U.S. and World News
- The Environmental Protection Agency has proposed legislation mandating U.S. power plants to cut greenhouse gas emissions by an average of 30% by 2030. The law would affect hundreds of fossil fuel power plants and would strike the nation’s 600 coal fired plants hardest.
- The European Central Bank announced a series of dramatic policy actions this week in an attempt to stimulate the Eurozone’s economy that faces low growth and threats of deflation. The ECB announced that it would be lowering all three of its key interest rates, bringing the refinancing rate to 0.15%, marginal lending facility to 0.4% and the deposit rate was lowered to -0.1% (banks are charged for holding excess reserves with the central bank, incentivizing them to lend). Liquidity was also injected into the system in the form of €400 billion of Targeted Long-Term Refinancing Operations (TLTRO) wherein the ECB would buy up asset-backed securities from its banks to improve their balance sheets and again incentivize them to lend more.
- Markets continued to rise this week, setting new All-Time Highs. The S&P 500 climbed 1.38% and closing at 1,949. The Dow Jones followed suit by increasing 1.26% and closing at 16,924. Year to date, the S&P is up 6.42% and the Dow Jones is up 3.19%.
- Treasury yields rose this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.65% and 2.60%, respectively.
- The spot price of WTI Crude Oil was relatively unchanged this week, closing at $102.75 per barrel. Year to date, Oil prices have climbed 6.53%.
- The spot price of Gold increased by 0.30% this week, closing at $1,253.41 per ounce. Year to date, Gold prices are up 4.31%.
- Initial jobless claims rose by 12,000 from last week, coming in at 312,000 vs. consensus estimates of 310,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 310,000, the lowest since June 2007.
- Monthly nonfarm payroll jobs came in slightly better than expected, showing an increase of 217,000 jobs vs. consensus estimates of 215,000. With this gain, the level of nonfarm payroll employment now exceeds its 2008 peak, although the working-age population has grown significantly in that time.
- The unemployment rate held steady at 6.3%, as did the labor force participation rate which remained at a very low 62.8%.
- Also of note were wages growing by 0.2% in the month and now are up 2.1% over the last year. It now appears that wage growth is in an uptrend, as would be expected in the second half of a business cycle.
Fact of the Week
- According to the Department of Commerce, the personal savings rate (after-tax income minus spending divided by after-tax income) in the U.S. was 13.1% in 1973. As of 3/31/2014, the personal savings rate has dropped to a meager 3.8%.
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