Weekly Global Market Commentary by jennyyingdi

VIEWS: 5 PAGES: 2

									                                                                                                                                                         Bryan Dooley, CFA &
                                                                                                                                                         Max Fiedler
                                                                                                                                                         (441) 294-7012
                                                                                                                                                         bryan.dooley@lom.com
Weekly Global Market Commentary                                                                                                                          max.fiedler@lom.com
June 25th 2012                                                                                                                                           www.lom.com


    Growth Takes a Holiday - Bryan Dooley, CFA

    Good things never seem to last forever and so it appears to be now with the so-called global economic recovery.
    What had been previously been declared to be a slow but wide-spread economic bounce appears to now have
    officially stalled, at least according to the latest series of economic data showing few signs of encouragement. Perhaps
    more importantly, Ben Bernanke and Co. appears to not quite get it: the Fed is, for the moment standing pat on the
    sidelines content to watch economic growth roll over without an immediate ‘QE3’ fix. But then, perhaps the central
    bank will live to fight another day.

    Risk markets plummeted last Thursday on the disappointing Fed response combined with an unexpected
    announcement by Moody’s Investors Rating Service that they had downgraded the credit rating of 15 major banks,
    despite the fact that most of these banks have vastly improved their capital ratios in recent years. Such actions have
    lately become commonplace for the increasingly dodgy ‘independent’ rating agencies. For the week the S&P 500
    declined by 0.56%, the MSCI Global Stock Index declined 0.20% while bonds were generally flat as the benchmark ten-
    year U.S. Treasury bond started and ended the week at a yield of 1.60%.

    ‘Buy the rumor, sell the news’ turned out to be the correct trade for navigating the risk markets last week as global
    equity markets rallied into the two-day FOMC meeting and then sold off late in the week after the Fed forecasted only
    a meager injection of monetary stimulus rather than the more robust packages supplied in the past. However, those
    looking for hope were somewhat encouraged by Federal Reserve comments which included an admission that the
    central bank needed to lower their growth estimates for 2012 and cited "significant downside risks" to the economy as
    progress in the labor market has been slow. Though the Fed said that it was "prepared to take further action" if
    necessary, some investors were expecting a stronger response. In the end, the Fed only agreed to expand their
    "Operation Twist," program, which was set to expire at the end of this month. The program will now continue until the
    end of the year with the goal of lowering long term interest rates by selling short term debt and using those funds to buy
    longer term debt.

    Now that the Greek election is yesterday’s news and Moody’s had their weekly dose of free advertising by
    downgrading the banks, attention shifted back to the U.S. with investors desperately searching for signs of life on the
    planet. Unfortunately, America did not provide usual basket of buoyant data as housing starts, jobless claims and
    manufacturing numbers all came in lower than expected. Stocks extended losses on Thursday as the Federal Reserve
    Bank of Philadelphia’s economic index signaled the worst contraction in manufacturing in almost a year, while other
    reports showed existing home sales decreased more than forecast and jobless claims topped estimates. The best news
    that could be salvaged from the past week’s series was better single-family housing starts and record low mortgage
    rates enticing some marginal buyers into cheaper homes.

    On the housing front, last week the Commerce Department reported that total housing starts fell 4.8% to a 708,000
    annual pace in May from 744,000 in the prior month. However, digging deeper into the number reveals some strength
    in the single family homes which had been offset by a significant falloff in new apartment building construction. For the
    latest month work began on 516,000 single-family homes implying an annual rate of 3.2%, above April’s level and the
    strongest showing for the year. Knocking the headline housing number down was a 21% decrease in new apartments.
    Also, on the plus side building permits, a reliable predictor of future housing starts, rose to a healthy 780,000 last month
    significantly above the prior month’s tally of 723,000 after revisions.

    On the manufacturing side, last week it was reported that the US Philly Fed manufacturing index fell in June, to -16.6
    from -5.8 in May adding more evidence to the case for a slower growth. This latest data point suggests that falling
    demand in Europe and Asia is taking a toll on the US economy, but that GDP growth still remains positive. Clearly, the
    Philly region’s manufacturing sector is experienced declines in overall activity last month with firms reporting a notable
    falloff in new orders and shipments. Overall, employment remained steady, but average work hours were lower. On
    the plus side, some firms believe that activity will rebound over the next six months according to the report.

This commentary is for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The
information contained herein, has been compiled from sources believed to be reliable, but no representation or warrant, express or implied , is made by Lines Overseas Management Limited
or any of its affiliates or representatives, as to its accuracy, completeness or correctness. Readers should consult with their Brokers if such information and or opinions would be in their best
interest when making investment decisions. This commentary is intended for the recipient only and must not be reproduced or forwarded to any other person without the prior [written]
consent of LOM. LOM is licensed to conduct investment business by the Bermuda Monetary Authority.

             LOM Securities (Bermuda) Limited • The LOM Building • 27 Reid Street • Hamilton HM 11, Bermuda
Going forward, markets are likely to key off further headlines from Europe and in particular the European Summit meeting
this week. Investors will also be eying news of any further progress by the new Greek coalition government and their ability
to successfully renegotiate the critical life-support loan packages from the IMF and ECB. Despite the economic growth
uncertainty and queasy euro situation, well-position companies should continue to gain market share and grow earnings
to some extent. In fact, the ongoing heightened market volatility and periodic risk asset sell offs in reaction to European
news may be providing an attractive entry point on the more defensive, multinational dividend-paying companies.




                  Stock Market Performance                                                                Key Rates and Prices
                                                                                                                                             Month             Year
                      06/22/12          W-o-W           M-o-M          Y-o-Y Currencies                              06/22/12
                                                                                                                                              ago              ago
                                                                                EUR                                       $1.26                $1.27           $1.44
DJIA                     12,641           -1.0%            1.1%         4.4%
                                                                                GBP                                       $1.56                $1.58           $1.61
S&P 500                    1,335          -0.6%            1.4%         3.7% JPY                                        ¥80.43               ¥79.96          ¥80.29
                                                                             CAD                                          $0.98                $0.98           $1.03
MSCI World                 1,206          -0.2%            0.5%        -7.2% CHF                                          $1.05                $1.06           $1.19
                                                                                AUD                                       $1.01                $0.98           $1.06
S&P/TSX                  11,436           -0.8%            -0.1%      -12.4%
                                                                                Fixed Income
BSX                        1,070           0.0%            -2.9%      -10.8%
                                                                                3M LIBOR                                   0.46                 0.47            0.25
                                                                                3M Treasury Bill                           0.08                 0.08            0.02
FTSE100                    5,514           0.6%            2.0%        -4.5%
                                                                                2Yr Treasury Note                          0.31                 0.29            0.37

DAX                        6,263           0.5%            -2.7%      -13.9% 10Yr Treasury Note                            1.68                 1.77            2.98
                                                                                Fed Funds Rate                             0.25                 0.25            0.25
CAC                        3,091           0.1%            0.2%       -20.2%
                                                                                Commodities
Nikkei                     8,798           2.7%            0.8%        -8.6% Gold/oz.                                 1,572.45             1,568.50       1,548.95

Hang Seng                18,995           -1.2%            -0.2%      -13.1% Silver/oz.                                   26.91                28.18           36.35
                                                                             Copper/lb.                                    3.32                 3.51            4.09
Shanghai                   2,261          -2.0%            -4.7%      -14.7%
                                                                             Oil                                          79.76                91.66           95.41




 Global Economic Calendar (June 22th - June 29th)
 Mon: New Home Sales (US), Fed Mfg Survey (US)
 Tue: S&P Case Schiller HPI (US), Consumer Confidence (US), Manufacturing Index (US)
 Wed: CPI (GER), MBA Purchase Applications (US), Durable Goods Orders (US), Retail Sales (JPN)
 Thurs: Unemployment (GER), GDP (GB), Economic Sentiment (EU), Jobless Claims (US), CPI (JPN)
 Fri: GDP (FR), Retail Sales (GER), PMI (US), GDP (CAD), Personal Income & Outlays (US)




This commentary is for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The
information contained herein, has been compiled from sources believed to be reliable, but no representation or warrant, express or implied , is made by Lines Overseas Management Limited
or any of its affiliates or representatives, as to its accuracy, completeness or correctness. Readers should consult with their Brokers if such information and or opinions would be in their best
interest when making investment decisions. This commentary is intended for the recipient only and must not be reproduced or forwarded to any other person without the prior [written]
consent of LOM. LOM is licensed to conduct investment business by the Bermuda Monetary Authority.

             LOM Securities (Bermuda) Limited • The LOM Building • 27 Reid Street • Hamilton HM 11, Bermuda

								
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