Jan 9, 201211:45 AMBlog: Alaska's Eye on Wall Street
Week in Review, Jan. 9, 2012
The equity markets started the year off on the right foot. The S&P 500 gained +1.6% last week to end at 1,278. Across the pond, the European Stoxx 600 was up +1.2%. Yields climbed almost 10 bp on 10-year U.S. Treasury bonds to 1.96%.
The unemployment rate in the U.S. fell to 8.5% last month (the lowest level since February 2009) and 200,000 new jobs were added to payrolls. It is good news, but sobering to remember that while 1.6 million jobs were added last year, 9 million jobs were lost during the recession. Other economic data out last week surprised on the upside.
The Federal Reserve said it would soon start publishing detailed forecasts on interest rates. Until now they have given generally rough guidance about which direction rates are likely to take. It is a big move towards greater transparency, though some argue it could cause confusion and box in the Fed.
Eastman Kodak started preparing for a bankruptcy filing that would allow it to stay in business while it deals with cash-flow problems. The company hopes that selling some patents will bring in enough money to avoid Chapter 11.
Europe looks weak. Unemployment is 10.3%. European banks stocks were down -3% last week compared to U.S. banks which gained +4%. The ECB intervened to keep Italian yields below 7%. The euro lost -2% against the dollar.
It's on to the New Hampshire primary (January 10). Mitt Romney eked out the narrowest of victories (by eight votes) in the Iowa caucuses over Rick Santorum last week. Michelle Bachman dropped out. The Republican field is slowing narrowing.
This week watch for the Fed's beige book on Wednesday and retail sales Thursday (consensus is up 0.3%). On Friday, we get a look at consumer confidence which is expected to be up marginally (from 69.9 to 71.5).
APCM is sponsoring a Commonwealth North lunch this Wednesday, January 10th, at the Dena'ina Center. It is the annual 2011 Alaska's Asset Review. It is open to the public. We have a table, so clients please let us know if you would like to attend.
Jeff Pantages, CFA
Chief Investment Officer
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