Week Sept 21 2012 – Weekly Recap & The Week Ahead
“There are two kinds of people who lose money: those who know nothing and those who know everything” — Henry Kaufman (Economist)
1. China/Japan Disputes over Shenkaku Island Continues — tensions continued to flare between China and Japan as protests reportedly coalesced in at least 100 Chinese cities in the wake of a recent territorial dispute; The two countries’ worst diplomatic crisis in years puts at risk a trade relationship estimated at $340B.
2. Bank of Japan adds to stimulus — expand asset purchases by another ¥10 trillion — The Bank of Japan last week said it will provide more monetary stimulus in response to a slowing in domestic economic activity, increasing the size of its asset purchases by 10 trillion yen ($126.7 billion) to about ¥80 trillion. The central bank also left its policy-interest-rate target unchanged, in a range of zero to 0.1%.
3. Sales of existing homes surge in August, best of activity best since May 2010 — according MarketWatch, the National Association of Realtors reported sales of existing homes surged 7.8% in August and rose to a seasonally adjusted annual rate of 4.82 million from July’s 4.47 million. Fueled by low interest rates and pent-up demand, home sales have improved considerably from their recession-era lows, but still are well below the 2005 peak of just over 7 million.
4. Chinese PMI improves but still continues to shrink — China’s flash HSBC PMI rose to 47.8 in September from 47.6 in August, which, if confirmed, would represent the 11th straight month of contraction in the country’s manufacturing sector.
5. Another Californian city heads for bankruptcy — per Merced Sun-Star Atwater is the latest Californian city facing bankruptcy protection after racking up a deficit of over $3M. Council members held a meeting late last week to discuss declaring a fiscal emergency, which would allow Atwater to file for Chapter 9.
6. EU in talks over Spanish rescue plan — according to FT,
EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week.
7. Russia may limit grain exports if prices jump — Russian Economy Minister Andrei Belousov has warned that the country may restrict grain exports – as it did in 2010 – if domestic prices increase too sharply. The government had previously said it wouldn’t limit exports despite a drought that will cause output to fall to an estimated 72M-73M metric tons from a record 94.2M tons last year.
The week ahead — Economic data from Econoday.com:
