Top Stories Last Week
- Stock Markets Rose for a Second Week
Stock markets rose slightly for a second week amid uncertainties on fiscal cliff negotiations. Investors were cautiously optimistic about a possible resolution by the end of the year. Standard & Poor’s 500 Index rose 0.6%, MSCI EAFE index was up 1.0% and MSCI emerging market index climbed 0.3%. Gold lost its lust, down by 2.0% while the GSCI commodity index was flat at 0.1%. In the bond markets, Barclays US Treasury index gained 0.6% while US high yield bond gained 0.7%.
- Greek was Getting Closer to Receiving Aid
Euro zone Finance ministers and the International Monetary Fund resolved some of their differences over a bailout for Greece early Tuesday with measures bringing closer the release of long-delayed emergency aid. The parties reached an agreement after their third meeting in three weeks aimed at finding alternative ways of giving Greece relief in light of opposition by creditors like Germany and the Netherlands to so-called haircuts that would involve forgiving some Greek debt. The decisions “will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece,” ECB president Mario Draghi said. For Greece, the agreement means euro zone ministers have unlocked loan installments totaling 43.7 billion euros.
- US GDP Growth was Revised Up to 2.7% in Q3
US gross domestic product – the broadest measure of goods and services produced – advanced at an annual pace of 2.7% in the third quarter. The revised figure is up from the previously reported 2.0% and nearly matched economists’ expectations for a 2.8% increase. But the factors that led to the upward revision – growing inventories, strong federal spending and robust exports – may not last. The economy could struggle to grow in the fourth quarter as Superstorm Sandy and the fiscal cliff create a drag on the economy.
- The Negotiation to Avert Fiscal Cliffs is in Stalemate
The negotiations over averting the fiscal cliff of budget cuts and higher taxes was in stalemate, with President Obama calling for a $1.6 trillion tax increase, $50 billion in infrastructure spending and new power to raise the federal debt limit. The Republican had rejected the proposals in the past. House Speaker John Boehner said that two weeks of negotiations had yielded “no substantive progress” toward a solution.
Top Stories to Watch This Week
- Fiscal Cliff Negotiation
Republicans and Democrats will continue to negotiate to avert fiscal cliff.
- US ISM Manufacturing Index
The ISM manufacturing index is expected to decline slightly to 51.0, still in expansion territory.
- Nonfarm Payrolls
The nonfarm payrolls in November are expected to rise just 50k and unemployment rate to tick up to 8.0%. Super Storm Sandy took its toll in job markets.
- Bank of England and European Central Bank Meetings
Both BOE and ECB will be likely to stay pat on interest rates.