The market posted a modest loss in the final session of the week. For the week, major indexes are still up by more than 2%. A couple of interesting developments occurred in the market in recent sessions. First, gold stands firmly above the key $1000 mark and at the same time, the US dollar is at the lowest level for the year. One may feel that the opposite relationship between the two makes perfect sense. But what seems to make sense doesn’t always work in the financial market. For example, oil price tumbled more than 3% today despite a weak dollar, which is usually cited as a reason behind crude oil’s movement. Second, many professional investors have been looking for a correction for a long time but they simply couldn’t get one. Even more frustrating to bears, several economic sensitive companies, including TI and FedEx issued positive earnings guidance. It looks like that the upcoming earnings seasons will repeat the one just finished, i.e., most companies will beat their expectations. In addition, the earnings comparisons for the next two quarters will be extremely easy. And in case we forget, the bulk of the stimulus package just started to kick in. Bulls, on the other hand, are equally nervous despite enjoying a nice summer rally. The market has run up more than 50% since March lows. But with unemployment rate approaching 10% along with one of the greatest recessions in history, can the market go straight up without even a modest decline? Only time will tell which side is right.

Most major sectors finished the session with little movement. The CRB commodity index declined 1.6%. The US dollar was lower against most major currencies. Treasuries rose with the yields falling. The three-month US LIBOR was unchanged at 30 bps. The VIX index rose modestly. The market breath was neutral on both NYSE and Nasdaq. The volume was on the light side.

The market rallied once again on Thursday, making it the fifth straight gain. All three major indexes are now sitting at the best level of 2009 with the Nasdaq posting a gain of more than 30%. It is hard to believe that one year ago at this time, the world economy was heading to a complete collapse following the bankruptcy of Lehman Brothers. Within weeks, the world equity market lost more than 30% of its value and the credit market was completely frozen. Now when we look back, what should we learn from last year’s episode? To me, the lost of trust and hence the confidence is the foremost factor behind last year’s turmoil. There are two very interesting articles on Bloomberg writing about the days around the Lehman bankruptcy filing and I have posted their links below for your reference.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLhi.S5xkemY
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX8D5utKFuGA

In today’s economic news, the weekly initial claims came at 550K, slightly better than expected. Continuing claims dropped to 6.08 million, the lowest level since April. The trade deficit, however, was wider than expected. The gap between imports and exports jumped the most in more than a decade or 16% to $32 billion mostly due to a faster rise in imports. Finally, Treasury Secretary Geithner spoke before Congress that it is unlikely that more bank bailout money will be needed and a contingency provision can be removed from the budget.   

All 10 major sectors finished the session higher led by transportation and basic materials. The CRB commodity index rose 0.8%. The US dollar was lower against most major currencies. Treasuries rose with the yields falling. The three-month US LIBOR was unchanged at 30 bps. The VIX index was off less than 1 point. The market breath was positive on both NYSE and Nasdaq. The volume was on the light side.

Market comments are omitted due to conflict of schedule.

Market comments are omitted due to conflict of schedule.

Market is closed for Labor Day Holiday.