Week ending 16th January 2009   

US economic data released this week showed an improvement on the US trade deficit, which in November came in at $40.4BN versus October’s $57.2BN, albeit that the “improvement” has more to do with the collapse of imports from the rest of the World. December PPI fell by 1.9% month on month whilst December advance retail sales collapsed by 2.7% versus the -1.2% forecast, which are even worse if you strip out autos. Citigroup announced its 5th consecutive quarter of losses and confirmed the inevitable breaking up of the group, whilst the Bank of America received a further $20BN of “Government funding” and $118BN of loss protection, after it announced huge losses on the recently acquired Merrill Lynch. The Dow fell by 3.7%, whilst the S&P 500 and the Nasdaq gave up 4.5% and 2.7% respectively.

The Euro-Zone exports fell by 4.7% in November, whilst December CPI for the zone eased by 0.1% month on month so there was no surprise to the 0.5% interest rate cut to 2% by the ECB. The German Government injected $7.5BN into Commerzbank in exchange for 25% of the company whilst the Irish Government nationalised AIB. The FTSE 100 index fell by 6.8%, whilst the French CAC and the German DAX were lower by 8.6% and 8.7% respectively.

Out East, Japanese bankruptcies soared by 24% year on year in December, whilst Chinese exports in the same month fell by the most in a decade, as Global growth collapsed. The Nikkei gave up 6.9% whilst the Hang Seng fell by 7.8%.

The $US index rose by 1.9%% to 84.2. Other gainers were the Norwegian Knone, higher by 1%, whilst on the downside were the $Kiwi and the $Canadian, which fell by 7.7% and 5% respectively. German 10-year bund yields fell by 9 bps to 2.93%, whilst Japanese 10-year “JGB” yields eased by 6bps, ending the week at 1.22%. US Treasury 5 & 10 year yields ended lower this week, by 4.9% and 4.3% respectively, ending the week at 1.45%, and 2.3%.

Within the commodities complex the $crude oil price fell by 4%, ending the week, at $36 a barrel. The price of $Gold also fell by 1.8% to $840oz. in what was another volatile week for the metal.

Next week sees the US markets closed on Monday due to the Martin Luther King public holiday and whilst a light week for US economic data, we get the latest housing starts and building permits outlook From Japan we’ll see department store sales and consumer confidence, whilst for the EU economic sentiment and industrial new orders are forthcoming. Last, but not least, will be the latest CPI, unemployment figures and Q408 advance gdp data for the UK.

George W rides off in the sunset early next week, exiting as the most unpopular American President in history. Meanwhile, on the 20th January 2009, the inauguration of Barack Obama will take place in an atmosphere of hysteria, hype and above all, hope! The range of uncertainties facing him are huge and none more so than that of the US economy. He has already committed to a further $750BN stimulus package, via tax cuts and public works projects and he is likely to announce a lot more yet.

“He who has never hoped can never despair”

[ Up ] [ Next ]