US economic data continued to be
dismal, with the largest ever quarterly jump in mortgage delinquencies
and lower than expected pending home sales in January adding to the
housing gloom, not to mention a recent report that suggests that 21%of
all US mortgages are over 6 months in arrears. Personal spending
exceeded income in January and February job losses jumped by 651,000,
bringing the official unemployment rate to 8.1%. The Dow fell by 6.2%
over the week, with the S&P 500 and the Nasdaq lower by 7% and 6%
respectively. It was the worst February on record for US stocks.
The Euro-Zone and the UK central banks’ cut their interest rate by 0.5%
to the lowest in history at 1.5% and 0.5% respectively as Q408
provisional GDP for the former contracted by an annualised 1.3% whilst
the latter saw a 22% fall in new car registrations, after January’s
-31%.The UK insurance sector was further pressurised as its largest
constituent, Aviva, announced a collapse in profitability. The FTSE 100
index slumped by 7.8%, whilst the French CAC and the German DAX were
lower by 6.2% and 4.6% respectively.
Out East, rail freight in China, which is a good proxy on economic
growth, collapsed by 31% in January and exports to China from Japan and
Taiwan fell by 45% and 55% respectively. Staying with Japan, wages fell
in January by 1.3% year on year and Japanese companies cut expenditures
last quarter at the fastest rate in a decade. The Nikkei fell by 5.2%
whilst the Hang Seng gave up 7%.
The $US index rose by 0.7% to 88.65, other gainers included the Swiss
Franc, higher by 0.7%whilst fallers included the British pound, lower by
1.6% and the Yen, lower by 0.8%. German 10-year bund yields fell by 19
bps to 2.92%, whilst Japanese 10-year “JGB” yields added 1bp, ending the
week at 1.28%. US Treasury 5 & 10 year yields fell by 9% and 7%
respectively, ending the week at 1.84%, and 2.83%.
Within the commodities complex the $crude oil price gained 1.7% to $45.5
a barrel, whilst the price of $Gold fell by just $1 ending the week at
$943oz.
Next week sees the latest trade data for the US and the UK and retail
sales for the US and the Euro-Zone. January PPI is also due for release
by the Euro-Zone whilst February consumer confidence numbers and machine
tool orders will be announced for Japan.
Returning to the UK, the Governor of the Bank of England received
permission this week from “Darling Chancellor” to print £150BN to invest
into UK Government securities, better known as “quatitive easing” in a
further desperate attempt to save Britain from entering an economic
depression. This activity was tried by the Weimer Republic and its been
tried in Zimbabwe, the end result being the destruction of their
respective currencies.
“Some people use one half of their ingenuity to
get into debt, and the other half to avoid
paying it”
[ Up ] [ Next ]
