Feb 13, 201209:55 AMBlog: Alaska's Eye on Wall Street
Week in Review, Feb. 13
Stocks lost some ground last week. The S&P 500 shed -0.17% and is now up +6.76 YTD. Bond yields rose slightly with the 10 year Treasury up 6 bps, to yield 1.99%. By the way, three month Treasury bills now yield an eye popping 0.08% - that's up from 0.01% at year end!
Not much data last week except for consumer confidence out on Friday. It dropped to 72.5 from 75 the previous month. The 22 cent jump in gasoline prices this year - back to the old highs of $3.75 per gallon - may crimp consumer spending and confidence.
The two-month extension of the Social Security payroll tax cut, unemployment benefits, and the Medicare "doc fix" expires at the end of this month. Time is running short for reaching an agreement, especially since Congress won't be in session the week of February 20. Tick, tick, tick.
Over the past several weeks, the overall situation in the European money markets has been improving, as rates and credit spreads move slightly lower each day. Meanwhile the soap opera that is Greece continues to unsettle the markets and yet another deadline looms this week.
Mario Draghi, president of the European Central Bank, said the fourth quarter was very weak as the ECB met and kept its benchmark interest rate at 1%.
The Bank of England, to bolster the fragile British economy, said it will purchase an additional £50 billion in sovereign debt. "The committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term." Sounds like the Federal Reserve!
Bloomberg reports that the U.S. has reversed a decades-old trend of increasing dependence on foreign energy and is closer to complete energy self-sufficiency than it has been in nearly 20 years. Data from the Energy Department shows that through the first 10 months of 2011, the U.S. met 81% of its energy requirements from domestic sources.
Next week is chock full of economic reports. Retail sales on Tuesday are expected to be up +0.7%. We will get the minutes of the last FOMC meeting on Wednesday and industrial production - expectation is up +0.7%. The PPI (+0.4%) is out Thursday. The CPI is out Friday and expected to be up +0.3% last month and +2.8% YoY, while leading indicators should jump +0.5%.
The most important thing happening next week? Pitchers and catchers report Sunday February 19
Jeff Pantages, CFA
Chief Investment Officer
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