May 27-31, 2013
Market comments: Things became ugly in the last trading minutes of the week as selling accelerated in US markets. The Dow tumbled 1.3%. Yet, markets managed to avoid a major sell off, as gains were made at the beginning of the week. Indeed, investors still seem to be considering bad economic news as good news – meaning quantitative easing will continue.
Last week, the Bank of Canada kept interest rates at 1%. While cautioning a slow down is likely, the Canadian economy grew an annualized rate of 2.5% based on Q1 of 2013.
An odd one: All days of the week are not equal when it comes to investing. Analysts have noted that Tuesdays tend to be better; The DJIA has rallied the last 20 Tuesdays. It may well be the “quirkiest stat of 2013.”
Company news: Facebook, which celebrated its one-year anniversary since its IPO a few weeks ago, jumped up two spots in analyst upgrades last week. This is despite the recent news that the company will have to change their advertisement formula, after leading brands pulled advertisements deals following misogynistic posts on the site.
The largest cross border money laundering scheme was uncovered last week. "Liberty Reserve, an online currency- and payment-processing firm. Prosecutors claim the service was a “PayPal for criminals” to launder ill-gotten gains from many crimes, including card fraud".
International News: The Nikkei fell again, losing over 5% in trading on Thursday. Some fear the rise in bond yields could undermine growth. It is down about 15% from its peak.
Otherwise: It should not come as a surprise that building is closely tied to economic growth. “Barclays' Skyscraper Index suggests that construction booms, especially those highlighted by record-breaking skyscrapers, coincide with the beginning of economic downturns. The index even suggests that the rate of increase in height could also reflect the extent of that economic crisis.” Sky City, a new building in China and next tallest building in the world, is expected to start construction in June.
A report by BCG shows that the top 1% of the world now controls 39% of the wealth. “The world's total private wealth grew 7.8 percent last year to $135 trillion… those worth $5 million or more control nearly a quarter of the world's wealth.”
According to Pew, mothers are the main bread winnners in 40% of American households. While many are single parents, there was a meaningful rise in those households where the wife earns more than her spouse.
*Empty Spaces by Pink Floyd chosen to reflect the backwardness of markets right now, where bad news is interpreted as good news (and the continuation of QE). You may remember, this song is known for having a backmessage.