news from ARA MELKONIANS/ week of August 9, 2010

Good Morning Everyone and Happy Friday! Last week's stock market rally added nearly 200 points to the Dow (see Monday's email blog), that's the good news for bullish traders. Unfortunately, this week has been quite a disappointment for those hoping to add to the 3 week long weekly rally which saw the Dow gain over 500 points. This week, if we were to close at this level at which we presently sit, we will have lost a little over 350 points for the week.
Stock markets around the globe seem to have settled down early this morning and the same calm (or maybe exhaustion) is present in our equity markets. I say this because Hong Kong's GDP came in lower than expected and Germany announced stronger than expected GDP . . . yet most markets around the globe closed with less than .5% reaction one way or the other. Traders in the US equity markets are receiving a mixed bag of economic data giving no real direction for which markets to move.

Advance retail sales showed a 0.4% increase, but that was slightly less than the 0.5% increase that had been widely expected. Prior month sales were revised upward to reflect a 0.3% decline. Excluding autos, retail sales were up just 0.2%, which is in line with expectations. July's Consumer Price Index made a 0.3% monthly increase, which is slightly sharper than the 0.2% increase that had been widely expected after a 0.1% decline in the prior month. Excluding food and energy, consumer prices were up only 0.1% month-over-month, as anticipated.

This CPI report counter's last month's deflationary numbers and sparks the debate on whether the Fed should be more concerned about inflation or deflation, and what tools the Fed has left to do anything about it anyway? The debate rose to a shouting match this morning on CNBC -- did you see it? If not, go to CNBC.com and see the recap. I thought Chicagoan Rick Santelli was going to have have a conniption fit. I love that guy's passion for his job.

The preliminary August Consumer Confidence Survey from the University of Michigan came in at 69.6, in line with the reading of 70.0 that had been widely expected, and represents an improvement from the 67.8 that had been recorded in July. The dollar is strong, oil prices keep falling and credit markets have recouped the small losses from the last couple of days. All this should mean very good rates today once again.

Look for the markets to be quiet throughout the day as traders hit the road for the weekend. I hope you have a terrific Friday and a very restful and relaxing weekend!