Julex Market Weekly 11-03-2013 | Still No Tapering

Top Stories Last Week

• Global Stocks were Mixed

Global stocks were traded mixed even the corporate profits have been strong and the Fed decided not to taper the quantitative easing after their two-day policy meeting. In the week, S&P index rose 0.1%, but MSCI EAFE index dropped 1.4%. The MSCI Emerging Market Index declined by 0.6%. Gold tumbled 2.9%, and the SPGC commodity index dropped 1.9%. The bond markets declined as well. Barclays US Treasury index was down by 0.9%, and US high yield bonds dropped 0.4%.

• No Tapering from the Fed

The Federal Reserve agreed not to pare back its extraordinary stimulus, citing a recent slowdown in the housing recovery and federal spending cuts. The Fed said it would continue to purchase $85 billion a month in Treasury bonds and mortgage-backed securities to hold down long-term interest rates and stimulate economic growth.
The move was widely expected after Fed policymakers stunned financial markets last month by putting off a reduction in purchases amid only modest improvement in employment and a budget battle in Congress. The Fed re-iterated its stand that the timing of tapering will be data-dependent.

• US Retail Sales excluding Auto Increase by 0.4%

Retail sales in the U.S. excluding autos climbed in September, indicating households were sustaining the economic expansion before the government shutdown shook confidence. The 0.4% gain in purchases excluding vehicles followed a 0.1% increase in August and matched the median forecast of economists. However, the total sales dropped 0.1%, restrained by the biggest decrease at auto dealers.

• Bank of Japan Kept Super Ease Monetary Policy

The Bank of Japan maintained its unprecedented easy monetary policy and forecast inflation will reach its target. BOJ continues a pledge to expand the monetary base by 60 trillion to 70 trillion yen ($711 billion) a year. Japan will see average inflation of 1.9 percent in the 2015 fiscal year, according to the BOJ’s median forecast.. The BOJ said Japan is on track to hit its inflation target, with the economy projected to grow faster than potential over the forecast period through March 2016.

• China’s Manufacturing Sector Continues Improving

China’s manufacturing sector strengthened further in October, though mixed signals in important areas including export orders suggest any recovery in the world’s second-largest economy will be gradual. China’s official Purchasing Managers’ Index (PMI) reached an 18-month high of 51.4 in October. A separate private sector HSBC/Markit PMI rose to a seven-month high of 50.9.

• US Factories Grow Faster

Manufacturing activities in the U.S. expanded at the fastest pace in 2½ years last month, getting a boost from exports and a strong year for the auto industry. The ISM manufacturing index rose to 56.4 in October. That’s up from 56.2 in September. It was the fifth straight gain for the index. A measure of new orders rose slightly, while a gauge of production fell but remained at a high level. Factories added jobs, though at a slower pace than the previous month.

Top Stories to Watch This Week

• US Job Report

US employers are likely to add 140K jobs in October, unemployment rate inches up to 7.3% due to government shutdown.

• ECB, RBA and BOE Meetings

European Central Bank, Reserve Bank of Australia and Bank of England are expected to keep monetary policies unchanged.


The first read of US GDP growth is likely to show third quarter annualized growth rate of 2.0%.

• More Earnings Reports:

This week will be the last week of earning season. Major companies reporting earnings this week include:

CME Group Inc.
Hertz Global Holdings Inc.
Kellogg Company
Tesla Motors Inc.
Duke Energy Corp.
Time Warner Inc.
Whole Foods Market Inc.
Groupon Inc.
The Walt Disney Company
The Wendy’s Company