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Week in Review


Have a great weekend!


Market Recap

The markets soared Thursday following the 17th consecutive rate increase by the Federal Reserve. The 25 basis point increase to 5.25% was largely expected by the market. Traders responded to language within the statement which seemed to imply the Fed will remain on hold for the time being as the economy begins to moderate. The slight shift, following recently hawkish comments which marked a short term top on May 10th, managed to keep the markets above the critical three-year trend line support and a potential shift into a bear market. The rise sent three of the four sisters back through the 200-DMA – a level of focus for a number of professional money managers.

In next weeks 'Morning Cup' you'll see an updated "Eye on the Ball" section to reflect yesterday's action. As discussed in Thursday's Jo, traders were uncertain about the Fed's future policy stance in terms of the balance between inflation fighting and economic growth. The announcement brought the picture into clearer focus in the short term. Also mentioned was the potential impact of a quarter end mark up on stocks. Now attention turns to the August meeting and the economic data (CPI, wages and GDP) in between. The conditions suggest a continuation of the recent volatility and choppiness although the markets could trend higher without a Fed headwind.

Top Headlines

Warren Buffet
announced that the Bill and Melinda Gates foundation will be the largest benefactor of his charitable donations. The foundation will receive roughly $1.5 billion every year. (Mon 26th)

Phelps Dodge (PD) announced its intention to buy Canadian mining companies Inco Ltd. and Falconbridge Ltd. in a cash and stock deal worth approximately $40 billion. (Mon 26th)

Johnson & Johnson (JNJ) will acquire Pfizer's (PFE) consumer health care unit for $16.6 billion in cash. The division's brands include Nicorette, Visine, and Sudafed and experienced $3.9 billion in sales last year. (Mon 26th)

Intel (INTC) will sell its non-profitable handheld chip business to Marvell Technology Group (MRVL) for $600 million cash. (Tue 27th)

The U.S. House is expected to vote on a bill this week that would overturn a 25 year old ban on offshore drilling and bring rigs as close as 50 miles from the Florida coastline. The bill has met sharp criticism and U.S. Florida Senator Bill Nelson vows to start a filibuster if the bill passes through the House. (Tue 27th)

Retail clothing store J Crew (JCG) issued 18.8 million shares at $20 on Wednesday and will trade on the New York Stock Exchange. (Wed 28th)

Athletic gear maker Nike (NKE) disappointed investors with a slip in 4th quarter income attributed to advertising costs associated with the World Cup and higher raw materials costs. (Wed 28th)

The Federal Reserve raised interest rates for the 17th consecutive time by a quarter of a point but took a less-hawkish stance in its post-meeting statement. Further tightening may be needed but will be dependent on economic data as the economy is expected to cool. (Thurs 29th)

Apple Computer Inc. (APPL) is the latest Silicon Valley Company to face scrutiny for its handling of employee stock options. (Fri 30th)

Automakers Renault SA and Nissan Motor Co. (NSANY) are interested in purchasing a significant portion of struggling automaker General Motors (GM) as well as include GM in its French-Japanese partnership. (Fri 30th)

Market Movers: Winners and Sinners

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No positions in stocks mentioned.

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