Week Nov 4 2011 – Weekly Recap & The Week Ahead
“The main purpose of the stock market is to make fools of as many men as possible.”Bernard Baruch
1. MF Global filed bankruptcy protection — MF Global (MF) filed for bankruptcy protection and sold its assets to discount brokerage firm Interactive Brokers (IBKR) for about $1B in a court-supervised auction, The Wall Street Journal reported.
2. Greece rediscovers democracy, markets sent into chaos — Global markets tumbled after shock announcement that Greece would hold a referendum on the severe austerity measures it would have to take in return for last week’s EU-IMF bailout proposal.
3. Asian manufacturing slow — Asian factory activity in October indicates that the eurozone debt crisis and recessionary trends are sapping global economic growth. China’s official PMI unexpectedly fell to 50.4 from 51.2 in September, while South Korean PMI remained below 50 – and therefore contracted – for a third consecutive month. Taiwan, meanwhile, hit an almost three-year low of 43.7.
4. ECB unexpectedly cuts rates — the European Central Bank cut its key lending rate by a quarter point to 1.25% in the face of deteriorating economic data and persistent market turmoil inspired by Europe’s ongoing debt crisis in the first policy meeting presided over by new ECB President Mario Draghi.
5. G20 may let IMF print money to help solve EU debt crisis — the G20 is considering allowing the IMF to print up to $250B more of its special currency to help resolve the eurozone crisis, The Wall Street Journal reported. However, for the IMF to issue the Special Drawing Rights, which are IOUs that countries can exchange for cash, the EU has to finalize a credible strategy to solve its problems.
6. Country Exposure to Greece Debt — below is the chart from Asha Bangalore, Northern Trust – Daily Economic Commentary, November 3, 2011.
The week ahead — Economic data from Econoday.com:
