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The Weekly Bottom Line : 08/07/2011
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
United States
Friday's employment numbers were disappointing. The payrolls report revealed that in June only 18,000 jobs were added and that the unemployment rate ticked higher to 9.2%.
U.S. politicians continued to wrangle over the debt ceiling and the fiscal austerity measures. Fiscal uncertainty will continue to plague the economic outlook.
Rising inflation rates prompted the European Central Bank and the People's Bank of China to raise interest rates yet again, despite evidence of slower economic growth.
Canada
Canada has recorded stellar job growth in this recovery - almost 600,000 net job gains over two years, with almost 200,000 in the past 6 months alone.
While extremely positive, looking underneath the headline ...
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Analysis: Taboo eases on talk of Greek euro zone exit
(Reuters) - Dismissed as foolish fantasy a year ago, the prospect of Greece leaving the euro zone has become a topic worthy of serious discussion among experts handling the crisis in recent weeks.
In public, the official line remains that no member will exit the single currency bloc, but policymakers are at least willing to exchange views on an intellectual level.
Is thinking the unthinkable a first step toward carrying it out? It would not be the first time euro zone officials have put the impossible into action.
In bailing out Greece, Ireland and Portugal, the bloc has already broken its rule that member states cannot assume the liabilities of others -- the supposed "no bailout" clause.
One of the senior euro zone officials involved in crafting the rescue packages, who is leaving ...
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Analysis: Worries on debt ceiling bubble beneath surface
(Reuters) - As the standoff over raising the government's borrowing limit enters its final month, it's becoming harder for investors to avoid thinking the unthinkable: the world's most trusted borrower could soon renege on its debt.
The U.S. Treasury says it will be forced to default on its obligations if Congress does not raise the $14.3 trillion debt ceiling, which caps how much it can borrow, by August 2.
The Treasury has not specified which bills it wouldn't pay, but the prospect of its missing interest or principal payments on any outstanding debt is a terrifying one for Wall Street.
Even a temporary default would erode the United States' status as the world's most powerful economy and the dollar's role as the dominant global currency.
"It would be catastrophically bad to tell the ...
Title:
Analysis: Worries on debt ceiling bubble beneath surface
As the standoff over raising the government's borrowing limit enters its final month, it's becoming harder for investors to avoid thinking the unthinkable: the world's most trusted borrower could soon renege on its debt.
The U.S. Treasury says it will be forced to default on its obligations if Congress does not raise the $14.3 trillion debt ceiling, which caps how much it can borrow, by August 2.
The Treasury has not specified which bills it wouldn't pay, but the prospect of its missing interest or principal payments on any outstanding debt is a terrifying one for Wall Street.
Even a temporary default would erode the United States' status as the world's most powerful economy and the dollar's role as the dominant global currency.
"It would be catastrophically bad to tell the world that ...
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China bank stocks drop, euro steadies
(Reuters) - Chinese banking shares fell for a second day on Wednesday after a sovereign fund unloaded a stake in two banks, flashing a cautious signal about risk even after the euro clawed back losses endured on Moody's downgrade of Portugal to junk status.
A rally in risky assets has stalled after a week, as investors take a cautious stance ahead of a European Central Bank meeting on Thursday, Friday's U.S. payrolls report and the latest inflation and GDP data from China next week.
However, Japan's Nikkei stock index .N225 bucked the trend, as investors scrambled to latch on to a 1.1 percent climb, which lifted the market to the highest since the first full trading day after a devastating earthquake and tsunami in March.
The MSCI Asia ex-Japan index .MIAPJ0000PUS rose a modest 0.2 ...
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Next quarterly tranche for Greece authorised
Morning Briefing: Next quarterly tranche for Greece authorised
News:
Forex: Euro rallies to 1-month high versus dollar, as Greek tranche approved
Global Markets: Risk appetite lifted by easing fears on Greece, drop in commodities
Greece: S&P says debt rollover may put Greece into selective default
Euro zone: Finance Ministers approve next Greek tranche
Australia: Aussie dips on downbeat retail sales data
Rates in Asia and Indices:
EUR/USD: 1.4578 - 1.4511
USD/CHF: 0.8485 – 0.8463
GBP/USD: 1.6120 - 1.6058
EUR/JPY: 117.75 – 117.13
USD/JPY: 80.91– 80.66
DowJones: 12'582.77 +1.36%
NASDAQ: 2'816.03 +1.53%
S & P 500: 1'339.67 +1.44%
Nikkei: 9’965.09 +0.98%
Shanghai: 2’804.38 +1.63%
Gold: $ 1'494.30
Crude Oil: $ 95.31
Comments:
The euro pushed higher on Monday, up to a 1-month high versus ...
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Weekly Economic and Financial Commentary : 01/07/2011
Weekly Economic and Financial Commentary
U.S. Review
Second Quarter Ends Poorly - Better Times Ahead
Weaker-than-expected consumer spending and income growth for May are causing many economists to further scale back their consumer spending and GDP growth forecasts for the second quarter. Expectations for a second-half growth rebound remain intact, however, although the evidence to date remains scant.
U.S. manufacturing gains remained modest in June if the ISM manufacturing and regional manufacturing surveys are to be believed. On the bright side, capital and durable goods orders rebounded strongly in May increasing the odds of a manufacturing rebound in Q3.
More Disappointment in the Third Quarter?
Economists are counting on a solid third quarter bounce in GDP growth in part ...
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The Weekly Bottom Line : 01/07/2011
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
United States
The austerity measure passed in Greece on Wednesday was crucial for avoiding a default which would have threatened the integrity of the global financial system
Greek debt is concentrated in a handful of French and German banks; the subsequent failure of any one of them could affect U.S. banks as well
While the current approach to Greece does nothing to fix the country's long-term solvency issues, it does buy time for European financial institutions to shore up their capital positions
While the U.S. does not face an imminent fiscal crisis, coming up with a credible plan to tackle its own fiscal imbalances is critical for minimizing the risk of one.
Canada
Looking back at the first few months of the year, ...
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Money Market Funds No Longer the World’s Safest Investments
“The world is full of banana peels, that goes without saying,” the insightful financial writer, James Grant, observed last week. “The difference today, across a range of markets, is you’re not getting compensated for the risks you face.”
Without knowing the context of Grant’s observation, most investors might imagine he was referring first and foremost to the stock market. But he wasn’t. He was referring to money-market mutual funds, or what most folks consider “cash.”
To be sure, Grant is no fan of the volatile, richly priced stock market; nor the bouncy, low-yielding bond market. But it is the utterly placid, zero-yielding “cash market” that seems to concern him the most. The world’s “safest” investments are, suddenly, among the world’s riskiest.
Money market funds have always been ...
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