| Weekly Market Overview | ||
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Week ending 11th June 2010 As President Obama,” placed his foot on the throat of BP,” this week, we note similarities with Huey Pierce Long, Jr, the 40th Governor of Louisiana from 1928 to 1932, a radical populist politician who was immensely popular for his social reform programs and willingness to take forceful action, his most famous being his suit against the powerful Standard Oil Company. Long, a Democrat like Obama, created the “share our wealth” program in 1934, which proposed new wealth redistribution measures whilst advocating far more expansive government services. Sound familiar? |
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 Indices - Year to Date (11th June 2010) |
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| US economic data
released this week showed that April consumer credit rose by a better
than forecast $1BN but the prior month reading was revised from $2BN to
-$5.4BN.Meanwhile, the trade deficit for April narrowed to $40.3BN but
advance retail sales for May were worse than expected, falling by 1.4%,
the first monthly fall since last September. The Dow clawed back the
10,000 level and ended a three week losing streak, gaining 2.8%, whilst
the S&P 500 and the NASDAQ rose by 2.5% and 1.1% respectively. The ECB left interest rates on hold, at 1%, as the EU sentix investor confidence reading for June came in at -4.1. The Bank of England MPC also left rates at 0.5% and maintained their QE target at £200BN, as PPI for May contracted by 0.6%. The UK’s trade deficit for April deteriated to -£7.3BN against the -£7BN seen in March. The FTSE 100 index rose by 0.7%, whilst the French CAC and the German DAX were higher by 2.9% and 1.8%. Out East, Japan’s trade surplus for April was lower than expected, Q110 forecast GDP was reported at a robust 5% year on year, higher than forecast. Elsewhere, China’s workers successfully demanded higher wages and better working conditions, with the strike at Honda plants being part of a series of labour disputes involving major global companies in recent weeks. Whilst this may assist in Western policymaker desires for China to move more towards a consumption society, it is starting to remove its competitive edge. The Nikkei fell by 2% whilst the Hang Seng gained 0.5%. The $US index declined by 1.1% this week, to 87.3, with the $OZ and $Kiwi managing a 3% rise. Losers included the South Korean Won, lower by 3.6%. Sovereign debt yields, with the exception of the US, eased, with German bund yields lower by 2bps to a record low of 2.56% and UK 10-year yield fell by 5bps to 3.46%. Japanese JGB yields, meanwhile, fell 4bps, finishing the week at 1.23%.US Treasury yields had a volatile week, with the 5 and 10 year higher by 1.6% and 0.7% respectively, ending the week at 2% and 3.2%. Within the commodities complex the $crude oil price gained 3.7% to $74.5 a barrel whilst in the precious metals complex the price of $Gold saw a 0.5% rise to $1226oz, after touching a new high midweek at $1250. Next week sees the latest inflation numbers for the US, the UK and for the Euro-Zone, plus the most recent on employment and new car registrations for the latter. May housing starts and condo sales will be released for the US and for Japan, whilst the UK announce May retail sales and consumer confidence data. A recent report on OECD residential property, by Deutsche Bank, states that the volume of subprime mortgage approvals has been rising significantly in the US over the past 12 months, from $19BN in 2008 to $423BN in 2009, on the back of stabilisation measures (read tax-payer guarantees) by the Obama administration. It goes on to say,” this of course can create new problems should the financial situation for low-income households fail to improve over the next few months.” Quite!
“Democracy will cease to exist when you take away from those who are willing to work and give to those who would not"
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