After last week’s fairy
tale inflation data, as measured by CPI, this week saw another howler as
the April Producer Price Index (PPI) came in at 0.2%.April home sales
disappointed as did the aforementioned Fed minutes. The Dow fell by 3.9%
over the week, with the S&P 500 and the Nasdaq ending lower by 3.5% and
3.3% respectively.
The Euro-Zone faired little better as the ZEW economic sentiment index
for May fell, despite the fastest pace of economic growth for Germany in
Q108 in 12 years.UK GDP came in as expected, at 2.5% annualised. The
FTSE 100 index lost 3.4%, against losses for the French CAC of 2.8% and
3% for the German DAX.
Out East, Japan’s Q108 GDP grew at 3.3%, bolstered by exports to Asia
and emerging markets against the slowdown of business with the US. China
has seen a continued rise in the Country’s savings rate to an
extraordinary 40%, whilst Americans remain in a negative savings rate.
The Nikkei fell by 1.5% and the Hang Seng lost 3.5%.
On the currency front, the $US index declined by 1.2% to 71.96,whilst
the Pound Sterling received a boost from a smaller than expected fall in
April retail sales. US Treasuries had a “telling week,” in that yields
hardly budged despite a rough week for stocks. The 5 year yield actually
gained 0.2%, ending the week at 3.12% whilst the 10 year eased by 0.5%
to 3.83%.
Within the Commodities Complex the crude oil price jumped by 4.9% to
another record high, at $132 a barrel, whilst the price of Gold added
2.9% to end the week at $926oz.
Next week will see the latest S&P/Case Shiller home price index for the
US, together with the April new home sales and durable goods orders,
whilst the UK also gets to see the latest house price data, together
with loan totals for house purchases. The latest M3 money supply and
consumer confidence data is released for the Euro-Zone whilst in Japan,
the April jobless rate is announced.
A recent article in USA Today, American taxpayers are liable for a
record $US57.3 Trillion in federal liabilities to cover the lifetime
benefits of everyone eligible for Medicare, Social Security and other
Government programmes. To save you doing the maths, it works out at
$500,000 per American household and more than 4 times what Americans owe
in personal debt and mortgages.
“Capitalism without bankruptcy is like
Christianity without hell.”
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