Money Watch Week Ahead
Greece was the word last week. Investors spent the five-day period worrying about a potential default in Greece and the domino effect it could create across the globe. By Friday, German Chancellor Angela Merkel backed off her position, which would have forced a restructuring of Greek government bonds, and instead she said was open to a rollover of the country's debt. (For more on why European leaders were bound to blink on Greece, check out this post.)
Other than the Greek drama, there was further evidence last week that US manufacturing is slowing down and inflation, while historically low, is increasing. Large US stocks barely broke a six-week losing streak, closing only slightly higher. The NASDAQ lost ground on the week.
- DJIA: 12,004, up 0.4% on week, up 3.7% YTD
- S&P 500: 1271, up 0.04% on week, up 1.1% YTD
- NASDAQ: 2616, down 1% on week, DOWN 1.3% YTD (5th consecutive weekly loss)
- July Crude Oil: $93.01, down 6.3% on week (fourth loss in five weeks, down $21 from $114 less than two months ago)
- August Gold: $1539.10, up $9.90 on week
Total bank failures for 2011 = 47 (2 new bank failures over weekend)
FACTOIDS OF THE WEEK: In Ben Bernanke we trust? Check out some of these pearls of wisdom from the Federal Reserve Chairman.
- 10/21/02: "The US government has a technology, called a printing press (or today, the electronic equivalent), that allows it to produce as many US dollars as it wishes at no cost."
- 10/20/05: "House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals."
- 02/15/06: "Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise."
- 02/15/07: "Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on more types of consumer loans and residential mortgages remain low."
- 5/17/07: "We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
- 1/10/08: "The Federal Reserve is not currently forecasting a recession."
IN THE WEEK AHEAD: As Puff Daddy would say, "It's all about the Benjamins"...Ben Bernanke, that is. The Federal Reserve Open Market Committee convenes its two-day policy meeting on Wednesday, and Bernanke holds press conference number two. Of particular interest will be comments about how the Fed is wrapping up the $600 billion bond buying program known as "QE2" and whether BB gives any hint of a potential QE3. Given that the Fed has opened up the aforementioned printing presses over the last three years to gin up economic activity, it wouldn't be out of the question that the central bank's answer to the current slow down is something of a similar vein.
Also on tap this week is housing reports for May, which are expected to show continued malaise.
Mon 6/20:
Tues 6/21:
FOMC Meeting Begins
10:00 New Home Sales
Weds 6/22:
10:00 FHFA House Price Index
12:30 FOMC Announcement
2:15 Bernanke Press Conference
Thurs 6/23:
8:30 Weekly Claims
10:00 New Home Sales
Fri 6/24:
8:30 Durable Goods Orders
8:30 GDP (3rd estimate of Q1-first 2 estimates were +1.8%)
8:30 Corporate Profits
