US economic data released this week
showed that April CPI contracted by 0.1%, worse than forecast, whilst
housing starts for the same month were higher than expected, at
5.8%.Wall St Economists estimated that the US budget deficit at April
2010 would be $40BN, after the $20.91BN seen at April 2009. In the event
it came out at $82.69Bn. During a very bumpy week the Dow fell by 4%,
whilst the S&P 500 and the NASDAQ ending lower by 4.2% and 5%
respectively.
Euro-Zone CPI rose by 1.5% annualised in April, a 16 month high, whilst
new car registrations for the same month fell by 7.4% against the 10.8%
rise seen in March. Britain had the biggest fiscal deficit for any April
since records began in 1993, suggesting a painful emergency budget to
come from the new chancellor. Meanwhile, April CPI came in at a higher
than expected 3.5% year on year, whilst retail sales for the same month
were a modest 0.1%. The FTSE 100 index lost 3.8%, whilst the French CAC
and the German DAX were lower by 3.6% and 3.8% respectively.
Out East Taiwan’s economy grew by 13.27% in Q110, the fastest pace in
more than 30 years, buoyed by surging sales of computer chips and
display panels, whilst Japanese Q110 provisional GDP disappointed at
1.2% against the 1.4% forecast. The Nikkei fell by 6.5% whilst the Hang
Seng ended lower by 3%.
The $US index fell by 1%, after a wild week, to 85.36, with big losers
including the South Korean Won and the $OZ, falling by 8% and 6.1%
respectively. Gainers included the Japanese Yen, up by 2.7% and the
Euro, higher by 1.7%.Sovereign debt yields collapsed, as stocks sank, as
German bund yields fell by 20bps to a record low of 2.66% and Japanese
JGB yields ended down by 6bps, finishing the week at 1.235%.UK 10-year
yields were lower by 20bps to 3.55%. US Treasury 5 year yields fell by
7.2% to 1.99% whilst the 10 year gave up 7.1%, ending the week at 3.2%.
Within the commodities complex the $crude oil price fell by a further
4.9% to $70 a barrel whilst the price of $Gold saw a 4.5% loss to
$1177oz. The CRB index, representing a basket of commodities, is now
lower by 11% year to date
Next week sees Q110 GDP figures for the US and for the UK, with the
former also set to announce April home sales, durable goods orders and
May consumer confidence data, together with the latest S&P/Case Shiller
home prices. UK nationwide house prices are also due for release,
together with Q110 private consumption and May consumer confidence.
March industrial new order info is due for the Euro-Zone, whilst in
Japan April unemployment, CPI and the trade balance figures will be
announced
Returning to “political market intervention,” mentioned at the top, the
US tried this same ploy back in 2008 when the SEC banned short selling
of financial stocks. If one looks at a chart of these restricted stocks,
compiled by Bloomberg, over the ban period of 19th September to October
8th, the S&P 500 index fell by 21.4% whilst the restricted stocks saw a
26.3% drop.
Meanwhile it’s hard to believe that it was only two weeks ago that we
reported that US regulators had closed down 68 banks versus the 140 for
the whole of 2009. With the additional failures this is now grown to 73
banks against 36 by this time last year.
“Creditors have better memories than debtors."
