JULEX WEEKLY REVIEW 12-16-2012 | Global Stocks Gained on Optimism about US Fiscal Deal and Economic Outlook

Top Stories Last Week

  • Global Stocks Gained on Optimism about US Fiscal Deal and Economic Outlook

Global stocks edged higher this week, lifted by optimism that a deal to avert the so-called fiscal cliff would be struck. Positive US housing data also helped move the markets higher.  However, the stocks lost some momentum on Friday as House speaker John Boehner could find enough supports to pass his “Plan B”.  Standard & Poor’s 500 Index gained 1.2%, while MSCI EAFE index was up 1.9% and MSCI emerging market index climbed 0.3%.  Gold continued its decline, down by 2.3% while the GSCI commodity index gained 0.5%.  In the bond markets, Barclays US Treasury index lost 0.4% while US high yield bond gained 0.4%.

  • Fiscal Cliff Negotiation Hit Another Bump

Late Friday, President Obama urged congress to accept a scaled-back deal on taxes and spending, putting off a resolution of larger budget-related issues until next year after House speaker John Boehner failed to rally supports among his conservative colleagues for his “Plan B” which will raise taxes only on Americans making one million or more. The fiscal talks were in disarray and the risk of going over the cliff was rising.

  • US Home Sales Rose 5.9% in November

U.S. existing-home sales gained 5.9% in November with home prices continued to trend up, a positive sign for housing sector recovery.  Existing home sales, which tally completed transactions for single-family houses, townhouses and condominiums, rose to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. The level was 14.5% higher than the 4.40 million units registered in November 2011.

  • Bank of Japan Eased Monetary Policy Moderately, but Faced More Political Pressure for Further Easing

Bank of Japan increased their Asset Purchase Program to 76 trillion yen, up from 66 trillion, while the Credit Loan program was left unchanged at 25 trillion yen, raising the total asset and credit facility program to 101 trillion yen. The key interest rate was unchanged at 0.10%. Bank officials said they would increase Japanese government bond (JGB’s) purchases by 5 trillion yen and also increase purchases of treasury securities by 5 trillion. The central bank said they would ‘examine’ the inflation target. The newly elected Prime Minister Abe may meet with Bank officials to discuss his plans to reflate the Japanese economy to produce 2% inflation. Abe also said that he would like to let yen depreciate to stimulate export growth and end deflation.

Top Stories to Watch This Week    

  • Fiscal Cliff Talks Continue

Republicans and Democrats will continue to negotiate for the last week to avert fiscal cliff.

  • More US Housing data

S&P Case/Shiller Home Price index are expected pose gains; Economists estimate new home sales for November will rise to 379K from 368K in October.