Monti: The Missing Mario Brother
The markets headed lower this week on thin volume as Italian and Spanish bond yields rose above 7% once again. The rumors coming out of Europe continued to whipsaw the markets each and every day. After weeks of Europe this and Europe that, there is a growing impatience that something must be done soon.
Next week we look forward to Thanksgiving but not before several key pieces of economic data are released. Monday brings us existing home sales, Tuesday is the all important first release of third-quarter Gross Domestic Product (GDP) and Wednesday the Labor Department will announce jobless claims. Lest we forget, Wednesday is also the deadline for the Congressional Super Committee to come up with $1.2 trillion in budget savings. Despite all the big announcements, it will be a short trading week with the market closed Thursday and after 1pm on Friday.
The week wouldn’t be complete without some reference to Greece, Italy or Spain. On Monday, Mario Monti became Prime Minister of Italy. As a “technocrat” and economist, it is believed he will have the stomach to push through the necessary austerity measures. In related news, Spain will be holding elections this weekend to elect a new Prime Minister. And in an audacious move, the European Union is proposing a suspension of credit ratings for those countries in the midst of bailouts. Ratings agencies “won’t have the right, if the EMSA decides, to rate certain countries,” says markets commissioner Michael Barnier. This led some to quip: short sale bans, deposing of governments, and now a ratings ban? This is going well!
In company news, we learned that none other than Warren Buffet has taken a 5.5% stake in IBM among other companies. We’re happy to say that Warren, while a consummate investor, is late to the game as we’ve been in it for several years now! In other news, Chipotle Mexican Grill (CMG) ranked #2 on NPD’s list of the fastest-growing restaurant chains in America, only trailing privately held Five Guys burgers.
The story of the week has to do with General Electric’s tax return. No, we’re not going to harp on whether they did or did not pay taxes in 2010. That’s old news. The story I came across this week is more jaw dropping. It turns out that General Electric’s federal tax return was a whopping 57,000 pages. Fortunately they were able to file electronically, but it does call into question the complexity of the IRS tax code as it stands. Whether we agree with it or not, it’s hard to argue against simplifying the current system.
As a final reminder, we’d like to take the opportunity to invite everyone to the Olde West Chester Christmas Walk this Saturday, November 19th. We will be serving punch and cookies and welcoming all who come out to visit. The day goes from 1pm to 8pm with much of the activity taking place from 6pm-8pm. The parade will start at 7pm and end by 8pm. We look forward to seeing you!
In closing we’d like to mention that due to the short holiday week, we will not be sending out the Harvest Advisor email next week. We want to take this opportunity to wish all our clients a very happy Thanksgiving. We value and appreciate each and every one of you.
November 18, 2011: Market Update
Follow Us!
