Week Jan31 2011 – Weekly Recap & The Week Ahead
“A market is the combined behavior of thousands of people responding to information, misinformation and whim”. — Kenneth Chang (NYT journalist)
1. India raises interest rates by quarter-point — The Reserve Bank of India raised its benchmark interest rate by 0.25 percentage point on Tuesday, marking its seventh such increase since the beginning of 2010 to cool soaring prices.
2. British economy unexpectedly shrinks to 0.5% in fourth-quarter GDP — British economic output shrank in the final quarter of 2010, shocking economists and raising questions about the resilience of the economy as the government prepares to implement far-reaching austerity measures.
3. BoJ raises outlook — the Bank of Japan kept its interest rate unchanged, as expected, but raised its forecasts for the year through March to 3.3% from 2.1%. The board believes “the economy will probably emerge from its slump soon and return to a moderate recovery path.”
4. Consumer Confidence Index Hits 8-Month High — The Conference Board said Tuesday its Consumer Confidence Index climbed to 60.6 this month, up from 53.3 in December. While that reading was better than economists had expected, confidence is still far from the 90 level that signals a healthy consumer mindset.
5. S&P cuts Japan’s credit rating — Standard & Poor’s on Thursday cut Japan’s long-term sovereign-credit rating, with the news sending the yen sharply lower against its major rivals.
6. China crackdown on property — the Chinese government, faced with a losing battle against rising home prices, launched a new set of measures to make housing more affordable to the masses.
7. Deficit spirals ever higher — the U.S. budget deficit is on track to rise to $1.48T, or 9.8% of GDP, by the end of the current fiscal year, largely because of the extension of lower tax rates and the economy’s continued weakness, reported the Congressional Budget Office. That’s $60B more than the White House projected last summer, and a notable increase from 2010’s $1.29T deficit.
The week ahead — Economic data from Econoday.com:
