It was a sparse week for US economic
data, which included the October index of leading economic indicators
coming in at 0.2%, below consensus expectations of 0.3%. Jobless claims
increased, as did crude inventories and consumer sentiment for late
November was revised slightly lower than the early November data.
Freeport – McMoran Copper & Gold acquired Phelps Dodge, pushing the
mining sector higher, whilst multi-billionaire Kirk Kerkorian dumped 14
million GM shares, after the auto-maker declined his corporate advice.
For the week the Dow eased by 0.5%, the S&P 500 index remained level,
whilst the Nasdaq gained 0.6%.
Turning to Europe, German business confidence unexpectedly rose to a 15
year high in November, whilst in the UK a former Russian spy (sorry,
intelligence officer), Alexander Litvinenko, died after being poisoned
by the highly radio active polonium 210, which has forced Vladimir Putin
into a public denial of any responsibility. European stocks came under
pressure due to the aforementioned dollar weakness, with the export led
car makers leading the decline. Daimler Chrysler, Renault and BMW all
fell by 3-4%. Staying with transport, airline stocks were buoyed on
take-over activity as Air France – KLM announced that it was in talks to
acquire Italian flag carrier/basket case, Alitalia. Meanwhile the
surprise potential $A10bn take over approach of Qantas added to the
bullish sentiment. The UK’s FTSE 100 had a 4 day falling streak, ending
the week lower by 1.1%, whilst the French CAC eased lower by 0.9%. The
German Dax remained level over the week, despite a very volatile Friday.
Out East, Japan’s trade surplus fell by 2.5% in October versus a year
earlier, whilst Hong Kong’s Q306 GDP rose by 6.8% annualised and at its
fastest pace in 6 years. Japanese stocks fell on the weaker
dollar/stronger Yen as the Nikkei lost 2.2%. The Hang Seng managed a
0.4% gain, after reaching a new all time high during the week.
It was a lively week for the foreign exchange market as the $US index
slid by a near 2%, ending it at 83.6. Gainers included the Swiss Franc
and the Euro, which rose by 2.8% and 2.1% respectively. On the debt
front, the largest Junk bond offering in 17 years by HCA Inc, America’s
largest hospital company, saw its face value rise to a 4% premium. 5 and
10 year treasury yields fell by 1.2% and 1.3% respectively, ending the
week at 4.55%.
Within the commodities complex; the $oil price rose by 0.5% to $60 a
barrel, whilst the $ gold price advanced by 2% to $639oz. The spot price
of platinum touched a record high, up 33% year to date, on supply/demand
worries.
The US returns from the holiday weekend to some important economic data
next week, including the October Durable Goods Orders and home sales,
both new and existing. Q306 provisional GDP figures are also released
for both the US and the Euro zone. The EU also releases November CPI
numbers, whilst the UK releases two sources of house price data. October
unemployment and industrial production figures for Japan are due, as is
November CPI.
Global M&A activity rose to a record $3.1 trillion year to date, as
leveraged buy outs almost tripled, surpassing the prior 2000 year high
and the global market for Derivatives has soared to a record $370
trillion in the first half of 2006, boosted by trading in credit default
swaps. Meanwhile, billionaire George Soros has warned that the private
equity bubble could burst, threatening the global financial system.
“Minorities
are individuals or groups of individuals
especially qualified. The masses are the
collection of people not specially qualified”
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