US Q406 GDP came in at 2.2% versus the
earlier number of 3.5%. January durable goods orders fell by 7.8% versus
the 3% expected and consumer confidence for February fell to 91.3 from
January’s 96.9, albeit the latter was a 2 year high. House prices
continue to look “Iffy” according to the latest S&P/Case Shiller index
and sentiment was further undermined by comments by Former FED Chairman
Greenspan who stated that the likelihood of a recession looking more
“possible than probable” Dell computer announced a slump in profits and
the aforementioned sub-prime activity grated on investors’ nerves. Over
the week, the Dow fell by 5.2% and the S&P 500 by 5.4%, whilst the
Nasdaq 100 slumped by 6.1%,
Euro-Zone, money supply advanced by a higher than forecast 9.8% in
January, a 17 year high, whilst the region’s “official” unemployment
rate for February was 7.4%. The UK’s money supply in January also rose,
as did house prices in February. Euro-Zone January inflation, as
measured by CPI, fell by 0.5% and is annualising at 1.8%. Sweden’s
household debt appears to be slowing after the 7 interest rate increases
of the past 13 months. For the week the region’s main bourses
predictably followed the direction of Wall St, with the UK’s FTSE 100
lower by 4.5%, the French CAC 40 down by 5.1% and the German Dax off by
5.8%.
Out East, Japanese retail sales fell by 0.8% year on year in January and
housing starts also fell by 0.7%. Staying with Japan, February vehicle
sales declined by 8.7% but one area that did rise was the notional
amount of OTC derivatives transacted by major Japanese institutions. At
the end of 2006 this figure was $18.7 trillion, up 9.5% from the mid
tear total. China’s retail sales surged by 15% year on year, but that
didn’t help the country’s stock market as the Shanghai Composite, posted
its largest single-day decline in a decade, at 9%. Over the week the
Nikkei fell by 5.3% , whilst the Hang Seng slumped by 6.1%,
The $US index slipped by 0.4% over the week to 83.64 whilst the Japanese
Yen enjoyed its largest weekly gain against the greenback since December
2005. Global Sovereign debt gained on safe haven status, with the US
Treasury 5 and 10 year Bond yields lower by 3.5 and 2.6% respectively,
The equity slump spilled over to the commodities complex, , where the
$Gold price fell by 6% or $40 to $641oz ,whilst Silver sank by 12%. The
$ crude oil price held level ending the week at $61 a barrel
Next week sees the latest US trade data and the February employment
numbers, whilst interest rate decisions are due in the UK and from the
ECB. The UK also announces February PPI and consumer confidence data,
whilst the latest Euro-Zone retail sales and GDP figures are released.
So there we have it. After a truly tumultuous week, investors’ and the
financial media appear as complacent as ever, “licking their lips” at
the “buy on dips” sure thing that many today have been encouraged to do.
Whilst next week may see a “dead cat bounce” from oversold levels’,
prudence would suggest that one uses the bounce to play safe.Volatilty
could be here for a while yet.
“I
used to be indecisive, now I am not sure”
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