“Words from the Wise” this week comes to you in a shortened format as my traveling in the US precludes me from doing my customary commentary. However, a full dose of excerpts from interesting news items and quotes from market commentators is provided.
Investors’ mood benefited last week from the potentially positive implications for the global economy emanating from the London G20 meeting, and the Financial Accounting Standards Board’s decision to relax mark-to-market accounting rules. And the previous week’s announcement of the Geithner plan to remove toxic assets from the balance sheets of banks was also still seen as a tailwind for stock markets.
Source: Chicago Tribune
Has the avalanche of policy actions and bank guarantees backstopped the global economy? If stock markets are a gauge of better tidings, it would seem that a bottoming phase might have started. Risk-taking investors pushed the S&P 500 Index to a straight four-week winning streak, registering a gain of 23.3% – the strongest since April 1933. But the jury is still out on whether the bear is simply offering a temporary reprieve.
The performance of the major asset classes is summarized by the chart below, courtesy of StockCharts.com.
For discussion about the direction of stock markets, see my recent posts “Video-o-rama: The road to recovery“, “Schiff interviews Faber“, “Stock market performance round-up: Signs of recovery” and “Donald Coxe: Investment Recommendations (March 2009)“. (And do make a point of listening to Donald Coxe’s webcast of April 3, which can be accessed from the sidebar of the Investment Postcards site.)
Next, a tag cloud of all the articles I read during the past week. This is a way of visualizing word frequencies at a glance. Key words such as “bank”, “market”, “index”, “prices”, “economy” and “financial” featured prominently.
Economy
“Business pessimism remains deep and widespread across all industries and regions of the globe. Survey responses regarding hiring and equipment and software investment fell to record lows last week,” said the latest Survey of Business Confidence of the World conducted by Moody’s Economy.com. However, the Survey concluded that it was encouraging that businesses were becoming steadily less negative about the economy’s prospects later this year.
Source: Moody’s Economy.com, March 30, 2009.
A snapshot of the week’s US economic data is provided below. (Click on the dates to see Northern Trust’s assessment of the various data releases.)
April 03
• Employment situation remains grim
April 02
• China:Signs of a recovery – already?
April 01
• Factory sector is tiptoeing towards a recovery
• Housing market: Pending Home Sales Index – positive signs
• Auto sales stage small rebound
• Japan: More news about a worsening situation
March 31
• Case-Shiller Home Price Index – downward spiral of home prices persists
• Consumer confidence retraces a small part of loss
Week’s economic reports
Click here for the week’s economy in pictures, courtesy of Jake of EconomPic Data.
|
Date |
Time (ET) |
Statistic |
For |
Actual |
Briefing Forecast |
Market Expects |
Prior |
|
Mar 31 |
9:00 AM |
Mar |
– |
28.0 |
28.0 |
25.0 |
|
|
Mar 31 |
9:00 AM |
S&P/Case-Shiller Home Price Index |
Jan |
-18.97% |
NA |
-18.6% |
-18.60% |
|
Mar 31 |
9:45 AM |
Mar |
31.4 |
36.0 |
34.3 |
34.2 |
|
|
Mar 31 |
10:00 AM |
Mar |
26.0 |
28.0 |
28.0 |
25.3 |
|
|
Apr 1 |
8:15 AM |
ADP Employment Change |
Mar |
-742K |
-635K |
-663K |
-706 |
|
Apr 1 |
10:00 AM |
Feb |
-0.9% |
-2.0% |
-1.9% |
-3.5% |
|
|
Apr 1 |
10:00 AM |
ISM Index |
Mar |
36.3 |
37.0 |
36.0 |
35.8 |
|
Apr 1 |
10:00 AM |
Pending Home Sales |
Feb |
2.1% |
-1.0% |
0.0% |
-7.7% |
|
Apr 1 |
10:30 AM |
Crude Inventories |
03/27 |
+2840K |
NA |
NA |
+3300K |
|
Apr 2 |
8:30 AM |
03/28 |
669K |
645K |
650K |
657K |
|
|
Apr 2 |
10:00 AM |
Feb |
1.8% |
1.2% |
1.5% |
-3.5% |
|
|
Apr 3 |
8:30 AM |
Mar |
33.2 |
33.3 |
33.3 |
33.3 |
|
|
Apr 3 |
8:30 AM |
Mar |
0.2% |
0.2% |
0.2% |
0.2% |
|
|
Apr 3 |
8:30 AM |
Mar |
-663k |
-670K |
-660K |
-651K |
|
|
Apr 3 |
8:30 AM |
Mar |
8.5% |
8.5% |
8.5% |
8.1% |
|
|
Apr 3 |
10:00 AM |
ISM Services |
Mar |
40.8 |
43.0 |
42.0 |
41.6 |
Source: Yahoo Finance, April 3, 2009.
In addition to interest rate announcements by the Bank of Japan (Wednesday) and the Bank of England (Thursday), the US economic highlights for the week include the following:
Source: Northern Trust.
Click here for a summary of Wachovia’s weekly economic and financial commentary.
Markets
The performance chart obtained from the Wall Street Journal Online shows how different global markets performed during the past week.
Source: Wall Street Journal Online, April 3, 2009.
John Maxwell said: “The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails.” (Hat tip: Charles Kirk.) Hopefully the “Words from the Wise” reviews will assist Investment Postcards readers in steering their investment portfolios to make the best use of the tailwinds and be cognizant of the dreaded headwinds.
That’s the way it looks from Cape Town (or, more accurately, from beautiful La Jolla, California, for the next few days).
