The Dow Jones Industrial Average lost 1.1% this week and is up 10.0% year to date and the S&P 500 dropped 1.3% this week and is up 14.6% in 2012.
Links Worth Snacking On:
- Chart of the Week – Thanks for the good times, Replacement Refs…Check out the financial impact on Vegas of their final game
- The Economist – What rent prices in Washington DC have to do with Silicon Valley
- Washington Times – Economic indicators on who will win the election in November
- NYT Dealbook – Bank of America rescued Merril Lynch in ’08 when it was about to fail beside Lehman. The acquisition came with far more lawsuits than advertised.
- Washington Post – A bustling Central Bank is working hard…to balance a video-game virtual economy
- WonkBlog – The economists of video games
- Financial Post – The art and science of the new industry of social entrepreneurship
- Reuters – Those Spanish riots last week? Italians shut down the Colosseum
- Video – Think you can be a Wall Street stock picker? Might be more work than you think.
It’s been a rough week on Wall Street and all we can think about is Kate Middleton – Specifically, we’re wondering which fell more: the markets, or the Queen’s respect for the Princess after seeing those grainy, bush league topless pics. There was rioting in Europe, dissent within the Federal Reserve and a surprise drop in Apple as stocks finished negative the first 3 days of the week amid all the Tim Burton-style gloom.
There are a lot of angry people in the world. Case in point – rioters lit up Madrid and Athens like an Avicii rave, protesting government austerity measures. Spain & Greece are cutting government spending/increasing taxes to deal with their debts and the public’s reaction shook European markets. Globally-minded investors see the riots and doubt Europe’s long-term chances of reducing the debt and getting things back in order.
We also enjoyed our fair share of cattiness here in the US, as Philly’s Federal Reserve President Charles Plosser kicked brotherly love to the curb and publicly criticized our central bank’s recent stimulus efforts. He told the press that he is opposed to QE3 and that he doubts it will create any jobs…he even speculated whether the policy will threaten the Fed’s credibility with the markets. Investors weren’t pleased to hear disses over the Fed’s quantitative easing policy that’s intended to keep borrowing rates down, encourage lending, and grow the economy.
Jobs, housing, manufacturing, GDP… The serving of US econ data was as diverse as it gets. The housing market shows notable signs of improvement after the famed S&P Case-Shiller home price index reported house values rose again and are up 1.2% since August ’11 – but new & pending home sales unexpectedly dipped last month, as the housing market still has quite a way to go. And the number of Americans filing for unemployment claims over the last week dropped by 26,000 (the most in months), adding some mojo to the labor market.
The big focus though was on Gross Domestic Product: how much stuff, no matter how small or bling-y, our economy is selling & buying. Every month, the Commerce Department re-analyzes its GDP estimate and disturbingly revised the 2nd quarter reading to 1.3% from 1.7%. Investors aren’t psyched that this measurement of annual growth is lower than the 2% GDP growth of the 1st quarter – the hope is that much of this is the result of the summer’s seasonably absurd drought that destroyed crops. On top of this, durable goods orders for big products (like cars) dropped 13% last month and the world’s hugest big machinery company, Caterpillar, lowered long-term profit projections, pointing to questionable global growth prospects.
The corporate world was dominated by tech headlines. Google hit an all-time high of $764 – so did Apple (last week) after its cult-level iPhone 5 debut. But the stock has fallen 5% since then because analysts expected sales of the super phone to reach 6 million over the weekend (they only unloaded an impressive 5 million). Facebook got hit hard after legendary finance publication Barron’s slammed the stock as “too pricey” over the weekend and questioned its business outlook as advertising on Facebook through mobile phone apps seems unfeasible. Speaking of Zuck, the exotically named Grupo Financiero Santander (una Mexican Bank), raised over $4 billion by offering its shares for sale on the New York Stock Exchange – the largest IPO stateside since Facebook’s in May.
- Monday – ISM September Manufacturing Index, August Construction Spending
- Tuesday – September Vehicle Sales
- Wednesday – ADP Jobs Survey, ISM September Non-Manufacturing Index, Presidential Debate
- Thursday – Weekly Jobless Claims
- Friday – Labor Department’s Non-Farm Payrolls & Unemployment Rate for August
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