It was a lean week for US economic
data this week, but it included June existing home sales, which advanced
by 3.6% to 4.89m units and the third consecutive monthly rise. Perhaps
of more interest to US taxpayers (and those elsewhere where “stimulus
packages” abound), is that they may be on the hook for as much as
$23.7Trillion in the futile effort to bolster the economy and bail out
companies, according to Neil Barfsky, special inspector general for the
US Treasury’s “troubled asset relief program,” better known as TARP.
Ignoring this, stocks enjoyed a second “back to back” stellar week as
the Dow and the S&P 500 jumped by 4% each and the Nasdaq climbed by 4.2%
and 7.4%. The Dow has soared by 11.39%, the best two week rally since
2000.
Euro-Zone industrial orders did worse than expected in May, at -30% year
on year, whilst the Italian research institute has projected an economic
contraction for their country of 5.3% for this year, twice that
originally forecast. Meanwhile, UK retail sales in June jumped by 1.2%,
almost 4 times analyst expectations, but the main news was that Q209
advance GDP for the UK contracted by 0.8%, nearly 3 times the rate
forecast and now showing a 5th quarter of contraction. The FTSE 100
index gained 4.3% over the week, whilst the French CAC and the German
DAX were higher by 4.6% and 5% respectively.
Out East, China’s $US585BN (4 Trillion Yuan) stimulus package, announced
last November, has certainly ramped up internal demand as home mortgage
loans are up by 150% over H109 versus the same period last year. New
home prices in 36 medium to large Chinese cities rose by 6.3% annualised
in June whilst 484,799 individual investor stock accounts were opened
last week! The Nikkei jumped by 5.9%, whilst the Hang Seng leapt by
6.3%, whilst the Shanghai Composite rose by 5.7%.
The $US index declined by 0.7% to 78.8. Notable gainers included the
$Canadian, again, up by 2.7%, whilst on the downside the Yen lost 0.6%.
Sovereign debt yields moved higher once more this week, with the German,
Japanese and the UK 10 year higher by 8,6 and 15bps, ending it at 3.48%,
1.37% and 3.96% respectively. The US Treasury 5 yield added 1.35% to
2.55% whilst the 10 year yield added 0.5%, ending the week at 3.67%.
Within the commodities complex, the $crude oil price jumped by 4.7% to
$66.6 a barrel, up by 12.5% over the fortnight, whilst the $Gold price
added 1.5%, ending the week at $951oz..
Next week sees more US housing data plus the June durable goods orders,
whilst the UK data includes house prices together with June consumer
credit and net lending on dwellings. The latest CPI readings are due out
for the Euro-Zone and for Japan, with the former also releasing June
unemployment numbers and July consumer confidence, whilst June retail
sales will be announced for Japan.
US “official” unemployment is at 9.5%, the same as New York City, but
its worse in California and Florida, at 11.6% and 10.6% respectively,
whilst in the heart of the auto industry, Michigan, it has soared to
15.2%. US corporate income taxes in Q109 fell by 19% year on year,
whilst US households have seen their net worth collapse by 22%, $US14
Trillion, since 2007. Meanwhile, President Obama’s first federal budget
will consume 28% of US GDP, with state and local governments taking
another 15%. Change indeed.
“The
size of the State is the sum of its
bureaucracies.”
[ Up ] [ Next ]
