Economics, Financial Services, Investments, USA

After taking a day off to celebrate Martin Luther King day on Monday, January the 14^th the markets opened on Tuesday on a positive note taking DJIA up 116 points to a new 15 months high closing at 10726 helped by strong gain by pharmaceuticals and health insurers anticipating a Republican candidate Scott Brown victory in Massachusetts. But on Wednesday the markets tumbled 122 points mostly on profit taking and news about government-induced economic slowdown in China. On Thursday it was followed by even larger decline by 213 points triggered this time by unprecedented attack by President Obama at financial industry trying to change the subject after a stunning defeat for his party at Senate elections in Massachusetts. The biggest decliners were major banks and insurance companies. Then on Friday markets continued the decline this time concerned about Ben Bernanke who was up to a vote at the Senate for a second 4 year term. Suddenly his confirmation was no longer automatic. DJIA closed on Friday down another 217 points and 4.1% for a week.

The following week started on Monday, January 25^th on a positive note boosted by better than expected earnings at Apple followed by a small drop on Tuesday. On Wednesday the markets started the day with a rally triggered by a strong performance by major banks and DJIA closed up 42 points but stocks resumed their decline on Thursday down 116 points led by decline in shares of major tech companies such as IBM, Intel, Cisco and others. The index finished the week on a down note and closed the month of January down 3.5% and 6.1% decline from recent highs reached on January the 19^th. The US dollar continued its strong rally especially versus the Euro. As usual I will make a few comments.

As I have mentioned several times before the markets were ready for a correction which started to take place. The Euro decline is attributable by a variety of problems in Greece, Spain, Portugal, and Ireland just to name a few. But by far the biggest event was a historic loss by the Democrats to a Republican Scott Brown in the most Democratic state where they outnumber the Republicans by 3.5 times margin. The Senate seat that was held by late senator Edward Kennedy was considered ‘’automatic’’ by the Democrats however their candidate lost and the party no longer has enough votes in the Senate to push through ambitious Obama agenda to remake America to their liking. As a result more and more Democrats are quitting before this year congressional elections. I think this is very positive for financial markets eventually but at the moment things don’t look too positive. The administration is trying to change the subject first by attacking the banks and also Fed Chairman Ben Bernanke. The unemployment remain stubbornly high and until there is an improvement it is difficult for the market to advance. On a positive note the corporate earnings remain strong and the latest preliminary GDP numbers surprised everybody being up 5.9%-far better than expected.

On a funny note about now discredited theory of global warming comes another embarrassment by Nobel Price winner(together with Al Gore) IPCC-Intergovernmental Panel on Climate Change claim on ‘’receding glaciers in the Himalayas”.  According to this distinguished organization they are supposed to disappear by the year 2035 obviously because of the climate change. The whole thing is another publicity stunt created by alarmists to justify billions of dollars they are getting to fight global warming. The Indian scientist Syed Iqbal Hasnain credited with the claim of disappearing glaciers has denied making the assertion. So if you were in rush to visit Himalayas before 2035 you could delay your visit for a few hundred years.