Issue 19 - September 3, 2004


August: Back & Forth

Despite exceptional volatility during August, the market indices were little changed from the beginning to the end of the month. The ambient anxiety that pervaded the markets in July found little relief despite the completion of the Olympic Games
and the Republican National Convention. Todayís employment figures, while still sluggish, paint a picture of forward progress with the overall unemployment rate dropping to 5.4% ≠ a figure last seen in October of 2001.


Oil & Jobs: The Dominant Drivers

After spiking 20% in July, oil prices got a measure of relief in late August, but only after ringing the bell at $50 per barrel. While much has been written on both sides of the debate as to the overall impact of such an increase, it is safe to say that unstable oil markets do not lead to improved investor confidence. The same can be said about the state of US employment. These two factors have certainly trumped any positive influences and caused any marginal data to be interpreted negatively. The returns for the quarter (through September 2) reflect these concerns.

Small Cap Growth: -8.8189%
Small Cap Value: -2.0787%

Mid Cap Growth: -6.0753%
Mid Cap Value: -0.1395%

Large Cap Growth: -4.8190%
Large Cap Value: +0.6303%

The Cooling of a Red Hot Economy: No Respect

The US markets have made enormous headway through the maze of challenges presented by busted internet bubbles, terrorist attacks, and war. Corporate sector finances are strong and real interest rates are still net negative and highly
stimulative. While late last year and earlier this year, the economy was running at unsustainable levels of productivity, we have recently seen a return to levels that are spot on the average of the period of 1995 to 2000. This return has been uniformly greeted with despair. What we are lacking is context.
Market participants must thoughtfully digest the data provided. They cannot say simplistically that slowing productivity is bad, nor can they can proclaim that the Fedís normalization
of negative interest rates is the death knell of equity performance. But in this environment of anxiety, investors will sell first and ask questions later. As the summer winds down, Wall Street will return to business and its focus can again be directed to reasonable economic fundamentals and valuations. While the election is still one more significant unknown, we have cleared the decks of a number of worries and our Rodney Dangerfield economy can perhaps get a little well deserved respect.


In this Edition

  • August: Back & Forth
  • Oil & Jobs
  • Cooling of a Red Hot Economy

Huntington Steele

925 4th Avenue
Suite 3700
Seattle, WA 98104



Past Issues

18 - 08.03.04
July: A Difficult Stage

17 - 07.01.04
2004 Second Half Outlook

16 - 06.01.04
Big Bad Fed

15 -05.04.04
Rising Rates/ Google IPO

14 -04.01.04
First Quarter 2004

13 - 03.02.04
2004: Encore Performance

12 - 02.03.04
Market Outlook/Cell phones

11 - 12.16.03
Auctions - eBay, US Treasury, IPOs

10- 12.02.03
Recent Economic Data
Market Implications

More Past Issues
can be found in our

Newsletter Archive


Market Highlights

  08/31/04 6/30/04 3/31/04 12/31/03 12/31/02
DJIA US 10173.9 10435.5 10357.7 10453.9 8341.63
S&P 500 US


1140.84 1126.21 1111.92 879.82
Nasdaq US 1838.10 2047.79 1994.22 2003.39 1335.51
EAFE Int'l Equity 1236.26 1327.97 1337.07 1288.77 952.65
5 Yr Treasury 3.349 3.818 2.89 3.231 2.74
5 Yr AAA Muni 2.68 3.150 2.38 2.45 2.59
10 Yr Treasury 4.156 4.636 3.874 4.225 3.82
10 Yr AAA Muni 3.57 4.020 3.49 3.6 3.72
30 Yr Treasury 4.937 5.166 4.69 5.01 4.77
30 Yr AAA Muni 4.58 4.93 4.51 4.54 4.69
EUR Currency 1.2117 1.2157 1.2227 1.2612 1.0488
JPY Currency 109.83 108.88


106.92 118.69
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