Top Stories Last Week
• Global Stocks Rallies Continued as Tension on Syria Eased
World stock markets rallies continued as Syria crisis faded and economic reports from China buoyed investor confidence on Chinese economic rebound. In the week, S&P index rose 2.0%, and MSCI EAFE index rallied 2.8%. The MSCI Emerging Market Index advanced 3.3%. However, gold tumbled by 4.7% , and the SPGC commodity index dropped 0.9%. The bond markets rose as the Ten-year Treasury rate was slightly lower. Barclays US Treasury index was up 0.4%, and US high yield bonds rose 0.5%.
• US, Russia agreed on Syria chemical weapons plan
The US and Russia agreed on Saturday on a proposal to eliminate Syria’s chemical weapons, averting the possibility of any immediate U.S. military action against President Bashar Assad’s government. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov announced the agreement after nearly three days of talks in Geneva. Kerry said that under the pact, Syria must submit a “comprehensive listing” of its chemical weapons stockpiles within one week. In the news conference, Kerry said that U.N. weapons inspectors must be on the ground in Syria no later than November. The goal, he said, was the complete destruction of Syria’s chemical weapons by the middle of 2014.
• US Retail Sales Rose 0.2% Last Month
American consumers boosted their spending at retail stores only modestly in August, indicating that economic growth remains sluggish. Consumers bought more cars, furniture and electronics but held back on most other purchases. Spending at retail businesses rose just 0.2%. It was the smallest gain in four months. But the government said retail spending was stronger in the previous month than first estimated, revising the July estimate to 0.4% from 0.2%. Consumer may be growing more cautious about spending, a trend that could slow economic growth in the July-September quarter. Slow wage growth, modest job gains and higher taxes have limited Americans’ spending power.
• Euro Zone Industrial Production Slumped 1.5% in July
The rebound of the troubled euro zone economy may be in doubt as figures show the industrial sector sliding into reverse during July. The industrial output slumped 1.5% in July from the previous month. The decline, which followed a 0.6% advance in June, was much bigger than expected. The retreat, which was fuelled by a 2.3% drop monthly decline in Europe’s heavyweight economy, Germany, is also likely to stoke fears over the state of the euro zone economy following its modest rebound from recession in the second quarter.
• Chinese Economic Data Show Economic Rebound Gaining Momentum
Chinese exports, industrial output, investment and retail sales all strengthened in August, the latest evidence of an upswing in growth in the world’s second-biggest economy. Coming on the heels of robust export figures and muted inflation, the recent data leave little doubt that the Chinese economy has rebounded after a shaky half-year. Although analysts still question the durability of the recovery, China seems to be able to hit its target of 7.5% growth this year. The national statistics bureau said on Tuesday that industrial output grew 10.4 % year-on-year in August, up from a 9.7% pace in July and beating market forecasts. Retail sales were up 13.4 % YOY, accelerating from 13.2% growth in July. Fixed-asset investment, expressed in year-to-date terms, rose 20.3% in August, up from 20.1% in July.
• Verizon Communications Issued a Record $49 Billion Debt
Verizon Communications is selling $49 billion of bonds, a mega debt sale that is easily the largest in history. It is nearly three times larger than Apple’s $17 billion bond offering in April. Verizon is conducting the offering to finance its $130 billion deal to take full control of Verizon Wireless by purchasing Vodafone’s stake in Verizon Wireless. Verizon had originally planned to issue bonds in eight stages and Wednesday’s offering originally was targeted to raise $20 billion to $30 billion. Verizon, however, priced the debt relatively cheaply, creating a frenzy among debt investors who had already shown strong demand. In the end, there were $90 billion of orders.
Top Stories to Watch This Week
• Fed Meeting
The Fed may reduce its monthly asset purchases by $15 billion, according the economists survey. The so-called tapering may start.
• US and Euro Zone CPI Inflation
The US headline CPI is expected to have risen 0.2% in August. The CPI in the Euro zone is likely to rise 0.1%.
• US Housing Data
August housing starts probably rose 913K and existing home sales may have eased to a 5.15 million annual pace.