Financial News and Notes 1/1/12 – 1/7/12

Economy

-Factory activity in December edged up to its highest level since June.  1/4

-The Fed announced it would begin communicating its expectations for any changes it would make to short term interest rates in a new policy. ¼

-Nondefense capital spending, an estimate of business spending, dropped 1.2% in November. 1/5

-Inflation in the euro-zone fell to 2.8% for the first decline since July.  The drop gives European officials more wiggle room to deal with the regions weakening economy.  1/5

-U.S. auto makers saw strong December sales gains rising 8.7% from a year ago.  They also forecast that improvements should continue as long as the U.S. economy continues along its current steady gain path.  1/5

-Apartment vacancy rates dropped to their lowest level since 2001 in the 4th quarter of 5.2%. 1/5

-Newly released Christmas season sales reports show that the holiday season was not as kind to retailers as expected.  Thompson Reuters reported that 22 retailers it tracks saw sales rise 3.1% over the November/December holiday shopping season in 2011 when they had risen 4.3% in 2010. 1/6

-Initial jobless claims fell by 15,000 to 372K and the 4 week moving average is at its lowest level since June of 2008.  Also, payroll processor ADP said private firms increased payrolls by 325K in December.  1/6

-The job market has continued its upward momentum with 200K jobs added in December and the unemployment rate dropping to 8.5%, its lowest level in close to 3 years.  1/7

-European business and consumer confidence ebbed in December moving to their lowest point in over a year.  This was followed by weak economic reports adding to the likelihood that the region may already be in a recession.  Germany’s factory orders fell 4.8% in November, euro-zone unemployment remained at a record high of 10.3%, and euro-zone retail sales fell 0.8% in November.  1/7

Corporate

-Kodak is on the edge of bankruptcy as it seeks buyers for its patent portfolio.  1/5

-Barnes and Noble stated it would lose double the money it previously expected for this fiscal year and is considering splitting off its Nook digital reading business. 1/6

Market

-Stocks got the New Year started off with a bang.  Investors, emboldened by improving manufacturing news in the U.S., Europe, and China, moved heavily into riskier assets.  The Dow rose 1.5% to its highest point since July, the S&P climbed 1.6%, Europe rose 1.6%, and Hong Kong rose 2.4%.  1/4

-Oil settled at $101.81 a barrel which is over a $26 higher than its price in early October.  Improving economic conditions and concerns over Iran have driven the rise.  1/6

-Concerns remerged over European leaders’ strategies to overcome their debt problems.  Italian 10 year bond yields rose above the important 7% threshold, the European bailout fund had to offer higher interest rates to raise $3 billion and the Euro sank to its lowest level since September of 2010.  1/6

-Despite strong gains in U.S. unemployment concerns over Europe overshadowed the improvements as world equity markets ended the week on a down note.  The Dow fell 0.5%, the S&P 500 fell 0.3%.  For the week the Dow rose 1.2% the S&P gained 1.4%, Japan fell 0.8%, and Europe rose 1.2%.  1/7

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