Top Stories Last Week
• Global Stocks Fell Sharply amid Concerns about a Possible US Military Strike on Syria
The markets reacted sharply to heated rhetoric about the Syrian government’s alleged use of chemical weapons in an attack last week, with concerns about a possible U.S. military strike rippling across asset classes. Stocks were slammed, gold moved back in bull-market territory, investors stampeded out of emerging markets, and oil hit a six-month high. In the week, S&P index declined 1.8%, while MSCI EAFE index tumbled 3.9%. The MSCI Emerging Market Index dropped 2.5%. However, gold was flat while the SPGC commodity index rose 1.2%. The bond markets gained as well. Barclays US Treasury index was up 0.3%, and US high yield bonds was up 0.1%.
• President Obama Urged Military Strike against Syria, but Seeks Congressional Approval
President Obama announced in his address the U.S. will strike Syria at some point in the future, but it won’t be happening until at least after September 9, when Congress resumes and the issue will be put to a vote. “Today I am asking Congress to send a message to the world that we are ready to move forward as one nation,” Obama said.
The President said he believes the U.S. “should” seek military action against Syria for the chemical weapons attacks that killed more than 1,400 people, including hundreds children. “I have decided that the US should take military action against regime targets.” he also explained that he is prepared to go forward without the approval of the U.N. Security Council, and that the attack would be “limited in duration and scope,” with no “boots on the ground.”
• US Home Prices Continued Moving Up at a Slower Pace
Home prices continued their upward move in June, if at a slightly slower pace. U.S single-family home prices in 20 metropolitan areas rose a seasonally-adjusted 0.9% in June from a month earlier, according to the S&P/Case-Shiller Home Price Index, after rising 1% in May. The gain puts home prices 12.1% higher than they were a year ago, as all 20 metro areas welcomed price increases on both a monthly and annual basis, led by Las Vegas (24.9%) and San Francisco (24.5%). Yet the biggest takeaway from the new report is the fact that the pace of home price growth is showing signs of slowing down, as rising mortgage rates begin to weigh on home sales. Thirteen of the 20 cities saw their returns weaken on a monthly basis.
• US Durable Goods Orders Dropped More Than Expected
Orders for long-lasting manufactured goods tumbled in July as demand for aircraft fell and business spending weakened, sparking concerns about third-quarter growth. The 7.3% monthly decline in orders for big-ticket items such as cars, furniture and appliances to a seasonally adjusted $226.6 billion, exceeded the 4% drop anticipated by economists.
Outside of the volatile transportation category, durable-goods orders were still relatively weak for the month, declining 0.6%.
Top Stories to Watch This Week
• US Job Market
US employers are likely to add 175K jobs in August, and unemployment is expected to remain the same at 7.4%.
• PMI Manufacturing Index
PMI manufacturing indices are likely to indicate expansion in both US and China.
• ECB and BOE Policy Decisions
Both ECB and BOE are expected to keep monetary policies unchanged.