Week June 25 2011 – Weekly Recap & The Week Ahead
“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” — Bernard Baruch
1. Regulators to increase embeds at banks — as part of efforts to prevent another financial crisis, the New York Fed and the Office of the Comptroller of the Currency are increasing the number of examiners who work at the offices of the banks they regulate.
2. Plane orders worth $20B announced in just one day — plane makers disclosed bookings for over 200 aircraft with a total value of more than $20B on the first day of the Paris Air Show. Airbus (EADSY.PK) led the charge, announcing several orders for its fuel-efficient A320neo jet, a competitor to Boeing’s (BA) 737.
3. FTC probes oil trading — the FTC is investigating whether oil companies, refiners and traders have engaged in anticompetitive practices or manipulated crude oil prices. The inquiry follows soaring refining margins and reports that refiners were using less of their capacity than they did last year, as well as other developments.
4. FOMC cuts 2011 GDP growth to 2.7%-2.9% from a 3.1%-3.3% — Ben Bernanke said the Fed doesn’t “have a precise read on why this slower pace of growth is persisting,” adding that weak housing and problems in the banking system might be “more persistent than we thought.” At the meeting, the FOMC kept rates at 0%-0.25% and said it would maintain this level for an ‘extended period.’ The Fed also confirmed it would end its bond-buying program on schedule, sending the dollar higher.
5. S&P 500 and sector P/E ratio charts — recent downturn for the S&P 500 has caused its P/E ratio (trailing 12-month) to drop from nearly 16 to 14.74. Below chart courtesy from the Bespoke Investment Group.
6. EU to provide Greece with funds — the EU and IMF have pledged to provide Greece with a €12B tranche of its bailout to stop it from defaulting in July after refusing to allow the country to soften its austerity measures. Greek Prime Minister George Papandreou now needs to get the program passed through parliament on Thursday next week. EU heads of government, who have been meeting in Brussels, are also nearing approval of a new rescue package to take Athens until the end of 2014.
7. Trading in Italian banks halted — trading in Italian bank stocks was suspended briefly following steep drops after Moody’s yesterday put them on negative outlook.
8. House passes patent bill — the House yesterday approved a bill that favors inventors who file their patent applications first as opposed to the current system that operates on a first-to-invent basis. The change will bring the U.S. into line with Europe and Japan.
9. IEA to release oil reserves — the 28-nation Int’l Energy Agency will release 60 mil. barrels from strategic reserves over 30 days, to cut prices and lift flagging growth just as fiscal and monetary stimulus end.
The week ahead — Economic data from Econoday.com:
