Top Stories Last Week
- Equity Markets Declined on Concerns about Fiscal Cliff
Equity markets declined after the US election as markets shifted attention to the upcoming fiscal cliff and European debt crisis. On the week, Standard & Poor’s 500 Index was down 2.4%, MSCI EAFE index lost 2.2% and MSCI emerging market index declined by 1.3%. Gold bucked the trend, up by 3.2% while the GSCI commodity index rallied 1.5%. In the bond markets, Barclays US Treasury index gained 0.6% while US high yield bond lost 1.1%.
- Obama Won Re-election
President Barack Obama narrowly won re-election, capturing 50.5% of the popular votes and overcoming public doubts about his performance on the economy — doubts that challenger Mitt Romney appeared well-positioned to exploit. The Democrats kept control of the Senate and Republicans retained majority of the House. The divided government faces major challenges before year end. The victory is also a test of Obama’s ability to forge a productive second term in a divided political system.
- Chinese Leadership Transition
On the heels of the U.S. election, the Chinese Communist Party began its own leadership transition Thursday with promises to double income over the next decade, stamp out corruption and allow more democracy — at least within the ranks of the party. President Hu Jintao spoke at the start of a congress that will culminate in his retirement and the appointment of a new generation of leaders after a transition marked by scandal and anxiety about the party’s future. He told the delegates that China faced a period of major change and “complicated domestic and international circumstances.” Vice President, Xi Jinping, is all but certain to take over as party chief after the congress ends next week and to take the reins as president in March.
- ECB and BOE Kept Interest Rates Unchanged
At its regular monthly monetary policy meeting, the ECB’s governing council left its benchmark interest rate at 0.75%, a record low. Mr. Draghi was satisfied with the progress the member countries made to resolve the crisis and seemed to leave the door open for a rate cut or other measures to stimulate growth without committing to one.
The Bank of England also kept its benchmark rate at a record low of 0.5% and left its bond-purchasing program at £375 billion unchanged, after the British economy emerged from a double-dip recession in the third quarter. The UK economy grew 1%, helped by Olympics ticket sales, and some economists said the outlook was gloomy.
Top Stories to Watch This Week
- US Retail Sales
US Retail Sales is expected to gain 0.4% in October after an increase of 1.1% in September. US consumers are getting more confident as equity markets rallied and housing market stabilized.
- Eurozone Finance Ministers Meeting
Eurozone finance ministers will discuss Greece and the possibility of unfreezing aid on Monday. Spain is also on the agenda
- Greek Budget Vote
Greece’s government pushed a tough budget of spending cuts and tax increases for 2013 through Parliament early Monday, moving a step closer to securing the crucial rescue financing from Eurozone countries.
- More Earnings Reports
Cisco, Walmart, GAP, Sears will report earnings.