On Tuesday, the S&P 500 ticked into bear market territory (down over 20% from the April high), but then rallied. The index finished the week up more than 3%. European leaders began hinting at the creation of an “orderly default” for Greece in which private investors would take losses and governments would backstop banks. Meanwhile the US economy continued to show signs of maintaining moderate growth, confounding bears who expect imminent recession. Government bonds fell as a result.
- Tuesday – Bernanke testified that the Federal Reserve has more tools available to provide stimulus and is willing to use them.
- Tuesday – Stocks rally 4% in the final hour of trading, without obvious explanation.
- Wednesday – Germany and France both increase indications that they will allow private investors to take meaningful losses on Greek debt. This is an important step toward getting resolution to the crisis.
- Wednesday – Harry Reid announced a Democrat plan to offset costs of Obama’s jobs creation plan by implementing a 5% tax on income over $1 million.
- Wednesday – Former Apple CEO Steve Jobs died.
- All Week – “Occupy Wall Street” protests spread nationwide. While the protesters seem to have no set agenda, they may inspire politicians to act in more populist fashion.
Despite no official announcements, Europe seemed to inch closer to an organized, sustainable solution for Greece. Even if banks have to take big losses, the sooner the better in our view.
Earnings season starts next week. Most of the recent economic news in the US has been positive, but the fear level remains high. It would catch a lot of people off guard if earnings beat, or even match, expectations.
As we prepare our iPhone and iPad applications for launch, we express respect for Steve Jobs who changed the world, inspired, and reflected the beauty of what a free, capitalist society can provide for humanity.