Week June 22 2012 – Weekly Recap & The Week Ahead
“Buy when others are despondently selling and sell when others are greedily buying” — Mark Mobius
1. Spanish bond yields surge past 7% on bad-loan data — Yields on Spain’s 10-year bonds rose 24 basis points to an unsustainable 7.11% following data showing that non-performing loans held by the country’s banks hit an 18-year high of 8.72% in April. Italian yields were +10.6 bps at 6.03%.
2. U.S. housing starts fall in May, but permits surge (XHB) — housing starts fell 4.8% last month to an annual rate of 708,000 — below the 720,000 forecast of economists surveyed by MarketWatch. New construction in April was revised sharply higher to the fastest rate since October 2008. Starts in April totaled 744,000, up from an initial reading of 717,000. Starts are running 28.5% higher compared to one year ago.
3. Companies put spending on hold ahead of “fiscal cliff” — companies have started to delay recruitment and investment on fears that Congress won’t act to stop the $600B of automatic spending cuts and tax hikes that are due in January.
4. Antonis Samaras sworn in as new Greece prime minister — Antonis Samaras, the leader of the New Democracy party, has been sworn in as the country’s new prime minister. The ceremony came shortly after he agreed a coalition government with the Socialists (Pasok) and the smaller leftist party, the Democratic Left.
5. Fed continues ‘Twist’; Bernanke hints at more — As expected, the FOMC said that it will extend Operation Twist through the end of the year, adding $267B to the total purchased. The Fed is prepared to take additional steps as necessary. The Fed also lowered its GDP growth forecasts for 2012, and said it sees significantly lower inflation.
6. Moody’s cuts ratings on 15 financial firms — as expected, Moody’s downgraded the ratings of 15 financial firms with global capital-markets operations from one to three notches. Among those affected were Bank of America Corp, Barclays, Citigroup Inc. ,Credit Suisse Group , Goldman Sachs Group Inc., HSBC Holdings PLC, J.P. Morgan Chase & Co., Morgan Stanley, Royal Bank of Scotland Group PLC, Credit Agricole SA, BNP Paribas, Deutsche Bank, Royal Bank of Canada , Societe Generale and UBS.
7. Supreme Court ruling on 2010’s Affordable Care Act — The Supreme Court is set to rule on the Obama health-care law on June 29th. The ruling will have major political ramifications headed into the November election.
The week ahead — Economic data from Econoday.com:
