It was a light week for US economic
data and included advance retail sales for February, which came in at a
better than expected 0.1% with the January number revised higher. The
trade balance for January, at -$36BN, was an improvement on December’s
-$40BN and the provisional University of Michigan consumer confidence
reading was higher than forecast. Stocks had a great week, spurred on by
the likes of Citigroup, whose Chairman, Richard Parsons, brushed aside
any nationalisation worries and even said that Citi was one of the
better capitalised banks. The Dow jumped by 9% over the week, with the
S&P 500 and the Nasdaq higher by 10.7% and 10.6% respectively.
The Euro-Zone PPI and retail sales figures for January were -0.8% month
on month and -2.2% year on year respectively and both worse than
expected and the ECB has forecast a worst than anticipated 6%
contraction for Ireland’s economy this year. For the UK, its trade
balance for January was at a worse than expected -£7.7BN and industrial
production for the same month fell by 11.4% annualised, again worse than
forecast. According to the Royal Institution of Chartered Surveyors, UK
house sales have fallen to the lowest level since 1978 and a separate
report by property brokers, Knight Frank, suggests the average price
within London’s most exclusive areas which cost over £1m have fallen by
23%, the most in 3 decades. The FTSE 100 index gained 6.3%, whilst the
French CAC and the German DAX were higher by 6.8% and 7.8% respectively.
Out East, bankruptcies in Japan, for February, jumped by 10.4% year on
year, whilst the Country itself posted its first current account deficit
in 13 years in January. Meanwhile in China, house prices fell by a
record last month although there was brighter news on vehicle sales,
which surged by 25% in February, the first gain in 4 months. The Nikkei
gained 5.5% whilst the Hang Seng rose by 5%.
The $US index fell by 1.45% to 87.35, with other losers being the Swiss
Franc, lower by 2.3% and the British pound, which gave up a modest 0.7%.
Risers included the Euro, higher by 2.1% and the OZ Dollar. German
10-year bund yields rose by 13 bps to 3.06%, whilst Japanese 10-year
“JGB” yields added 2bp, ending the week at 1.31%. The US Treasury 5 year
yield fell by 1.8% to 1.87%, whilst the 10 year rose by 2% to 2.89%.
Within the commodities complex the $crude oil price gained 3.3% to $47 a
barrel, whilst the price of $Gold fell by 1.3%, ending the week at
$930oz.
Next week sees the latest trade CPI data for the US and the Euro-Zone,
with the EU and the UK also releasing employment figures. Japan announce
nationwide department store sales for February and reverting back to the
US we await any decision on interest rate policy from the FOMC.
Finance Ministers of the G20 meet up in the UK this weekend in an effort
to “smooth the way” for the G20 Heads of State summit to be held on the
2nd April in London. High on the agenda will be to “unite” the two main
differing views on how they “solve” the Global economic crisis. Is it to
be more “Stimulation” by the printing of even more money (and the
consequential tax hikes and the trashing of currency values) or by
“Regulation” of the existing regulators’ and the closing down of the so
called tax havens (many of whom have become low tax Countries by their
running of fiscally prudent policies.)
“A government big enough to give you everything
you want is a government big enough to take from
you everything you have”
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