Week May 27 2011 – Weekly Recap & The Week Ahead
“When I have to depend upon HOPE in a trade, I get out of it” — Jessie Livermore
1. S&P lowers Italy’s credit-rating outlook — Standard & Poor’s Ratings Services late last week lowered its outlook on Italy’s A-plus sovereign credit rating from stable to negative, citing potential political gridlock that could derail the government’s plan to balance its budget by 2014.
2. Greek PM rules out restructuring — Greek Prime Minister George Papandreou was due to hold a cabinet meeting today about a new four-year fiscal plan to reduce the country’s €340B ($484B) of sovereign debt after yesterday ruling out a restructuring of that debt.
3. Moody’s considering downgrades for U.K. banks — Moody’s is placing 14 U.K. banks on review for downgrades, including Lloyds (LYG) and Royal Bank of Scotland (RBS), due to the authorities indicating that they will be less likely to bail out the banks in the future. The rating agency also changed Barclays’ (BCS) outlook to negative and maintained the same prognosis for HSBC (HBC).
4. Pressure on banks from probes intensifies — despite their protestations of innocence, the scrutiny on banks by the authorities continues to increase. The SEC is examining whether Bank of New York Mellon (BK) and State Street (STT) fairly charged pension-fund clients for currency trading, a source said. The probe follows investigations by the Justice Department and three state attorney generals. Meanwhile, other sources said New York AG Eric Schneiderman has extended his probe into mortgage practices at leading banks to include Royal Bank of Scotland (RBS), UBS (UBS), JPMorgan Chase (JPM) and Deutsche Bank (DB), bringing to seven the number of firms under scrutiny.
5. First-quarter GDP growth remains at 1.8% — In the first quarter, the U.S. economy expanded at the same 1.8% clip that was initially forecast, the Commerce Department said in its second estimate of quarterly gross domestic product released Thursday. The second estimate comes in well below expectations of 2.2%.
6. Foreclosure sales tick higher — sales of homes in foreclosure rose to 28% of all home sales in Q1, nearly six-times as much as in a typical healthy housing market. “It’s an astronomically high number,” RealtyTrac’s Rick Sharga said, though it is down from a peak of 37.4% in 2009.
7. Latest sentiment figures from the American Association of Individual Investors (AAII), bullish sentiment declined from 26.7% to 25.6% — chart courtesy from the Bespoke Investment Group.
The week ahead — Economic data from Econoday.com:
