Top Stories Last Week
• US Stocks Reached Fresh Records
US stocks continued to move higher, reaching fresh records, amid strong bank earnings and a reassuring Bernanke’s testimony before Congress. In the week, S&P index rose 1.0 %, and MSCI EAFE index climbed 1.4%. The MSCI Emerging Market Index rallied by 0.9%. Gold continued to rise 0.8%. The SPGC commodity index climbed by 1.2% as oil prices continued rising. The bond markets gained as well. Barclays US Treasury index was up by 0.9%, and US high yield bonds rose 1.4%.
• China’s GDP Growth Slowed to 7.5%
China’s GDP growth slowed in the second quarter to 7.5% year-on-year as weak exports weighed on output and investment, challenging Beijing’s resolve to revamp the world’s second-biggest economy in the face of deteriorating data. The latest year-on-year economic growth reading compared with the median forecast in a Reuters poll of 7.5% and showed the pace of economic activity easing from 7.7% annual growth in January-March. The new Premier Li Keqiang has been prominent in pushing for economic reform over fast-line growth, suggesting the government is in no rush to offer fresh stimulus to revive an economy in a protracted slowdown.
• Tech Sector Earnings were Disappointed, but Banks Reported Strong Results
Microsoft reported poor sales of its Windows 8 software and Surface tablet, Google saw its cost-per-click metric decline, and eBay offered a disappointing outlook. However, US banks reported stronger-than-expected results. Goldman Sachs doubled its profit. Morgan Stanley’s bottom line swelled by 66%. Bank of America reported a 63% profit rise. Citigroup’s profits rose 42%.
• Bernanke Reassured Loose Monetary Policies Before Congress
In two days of testimony before Congress, Federal Reserve Chairman Ben Bernanke told Congress that the economy is still “vulnerable” and there is no “preset course” for the Fed to reduce asset purchases. He viewed the current rise in interest rates as “unwelcome” as the Fed is not talking about tightening.
• Detroit Filed Bankruptcy
Once the symbol of American industrial might, Detroit became the biggest U.S. city to file for bankruptcy, its finances ravaged and its neighborhoods hollowed out by a long, slow decline in population and auto manufacturing. The filing put the city on an uncertain course that could mean laying off municipal employees, selling off assets, raising fees and scaling back basic services such as trash collection and snow plowing.
Top Stories to Watch This Week
• US Existing Home Sales
Existing home sales should rise to 5.5MM annual pace in June, a 6% increase, according to economists.
• US Durable Goods
Durable goods orders are likely to rise 1.7%, according to economists.
• More Q2 Earning Reports
Kimberly-Clark, Halliburton and Texas Instruments report second-quarter results.