Chump change

July 15-19, 2013

AMERICAS

Markets:  Markets fell on Friday, after several days of gains. It finally seemed Bernanke's message regarding tapering and easing seemed to get through to and calm investors, who sold on Friday in order to consolidate  gains.

Interestingly, new market highs were reached throughout the week, but with different companies than historically.

Since the May high close, the S&P 500 is now up nearly 1.4 per cent, as of Thursday in midday trading. But consumer discretionary stocks and financials have done considerably better over this period with a gain of about 3.5 per cent each – or more than double the market.
At the same time, telecom stocks, materials, utilities and energy stocks have underperformed, showing slight declines from the May high.

Companies:  Loblaws has signalled it will buy Shoppers Drug Mart (or Pharmaprix, if you are a Francophone), Canada's largest pharmaceutical store for $11.9 bn. Many see this as an attempt to fight back against Sobey's purchase of Safeways last month. The proposed purchase will be stringently looked at by regulators, as antitrust concerns exist. 

American banks continued to report strong half year earnings this week. Citigroup's profits rose 42%, Golman Sachs profits doubled, Bank of America reported a 63% gain in net income. All exceeded analyst expectations, and were buoyed by strong stock market gains and equity sales.  Combined, the six largest banks in the US  reported $23 billion in profits in the second quarter

The SEC has brought a case against Steven Cohen of SAC, arguing he failed to supervise employees adequately. The fund has already faced $616 mn as a civil penalty for insider trading.  

 From: The Economist

From: The Economist

Otherwise:  China’s economy slowed in the second quarter. The finance minister, Lou Jiwei, caused a stir when he reportedly said he expected GDP for the year to rise by 7%, which is below the government’s 7.5% target. 

EMEA

Google has faced antitrust problems in Europe regarding its promotion of its own services over rivals in its search results, despite submitting amends to their search engine earlier this year. This week, Joaquín Almunia, the EU’s competition chief, declared that it had so far not done enough “to overcome ... concerns”.

On the politics front. Cameron put forward a bill forcing third party lobbyists to publish a list of their clients. Given his relationship with Lynton Crosby, a pollster who works with both the Tories and controversial industries such as tobacco, alcohol and oil industries (among others). 

 

*Chump change by The New Pornographers chosen to reflect market gains and the end of week selling by investors done, once again, in response to comments by Bernanke regarding QE. I'm not so sure consolidating holdings makes someone a chump, but I am negative about the underlying values of certain companies, and what people are investing in generally.