Week of Jan 31 2014- Weekly Recap & The Week Ahead
“Only when the tide goes out do you discover who’s been swimming naked.” — Warren Buffett
1. Apple building mobile-payments business — WSJ reported Apple (AAPL) is working to expand its mobile-payments service to enable users to buy goods and services. AAPL ‘S iTunes havE 575M registered users, it poses a serious threat to the likes of PayPal (EBAY) and Square.
2. British economy grows at fastest pace since financial crisis — U.K. GDP increased 1.9% in 2013 in what was the quickest growth since 2007. However, GDP slowed a bit to +0.7% on quarter in Q4 from +0.8% in Q3 and the economy was still 1.3% below its pre-recession peak.
3. Congress forges deal on farm bill — Bloomberg reported the House and Senate negotiators have agreed to a five-year farm bill that would save up to $24B over the next ten years. The bill will reduce spending on food stamps by $8B and ending direct payments to farmers. That’s the third bill that legislators have negotiated in recent weeks.
4. FOMC Maintains QE Tapering Pace — Policymakers scaled back the bond purchase program by another $10bil a month, matching the prior cut despite the weak Dec. jobs report and upheaval in emerging markets. Central bankers noted mixed labor data and some slowing in housing.
5. Emerging Markets raised interest rates to calm market — Turkey raised rate on one-week Interbank Rates, from 4.5% all the way to 10% as an attempts to get it’s plummeting currency and runaway inflation under control. Others did the same, see chart below courtesy of the WSJ.
6. Investors yank $9 billion from emerging market funds — Reuters, investors yanked $9 billion from emerging stock and bond funds during a turbulent past week, with equities seeing their biggest outflow in 2-1/2 years according to Boston-based fund tracker EPFR Global. This past week has seen some major falls in emerging currencies’ exchange rates, with central banks forced into rate rises or market interventions to limit the swings. Those currency losses and rate rises have put pressure on bond and stock holdings, forcing exits.
7. Individual Investors Rushed for the Exit — courtesy of BIG, According to the American Association of Individual Investors(AAII), bearish sentiment is now greater than bullish sentiment for the first time since mid-August. The last time bullish sentiment was above the 50% mark was back in late January. This represents the fourth weekly decline in the five weeks since bullish sentiment peaked on 12/26/13 at 55.06%. While bullish sentiment declined, the bearish camp became more crowded rising from 23.76% to 32.76%.
The week ahead — Economic data from Econoday.com:
