US economic data released this week
showed the largest 1 month rise in unemployment since 2001, as non-farm
payrolls fell by 240,000 versus the 200k expected in October and
September’s 159,000 number was revised to 284,000.The “official”
unemployment rate is now at 6.5% versus 6.1% in September and is at the
highest level in 14 years. This was the only economic statistic released
which went up, as domestic vehicle sales and the ISM manufacturing data
for October both fell by more than expected. The main stock indices
endured two back to back days of 5% falls, ending the week with the Dow
lower by 4.1%, whilst the S&P 500 and the Nasdaq were down by 4% and
4.3% respectively.
Euro-Zone interest rates fell by 0.5% to 3.25%, whilst the UK was
treated to a 1.5% cut to 3%, the lowest rate in 50 years. The latter
appears to have been an effort to get the banks to pass on easier
servicing costs to their clients’ and to bolster consumer confidence,
albeit that ironically the Nationwide figure for October, released this
week, showed a better than expected 55 against the 50 seen in September.
UK September manufacturing fell by more than expected, as did retail
sales within the Euro-Zone. The FTSE 100 index eased by 0.3% over the
week, whilst the French CAC and the German DAX were lower by 0.5% and 1%
respectively.
Out East, vehicle sales in October for Japan crashed by 13%, with Toyota
Motor Corp forecasting the biggest fall in profits in at least 18 years.
China’s growth is being hit by falling exports, which in themselves are
hurting other regional economies such as Taiwan, who saw exports fall by
8.3% in October, the most in more than 3 years. The Nikkei was even over
the week, whilst the Hang Seng gained 2%.
The $US index rose by 0.3% to 85.9, with the big gainers being the
British pound, lower by 2.7%, and the Swiss Franc, down by 1.8%. German
10-year bund yields fell by 12 bps to 3.675%, whilst Japanese 10-year
“JGB” yields increased by 4bps, ending the week at 1.51%. US Treasury
yields fell as stocks dipped, with 5 year yields ending the week lower
by 8.4% at 2.56%, whilst the 10 year yield fell by 4%, to 3.78%.
Within the commodities complex the $crude oil price sank by 10% ending
the week at $61 a barrel, whilst the price of $Gold rose by 1.8% to
$737oz.
Next week is all about trade balances, as the data for September is due
to be released for the US, the UK and for Japan. US advance retail sales
numbers are also due, as are the latest PPI and unemployment figures for
the UK. The October CPI figures for the Euro-Zone are also due.
Regulators shut down two more American Banks this week, bringing the
total this year in the US to 19 versus the 3.for the whole of 2007 and
more than in the previous five years combined. Of the 8500 FDIC insured
banks, 117 were considered to be in trouble in Q208, up from 90 during
Q108. Good luck with this Barack.
“The greatest scientists in history are great
precisely because they broke with the consensus”
Author Michael Crichton, who sadly died this week
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