Week ending 5th October 2007   

US September manufacturing came in as expected, whilst US consumer credit surged to $12.2bn in August against consensus expectations of $9.5bn and a fair jump from July’s $7.5bn.The main focus of attention, however, were on the jobs data, where as stated above the non-farm payrolls for September pleased, albeit that the September unemployment figure rose to 4.7% against last month’s 4.6%. The Dow gained 1.2% gain whilst the S&P 500 rose by 2%, both of which were outdone by the Nasdaq , which jumped by 2.9%.

The Euro-Zone interest rates were left on hold, as the ECB stayed with 4% and the Bank of England MPC at 5.75%, despite the fact that August M4 money supply for the UK was announced at 13.5%. UK consumer credit and mortgage approvals were lower than July, however, paying more testimony to the ongoing “refining” of credit conditions. Euro-Zone PPI for August eased to 1.7% annualised versus July’s 1.8% and the Zone’s retail sales in August were also lower than July, at 1% year on year. The region’s official unemployment rate was unchanged in August, at 6.9% The FTSE 100 index rose by 2%, whilst the French CAC and the German Dax were higher by 2.2% and 1.8% respectively.

Out East, Japan’s Q307 Tankan survey came in as expected, albeit that capex jumped by 8.7% versus the expected 7.5%.Meanwhile the country’s vehicle sales fell by 9.5% annualised in September. Elsewhere, Hong Kong retail sales jumped in August which shouldn’t be a surprise, given the recent money supply data which is running at 18% annualised. The Nikkei rose by 1.7% over the week, whilst the Hang Seng gained 2.5% after a bumpy week.

On the currency front, the $US fell managed a 0.7% gain to 78.3 on a trade weighted basis. The better than expected US jobs data reversed the falling trend seen within US Treasury yields of late. Over the week the US 5 and 10 Treasury yields rose by 2.5% and 1.3% respectively, ending the week at 4.34% and 4.64%.

The commodities complex consolidated its recent record gains with the CRB index falling back 1.3%. The $crude oil price eased by 0.5% to $81.2 a barrel, whilst the. $Gold price fell by 0.4%, tot $743oz.

Next week sees the latest PPI data and trade balances for the US and the UK, with the US also announcing the advance retail sales number for retail sales. The Euro-Zone Q207 GDP and August industrial production stats are released. Japan also announces the latest trade balance, together with September money supply.

Following last week’s announcement that Citigroup, the World’s largest bank, anticipates a 60% Q3 profits fall, mega banks, UBS, Credit Suisse and Deutsche have all warned of deteriorating profits and large debt write downs. “Investors” have obviously chosen to ignore these statements and believe that the recent credit crunch was indeed a one month blip, judging by the banking sector which has outperformed the general market this week. Time will tell if this was a wise medium term bet.

Due to holiday commitments, the next week ending will appear for the week ending 26th October 2007.

“Suckers have no business with money anyway”

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