01/30/12: In the markets, as in life, there are no guarantees but everyone is entitled to their opinion. Here’s my opinion on four major decisions that could have impact on markets this week:
First, here’s a “week-in-a-glance” list of key data items over the next five days. Beginning today, the U.S. reports on personal income and spending for December. Tuesday brings the Florida Republican primary, the S&P/Case-Shiller home price index for November and the release of the Conference Board’s consumer confidence index for January. On Wednesday, auto manufacturers release their sales of new vehicles for January, the Institute for Supply Management posts its manufacturing index for January and construction spending numbers for December are published. On Thursday and Friday, respectively, the U.S. issues numbers of weekly jobless claims and the government releases the January employment report along with data on factory orders in December.
Europe, more Europe and still more Europe. EU leaders should agree today on a permanent eurozone rescue fund and a balanced budget rule. Greece will also be “front and center” in the talks, though leaders are trying to keep most of the conversations to job creation and growth. Greece and its private creditors are apparently close to a debt-swap deal.
In addition to Europe, concerns are beginning to rise on Japanese sovereign debt as well. In a very interesting article today in the Wall Street Journal, the cost of insuring against default on Japanese government bonds has risen sharply in recent weeks. Overall, Japan has had a very “sedate” bond market for several years despite fiscal deficits that are larger than Greece and Italy. Investors are watching closely two main factors: (1) the rating agencies, and (2) the Japanese parliament. Both S&P and Fitch have put Japan’s government debt on watch for possible downgrade and the Japanese parliament is debating the possibility of a sales tax increase by March. It appears that this may be a “new chapter” in how Japanese sovereign debt is viewed (with more scrutiny) due to the fact that the current fiscal situation appears unsustainable long term.
This is a busy week for companies going public. Eight stock offerings are “ramping up” in the latter stages of this week, more than twice the amount in all of January so far. The list is heavy on energy- related and technology deals. Further, two drug developers are also seeking to list on Nasdaq. Most importantly, a well-known social media site could file its paperwork this week to begin the process for an initial public offering.
Feel free to contact me with any questions or concerns about the markets. I would be delighted to talk with you. You can call or email here.
Senior Vice President
Note: The opinions voiced in this material are for general information and are not intended to be specific advice. Any indices such as the S & P 500 can’t be invested into directly. Past performance is no assurance of a future result.
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