Week of Jan 29 2016 Weekly Recap & The Week Ahead
“When a falling stock becomes a screaming buy because it cannot conceivably drop further, try to buy it thirty percent lower.” – Al Rizzo
1. Energy Sector Debt Review Loom — Moody’s put ratings of 175 energy and mining companies on review for downgrade. Overall, 120 companies in the oil sector and 55 companies in the mining sector are on negative watch. Any credit downgrades may worsen its liquidity crunch among energy companies, which have had to rely more on bank loans as oil revenue dries up.
2. China Stocks Finish At More Than Year Low — China’s volatile shares tumbled last week, taking losses this month to about 25% or 13T yuan ($2T), while state media insisted that the market ructions did not reflect the real economy. The People’s Bank of China also auctioned 340B yuan ($51.7B) of reverse-repurchase agreements during the session, after offering a record 440B yuan two days earlier. Policy makers are hoping to prevent a cash crunch before the week-long Lunar New Year holiday.
3. FOMC Meeting Recap — the Fed kept interest rates unchanged and said it was “closely monitoring” global economic developments, signaling it had accounted for a stock market selloff but was not ready to abandon a plan to tighten monetary policy this year.
4. Obama Calls for Rapid Zika Research — President Obama is calling for the rapid development of tests, vaccines and treatments to fight the mosquito-transmitted Zika virus, which has been linked to brain damage in thousands of Brazilian babies. American health officials are eager to step up efforts studying the link between Zika infections and birth defects, citing a recent study estimating the virus could reach regions where 60% of the U.S. population lives.
5. Bank of Japan (BOJ) Adopts Unprecedented Negative Interest Rate — the BOJ said it would adopt a negative interest rate policy for the first time, as a sputtering economy, stubbornly low inflation and turbulent global financial markets threaten to undermine Prime Minister Shinzo Abe’s economic-revival plan. The central bank said it cut the deposit rate it pays on cash parked at the BOJ by commercial banks in excess of legally required reserves, to minus 0.1% from the previous plus 0.1%. The goal was to push down borrowing costs across a broad time spectrum to stimulate inflation.
The week ahead — Economic data from Econoday.com:
