Top Stories Last Week
• Global Equities Rose among Debt Ceiling Negotiation and Yellen Nomination
Global equities rose for the week amid the optimism on the fiscal negotiation. President Obama’s nomination of Janet Yellen to be next Fed chairman triggered the speculation that the tapering will be slow. Alcoa kicked off the third-quarter earnings season with a positive note. In the week, S&P index rose 0.8%, and MSCI EAFE index climbed 0.9%. The MSCI Emerging Market Index rallied 1.6%. Gold tumbled 3.1%, but the SPGC commodity index rose 1.2%. The bond markets were little changed. Barclays US Treasury index was down slightly by 0.2%, but US high yield bonds was up 0.4%.
• Janet Yellen was Nominated as the Next Fed Chairman
President Obama announced the nomination of Janet Yellen to lead the Federal Reserve system, calling her “one of the nation’s foremost economists and policy makers.” Financial markets have been anxious over who would take over from Mr. Bernanke and taper the ultra-loose monetary policy. Analysts favored Ms. Yellen’s selection, seeing her as a welcome continuity after Mr. Bernanke. Ms. Yellen has been a supporter of the expansionary monetary policy and has been dovish in her votes.
• The White House and Republicans Started Negotiations After 11 days of Government Shutdown
The gridlock over government spending gave way to a stream of negotiations, as White House officials and Republicans in Congress worked to hash out a plan to restore government funding and lift the debt ceiling, and also initiate a new round of budget and deficit-reduction talks. But the task of sealing a deal was complicated by division between Senate and House Republicans, who were conducting separate negotiations. Still, for the first time in the 11-day shutdown, lawmakers expressed optimism that a deal could be reached in the next several days. Meanwhile, the calendar crept closer to Oct. 17, the debt ceiling deadline
• Bank of England Kept Interest Rate Unchanged
The Bank of England kept its monetary policy unchanged as expected, sticking to its commitment to keep interest rates steady while unemployment remains high. The central bank made no change to its £375 billion of asset purchases or to its main interest rate – which has stood at a record-low 0.5% since March 2009. Britain’s economy has shown signs of further recovery this month, diminishing the prospect of more asset purchases.
• Alcoa Kicked off the Q3 Earning Season
Aluminum producer Alcoa reported better than expected earnings, as strength at the unit that sells auto parts and other complex items helped offset lower metal prices.
After-tax operating income was $8 million in that segment, compared with a loss of $14 million a year earlier because of productivity gains. Alcoa has long been the first company on the S&P 500 to report quarterly results.
Top Stories to Watch This Week
• US Government Shutdown Continues
The optimism grows as the White House and Republicans are working on a plan to reopen the government and raise the debt limits.
• Chinese Economic News
China will report GDP growth, retail sales, inflation, and industrial production. Most economists expect some improvements.
• Euro Zone Inflation
Euro zone inflation is likely to remain at 1.1% YOY, below the ECB 2% target.
• Earning Reports
More companies are scheduled to report earnings this week. Here are some of the large companies:
Tuesday
Intel. Johnson & Johnson, Coke, Citigroup, Yahoo
Wednesday
American Express, Bank of America, eBay, Pepsi
Thursday
Goldman Sachs, Google, Las Vegas Sands, Philip Morris, Verizon
Friday
General Electric, Morgan Stanley