There will not be any Weekly Re-Cap for the week of May 23 to May 30 2014. We are away for some needed R&R.

Have a good week.

The staffs at EGS.

“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend.” – Martin Zweig

1. Japan’s current account surplus declined in March — Japan’s surplus slumped to ¥116.4B ($1.14B) in March from ¥612.7B in February. It was hurt by weak exports and rising imports and ahead of a hike in sales tax in April. For the fiscal year, the surplus was ¥789.9B, the lowest on record.
2. Retail Sales barely rise in April — Marketwatch, sales at retailers rose a scant 0.1% in April, the Commerce Department reported. Americans boosted spending in March and February after harsh weather kept them mostly indoors in January and December. Easter also took place three weeks later this year — in mid-April instead of the end of March — making it harder for the government to seasonally adjust the numbers.
3. AAII Bullish Sentiment Falls — from Bespoke, bullish sentiment declined from 29.77% down to 28.34%, while bearish sentiment also declined from 29.45% down to 28.7%. Even though both bullish and bearish sentiment showed little in the way of change over the last week, what is notable is that bearish sentiment is now greater than bullish sentiment. This comes as the S&P 500 and Dow Jones both hit all-time high.

4. Japan first-quarter growth hits over two-year high — Japan GDP accelerating to an annualized 5.9% from 0.3% in Q4 and past consensus of 4.2%. The economy was boosted by personal consumption soaring 8.5% as shoppers went on a spree prior to sales tax rising to 8% from 5% on April 1. A 4.9% rise in capital expenditure also helped.
5. Eurozone GDP growth held steady at 0.2% in Q1 — Germany maintained its role as the bloc’s engine of growth, with economic expansion doubles in first quarter. France returned to neutral with zero growth after rising 0.2% in Q4 and Italy fell back into contraction of 0.1% following an expansion of 0.1%. The ECB’s vice president said that it is open to further monetary easing to prevent the euro zone from stagnating under an extended period of low inflation.
6. Economists lift 2nd-quarter US growth forecasts — CNBC, economists raised their forecasts for U.S. economic growth in the second quarter and through the balance of 2014. Analysts see the economy growing at an annual rate of 3.3 percent in the current quarter, up from a previous estimate of 3.0 percent. Third-quarter growth was forecast to accelerate to 2.9 percent, up from a prior forecast of 2.8 percent, and fourth-quarter growth estimates have been raised to 3.2 percent from 2.7 percent.

The week ahead — Economic data from Econoday.com:

“Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy.” – Dale Carnegie

1. Service Sector Increased in April — the ISM ‘s nonmanufacturing survey for April showed stronger services at 55.2. New orders increased 5 points to 58.2. Business activity and new export orders each rose 7.5 points to 60.9 and 57. Employment was the weak spot and it shed 2.3 points to 51.3.
2. China Factory Data Decrease — the Market/HSBC manufacturing PMI measure for April was 48.1. It was the 4th month in contraction. Output and new work declined over the month, employment fell a 3rd straight month and prices decreased.
3. Annual home-price growth posts sharpest slowdown in three years — according to data released, home prices rose in March, with certain regional markets posting fresh peaks, while the U.S. as a whole saw a sharp slowdown in annual growth. Looking at a longer-term trends, prices are slowing down, with dropping affordability cutting demand. For the year through March, home prices rose 11.1%, a notable slowdown from annual growth of 11.8% in February, which was the fastest pace in eight years.
4. Alibaba filed for an IPO in the U.S. — it is expected to be one of the largest in history. Forecasts on valuation range as high as $245B for the company that earns more revenue than Amazon and eBay combined. Last year, Alibaba handled about $248B in transactions. Yahoo (YHOO) has a 22.6% piece of the Alibaba pie, while SoftBank (OTCPK:SFTBF) holds 34.4%.
5. China’s inflation slowed to an 18-month low — China’s (FXI) inflation decreased to 1.8% in April from 2.4% in March. Factory-gate prices (PPI) dropped for the 26th consecutive month with a decline of 2%. With other data indicating that China’s economy is slowing down, economists attributed the fall in CPI to a weakness in demand.

The week ahead — Economic data from Econoday.com:

“Beware when investing turns into speculating” — Warren Buffett

1. UK economy grows at fastest pace in over 6 years — UK ‘S Gross domestic product growth strengthened to its fastest rate in six years in Q1, climbing to +3.1% on year from +2.7% previously.
2. S&P 500 Sector Weightings Changes in 2014 — below is an updated look at the current weightings for each of the ten sectors in the S&P 500 courtesy of BIG. Energy, Utilities, Consumer Staples, Health Care and Telecom have all seen increases in their S&P 500 weightings this year, while Materials, Financials, Technology, Industrials and Consumer Discretionary have lost share.

3. China’s official manufacturing PMI edged up to 50.4 in April from 50.3 in March — the data indicates that manufacturing is just about expanding and adds to HSBC’s flash PMI reading which demonstrates that the sector is contracting.
4. Fed Tapers Bond-Buying by $10B — the Federal Reserve voted unanimously to trim its monthly bond-buying by $10 billion to a monthly pace of $45 billion. Federal Reserve Chairwoman Janet Yellen pointed out there’s “slow but steady loan growth” that she considers an encouraging sign of an improving economy.
5. ISM manufacturing index climbs to 54.9% in April from 53.7% — MarketWatch, the Institute for Supply Management said its manufacturing index rose to 54.9% last month from 53.7% in March, marking the highest level since December. That was higher than the 54.4$ forecast of economists surveyed by MarketWatch. Readings over 50% indicate more companies are expanding instead of shrinking.

The week ahead — Economic data from Econoday.com: