Apr 30, 2012
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Equity markets are starting the week with a bump on better than expected retail sales, which ex-autos rose by 0.8% in March vs. expectations of 0.6%. Retail comps, reported last week, came in better than expected for March as 14 out of 21 retailers we follow beat comps. Big comps were posted by Zumiez (ZUMZ) +14%, PriceSmart (PSMT) +17%, Ross Stores (ROST) +10%, and TJX (TJX) +10%.
China’s central bank doubled the daily band it will allow the yuan to fluctuate vs. the dollar, a move which is expected to ease trade tensions and is another step closer to raising the yuan’s utilization in international settlements. The new range is +/- 1% per day.
The Summit of the Americas broke up without a consensus after President Obama refused to sign a statement promising to invite Cuba to the next gathering. The other Western Hemisphere leaders signed the statement. The trip was also a minor embarrassment to the US after secret service and DOD officials working on the event were sent back to the US due to allegations of misconduct. Does anyone else remember the President's campaign promise to improve the reputation of the US internationally? I'd say this President has done more to damage our international reputation than any President since LBJ.
Yields in Spain have been rising as the effects of the LTRO fade. “The ECB could restart direct bond purchases” suggested Benoit Coeure, a member of the ECB executive board. Eurozone officials have been making a case for a larger IMF bailout fund, however, the US has been fighting this move, saying the Eurozone has the financial resources to handle their issues.
The Chicago Fire and Houston Dynamo played to a draw last night after the game was called due to lightening, an MLS first.
Have a great day
Apr 13, 2012
Thursday’s jobs report was weak again, with initial claims coming in at 380K vs. expectations of 355K for March. February’s claims were adjusted upwards from 357K to 367K. Drilling down a bit further, economic and employment strength has been focused in traditional cold weather states which have experienced a mild winter. Momentum in the employment market over the past four months has helped fuel the equity markets; a slowdown could lead to a rough summer for equities. The University of Michigan Consumer Confidence index came in this morning just under expectations at 75.7.
Google (GOOG) reported better than expected earnings and revenues last night, and also announced plans for a stock split via the issuance of a new class of shares. The chart below shows the absolute price of Apple (AAPL) and GOOG over the past five years. AAPL has outperformed GOOG over that time period, however, an irrelevant but much anticipated milestone appears close: AAPL’s price exceeding that of GOOG. Both stocks trade in the $600’s, and were within a couple of dollars of each other earlier this week.
The IMF issued a report raising concerns about a threat to global financial stability: the lack of safe assets. As fewer governments are considered “risk-free”, the IMF is concerned that the pricing and allocation models relied upon by advisors could become irrelevant if there is no risk-free asset to use as a basis for pricing.
China is piecing together a global payment system for cross-border transactions based in yuan. Should the yuan become more readily used in global transactions, reliance upon the dollar as a reserve currency would decline. The People’s Bank of China announced that global banks will be free to use the China International Payment System.
China reported their first quarter GDP this morning, which fell to its lowest level since 2009 at 8.1%.
Iran has engaged in what it has termed “counter-sanctions”, ending oil exports to nations supporting the US embargo of Iran. Germany became the latest country to lose its access to Iranian oil, joining Spain, Greece, France and the UK.
A new spill in the Gulf of Mexico, this time reportedly from a well operated by Royal Dutch Shell, has created an enormous oil slick across the Gulf. Shell is denying responsibility, but has been engaging in cleanup efforts to help stem the environmental damage.
Trivia question of the day: What do Bobby Petrino, Brian Dunn, and Tiger Woods have in common?
Have a great weekend