Weekly Market
Review
03/31/08
Up, down, up, down. The
US stock market is either in the middle of an intense tug-of-war or
investors simply can’t make up their minds whether to be buyers or sellers.
The roller coaster ride that has been masquerading as a stock exchange seems
to be teetering on the edge of disaster one day, only to recover the next
day. The final 3 trading days of last week saw daily gains/losses of at
least 2% on the S&P 500 stock index, the first time that has happened since
October 2002 (source: BTN Research).
The Fed did what they
could at their scheduled meeting last Tuesday, lowering short-term interest
rates for the 6th time in the last half-year. Time will tell
whether the Fed is using “Indiana Jones weapons” in a “Star Wars world” of
finance. It is the interconnection between many of the Wall Street firms
that has complicated a financial storm unlike any we have experienced
before. Numerous companies are lenders and borrowers to each other such
that one company’s debt is another company’s asset. Thus, one company’s bad
debt is another company’s lost asset (source: Federal Reserve).
The annual trustee reports
from the Social Security Administration and from Medicare will be released
on Tuesday. In last year’s report, it was estimated that the Social
Security trust fund would be depleted in the year 2041 and the Medicare
trust fund would be gone in 2019 (source: Social Security and Medicare).
Notable Numbers for the
Week:
1.
OIL AND GOLD
- Since the price of oil and the price of gold are both stated in dollars,
as the US currency falls in value, the prices of both commodities
tend to increase. From the Fed’s initial rate cut (9/18/07) to last week’s
6th rate reduction, the price of oil is up +34% and the price of
gold is up +40% (source: BTN Research).
2.
NOT LATER, NOW
- 55% of employers believe a new hire to their firm
would sacrifice some amount of future retirement benefits for additional
current compensation (source: Transamerica Center for Retirement
Studies).
3.
PERSONAL RESPONSIBILITY?
- Nearly 3 out of every 4 adults (73%) believe the housing and mortgage
crisis in the USA today is the fault of the mortgage lenders,
mortgage brokers and the government officials responsible for
banking regulation (source: Harris Interactive, USA Today).
4.
REQUIRED MINIMUM DISTRIBUTIONS
- If you turned age 70 ½ during calendar year 2007, then you must begin
taking annual withdrawals from your IRA accounts no later than 4/01/08.
If you delayed your 1st withdrawal until now, you must also take a 2nd
distribution by 12/31/08 (source: IRS Publication 590).
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