U.S. and World News
- President Obama gave his State of the Union Address this week and there weren’t too many surprises contained in the speech and markets were generally unaffected. His initiatives (some of which will have a hard time passing through the Republican controlled House) include investing $50B on infrastructure, raising the minimum wage by 24% to $9/hour and launching free-trade talks with the European Union. His address, however, did not indicate much progress on averting the upcoming sequester spending cuts.
- The G7 Finance Ministers and central banks governors issued a joint statement reaffirming their “longstanding commitment to market-determined exchange rates and to consult closely in regard to actions in the foreign-exchange markets.” The statement was an attempt to defuse growing fears about a global currency war in light of the currency devaluations that are taking place in countries like Japan.
- Markets were relatively flat again this week with the S&P 500 Index rising by 0.1% this week and closed at 1,520. The Dow Jones Industrial Average on the other hand fell a bit on the week, posting a loss of 0.1% and closed at 13,982. Equity markets paused a bit this week but maintain their great start to 2013; the S&P and the Dow are up 6.6% and 6.7% respectively.
- Treasury yields climbed a bit this week as the 5 year and 10 year treasury finished the week at 0.87% and 2.01% respectively.
- The spot price of WTI Crude Oil rose this week by 0.2%, closing at $95.95 per barrel. So far in 2013, oil prices are up 4.0%.
- The spot price of Gold fell by 3.5% this week and closed at $1608.80/ounce. Year to date in 2013, gold is down 4.0%.
- Weekly Initial Jobless Claims fell by 24,000 and came in lower than expected at 341,000 vs. consensus expectations of 360,000. The 4-week moving average of jobless claims rose to 353,000. Volatility remains in the claims numbers, which may be the result of distortions caused by seasonal adjustments to the data.
- Of the 338 S&P 500 companies to report 4th quarter earnings, 71% exceeded sales expectations, while 67% have beaten profit forecasts. The reporting companies have seen an average of only 3% year-over-year sales growth, while achieving 8.7% in year-over-year earnings growth.
Fact of the Week
- China has surpassed the U.S. as the largest trading nation in the world for 2012. The total value of Chinese imports and exports hit $3.87T, while those of the U.S. reached $3.82T. Still, the U.S. total economy remains more than double the size of China’s.
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