Wall Street lost a "power house" with the passing of Alan "Ace" Greenberg this week. He had been the head of Bear Stearns for many years.
I had met him in the late 1970s when the firm I was with cleared its securities business through Bear Stearns and we were trying to develop an association with our commodities businesses. My prayers go out to his family.
Market Overview and Observation
Just when you didn’t think it could get worse in the world, it does. The announced withdrawal of U.S. Embassy personnel in Libya is the latest news coming out of the region. The short cessation of actions in the Gaza/Israel conflict on "humanitarian" considerations is not expected to produce a lasting "peace." With over 900 Palestinians killed including women and children who were used as "shields" for the rocket launchers, and the loss of 40 Israeli lives, it is highly unlikely either side will "forgive and forget."
The Ukraine situation also presents problems for the West as Europe is reluctant to increase sanctions against Russia for fear of losing the "pipeline" of energy. Russian President Putin, in our opinion, remains determined to "restore" Russia to its previous "glory." The U.S. is going it alone in that respect as the U.S. President continues his "fund raising" trip and no real progress by Secretary of State Kerry other than a short respite in the Middle East. We are following the events and trying to determine what effect they may possibly have in the global marketplace. For now our comments will reflect our overall concerns.
Interest Rates: September Treasury bonds closed Friday at 138 21/32nds, up 25/32nds tied to the weaker than expected U.S. durable goods report. While the "top number" showed a gain of 0.7% in June the underlying components including core shipments and capital goods interest waned and provided the backdrop for the move from equities back to the relative safety of treasuries. We continue to view treasury prices as in a range with a bullish bias. The ongoing concerns of the impact on Russian ambitions in Ukraine and the ramifications for Western Europe remains in the forefront of our thinking as well as the accelerating hostilities in the Middle East oil producing region. The yield on the 30 year bond declined by 6 basis points to 3.238%. This week will provide a myriad of data as the second quarter GDP, the Federal Reserve decision, theFriday July payrolls report and the July Institute for Supply Management manufacturing report are going to influence trading across the board. Hold current positions.
Stock Indices: The Dow Jones industrials closed at 16,960.57, down 123.23 points or 0.7% and for the week lost 0.8%. The S&P 500 closed at 1,978.34, down 9.6 points or 0.5% and for the week was close to unchanged. The tech heavy Nasdaq closed at 4,449.56, down 22.5 points or 0.5% and for the week managed a gain of 0.4%. Some earnings numbers were disappointing and concern over the European and Middle East conflicts also a fact for investors. We continue to implore holders of large equity positions to avail themselves of our strategic risk hedging programs.
Currencies: The September U.S. dollar index closed at 81.13 on Friday up 16.8 points, gaining against most currencies as disappointing earnings and weaker than expected German economic data weighed on the Euro. The September Euro closed at $1.3404, an 8 month low against the dollar. Other losses included the Swiss Franc 25 ticks to $1.1057, the British Pound 6 ticks to $1.6971, the Canadian dollar 59 points to 92.34c and the Australian dollar 17 ticks to 93.64c. The Japanese yen managed a slight gain of 2 ticks to close at 0.09825c. We have favored the dollar in recent months and continue to do so not on any view of a U.S. economic recovery but only relative to "worse" conditions for its trading partners. Stay with the dollar.