December 17, 2011

Market Wrap For The Week Ending 16-December-2011

Here is our latest issue of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Weekly Chart
• Precious Metals, a quasi Religion?

Weekly Snapshot
• The Italian 2 year yield is down to 5.29% - the 10 year yield is at 6.59%.
• The Spanish 2 year yield is down to 3.46% - the 10 year yield is down to 5.31%.
• The Euro fell below 1.3000 vs US$ but recovered to close at 1.3045 on Friday
• U.S. initial jobless claims fall to 366,000, the smallest number since May ’08
• Euro area annual inflation was 3.0% in November unchanged compared with October
• U.S. CPI increased 3.4% over the last 12 months before seasonal adjustment
• U.S. current account deficit decreased to $110.3 billion or 2.9% of GDP Q3 of 2011
• U.S. industrial production decreased 0.2% in November versus +0.7% in October
• OPEC ministers likely to keep oil production steady at 30M barrels a day
• IFO cut forecast for Germany, projecting GDP of +3% in 2011 and only +0.4% in 2012
• U.S. retail sales were $399.3 bn, up 0.2% from October and up 6.7% from one year ago

Weekly Barometers

2011-1216   fx2011-1216

Weekly Chart
2011 has been a bumpy year for stock investors.  In the U.S. the punters will be happy if they can break even for the year.  Yet, if you feel U.S. markets have been volatile, think again.  Most emerging markets have had an even tougher year.  Investors in China probably won’t be too happy with the Shanghai Stock Index currently down over 20% for the year.  But that pales in comparison to the parabolic rise and fall of Chinese stocks since 2006.  The rise and fall was so dramatic that you can actually fit the shape of an Eiffel tower into the chart (see below). 


Given these wild price swings, we should feel relatively safer investing in U.S. stocks.  The direct comparison of Chinese equities with the S&P 500 makes the impact of the credit crisis on our turf look like a lame duck event. So then, are we better off investing in U.S. markets?  Since 2006 Chinese equities are still up about 80% while U.S. stocks barely broke even.  You may have lost your sanity along the way but if you had the courage to hold on, 80% over a 5 year period isn’t all that shabby.


Precious Metals, a quasi religion?  
Precious Metals have had a difficult few months. Gold is off 16% from its high, Silver almost 40% down from the record high established in May of this year.  But things aren’t just difficult for Gold and Silver, Mark Dow predicts more head wind ahead for 2012.  Please consider: Another Grim Year for 2012–Even For Commodities.

Good luck and good investing!

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