Top Stories Last Week
• Global Markets Rallied for the Week
All asset classes across the globe rose last week, as solid corporate earnings and data that
showed the U.S. economy is still on its slow, unimpressive path of growth. S&P index
was up by 1.8%, and MSCI EAFE index rallied 3.4%. The MSCI Emerging
Market Index rose 1.3%. Gold price jumped by 4%. The SPGC commodity index
climbed 2.5% as oil prices reversed the declining trend. The bond markets rose slightly as
well. Barclays US Treasury index was higher by 0.3% and US high yield bonds was up
1.0%.
• Apple Reported a Drop in Earnings
Apple Inc. reported a drop in earnings, along with a substantially higher stock buyback program for shareholders that may buy the company some relief from worried investors who have driven the stock down more than 40% in recent months. Apple said it was raising its dividend by 15% and adding $50 billion to its share buyback program. Most of the discussion on the conference call focused on the company’s lower gross margins for the March quarter and a disappointing forecast for the June period. Shares of Apple closed Tuesday’s regular session up 1.9% at $406.13, but remains well below its peak above the $700 in September.
• US Economy Grew at 2.5% in the First Quarter
The US economy sped up in the first quarter of this year, with output expanding at an annual pace of 2.5%. The number was lower than the 3% forecasters had been expecting. Consumer spending was up, despite fears that the lapse of the temporary payroll tax holiday at the start of the year would hold back how much consumers were willing to spend. The government spending was lower.
• US New Home Sales Rose 417K Last Month
New home sales rose in March as near record-low mortgage rates helped the industry complete the strongest quarter since 2008, putting the economy on firmer footing. Purchases of single-family properties climbed 1.5% last month to a 417K annual pace. The median estimate of economists called for March sales to rise to 416K. Shares of homebuilders such as Toll Brothers Inc. rallied as cheaper borrowing costs and rising household formation bolstered demand.
• Bank of Japan Committed to Boosting Inflation
The Bank of Japan said it expected prices to rise as a result of its ambitious stimulus plan, even as a separate report showed deflation accelerated. Japan’s consumer price index fell by 0.5% in March. Prices have now declined for five consecutive months, underscoring the monumental task facing Governor Haruhiko Kuroda. In a bid to spark inflation, Kuroda is injecting money into the economy on a massive scale. Earlier this month, the central bank said it would start purchasing longer-term debt and securities like ETFs at an annual pace of 60 to 70 trillion yen.
Top Stories to Watch This Week
• More Earning Reports
Facebook, Visa and AIG will report earnings.
• Fed Policy Meeting
FOMC will meet this week, nobody expects much change in monetary policy.
• ECB Policy Meeting
European Central Bank is expected to lower its benchmark interest rate to 0.5% to add stimulus to the struggling economy.
• US Job Reports
Economists predicted the hiring to pick up moderately in April after the disappointed nonfarm payrolls increase of 88K in March.
• PMI Manufacturing Index
US and Chinese manufacturing activities continued to expand in March, according to economists.