S & P 500 Up 7.5%

Good News! The S&P 500 is up 7.5% between July 8 and July 17! In a period of about a week and a half we saw the S&P 500 go from 875.07 to 940.31 on recent good news. It is being reported that various aspects of the economy seem to be showing signs of either nearing a bottom or possibly bottoming out. This, it would seem, has pushed the stock market up in a meaningful way in a short period of time. On the flip side of this is the fact that from January 2 of this year through July 17 the S&P 500 has gone from 931.80 to 940.31 or up about 0.9%! So, is the glass half empty or half full? I don’t really know. In looking back on the past month we saw the S&P 500 close at 944.89 on June 11 then go down to 875.07 by July 8 to return to 940.31 on July 17. In other words, the S&P 500 went down 7.4% then went up 7.5%. As this up and down process went on from mid June through this past Friday, the 30 day average volume on the NYSE has been going down. Lower volume is not the normal condition for the beginning of a new bull market. Whatever is going on, this sideways movement of stocks would appear to be containing the trading range with no dramatic current movement either up or down. My expectation for the market this summer has been either no substantial change or a gradual move downward until mid September. The positive surprise has been some of the good earnings reports and the fact that they seem to have had an impact on the market. Perhaps the lack of volume is due to the summer doldrums and investors waiting for the main event: earnings reports for the third quarter! Ed

President Obama's Report Card

Where's the money? Where are the jobs? Before President Obama's inauguration he seemed to understand that his most critical role as President was to retain and create 600,000 jobs by this summer. He also knew that he needed a stimulus package to help get the economy back in gear! Congress passed a stimulus package in the amount of $787 billion at his request! Well, how has he done? On the job front, it appears that about 150,000 jobs have either been retained or created. This is far short of the 600,000 that his administration had targeted for this summer. As far as the stimulus package is concerned, thus far about $43 billion has been given in temporary tax cuts and $158 billion has been committed for spending around the country, but only about $53 billion has been spent, according to The N.Y. Times! That means of the total of $787 billion available a little over $100 billion has been used. And now his administration is thinking about asking for more stimulus money. With this as a backdrop, according to the Congressional Budget Office, the deficit for this year will hit $1.7 trillion, which is about 12% of Gross Domestic Product and is a far higher deficit, by any measure, than any President since WWII. The President had indicated early in the year that his administration expected the unemployment rate to go as high as 8.5% by the year's end. Unemployment as measured by the Government is at 9.5% now. This only includes those individuals still receiving state benefits and does not include those receiving the added Federal unemployment benefits, or those whose benefits have run out entirely. President Obama now owns these problems. What is going on? It appears the advice he is getting is to grab for all you can during your first year as President. His eye is off the main event. Get the Health Insurance passed, no matter what! Get an environmental law passed. Spend time visiting other countries. Well, I ask, what has happened to the basic issues that needed to be addressed in January and still need to be addressed: jobs and the economy! I don't like being a taxpayer and owner of GM, Chrysler and AIG. Isn't this what President Bush was chastised for when he suggested we should put some of our Social Security Money into stocks? I am an optimist and am hopeful that Mr. Obama, who is a bright and politically savvy guy, will wake up and get back to the basics. If he doesn't, we may be in a real pickle. His ratings are declining and his personal charisma is waning with too much exposure in the media. His own party is starting to turn away from some of his ideas. If this continues, he will lose his ability to be a leader dealing with the real issues of the economy and may wind up looking more like Jimmy Carter than FDR! Those who are out of work, underemployed or scared of what will happen to them the next time there are layoffs want a leader who is working for them and taking care of the economy! To me President Obama's Report Card gets an "IC", incomplete! This is what a student gets when he drops out. Ed