Financial News and Notes 1/8/12 – 1/14/12

Economy

-Household borrowing gained steam late in 2011 with the Fed reporting that borrowing in the form of credit cards, car loans, and student loans rose 9.9% in November. The move could signify a reduction in the household belt tightening which has been in effect since 2008 and has hindered the economic recovery. 1/10

-The number of job openings per unemployed worker rose in November. 1/11

-Businesses continued to add to their inventories in November as they rose 0.3% for the second consecutive month. 1/13

-The ECB left rates unchanged after their most recent meeting saying that business activity had stabilized, but said there was the potential for cuts in the future. 1/13

-US retail sales barely rose, increasing by 0.1% in December, falling well short of expectations and ending 2011 on a sour note. 1/13

Corporate

-Hostess is filing for chapter 11 again after doing so only 3 years earlier. 1/10

-Alcoa kicked off earnings season with better than expected results. While the aluminum producer reported a loss its revenue is up and it offered an upbeat forecast. 1/10

-Fannie Mae’s CEO Michael Williams announced he was stepping down once a successor was found. 1/11

-European regulators cast doubt on the completion of the merger between NYSE Euronext, owner of the NY stock exchange, and Deutsche Borse urging that the deal be rejected. 1/11

-RBS said it would cut 3,500 investment banking jobs and close down four division of that business. 1/13

-After losing its patent on its heart drug, Novartis announced it is dropping 1,960 jobs and will restructure in the U.S. 1/14

-J.P. Morgan saw its fourth quarter profit dip by 23% sitting a slowdown in investment banking and its trading business. 1/14

Regulatory

-The head of the Swiss National bank, Philipp Hildebrand, resigned after controversial currency trades were made by his wife last summer prior to the central bank intervening heavily in the currency market. 1/10

Market

-Italy’s 10 year government bonds have remained above the 7% yield level since late December. That level is considered unsustainable over time. 1/10

-German 6 month bills’ yield has moved into negative territory resulting in investors paying Germany for the country’s ability to borrow. 1/10

-US markets climbed to their highest level since late July on a positive start to earnings season. The Dow rose 0.6% to 12,462.5, the S&P 500 gained 0.9% finishing at 1,292.1. Europe rose 1.8% and china saw gains of 2.7%. 1/11

-The Euro dropped to $1.27 for its lowest value since August of 2010. 1/12

-Germany saw its economy contract in the 4th quarter by 1% on an annualize basis; increasing the chances of a recession for the country that has largely been the driver for the Euro zone bloc. 1/12

-S&P downgraded France, Austria, and seven other countries’ sovereign debt. France and Austria are the most recent to lose the highest triple A rating by the credit agency. The downgrades could also make it harder for the European bailout fund to help problem nations. 1/14

-U.S. stocks rose for the week. The Euro fell against the dollar once again to $1.267 as confidence dwindled in the currency bloc over S&P’s downgrades. The 10 year treasury finished at 1.853%. 1/14

-30 year mortgage rates dropped to their lowest level ever with rates falling to 3.89%. 1/14

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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