Weekly Market News for the Week of January 18, 2010

Presented by Mark Lund, The Investor Coach.

Quote of the week. “Laughter is by definition healthy.”– Doris Lessing

How about a too-big-to-fail tax? Last week, President Obama proposed a Financial Crisis Responsibility Fee – a tax on the largest U.S. banks to help repay $117 billion in TARP losses. Would banks respond to this populist move with higher lending fees for customers? Or would executives and shareholders effectively bear the cost? One certainty: designated banks would have to pay the fee for 10 years or longer.¹

CPI slightly up, retail sales slip down. The Consumer Price Index inched north 0.1% in December. That puts it up 2.7% over the last 12 months, with core CPI up 1.8% in that span. Retail sales fell 0.3% last month, with the decline ranging across many sectors; economists polled by MarketWatch had expected a gain of 0.5%.^2,3

Cool consumer sentiment. The preliminary January Reuters/University of Michigan survey came in at 72.8. That was less than the 75.0 economists had hoped for, yet higher than the 72.5 December mark.⁴

Industrial output up again. The Federal Reserve noted a 0.6% advance in December, with utilities behind most of that gain. Industrial production has risen for six straight months.⁵

Oil back under $80 a barrel. Crude futures slipped more than 5% for the week on reduced demand projections with warmer weather. Oil prices fell 1.8% Friday to close at $78.00 per barrel on the NYMEX.⁶

Fears of fees affect the market. The second full trading week of the year was not as great as the first. The Dow lost 0.08%; the S&P 500 retreated 0.78%. Even with these losses, the Dow and S&P wrapped up their best 2-week stretches since mid-November.⁷

(Source: CNNMoney.com, ustreas.gov, bls.gov, 1/8/10)^6,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

Riddle of the week. If it were two hours later than right now, it would be half as long until midnight as it would be if it were an hour later than right now. What time is it?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: There is a kind of sweet bean that never grows in a garden. What is it?

Last week’s riddle answer: The jelly bean.

Citations.
1 csmonitor.com/USA/Politics/2010/0114/Bailout-aftermath-Obama-proposes-fee-on-big-banks [1/14/10]
2 money.cnn.com/2010/01/15/news/economy/consumer_prices_december/ [1/15/10]
3 marketwatch.com/story/retail-sales-drop-03-on-widespread-declines-2010-01-14?dist=beforebell [1/14/10]
4 smartmoney.com/investing/short-term-investing/market-update-friday-jan-15-2010-20844/ [1/15/10]
5 marketwatch.com/story/industrial-output-leans-on-a-cold-shoulder-2010-01-15 [1/15/10]
6 money.cnn.com/2010/01/15/markets/oil/ [1/15/10]
7 cnbc.com/id/34880099 [1/15/10]
8 money.cnn.com/data/markets/dow/ [1/15/10]
8 money.cnn.com/data/markets/nasdaq/ [1/15/10]
8 money.cnn.com/data/markets/sandp/ [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=SPX [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=SPX [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=SPX [1/15/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [1/15/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [1/15/10]
10 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

These views are those of Peter Montoya Inc., and not the presenting Representative Broker/Dealer, and should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.