Aside of no mention on future interest
rate policy, they recognise a slowing housing sector, higher inflation
and an economy likely to grow moderately at best.
February US housing starts came in at 1.5m versus the 1.45m expected,
whilst housing permits were lower. Existing home sales for February
surprised on the upside, at 3.9% versus the -2.5% forecast and higher
than January’s 3%. They were, however still 3.6% below February 2006.
The leading economic indicators index for February were disappointing
however at -0.5%. The Dow jumped by 3% whilst the S&P 500 gained 3.5%
and the Nasdaq 3.2%
.
The Euro-Zone trade balance for January came in at –Euro 7.8BN versus
the -1bn expected. Staying with the EU, which celebrated its 50th
anniversary this week, EU transport ministers’ gave their backing to a
transatlantic “open skies” deal with the US. The UK had its 11th (and
final) budget, under Prudence Brown, in which his usual trickery was
evident. The headline corporate tax rate was cut by 2%, only to find in
the small print that the smaller companies’ rate (representing some 60%
of the UK’s economy) will actually increase by 2%. Meanwhile UK
inflation for February came in at a higher than expected 2.8%
annualised. Following Wall St’s lead the UK’s FTSE 100 jumped by 3.4%,
whilst the French CAC 40 and the German Dax soared by 4.7% and 4.9%
respectively.
Out East, the bank of Japan decided to leave interest rates on hold at
0.5% after last month’s hike, whilst the countries trade surplus widened
by 7.7% last month. Hong Kong unemployment fell in February to 4.3%, the
lowest level in 8 years, whilst exports in Thailand rose by 18% year on
year according to January data. Over the week the Nikkei gained 4.4%,
and the Hang Seng 3.9%,
The $US index inched higher over the week to 83.3 as the Yen declined by
1.1%. US Treasuries gave up part of last week’s gains as the 5 and 10
year yields rose by 0.9% and 1.5%, ending the week at 4.5% and 4.6%
respectively
Within the commodities complex, the $crude oil price ended higher by
4.5% at $62.3 a barrel, whilst the $Gold price gained 0.5% to $657.
Next week sees the fial Q406 GDP numbers for the US and the UK, with
February Durable Goods Orders due out for the US also. Euro-land
announces February money supply data and March CPI and consumer
confidence numbers’. March CPI is also released for Japan, along with
February unemployment and large store retail sales figures.
Private-equity funds exist to buy out public companies from
institutional investors, usually then selling the same business back to
the same people a few years later for a lot more money. One does have to
wonder just why the institutions gave their stock away so cheaply in the
first place. Blackstone Group, the New York based PE firm which was set
up in 1985 with $400,000 seed money and is now the World’s biggest
leveraged buyout firm, filed last week for an IPO worth $4BN. Investors’
into the IPO will get no say on the running of the company, including
any hiring or firing of the board.
“The
greater fool theory is that you hope to find
someone prepared to pay a higher price than you
did”
[ Back ] [ Up ] [ Next ]
