September 17, 2010

Market Wrap: for the week ending 17-Sep-2010

• Spot gold hit a new all-time high of $1,282.75 before closing the week at $1,274.50 (Reuters)
• US Consumer Price Index increased 0.3% in August on a seasonally adjusted basis (BLS)
• US consumer sentiment at weakest point since August 2009 (Reuters)
• US poverty rate jumped to 14.3% in 2009, its highest level since 1994 (CNNMoney)
• US producer price index increased 0.4% percent in August, seasonally adjusted (BLS)
• US current-account deficit increased to $123.3 billion, or 3.4% of GDP in Q2 of 2010 (ESA)
• A new study says Americans are $6.6 trillion short of what they need to retire (CNBC)
• Euro area annual inflation was 1.6% in August 2010, down from 1.7% in July (Eurostat)
• Greece needs to raise €4.7bn via treasury bills until end of October (Eurointelligence)
• Swiss Franc reached parity versus the US Dollar (Reuters)
• U.S. import prices increased 0.6% in August, after rising 0.1% previous month (BLS)
• The Yen fell from a 15-year high after Japan intervened in currency markets; first time since 2004 (AP)
• Japanese Prime Minister Naoto Kan beat Ichiro Ozawa in a vote for control of the ruling party (Bloomberg)
• US retail sales in August were $363.7 billion, up 0.4% from July and up 3.6% from the prior year (ESA)

Weekly Market Barometers    
Stock-2010-0917   FX-2010-0917

Chart Of The Week
It doesn’t take much to realize how the slowly crumbling US infrastructure affects the lives of everyone living and doing business in this country.  Visitors travelling on US highways, let alone LA freeways or some of the notoriously poor US City streets and neighborhoods must feel like they are in a third world country.  

Please consider this sobering report on America’s infrastructure: US Infrastructure Report Cards

The current administration has been pumping billions of dollars into stimulus spending, repairing some of the poor roads and bridges.  Commendable in a way and yet, this strategy is mostly creating jobs for low-skilled manual labor in the interim; and it is not sustainable in the long run.  The money that could have been used to give incentives for new technologies and manufacturing capacity, is no longer available now.  As much as these infrastructure needs are important and desirable, they can only be sustained from a well functioning and vibrant economy.  We should look towards the developing world that endured poor roads (for decades) when it couldn’t afford them.  As living standards improved along with the growth of their economies, they begun fixing and improving infrastructure.

The world has changed; for the better in some developing countries and for the worse in what is still considered the first world or developed world.  While US roads will continue to be bumpy for a while longer, the global economic playing field has become a lot more level...

US-Report Card

Recommended Read 
Just in time for the 2nd anniversary of the fall of Lehman Brothers, Basel III is out with a set of new regulations for Banks.  Please consider The Money moves on.   More regulation is certainly upon us but it remains questionable whether it can detect AND prevent the next crisis lurking in the dark...

Good luck and good investing!

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