A most bearish bull market

April 29 – May 3, 2013

AMERICAS 

Market comments: Markets continued to gain last week, after blow out US job figures.  For the first time, the Dow rose above 15,000 and the S&P 500 passed 1,600. “The S&P 500 is now well above the targets issued by Wall Street strategists at the start of the year”, many of who thought it would reach these levels at the end of 2013. Despite all-time highs, many think markets just don’t “feel” bullish.  “Even as stocks are perched around record levels, the latest investor sentiment from the American Association of Individual Investors showed investors are still skeptical about the rally. Bullish sentiment came in at 31%, below the survey’s historical average of 39% for the seventh straight week.”

Canada got a new bank governor; a slightly unexpected choice in Stephen Poloz, the head of Export Development Canada. While Poloz spent the first 14 years of his career at the Bank of Canada, he has not been directly involved with monetary police since he left the central bank almost 20 years ago. Many believe he lacks "the front-line experience fighting the financial crisis” that Mr. Macklem, the expected choice, had gained under Carney.

Federal reserve considering changing capital requirements for banking institutions, amid concerns they have once again become too big to fail. Daniel Tarullo in particular, has recently spoken against bank-to-bank lending in wholesale markets. He wants to increase capital ratios further, believing it will result in banks becoming smaller.

Company news:  Apple raised $17-billion (U.S.) on Tuesday with the largest ever non-bank corporate bond issue of all time. Combined with Apple’s decision to increase dividends and a recent share buyback, is giving apple a very different market profile. “Bonds, buybacks and bigger dividends will help Apple transition from a growth company to a cash-generating stalwart, but it is unclear how they will help restore excitement in the share price.”

International News:  While unemployment numbers are considered the main reason for market behaviour on Friday, should note that the ECB cut its lending rate to 0.5% last week, and said it was willing to do more.

Otherwise:  Warren Buffet joined Twitter, his handle @WarrenBuffet already has close to 400,000 followers. His first tweet was “warren is in the house”. His second was a link to an essay on the necessity of women to America’s prosperity. What will he post next? Also in Twitter: the company has hired a Banker from Morgan Stanley (Cynthia Gaylor, a managing director) to become head of corporate development. This is causing many to wonder if an IPO is in the pipeline.

UK/EMEA

Markets: A result of US jobs numbers, the FTSE reacted and shot up to its highest level since March. Also, "investors continue to be enthused by the idea that central banks will continue acting to boost the global economy, which was reinforced by Thursday's widely anticipated interest rate cut by the European Central Bank." The UK did have some other mildly bullish news throughout last week... The UK Manufacturing sector sees signs of stabilizing and UK business confidence 'improving'. 

Italy, on the other hand is set to shrink 1.4% in 2013, according to new forecasts.

Just because of my coffee obsession (addiction, whatever):Costa is benefiting from the Starbucks tax row as consumers are "voting with their taste buds", according to chief executive Andy Harrison.

Also: more trouble at the BBC as Stuart Hall admitted indecently assaulting 13 girls, one aged nine. A separate inquiry will take place.