August 13, 2010

Market Wrap: for the week ending August 13, 2010

• US consumer sentiment climbed to 69.6 following a reading of 67.8 in July (Reuters)
• US CPI increased 0.3% in July on a seasonally adjusted basis (BLS)
• US retail sales in July 2010 were $362.7 billion, up 0.4% from June and up 5.5% from July 2009 (ESA)
• GDP increased by 1.0% in the Euro area (EA16) and the EU27 during the Q2 of 2010 (Eurostat)
• Germany GDP expanded 2.2% in the second quarter compared with the previous three months (FT)
• Bank of England lowers economic growth forecast and raises inflation expectations for 2011 (AP)
• US trade deficit in June 2010 increased 18.8%, to $49.9bn (ESA)
• US imports from China reached $32.9bn in June, the highest since October 2008 (Economist)
• Fed downgrades outlook, target range for the federal funds rate remains at 0-0.25% (FT)
• German exports were €86.5bn ($115bn) in June, up 3.8% from the previous month (AP)
• China’s goods-trade surplus almost trebled in the year to July, reaching $28.7bn (Economist)
• German imports were €72.4 billion in June, 31.7% increase on the year and the highest level since 1950 (AP)
• Freddie needs another $1.8bn-US home loans bail-out now totals $148.3bn (FT)
• The Bank of Japan held its key policy rate steady at 0.1%, as expected (Bloomberg)

Weekly Market Barometers    
Stock-2010-0813   FX-2010-0813

Chart Of The Week
Courtesy of Political Calculations comes this excellent chart for the week.  We looked at this year’s US Budget proposal with plenty of skepticism before.  In our market insights edition of February 6 of this year, we concluded that “20 Million new jobs will have to be created in the next 10 years and, as per forecast, the US economy will have to grow from about $14 trillion to about $24 trillion by 2020, an average rate of almost 5% per year” if the projections were to come true - quite a tall order (if you’re not China who can seemingly order economic growth). Since there are no noticeable changes in the employment landscape, particularly with regard to the long-term unemployed, it remains questionable how fast consumers can pick up the slack and spend their way to prosperity again.


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Good luck and good investing!

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