Weekly Commentary

September 10, 2012

09.10.12

September, historically the worst month of the year, got off to a roaring start, with the NASDAQ up 2.3% and the DJIA advancing 1.6%. The markets were buffeted by mostly positive political developments offset by mixed economic reports.  This week will be more of the same, leavened by Wednesday’s launch of the new iPhone.

Bernanke started the week on a strong note by reaffirming his commitment to act if economic conditions deteriorate, noting that our labor market is a grave concern. On Wednesday, Bloomberg reported that the ECB would do unlimited [but sterilized] bond buying. Thursday Mario Draghi confirmed that the ECB will buy bonds of countries who ask for aid. All of these items helped support/propel the markets higher.

While the week’s economic data was much less positive, it was mostly interpreted in a positive manner.  Friday’s jobs data was an important reaffirmation of the weakening economic recovery. Nonfarm payrolls added only 97,000 [130,000 expected] and the prior report was reduced by 22,000. Moreover, the widely watched unemployment rate came in at a superficially favorable 8.1% [8.3% expected], but this was achieved by having more people leave the workforce.  The immediate response was to increase hopes for more quantitative easing [the glass is half full!]. The problem is that each additional round of QE has less and less positive impact [similar to an addict getting one more dose of his favorite drug].


AAPL’s products have been a big positive over the last decade, and this year’s goodies will be no exception. New product details have been leaking for weeks [where is Steve when you need him?], and they include a bigger [longer] and thinner screen, smaller connector, LTE/4G [but no NFG!], new mapping etc. Santa will not be wanting for ideas [new iPods too?] this holiday season.

“ Leadership is action, not position. ”
— Donald H. McGannon