Week 40: America Loses an Icon

October 8, 2011 – For over the past 40 some years, the world has lived in a hyper-speed environment of technological innovation, and while many names and companies played an integral role in this digital revolution, few people held the stage as well as Steve Jobs.  In the early 1970s the world was run by mechanical processes:  cash registers, gas pumps, music and anything else that we thought of as “modern” was really no more than a machine operating by some sort of mechanical process.   All of that changed with the advent of the computer.  Within 40 years the world as we knew it was washed away by smaller, faster, lighter devices and mechanical became digital.   However, while these inventions all were impressive, only one person took the makings of a rudimentary computer, recreated it, and made it user friendly.  His name was Steve Jobs.  His company was Apple Computer…and the two  captured and captivated the world: a Walt Disney of the computer age.

Job’s personality was as bold as his company’s inventions.  While others saw computers as complicated machines, Apple turned them into simple devices.  No manuals were needed, just a simple intuitive process.  In short, they made the complicated simple. 

Steve Job’s passed away this week from cancer and while his loss in still fresh in our memories, his impact on the world will live on for a long time.  His ideology: make the complicated simple…make boring, cool…create an entire market where computers are used not only for productivity (as everyone in the 70s  thought), but also for fun.  Simply genius!  Steve will be missed.  Some say he lacked the number of patents to be considered a brilliant inventor, but in my mind he ranks right up there with America’s other greater inventor, Thomas Edison. 

While the passing of Jobs caused Apple shares to decline, the markets ended the week higher as ADP released their latest National Employment Report indicating that private employers added 91,000 jobs in September, which was above economists’ estimates.  (Those poor economists, when will they get it right?)  This reassuring news was proof enough to the markets that the economy still has a heartbeat and perhaps a double dip recession may not yet be as inevitable as some have lately claimed. 

As the U.S. economy is sputtering along, things in Europe took a decisively (and somewhat expectedly) negative turn this week.  On Friday, Fitch rating agency downgraded the sovereign debt credit rating to A+ for both Italy and Spain.   The company also said that the outlook on Rome’s long-term rating is negative.  None of this should be a surprise to investors as the European debt crisis has become one of the year’s most prominent themes and thus the reason why the downgrade had little impact on U.S. markets.  

With earnings season in full bloom (the period where companies report their quarterly, or yearly earnings), next week will be of interest and could (may?) provide the perfect insight for investors.  With the markets having so much volatility, one could anticipate that any unexpected report could move the markets. 

Week 40 Market Data            
    Market Close                    % Change
  12/31/2010 9/30/2011 10/7/2011   Weekly YTD
DJIA 11,577.51 10,913.38 11,098.43   1.7% -4.1%
S&P 500 1,257.87 1,131.44 1,159.64   2.5% -7.8%
NASDAQ 2,652.87 2,415.40 2,483.18   2.8% -6.4%
Crude Oil ($ per barrel) 91.4 79.2 83.05   4.9% -9.1%
Sources: Thomson Reuters; WSJ Market Data Group