TGIF January 13, 2012

Happy Friday the 13th: A day that spooks many around the world. JP Morgan spooked the Market this morning with a revenue miss. Banks stocks have flown this year, so no surprise they’re getting hit on this news.

Adding to the bad luck background today Standard & Poors downgraded multiple European country credit ratings. France lost its prestigious AAA credit. This was no surprise. You may recall S&P did the same to the US in 2011. The downgrade is not news; but it most certainly is noise which spooked some investors. Today, on Friday the 13th, there are only 13 countries with AAA status.

Europe seems to be back on the fence with a potential embargo of Iranian oil. Euro leaders plan to meet January 23rd to discuss it further. Our educated guess sees any Eurozone embargo being delayed for 6 months. China has already said it will continue making purchases from Iran. Japan has joined with the US in the embargo. Meanwhile, UN nuclear officials are going to Tehran at the end of the month to begin discussions on Iran’s nuclear program.

We’ve had a nice start to 2012, so today’s sell-off is healthy. It felt as though we were moving too far, too fast. That said, this Market is demonstrating resiliency and it knows about all of these problems. Bonds continue to perform well after beating all other asset classes in investment performance last year. The 10-Year U.S. Treasury yield below 2% is a concern though, as it suggests that we have more problems ahead. Treasuries and Dollars are rallying against a weaker Euro today, which is down to $1.26. Time to pack your bags full of cheap Euros for a bargain vacay in Paris?!

Remember we’ll be closed Monday on the national holiday honoring Dr. King. TAX ESTIMATES are delayed until Tuesday, January 17th due to the holiday.

And finally, the San Francisco 49ers return to Playoffs tomorrow at 1:30PM. It’s going to be huge. Candlestick is going to be jumping like it hasn’t in 10 years. It’s good to be back. Go Niners!

By: Mike Frazier

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