The Big Picture For The Week of August 7, 2005

Last week I wrote that I thought August may start a little slowly. I was three days early, maybe.

I think part of the equation for the short term noise is the action in the ten year treasury bond. The news about the 30 year will mean higher rates ( this was my initial reaction and now most people seem to believe this is so) so the ten year looks like it is having a violent reaction as it tries to discount the news correctly. A ten year yield between 4.25% and 4.50% is not going to disrupt too much, for that matter I don't think a 4.75% yield would change a lot of things either.

I don't think the retail sales numbers were really that bad, in fact they were quite good but perhaps some retail stocks had priced in better numbers.

I was way wrong about the NFP on Friday and it seems like now the market gives more credence to a Fed Funds rate at 4.25%, maybe, but there will be a number that will take 4.25% back off the table then one that puts it back on the table and so on.

The news from Israel this weekend about Benjamin Netanyahu knocked the Tel Aviv market down 5% on Sunday (yes the market is open on Sunday). A couple of months ago I bought the First Israel Fund (ISL) personally at $14.06 thinking I would hold it. I was able to get $1.30 out of it quickly, so I took the trade. I was on board with all things I was hearing from Netanyahu over the last couple of years and I guess I got lucky. I have thought of Israel as an interesting investment destination with him but I am not so sure about Israel without him.