Weekly Recap - Week ending 30-Jul-10

What a difference a month makes -- or does it?  The stock market took a bullish path through July, which seemed unlikely when June was coming to an end.  Specifically, the S&P 500 increased 6.9%.

The great equalizer was a batch of stronger-than-expected earnings reports and generally reassuring guidance from U.S. companies.  Still, in the week just concluded, it was evident that market participants are still not convinced that earnings growth rates in coming quarters are going to be met, which is no different from what was feared in June. 

The clearest evidence of that concern could be found in the Treasury market, which had little problem digesting another $100 bln in new issuance across 2-year, 5-year, and 7-year maturities.  Yields for each maturity ended the week lower than where they began; in fact, the 2-year note slipped to a record-low 0.546% on Friday.  Separately, the yield on the 10-year note was slashed 9 basis points to 2.90%.

The bulk of the move in the 10-year came on Friday following the advance Q2 GDP report, which showed an annualized growth rate of 2.4% that was close to expectations and down from an upwardly revised 3.7% growth rate (from 2.7%) in the first quarter.

The change in private inventories contributed 1.05 percentage points to Q2 GDP while government spending contributed 0.88 percentage points. These contributions diminished the quality of Q2 GDP growth, especially the government contribution which substantiated the concerns that the economic recovery effort is not as self-sustaining as one would like to see at this juncture.  

5:01PM Syniverse terminates shareholder rights plan (SVR) 22.33 -0.23 :  

5:00PM Boyd Gaming discontinues efforts to acquire station casinos assets (BYD) 8.46 -0.08 :  

4:42PM Silvercorp Files Preliminary Base Shelf Prospectus (SVM) 6.56 +0.24 : Co has filed a preliminary short form base shelf prospectus with the S.E.C. in each of the provinces of Canada, except Quebec. These filings, when made final, will allow the Co to make offerings including debt securities, common shares, warrants to purchase Common Shares and warrants to purchase Debt Securities.