Mel's Blog

July 26,2012 Market News

July 26th, 2012 9:14 AM by Mel Samick

The Olympics were invented as preparation for war. For the young men of Ancient Greece, the quadrennial sporting tribute to the god Zeus was also rehearsal for armed conflict. The games equipped young men with a spirit of self-sacrifice and the stamina which underpinned the Greeks’ supremacy in battle. Today, the Olympic Games is a major international event featuring thousands of athletes participating in a variety of competitions. The Games are considered to be the world’s foremost sports competition and more than 200 nations participate.

In 1948, London was a broken city barely crawling out of the Second World War. The Blitz had reduced whole neighborhoods to rubble. The Olympic Games, which were held in London that bleak summer, were about as welcome as a sunburn. The Olympics went on, of course, and 64 years later, as the Games return there on July 27, it is almost impossible to reconcile that gray place with today's London: a vibrant mash-up of tradition and innovation, a center of global finance - even though perched at the edge of a Europe in crisis - and a magnet for migrants from all over, one of the most ethnically diverse major cities in the world. London's 2012 Olympic Games will give Britain's beleaguered economy a shot in the arm.

As England hopes the Olympics will help its economy, worries about Spain swirled as the euro fell one percent against the dollar last Friday, and Spain’s 10-year was yielding a record 7.27 percent, a level that raises concerns about the country’s ability to fund itself. Last week, Spain announced an austerity plan and tax increases. The debt-laden Valencia region asked for financial aid, spurring fears that the Spanish government itself will need a bailout. What’s a European debt crisis without Greece? Greek coalition leaders agreed to meet this week to hammer out almost 12 billion euros worth of austerity cuts demanded by the near bankrupt country's lenders after a deal proved elusive at an initial round of talks last Wednesday. Clinching agreement on the unpopular cuts is likely to be Greek Prime Minister Samaras's first major test since assuming power last month. His government has made a positive first impression on European partners abroad, but has angered critics at home who accuse it of not pushing aggressively enough for changes to the bailout.

Domestically, stocks finished near session lows last Friday, breaking a three-day winning streak, sparked by fresh fears over the euro zone sovereign debt crisis and after a batch of mixed earnings reports. Stocks had rallied for most of the week thanks to gains in techs, and after the Federal Reserve Chairman, Ben Bernanke, said the Central Bank stands ready to act if needed. The Dow and NASDAQ indexes posted modest gains for the week. The Dow gained .36 percent last week to finish at 12,822. The NASDAQ gained .58 percent to finish at 2,925. The number of Americans filing new claims for unemployment benefits rebounded last week, pushing them back to levels consistent with modest job growth. The Consumer Price Index fell 0.3 percent in May and June's reading was in line with economists’ expectations. Last month, overall inflation was held back by a 2.0 percent drop in gasoline prices, offsetting a 0.2 percent rise in food prices. Gasoline prices at the pump have declined about 53 cents from their peak of around $4 a gallon in April, easing some of the strain on household budgets amid stagnant wages.

Americans bought fewer homes in June than May, indicating the weak economy could make a modest housing recovery choppy. Sales are up 4.5 percent from a year ago, evidence that the market is still recovering. But the annual sales pace is below the 6 million that economists consider healthy. The number of first-time buyers, critical to a housing recovery, made up just 32 percent of sales. That's down from 34 percent in May. In healthy markets, first-time buyers make up more than 40 percent of the market. The housing market is also being supported by record-low mortgage rates. The 30-year fixed-rate average fell to a historically-low 3.53 percent. The 15-year fixed-rate average was 2.83 percent and the five-year ARM dropped to 2.69 percent. The rough housing market really makes me want a nice cold one.

What’ll you have? This is a complicated question to answer when you're the leader of the free world, where every action and every decision is analyzed. Yes, when you're the President of the United States even your choice in beer is scrutinized. Recently at a bar 30 miles outside of Cleveland, the President is seen drinking a Miller Lite draft and later, a bottle of Bud Light. The choice may come as a surprise to some beer fans, who might expect President Obama to select a craft beer, especially since he has been known to brew his own beer at the White House. Cleveland based Great Lakes Brewing Company would love to show the President the impact of breweries on the local economy. In recent years, Great Lakes has been able to grow and provide jobs in a struggling economy.


Information Provided by NYCB Capital Markets

Posted in:General
Posted by Mel Samick on July 26th, 2012 9:14 AM



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