Financial News 5/27/12 – 6/2/12

Economy

-Single family homes fell 2% in the first quarter from the fourth quarter according to the S&P/Case Schiller home price index.  The index has reached its lowest level since the start of the housing crisis.  5/30

-Consumer confidence fell well below expectations for May and dropped to their lowest point since January. 5/30

-Retail sales in Spain fell at a record pace dropping 9.8% in April as the country struggles under the weight of its austerity measures.  5/30

-India’s GDP grew 5.3% in the first quarter, its slowest growth in close to a decade and below economists’ estimates.  6/1

-Chinese manufacturing activity for May fell to a lower than expected level. 6/1

-The final revision of the first quarter U.S. GDP dropped the measure to 1.9% below the 2.2% previously estimated.  6/1

-Jobless benefit claims rose by 10,000 to 383,000 and payroll processor ADP reported that private hiring in May rose 133,000, which was below estimates. 6/1

-U.S. car sales skyrocketed in May.  All big three car makers had double digit gains and Toyota’s sales surged 87% a year after the Japanese earthquake.  6/2

-Global manufacturing declined in May in the Euro zone to nearly a 3 year low and the 10th straight month showing manufacturing shrinking. 6/2

-The unemployment rate in the Euro zone reached its highest ever level of 17.4 million people in April and a rate of 11%.  Spain saw its unemployment level soar to 24.3%, and Italy set a record of 10.2%.  This contrasts with the more prosperous northern countries like Germany which saw its unemployment rate fall to 5.4% and Austria with a 3.9% unemployment rate. 6/2

-The May unemployment report gave further support that the economy is struggling to grow.  Employers added 69,000 jobs in May the smallest increase in a year and the past two months hiring numbers were reduced.  The unemployment rate rose to 8.2%. 6/2

-The pace of manufacturing growth in the U.S. has slowed. 6/2

Market

-Gold has fallen 7% this month settling at $1,538.60 on Tuesday as more investors have looked to U.S. Treasurys and German Bunds. 5/30

-Global stocks rose on hopes on improving optimism that Greece will remain in the Euro zone.  The Dow jumped 1.0%, while the S&P 500 rose 1.1%.  In Europe stocks were up 0.8% and China rose 1.2%.  5/30

-World stock markets fell over growing concerns that Spain won’t be able to save its troubled banks. Spanish 10 year debt yields rose to 6.669%. The S&P 500 fell 1.4%, the Dow dropped 1.3%, in Europe Spain fell 2.6%, and continent as a whole dropped 1.5%.   The Euro slumped to $1.2366 its lowest point since June 2010.  Oil fell $2.94 a barrel to $87.82.  Investors flocked to safe havens like U.S. Treasurys and German Bunds.  The yield on the 10 year treasury dropped to 1.627% and the German 2 year bonds saw their yields drop to 0.002%, both record lows. 5/31

-U.S Mortgage rates have continued to hit record lows.  The 30 year fixed rate mortgage averaged 3.75%. 6/1

-Global safe haven debt yields fell still further on the last day of May.  The 10 year U.S. Treasury yield set another record dropping to 1.58%.  German bunds hit a record low as well of 1.207% and the U.K., Switzerland, Denmark, Sweden, Finland and Japan all have 10 year government bond yields lower than the U.S.  6/1

-World stock markets fell yet again on the last day of May on continued European concerns and weakness in the U.S labor market.  The Dow fell 0.2% for the day and is down 6.2% for the month, its worst month in 2 years.  The S&P 500 dropped 0.2% as well and is down 6.3% for the month.  Europe sank 0.3% and skidded down 9.2% for the month.  The weakness in risky assets carried over to commodities as oil sank to $86.53 a barrel, its lowest level this year and gold dropped to $1,562.60.  6/1

-Stocks had their worst day of the year on multiple poor economic reports.  Reduced hiring in the U.S. and increased weakness in Europe led all markets down.  The Dow fell into negative territory for the year falling 2.2% for the day to 12,118.57.  The S&P 500 Fell 2.5%, and Europe dropped 2.4%.  Investors flooded the safe haven of U.S. Treasurys and the 10 year yield dropped to a new record low of 1.467%.  In a reversal of a recent trend Gold rose 3.7%. 6/2

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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