.  Their enthusiasm was tempered by a weak growth number for the economy (up +0.6% in the 4^th quarter 2007) and a net reduction in the country’s monthly employment report (a loss of 17,000 jobs in January 2008).  Opinions vary widely as to whether these latest statistics validate the belief that we are experiencing our first national recession in over 6 years (source: Commerce Department, Labor Department).   

President Bush will deliver the fiscal year 2009 budget to Congress today, likely to project spending of $3 trillion, the largest in our nation’s history.  Political junkies know that their Super Bowl takes places tomorrow in more than 20 states around the nation, including the delegate-rich states of California and New York.  49% of the Republican and Democratic delegates in all 2008 primaries/caucuses are at stake on Super Tuesday (source: CNN.com). 

Notable Numbers for the Week:

1.  BIG SWINGS – The average point spread between the S&P 500’s daily high and low was 11.12 points in 2006, rising to 17.29 points in 2007.  For the first month of 2008, the daily point spread for the stock index has averaged 33.13 points.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).    

2.  SUPER BOWL AND STOCKS - In 11 of the last 15 Super Bowls (1993--2007), the winner has been predicted based upon the stock market performance of the S&P 500 from the week prior to the game.  The theory states that when the stock market has been up, the favorite has won and when the stock market was down, the underdog has prevailed.  Since the stock market was up +4.9% last week, the Patriots should have beat the Giants in yesterday’s Super Bowl game.  Did they? (Source: BTN Research). 

3.  OURS AND THEIRS - The US economy grew +2.2% in sizze in 2007 vs. a +11.4% growth rate last year for China’s economy (source: Commerce Department). 

4.  DEBIT OR CREDIT? - American consumers spend more mooney on average in 2 months than all the consumers in China and India spend in a year (source: Time Magazine).