Week Oct 12 2012 – Weekly Recap & The Week Ahead
“Stock prices tend to discount what has been unanimously reported by the mass media” — Louis Ehrenkrantz
1. IMF lowers global economic outlook — the IMF has cut its global growth estimates again, predicting a rise of 3.3% this year (down from 3.5%) and 3.6% in 2013 (down from 3.9%). The fund has raised its estimates for U.S. growth slightly to 2.2% in 2012 and 2.1% in 2013, but forecast that China will weaken to 7.8% this year and grow 8.2% next year.
2. Companies Took Advantage of Cheap Money — per WSJ, Firms lock in low interest rates for decades. Companies are not only exploiting rock-bottom interest rates to issue more debt, but are also taking advantage by offering long-term paper. Companies have sold $91.9B of 30-year bonds in 166 deals this year, up from $73.2B in 145 offerings in 2011 and the most in any full year since 1995. Those include GE (GE), Comcast (CMCSA) and UPS (UPS).
3. PBOC pumps more liquidity into markets — the People’s Bank of China has provided the money market with another liquidity rush, injecting 265B yuan ($42.14B) by offering reverse repurchase agreements. It’s the PBOC’s second-largest ever daily fund injection after the 290B yuan of reverse repos the bank offered on September 25.
4. U.S. panel to probe new wave of complaints against Chinese Telecommunication Companies (Huawei, ZTE) — per Reuters, a U.S. congressional report that urged American companies to stop doing business with Chinese telecom equipment makers Huawei and ZTE has triggered a fresh wave of complaints against the firms, opening a second phase to the panel’s investigation.
In a report issued last week after an 11-month investigation, the House committee warned U.S. industry that Beijing could use equipment made by the two companies to spy on certain communications and threaten vital systems through computerized links.
5. Standard & Poor’s Ratings Services Cuts Spain two notches to BBB-, with a negative outlook — In a statement, S&P said the downgrade could have a negative impact on several banks including: Banco Santander, Banco Popular Espanol, Bankia and Bankinter, among others.
6. Japan and China Agree to Hold Talks on Rift Over Island — Japan and China agreed to talks aimed at reducing tensions over a territorial dispute a day after Japanese Prime Minister Yoshihiko Noda warned that Asia’s two biggest economies would suffer without negotiations.
The week ahead — Economic data from Econoday.com:
