For anyone that is in University right now, its always nice to remember that it can only get much worse when you start work… When most university students are off for reading week, the world continues to move. The financial markets only stop for a few select holidays throughout the year so when I graduate, I’d be saying goodbye to a ridiculous amount of holidays. Until I retire, I doubt I’ll ever have that much freedom again… Or unless I become a professor =P So even though I’ve been on a nice relaxing holiday this week, I’ve still kept a passing eye on whats happening…
Market Summary Feb 19 – 22
With negative data having come out throughout the week, the stock indexes looked to be going down for the week. CPI numbers were greater than expected, increasing by 0.4% and core prices by 0.3%. Philadelphia Fed Manufacturing survey numbers were at -24, below an expected -10, and the lowest numbers since February 2001. Along with the negative data, gold and oil prices hit their all time highs this week.
What saved the markets, the S&P 500 and Dow Jones just managed to finish a few points above last week’s close, was news that Ambac bailout plans were close to completion. An Ambac bailout will save the banks from further losses so its no surprise that some of the banks involved in the bailout, UBS, Barclays and Citigroup, all have a lot of debt insured by Ambac… Strangely enough Ambac are still in denial claiming that “a bailout means a company that is struggling to meet its obligations, we’re in no need of a bailout.”
Market Outlook Feb 25 – 29
There will be a ton of important economic data coming out next week. Consumer spending, PPI, Consumer confidence, preliminary GDP and the Chicago Fed Manufacturing survey. On top of that, the earnings for major retailers, Home Depot, Target, Sears, Macy’s and Target will also be released next week.
The markets have averaged a 30% drop during a recession, so even though the stock market is already down around 15% from its peak in October, data that indicates a recession will have no trouble sinking the markets further.
