Interesting developments to come - See what made the cut...|
Italy's Monti Prepared to Resign...
Mario Monti, Italy’s technocratic prime minister announced this weekend that
he is prepared to resign as soon as parliament passes a pending budget law.
Monti had been working with fellow Italian Mario Draghi, European Central Bank
Chief to bestow calm on the euro zone and global financial markets. Silvio
Berlusconi, who has been plagued with scandal, will attempt to win the
premiership once again. Berlusconi will call for the return of the lira. There
is strong possibility that the turmoil in Italy will create more uneasiness with
the U.S. and European markets. During early European trading on Monday,
particularly the yield spread relative to safe-haven German government paper,
Italian and Spanish government bonds performance will be monitored carefully.
Viewed as relatively risk-free, investors will have a close eye on German paper.
Italy, the euro zone’s third-largest economy and home of the world’s
third-largest government bond market, Italy remains too big to be saved. A far
cry from the situation a little more than a year ago, investors view Italian
debt as polarized. As investors start to reprice Italian credit risk, Monday
could prove to be a difficult trading session for investors.
Chinese Economy Showing Strength...
Latest government figures over the weekend showed strength in China's
economy. Industrial output in China during November rose 10.1% compared to same
month during 2011 for the strongest reading since March. Key data out of China:
electricity production, a gauge for economic activity, advanced 7.9%; retail
sales rose 14.9%; residential sales gained 31.6% and consumer prices rose by 2%.
China’s new Communist Party leader, Xi Jinping, is being monitored closely for
any change in the country’s business-investment policies. China, the world’s
second-biggest economy, has relied on exports and investment to bolster growth
over the past decade. Gains across the pond may filter over into U.S. stock
markets and we could see some bull market action in days to come.
Federal Reserve to Scope Out Economic Landscape…
During Tuesday and Wednesday of the upcoming trading week, top U.S. Central
Bankers, Federal Open Market Committee, will hold their two day meeting in
Washington to look review the latest U.S. economic situation. Its likely the Fed
will confirm the economy remains held back by weak consumer spending, lackluster
hiring trends and not-so-hot business investments. As Operation Twist is set to
expire, the Fed is expected to unveil more stimulus for the economy since
short-term securities are running low. Investors are not looking for any major
news from the Fed although there is high anticipation for the Fed to announce a
supplemental bond buying program. Investors on Wall Street will listen carefully
for any change in the Feds outlook for the U.S. economy. Regardless of comments
from the Fed, news out of Washington on progress for the 'fiscal cliff' will
remain front and center for Wall Street.
December 10, 2012