US economic data released this week
included advance retail sales for September, which at -1.2% were lower
than expected and the worst in 3 years but better news on the inflation
front as CPI came in at 4.9% year on year, down from the 5.4% seen for
August. September housing starts fell by 6.3% and building permits, a
sign of future construction, dropped by 8.3%, the lowest level since
November 1981. Stocks continued to be highly volatile, with daily swings
of 7% seen for the main indices, but they enjoyed their first weekly
gain in more than a month. The Dow ended the week higher by 4.75%, as
the S&P 500 gained 4.6%.The Nasdaq ended higher by 3.75%.
Within Europe, Switzerland became the latest Nation to fund a vehicle to
take on toxic debt, this for UBS, in an effort to restore confidence in
the banking system. European car sales fell for the 5th consecutive
month in September, whilst UK home sales fell to the lowest level in at
least 3 decades, according to the Royal Institute of Chartered
Surveyors. Unemployment in the UK increased to 5.7% on a quarterly basis
from the 5.5% seen last time whilst the wider Euro-Zone saw official CPI
for September come in as expected at 3.6% annualised. The FTSE 100 index
eased by 0.6% over the week, with the French CAC and German DAX both
higher, rising by 4.8% and 5.2% respectively.
Out East, China’s trade surplus widened to a record in September, as
exports managed to rise by 21.5% year on year, despite the Global
slowdown. Elsewhere, the Hong Kong Monetary Authority announced that it
will use its foreign exchange reserves to guarantee bank deposits. The
Nikkei gained 5% over the week, whilst the Hang Seng gave up 1.6%.
The $US index eased by 0.3% to 82.4, whilst the $OZ enjoyed a weekly
gain of 7.1%. German 10-year bund yields rose by 2 bps to 4.01%, whilst
Japanese 10-year “JGB” yields rose by 6bps, ending the week at 1.58%. US
Treasury yields ended higher, with the 5 year yield up by 2.6% on the
week at 2.83%, whilst the 10 year yield was higher by 2%, ending the
week at 3.94%.
The commodities complex continued its ugly liquidation, of late with the
$crude oil price lower by 7.5% at $72.1 a barrel, whilst the price of
$Gold ended the week at $787oz, lower by 8.3%.
Next week sees money supply data for the EU and the UK, with the latter
also releasing September retail sales. Q308 advance GDP and the
September PSBR. The US announces the latest home sales and leading
indicators, whilst the latest trade numbers are released from Japan.
Where W fails, billionaire investor, Warren Buffett, appeared to have
more success, as he cited the market's slump as a prime buying
opportunity. He dismissed the notion that cash is a preferable
alternative to stocks at the moment, asserting that "Equities will
almost certainly outperform cash over the next decade, probably by a
substantial degree." The Oracle of Omaha's traditional contrarian wisdom
has included his comment "Be fearful when others are greedy, and be
greedy when others are fearful." He may be right but the trouble is
there has been far too much greed of late.
“Put your future in good hands—your own”
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