The Financials Pit
Review: By PitGuruKalvin O'Brian
U.S.
Economy
Last week, the U.S. Commerce
Department announced that consumer spending was up .1% as expected and personal
incomes were also up .5% in February.
The University of
Michigan's consumer sentiment index
fell from 70.8 to 69.5 in March which was weaker than expected. During a time of
the biggest housing plunge in over 20 years, continued job losses and the
general expectation for
America to slump
into recession there is an obvious watch for a slowdown in consumer
spending. In a continuing effort to help
banks stay liquid, the Fed announced that it will offer $50 billion on the
7th and 21st of April.
This week, Fed Chairman Ben Bernanke will
testify before Congress after his attempts to calm the financial markets by
lowering rates and extending credit to non-banks. It is expected that the jobless rate rose and
payrolls shrank by between 50,000 and 63,000 according to some estimates. There is heavy intervention to try and
breathe life into the market. I expect
after Bernanke's testimony the market will get a spark
but there is still room to move to the downside. Continuing conversations
calling to revamp financial industry policy will unfold in the weeks to come,
but anything that gives the market jitters will also bring in selling pressure
and uncertainty.
Currencies
The unemployment rate in
Japan increased
from 3.8% to 3.9% in February. It was
also announced that consumer prices were down .2% in February, but up 1.0% from
a year ago.
Japan has
also cut production for the second straight month in February. The cut is due to the countries biggest
exports market the United
States verging on a recession. This is the first back to back decline in
production in nine months. This is a
true indicator that companies are concerned word demand is decreasing as the
U.S. economy
slows. I would not be surprised to see
some intervention coming soon and I am looking for the yen to trade lower this
week.
Across the pond the
U.K.'s Office for National Statistics announced real
GDP was up .6% in the fourth quarter of 2007 and up
2.8% from a year ago, slightly less then expected. The confidence level in the
British nation for property has slipped, reflected in the six straight month of lower prices for homes.