Stocks indices rose this past week despite soft numbers out of Japan and Europe buoyed by a surprised cut in China’s interest rates. Treasury prices were flat and commodities rose with oil posting its first weekly gain since September on speculation OPEC will cut production at its meeting next week. Japan is now officially in recession after having announced its economy contracted for two quarters in a row following their sales tax increase. However, we are now experiencing stimulus out of Europe and Japan as well as interest rate reductions in China. In the
In particular this week:
- The Labor Department reported that wholesale prices rose a seasonally adjusted 0.2% in October after falling 0.1% in September. The October increase was mainly due to trade services which includes increases in margins by wholesalers and retailers and came despite a 3% drop in energy prices. Excluding trade services, energy and food wholesale prices rose only 0.1% in October.
- The Commerce Department reported that US housing starts fell 2.8% in October from a month earlier much less than expected. The decline was largely due to a drop in multifamily construction. Building permits, however, rose 4.8% as a sign of future construction.
- The National Association of Realtors reported that sales of existing homes rose 1.5% last month and 2.5% above last year.
- The Labor Department reported that first time claims for unemployment in the prior week fell 2,000 to a seasonally adjusted 291,000. The week before was revised higher. The four week moving average also rose to 287,500. This is still the longest stretch of numbers below 300,000 since 2000.
- Also, the Labor Department reported that the consumer price index was flat in October, less than forecast. Excluding volatile food and energy, consumer prices rose 0.2%, more than forecast. From a year ago consumer prices rose 1.4%.
- Markit’s revised monthly survey of purchasing managers for September showed manufacturing contracted in Germany, Europe’s largest economy. The Purchasing Managers index was 49.9 down from 51.4 in August. France also declined for the 5th month in a row.