- The most important figure of the past week came out on the last day of the week – U.S unemployment numbers. The jobless rate declined from 8.1 % to 7.8% (12.1M/ (115.6M+27.3M+12.1M) as 114,000 jobs were added. This definitely boosts Obama’s campaign one month before the election, especially after his poor debate with Romney. Romney on the other hand disputed that the lower unemployment rate is only due to a decrease of the workforce as a result of discouraged workers who stop looking for employment.
- The markets responded favourably as share prices increased to the positive four year low unemployment data, while safe heaven securities such as Treasury notes tumbled. Gold retreated by 0.6% to $1,777 an ounce given the positive news. However gold will most likely remain a top commodity choice as the possibility of a “fiscal cliff” approaches.
- Another election campaign coming to an end south of the border is that of Hugo Chavez Venezuela’s president and Henrique Capriles Radonski – the opposition candidate who has a lead in the polls. This could bring a lot of change to Venezuela’s currently nationalized financial institutions and utilities/steel companies. If Capriles takes office, he will decentralize control and dismantle policies such as currency and price controls while allowing more foreign direct investment to boost the economy.
- On the other side of ocean, European markets also rose as the European Central Bank reinforced its willingness to buy Spain’s bonds if it requested aid. Europe’s move to a more unified union be it monetary or fiscal continues as France, Malta, Spain, Italy and Portugal released a joint statement to push the European Council in establishing a single European banking supervision system in which states would jointly back their banks.
- Europe’s debt crisis has also affected China, a large trade partner with Europe, who is preparing to show weaker earnings in the third quarter. Technology and materials companies originate a big portion of their revenues from China which could be potentially putting them at disappointing third quarter performance. The Chinese index is trading at its cheapest since 2008 which is attractive for investors while the Republic struggles to reduce the economy’s dependence on exports and boost consumption. China along with the other three emerging markets (the BRICs) have shown signs of a slow down. Last year $5.4 billion investments flowed out of the BRICs.
- Goldman Sachs has moved beyond the Big Four. The latest emerging market acronym is MIST – Mexico, Indonesia, South Korea and Turkey. Mexico’s benchmark IPC Index climbed 11 % this year, compared with a 2.8 % increase in Brazil's Bovespa. Mexico continues to compete with China for manufacturing as costs are climbing in the Asian nation. Turkeys ISE National increased 28 % and Indonesia's Jakarta Index gained 7.4%. Out of the MISTs, Turkey stands out with a 8.5% growth in the economy last year.
Happy Thanksgiving and stay tuned for next week's review!
|Hugo Chavez and Henrique Capriles Radonski|