Friday the 13th!

Friday April 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

Ned