Week of Dec 4 2015 Weekly Recap & The Week Ahead
“Nothing created by the mind of man has ever equaled the stock market in terms of its sheer ability to frustrate people. Why is this? The answer is that the stock market frustrates because millions of traders and investors across the face of the U.S. and the world are trying to make money out of the market. Now when millions of people are trying to make money out of the market, you know right off the bat that it can’t be done. A majority of people are not fated to make money doing anything, much less beat the stock market. ‘It’s not fair’ you complain, ‘why can’t all those nice, well-meaning people make money with their trading and investing?’ There’s one simple fact that makes it difficult. And that fact is that throughout history there have always been a small number of financial winners and an army of financial losers. So when we state that the stock market is frustrating, we must qualify the statement by asking, ‘frustrating for whom?’ And the answer again is that the stock market is frustrating to the great majority of participant-losers but highly rewarding to the small minority of informed, hard-working, intelligent winners.” — Richard Russell
1. Puerto Rico Debt Payment Comes Due –Puerto Rico makes a $354M debt payment owed to creditors late last week, while a U.S. congressional hearing about the island’s fiscal crisis takes place in Washington. Analysts have warned that the debt owed by the Government Development Bank could be the first major payment skipped by the San Juan government as part of a strategy to preserve cash and force creditors to negotiate.
2. China’s Renminbi Is Approved by I.M.F. as a Main World Currency — NYTimes, the IMF added the yuan to its Special Drawing Rights basket. Effective Oct. 1, 2016, the renminbi will officially be recognized as a reserve currency, meaning central banks will have an alternative for foreign exchange reserves. The yuan also meets criteria of being “freely usable,” or widely used for international payments and in foreign exchange markets, boosting China’s influence in the global economy. The move will help pave the way for broader use of the renminbi in trade and finance, securing China’s standing as a global economic power. Just four other currencies — the dollar, the euro, the pound and the yen — have the I.M.F. designation.
3. ECB Cuts Deposit Rate, Launches Fresh Stimulus — ECB President Mario Draghi said the bank would cut the deposit rate to -0.30% from -0.20%. Mr. Draghi noted the success of the bank’s existing QE program, and said it would be extended until March 2017 or “beyond if necessary.” The Frankfurt-based ECB will also extend quantitative easing by six months until at least March 2017 at the current rate of 60 billion euros a month and broaden the assets purchased to include local and regional debt, ECB President Mario Draghi said last Thursday.
4. FOMC Chairwoman Eager to Raise Rates — Fed Chair Janet Yellen said she’s “looking forward” to the first interest rate hike in nearly 10-years. She stated data since the Oct. gathering have been “consistent” with improving labor market, which should lead to 2% inflation.
5. American Association of Individual Investor (AAII) bullish sentiment — courtesy of BIG, In this week’s report, bullish sentiment dropped from 32.36% down to 29.49% for the first sub 30% reading in bullish sentiment since the early October lows. The latest survey shows investors are increasingly less willing to take a stand on the market in one way or the other.
The week ahead — Economic data from Econoday.com:
Tags: ECB