- Turkish markets plunged following violent protests in Istanbul over the weekend. Citizens have been staging anti-government demonstrations in response to what many feel is increasing authoritarianism in the country. Over 1,000 people were injured and two people died during the protests that were met with tear gas and rubber bullets.
- Japanese Prime Minister Shinzo Abe has announced the “third arrow” of his grand plan to pull his country out of deflation. The first two arrows of his plan were aggressive monetary easing with the goal of spurring inflation and blowout deficit spending by the government on public works projects. This third arrow is a package of sweeping reforms made to encourage business activity. This will be achieved through improving productivity in the private sector, labor reform and developing new markets. The program includes allowing Japan’s massive public pension funds to buy more stocks, the creation of special economic zones, free-trade agreements and privatization.
- Despite the announcement, turmoil in the Japanese equity markets continued this week as the Nikkei Index has lost about 20% since hitting its recent high on May 23rd. Part of this had to do with disappointment with the proposed grand plan, as some see that the labor-market proposals don’t go far enough and a nationwide corporate tax cut was not included.
- Stock markets ended the week up thanks to a positive jobs report. The S&P 500 Index rose .89%, closing at 1,643. The Dow Jones Industrial Average was up .78% to close at 15,248. After this week’s increase, the S&P and the Dow are respectively up 15.2% and 16.4% year to date.
- Treasury yields continued to drift higher again this week with a continued focus on when the Federal Reserve will begin to taper their asset purchases, as the 5 year and 10 year treasury finished the week at 1.09% and 2.17% respectively.
- The spot price of WTI Crude Oil rose this week, increasing by 4.4%, closing at $96.03 per barrel. On the year, oil prices are up 2.5%.
- The spot price of Gold was down for the week, closing at $1383.05/ounce. Gold is down 17.4% for the year.
- Weekly Initial Jobless Claims fell this week as claims decreased by 8,000 and came in slightly higher than expected at 346,000 vs. consensus expectations of 345,000. The 4-week moving average of jobless claims moved up to 353,000.
- Bureau of Labor Statistics monthly employment reported payrolls rose 175,000 last month beating economists’ forecast of 169,000. The unemployment rate rose to 7.6 percent from 7.5 percent.
- The May ISM manufacturing index fell against expectations, declining to 49.0 in May vs. expectations of 51.0. The reading below 50 indicates contraction in manufacturing activity during the month.
Fact of the Week
- Social Security Trustees announced last week that the trust fund backing the payment of Social Security benefits would be zero by 2033. A zero trust fund doesn’t mean the payment of benefits would go to zero, but rather they would drop to 77% of their originally promised levels through the year 2087. When the trustees reported on this in 2007, the projection was that the trust fund would be depleted in 2041, showing the significant damage that has been done to this entitlement program’s funding levels.
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