Mel's Blog

February 15, 2012 Market News

February 15th, 2012 11:33 AM by Mel Samick

Much of the news last week revolved around Greece again. On Sunday, protestors took to the streets to denounce more and tougher austerity measures. The measures would cut wages, pensions, and jobs by 3.3 Billion Euros for this year alone. The Finance Minister of Greece said that the citizens would face even deeper cuts if they choose to leave the EU. Germany is reluctant to support a bailout even with these cuts in place. The Greeks need support from the EU (led by Germany) and the IMF to avoid default by March 20, 2012. They have 14.5 billion Euros in bonds coming due in March.

The employment numbers continue to get better in the United States. Job openings climbed to 3.38 million in December. The biggest increases came from professional and business services and the largest decreases came in the education and health-care fields. The weekly unemployment numbers continued to be encouraging. Jobless Claims fell by 15,000 last week and the four-week average dropped by 11,000. That is the lowest level since April 2008.

While the employment picture is improving, Consumer Credit is shooting up. For the second consecutive month, consumer credit increased, by $19.3 billion in December. In 2011, Consumer Credit was up 3.7%, the largest increase since 2007. Non-revolving debt, such as auto loans and student loans, increased 11.8% in December. Credit card debt was up 4.1%. The increase in Consumer Credit reflects increasing consumer confidence, as well as banks willingness to lend money. Hopefully, that will spill over into the housing market.

At the International Builders Show in Orlando, economists were predicting that the housing market will improve this year; but will still be less than what would be desired. Frank Nothaft, chief economist for Freddie Mac, said, "We're talking about housing sales increasing 2% to 5% off a very low level, so we're moving in the right direction. But it won't feel like a robust market."

Another sign that the economy is improving is reflected in Wholesale Inventories which were up 1 percent in December. However, analysts believe that businesses will not restock their inventories in the first-quarter. They expect the growth to slow down.

The Federal Reserved decided not to vote on the acquisition of ING's online banking division by Capital One this week. This is the first major bank merger to be considered under the new requirement that regulators consider costs to the financial system if the combined firm were to fail. The deal would make Capital One the fifth largest bank in the U.S. by deposits and the 11th largest by asset size, with over $3 billion in assets.

There was good news out of Washington this week as the House voted to approve a ban on congressional insider trading. The ban would prohibit lawmakers and their families and staffs from buying and selling securities based on their knowledge of nonpublic information. The Senate passed similar legislation last week.

This week, there are numerous report releases. Tuesday, the NFIB will release its small business report; Retail Sales, Inventories and Import Prices will be reported as well. Wednesday, the Empire State Index, Industrial Production, Capacity Utilization, and the FOMC minutes will be released. Thursday, the Producer Price Index, Core PPI, and Housing Starts releases. Friday, Leading Indicators, Consumer Price Index, and Core CPI will be made available.


Information provided bt NYCB Capital Markets

Posted in:General
Posted by Mel Samick on February 15th, 2012 11:33 AM



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