Apr 2, 201210:17 AMBlog: Alaska's Eye on Wall Street
Week in Review, April 2
The S&P 500 gained +0.85% last week to close at 1,408. It was up +12.6% in Q1 making it the best quarter since 1998. The tech heavy NASDAQ was up +18.8% and the 30 DJIA stocks gained +8.4% for the quarter. Europe lagged while Japan's Nikkei gained +19.6% in yen and +11.0% in dollars over Q1.
The China Shanghai stock market continues to weaken on hard landing concerns. It was down -5.2% last week and is up only +2.4% year to date.
Ten year Treasury yields fell slightly last week to 2.21%, but are up over 20 bp year to date.
Ben Bernanke said that drop in unemployment rate could be temporary, hinting that monetary policy will stay easy - translation - expect rates to stay low. ISI notes that Ben doesn't want to see a repeat of the 2010 and 2011 double dip fears that led to stock market "corrections." He sees the unemployment story as more cyclical than structural, so more demand is the answer.
Rumors of an internationally coordinated release of oil reserves are making the rounds. (It's an election year in the U.S. and France). Saudi Arabia has promised to increase production as Iranian exports fade due to sanctions. WTI oil was down almost $4 last week to $103, about where it began the year.
Meanwhile, natural gas futures closed at a 10-year low ($2.15 an MMBTU), after the energy department said inventories rose 57 billion cubic feet, way more than expected.
The Case-Shiller Index of residential property values in 20 cities fell -3.8% from a year earlier. Prices were little changed in January from the prior month, the best performance since July.
ISI notes that "gasoline prices around $4.25 per gallon are a key hurdle price for consumer spending. But to date, there are few signs that consumer spending has yet to hit a brick wall." Consumer spending jumped +0.8% in March while personal income was up +0.2%. The savings rate fell to 3.7% possibly crimping future growth.
Unemployment claims edged down 5,000 to 350,000. It's the lowest claims reading (4 week moving average basis) since June 2008. Bloomberg Confidence among U.S. consumers in March held close to the highest level in a year, underpinned by an improving that labor market.
The all-important March employment report will be out on Good Friday. The stock market will be open but the bond market will close early at 8:00 AM Alaska time. Analysts expect 220,000 new jobs and the unemployment rate to remain at 8.3%.
Major League Baseball opened the season Wednesday in Japan! The Mariners beat the A's 3-1 in Tokyo. Their home opener is April 13.
Chief Investment Officer