The Stats
As of close Friday, April 13th (no wonder markets were off so much):
The U.S.: S&P 500 was down 2% on the week. It’s up about 9% on the year- down from this year’s highs.
Europe: Euro Stoxx 50 was down 4.5% on the week. It’s down 1.1% on the year- ouch.
China: Shanghai Index was up 1.8% on the week. It’s up 6.8% on the year.
Gold: GLD was up 1.6% on the week. Gold is up 5.8% on the year.
Europe had a Tough Week— Why?
A lot of the good news in the U.S. economy has already been digested. Up until now, this helped stock markets globally as it lifted risk assets year to date. Stocks are considered risk assets. Also, the excitement over the European LTRO– the Longer Term Refinancing Operation (which many believe stemmed fears of a European Bank collapse)- is officially behind us.
As such, people have grown more wary of Europe again. And bond yields in the European region are rising, indicating increased risk. Yikes. Read: Can You Lose Money in Bonds?
Words take Too Long to Read: Europe in Pictures
We found these graphs from The Big Picture to be particularly helpful. They show, in pictures, different statistics for the entire European region—see here.
People Are Also Worried about China
Are people just worried about Europe? No. People are also nervous about a Chinese ‘Hard Landing’. It’s a bizarre image – a country soaring above the clouds… then crashing to the ground in an uncoordinated fashion.
What does a ‘Chinese Hard Landing’ Actually Mean?
GDP lower than 7% is what generally constitutes a Chinese Hard Landing. Given the U.S. is expected to grow at 2.5% this year, this is hardly a crash and burn situation. But any slowdown, even from a torrid pace, doesn’t feel good. In the first quarter of this year, Chinese GDP grew at 8.1% versus 8.4% expected. A lot of this fear has been priced in this year and last year.
What To Do with your Tax Refund?
Save it. Here are some disturbing statistics around the level of retirement saving in America: Saving for Retirement- Most People Don’t.
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