Weekly Review 10.22.2012

All eyes were on the Second Presidential Debate.

Both Romney and Obama delivered strong punches tackling issues such as unemployment, oil and energy.  All said and done, Mitt Romney is in the lead in the gallop polls 52% to 45%.

Central Bankers and Government officials met up in Tokyo for the annual IMF conference.  (http://www.imf.org/external/am/2012/) The IMF lowered its GDP outlook on the global world economy.  The major theme talked about was fiscal unity among political leaders hinting towards the EU leaders.

Also, Bernanke addressed critics abroad saying stronger growth in the United States bolsters global prospects as well, countering the likes of Brazil's Finance Minister Guido Mantega who has labeled the Fed's latest stimulus effort "selfish".
Critics say the Fed's unorthodox policies weaken the U.S. dollar and boost the currencies of developing countries, hurting their ability to export.

Canada has blocked Malaysian state oil firm Petronas’ C$5.17 billion bid for gas producer Progress Energy Resources in a surprise move that could signal problems for a much larger Chinese deal in the country’s energy sector.
Canada’s announcement late on Friday, minutes before a deadline, was a blow to Petronas whose domestic oil supplies are shrinking and which has been seeking to boost its resources beyond Malaysia and volatile areas such as Sudan.
It also raises doubts over Chinese oil group CNOOC’s C$15.1 billion offer for oil producer Nexen and could weigh on other Canadian firms hoping for foreign investment to tap their vast energy reserves.
Any rejection of the CNOOC bid would likely damage trade ties Canada has been trying to build with China, underlining political sensitivity to Chinese corporate expansion in North America.
http://www.vancouversun.com/business/Canada+blocks+billion+Petronas+Progress+deal+with+video/7422103/story.html#ixzz2A4gWGYes

Google's earnings were released ahead of schedule.  The stock plummeted -$3.12.  Why? according to experts mobile has been a mixed blessing. Smartphones and tablets are bringing in new users — and the advertisers that follow them — but it makes less money on mobile ads than on desktop ads.

For a  list of companies who released earnings this week click here.   http://www.earnings.com/highlight.asp?client=cb

Weekly Review - 10.07.2012

 

• 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

Anna Nepravishta