Under pressure (and people on streets)

June 3-7, 2013

AMERICAS

Market comments: The TSX did not do well last week, closing down the last 6 sessions. This was despite stronger than expected job numbers in both Canada and the US.  Statistics Canada reported 95,000 jobs were created in May, resulting in the unemployment rate moving down to 7.1 per cent from 7.2 per cent.

Company news:  SAC, which was struck by an insider trading case months ago, is experiencing renewed problems.  Investors are able to take money out every quarter, and the most recent deadline passed last Monday. Apparently, large withdrawal of funds occurred, described by some as an “exodus.”

The US Trade commissions decided Apple infringed on Samsung patens, ordering a ban on sales of some of the older version of iPad and iPhones. eBooks are also proving problematic for the company.

Investors seem crazy for cloud-computing companies – IBM bought SoftLayer and Salesforce recently acquired ExactTarget. Is this an attempt to compete with Amazon?

International:  Japan’s stock market once again recorded meaningful losses. Last week Abe announced the third arrow of economic reforms, part of his plan to increase GDP per person by 40% in 10 years. The third arrow is made up of deregulation and tax reforms, primarily.

Otherwise: Pressure is growing in Britain over what to do about bailed out banks. Many influential people – from the Archbishop of Canterbury to out going Bank of England governor Sir Mervyn King – are calling for the Royal Bank of Scotland and Lloyds to be broken up. The government owns 81 per cent and 39 per cent of each bank respectively.  Unlike state owned banks in the US, these have not yet been profitable. 

Also about bailouts: The IMF announced it botched the Greek situation, badly underestimating the problems faced by the country.

EMEA/UK

The bank holiday made for a relatively quiet week markets wise. But, a few points:

  • Eurozone unemployment reached a new high in April (BBC)
  • The Italian deficit is now within Eurozone mandated levels, and the European Commission recommended ending the "excessive-deficit procedure". Next up? Growth.
  • The first same sex couple was married in France (woooo equality) 

Otherwise, outgoing Bank of England governor Sir Mervyn King announced people are right to be angry at banks. Next week, in one of his last acts as governor, there will be a monetary policy meeting. PMI is also due next week. 

The European Central Bank meets June 6. Some believe a move into negative interest rates is possible.  

*Under Pressure by Queen chosen to reflect pressure on companies and markets this week, including Apple and SAC, as well as mounting pressure on Shinzo Abe given the performance of Japanese markets and the third arrow.