US economic data released this week
showed a better than expected trade deficit in September and a more
upbeat consumer confidence reading for November, albeit the latter is a
provisional reading. Not so good, however, were the advance retail sales
for October, which shrank by 2.8% versus the -1.2% of September, the
worst since records began in 1992. Despite the main stock indices
spiking by a near 7% on Thursday, they ended the week lower. The Dow
fell by 5%, whilst the S&P 500 and the Nasdaq were down by 6.2% and 7.9%
respectively.
Europe’s economy contracted by 0.2% in Q308, ushering in its first
recession in 15 years, assisted by car sales, which plunged by 15% in
October, the 6th month of decline. Euro-Zone CPI for October came in as
expected at 3.2% annualised. UK unemployment rose at the fastest pace in
16 years, according to a Bloomberg article, as construction jobs and
banking bore the brunt, whilst the Royal Institution of Chartered
Surveyors confirmed that UK home sales declined in October to the lowest
level in 3 decades. The FTSE 100 index ended lower by 3.5%, whilst the
French CAC and the German DAX fell by 3.3% and 4.6% respectively.
Out East, Japanese machine tool orders in October collapsed by 40.4%
year on year versus the 20% decline in September. Meanwhile, Forbes
Magazine reports that the combined wealth of India’s 40 wealthiest
people has slumped by 60% to $139BN, thanks to falling stocks and
property values. The Nikkei gave up 1.4%, whilst the Hang Seng lost
4.9%.
The $US index rose by 0.8% to 86.7, with the other gainer being the
Japanese Yen, higher by 1.1%. German 10-year bund yields fell by 8 bps
to 3.6%, whilst Japanese 10-year “JGB” yields dipped by 2bps, ending the
week at 1.49%. US Treasury yields fell once again as stocks dipped, with
5 year yields ending the week lower by 8.25% at 2.35%, whilst the 10
year yield eased by 0.8%, to 3.75%.
Within the commodities complex the $crude oil price fell by 5.6% ending
the week at $57.6 a barrel, whilst the price of $Gold rose by 1.1% to
$742oz.
Next week sees the latest CPI data for the US and for the UK, with the
former also releasing housing starts and building permits for October.
The EU and Japan announce the latest trade numbers, with Japan also
releasing Q308 GDP..
As the G20 leaders gather in Washington this weekend, to seek solutions
to the Global Economic Crisis, they will no doubt discuss the “need” for
increased regulation, artificially low interest rates and some fiscal
stimulus, without any mention at all for a move back towards,” sound
money.” International monetary disorder commenced in 1971, as
Nixon removed the Gold backing of the Dollar.
“Mistakes are a great educator when one is
honest enough to admit them and willing to learn
from them”
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