Week Dec 17 2010 – Weekly Recap & The Week Ahead
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham
1. Part of Obamacare ruled unconstitutional — A federal judge ruled yesterday that a key part of President Obama’s healthcare overhaul is unconstitutional, marking a significant but not necessarily fatal setback to the major legislative accomplishment. The ruling took issue with the law’s requirement that most Americans buy insurance or pay a penalty, but didn’t go so far as to say states or the federal government should stop implementing the law.
2. VIX hits low — the VIX is fast approaching levels that are consistent with very high complacency.
3. Moody’s may downgrade Spain — Moody’s warned it may downgrade Spain’s Aa1 credit rating. The country’s high refinancing needs in 2011 and the possibility of a further rise in Spain’s public debt ratio were contributing factors to the warning.
4. No surprises from FOMC — There were no surprises in yesterday’s FOMC announcement, as the committee maintained its near-zero rates, expects no rate changes for an ‘extended period,’ and stuck to its bond-buying plan. Kansas. The committee noted that the economic recovery is continuing, but not fast enough to cut unemployment. Household and business spending is rising moderately. Employers remain reluctant to hire, housing is still depressed, and underlying inflation measures are still trending down.
5. Senate approves tax deal — the Senate voted 81-19 to approve the $858B tax deal hammered out by President Obama and Republican leadership. The bill now goes to the House, where it’s expected to face stronger opposition. Lawmakers are rushing to reach a resolution before the Bush-era tax cuts expire on Dec. 31.
6. S&P boosts China’s rating — S&P raised China’s long-term sovereign credit rating to AA- from A+ this morning. S&P cited the country’s strong foreign reserves and fiscal position, adding “we believe the Chinese authorities would respond to future threats to financial stability with timely measures, based on our observations over the past two years.”
7. Moody’s cuts Irish credit rating by five notches — Moody’s Investors Service said Friday it has cut its rating on Irish government bonds by five notches to Baa1 from Aa2. The credit rating agency said the outlook for the rating is negative.
The week ahead — Economic data from Econoday.com:
