Weekly Recap - August 24, 2008

The summer may be gone before the traditional summer lull arrives. We got a hint of it on Friday, when the volume during the rally was the lightest in months. Don’t just leave the markets unsupervised!

This week’s calendar is quite busy.
We have reports on:
- July Existing Home Sales on Monday
- August Consumer Confidence and July New Home Sales on Tuesday
- July Durable Goods on Wednesday
- Q2 GDP on Thursday
- July Personal Income, July Consumption, August Chicago PMI and August Michigan Sentiment, all on Friday

The major indexes have posted slight declines for the week. The Dow Jones Industrials has closed on Friday at 11,628, or -31.84 points for the week, a -0.27% decline. Nasdaq has closed at 2,414.71, or -37.81 points, a –1.54% decline and S&P 500 closed at 1,292.20, or -6 points, a -0.46% decline.The sectors finishing in black for the week are Oil & Gas (up 4.96%), Basic Materials (up 3.03%) and Utilities (up 2.03%). The rest of the sectors finished lower, with Financials posting the greatest loss, of -2.85%.

Shares of Freddie Mac and Fannie Mae tumbled on growing fears that the Treasury Department will have to bail out the mortgage giants, wiping out existing shareholders. Moody’s cut ratings on the firms’ preferred shares. Freddie fell 52% for the week, Fannie 37%.

Lehman has become a buyout target, after Korea Development Bank reported that would like to make an investment in the ailing U.S. investment bank. Other suitors may follow, prompting upgrades for Lehman. However, the shares fell 11% for the week.

The presidential race gets hotter, as McCain closed a once-sizable gap in the polls or even led, especially in key swing states. Read more about both candidates’ policies in the attached Barrons article.

The economic data is still weak. Housing starts dived in July to a 17-year low and producer prices spiked. Oil prices have reversed since them.

The CEO’s are gloomy on economy, with about 90% of top executives describing the U.S. economic conditions as fair or poor. The percentage of pessimistic CEO’s was only 16% a year ago.