Top Stories Last Week
• S&P 500 Had Worse Week in 2013
U.S. stocks ended the week with a thud, after the nonfarm payrolls report showed much slower growth in jobs than what investors expected. With Friday’s move down, the S&P 500 closed out their weakest week of the year. The S&P index fell by 1.0%, and MSCI EAFE index declined 0.4%. The MSCI Emerging Market Index tumbled 2.2%. Gold price was down by 1.1%. The SPGC commodity index slumped 4.0% as oil prices tumbled. The bond markets rose as investors expected the Fed to continue quantitative easing. Barclays US Treasury index rose 1.2% and US high yield bonds was up slightly 0.2%.
• US Job Creation was the Slowest in Nine Months
American companies hired at the slowest pace in nine months in March, a sign that Washington’s austerity measures could be stealing momentum from the economy. The economy added only 88K jobs and the unemployment rate ticked a tenth of a point lower to 7.6% largely due to people dropping out of the work force. Analysts had expected a gain of 200K. February data has been revised to 268K from 236K, January to 148K from 119K. The household survey showed workforce down by 496K in March, compared with a decline of 130K in February. The labor participation rate fell to 63.3%, the lowest since 1979.
• US Manufacturing Activities Slowed
U.S. manufacturers extended a fourth consecutive month of expansion in March, continuing to grow but at a slower pace, especially in new orders and production. Last month’s ISM index level of 51.3 in overall manufacturing activity was down from 54.2 in February, suggesting that companies continue to exercise caution in hiring and spending. The report is too early to reflect fallout from the $85 billion in federal spending cuts known as the sequester, which was triggered early in March.
• Bank of Japan Launched an Aggressive Campaign Against Deflation
The Bank of Japan launched what promises to be an aggressive campaign against deflation, announcing a bold set of policy measures that exceeded market expectations. The central bank pledged to achieve the 2% inflation target at the “earliest possible time.” The BoJ said it would expand its balance sheet by purchasing longer-term debt and more exotic securities like ETFs. The bank also merged its asset-purchase programs and suspended a rule that prohibited the purchase of longer-term debt. The new purchases — made at an annual pace of 60-70 trillion yen — will double the bank’s monetary base over a two-year period.
• Tensions on Korean Peninsula Continued
North Korea has moved a missile with “considerable range” to its east coast, but the missile is incapable of reaching the US. The North Korea also blocked entry if South Koreans into an industrial park. The heightened tensions have led the United States to postpone congressional testimony by the top U.S. military commander in South Korea and delay a U.S. intercontinental ballistic missile test from a West Coast base.
Top Stories to Watch This Week
• Alcoa Will Kick Off Q1 Earning Season
Alcoa will kicks off the first-quarter earnings season on Monday. JP Morgan, Barclays Capital and Wells Fargo will report earnings later this week.
• China CPI and Trade Balance
China will report March consumer/producer inflation and trade balance. Analysts will get more information on how strong the Chinese economy is.
• US Fed Minutes and Retail Sales
The FOMC minutes will be released on Wednesday, helping shed some lights on the centric bank’s thinking. US Retail Sales are expected to rise by 0.2% in March by analysts.