Market Week: October 15, 2012

Equities data reflect price changes, not total return.

Last Week’s Headlines

• The International Monetary Fund cut its forecast of global growth to 3.3% for this year (from 2011’s 3.8%) and 3.6% next year (although its 2.2% forecast for the United States is slightly higher than previously estimated). However, the IMF’s annual report warned that its growth estimates depend on the eurozone addressing members’ debt problems and the United States avoiding the so-called “fiscal cliff.” Otherwise, the IMF called the risk of a serious global slowdown “alarmingly high.”
• There continued to be relatively encouraging news out of the housing market. Mortgage foreclosures nationally fell to a five-year low in September, according to RealtyTrac®. The 180,427 foreclosure filings were 7% lower than the previous month and down 16% from a year ago. The biggest declines were seen in California, Georgia, Texas, Arizona, and Michigan, while states where foreclosures must go through the judicial system, such as Florida, Illinois, Ohio, New Jersey, and New York, continued to have substantial year-over-year increases.
• Standard & Poor’s downgraded Spain’s sovereign debt to BBB- (one notch above junk status) and gave it a negative outlook for the future, indicating the likelihood of future downgrades. However, the yield on the Spanish benchmark 10-year bond remained under 6%.
• Once again, higher gas prices helped push inflation at the wholesale level up 1.1% in September. However, producer prices overall remained relatively stable, as the year-over-year inflation rate was a moderate 2.1%.

Eye on the Week Ahead

The bailout watch on Spain could intensify in advance of the European Union summit on Thursday and Friday. Domestically, a flood of earnings reports as well as housing and manufacturing data will suggest the state of the economy.

Key dates and data releases: retail sales, business inventories, Empire State manufacturing survey (10/15); consumer inflation, industrial production, international capital flows (10/16); housing starts (10/17); Philadelphia Fed manufacturing survey (10/18); home resales, options expiration (10/19).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

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