Source: The Economist: Can it be… the Recovery?

Around the World

A summary of last week’s stats is detailed below. Europe and the US were strong as China faltered. Gold, in the face of less fear in the market, better economic data and less talk of Quantitative Easing, fell as well.

As of Friday’s close:

The US: The S&P 500 was up 2.4% on the week. It’s up 11.6% year to date.

Europe: The Euro Stoxx 50 was up 3.7% on the week. It’s up 12.6% year to date.

China: The Shanghai Index was down 1.4% on the week. It is up 9.1% year to date.

Gold: As measured by GLD, Gold was down 3.1% on the week. It’s up 6.1% year to date.

“Is it Getting Better? Or Do You Feel the Same” – U2

Was Bono speaking about the Global Economy? No. The single, “One” was actually released as a benefit single with proceeds going to AIDS research. However, the lyrics hold relevance today as people are asking: Is it really getting better?

Periods of recovery following deep recessions can tend to be feeble. This recovery has been no exception. But with the unmistakable improvement in economic data year to date – and soaring stock prices to match—it feels like the economy is on stronger footing.

What are Some Good Signs?

Treasuries:

In very general terms– people buy treasuries when they are fearful –  when they think growth will slow and inflation will remain low. People sell treasuries they are optimistic– when they think growth will resume and inflation will rise.

For more read: What are Treasury Bonds?

See below graph from the Federal Reserve Board 2012. It shows how people have hoarded treasuries since ’08. Only now are we beginning to see some selling. As most people have money invested in bonds– it’s good to remember that as people sell, interest rates rise, and values fall.

For more read: Can you Lose Money in Bonds? 

Housing:

Barron’s has recently been calling for the bottom in the U.S. Housing Market by 2013. Improved jobs numbers, drastically falling prices (over 60% in Las Vegas), high rental rates and low mortgage rates will be some of the factors which should help. Since the house price down-spiral began, homeowners have lost about 7.3 Trillion dollars in home value collectively– according to Barron’s.

The S&P Homebuilders Index has soared year to date- up about 25%. If the jobs numbers continue to inch up, tensions in the middle east ease (or at least fail to escalate) and mortgage rates don’t push up too much from here– things could be looking better.

See Barron’s for the full story here: Ready to Rebound

Just for Fun

The Financial Times put out an article: How to Have a Conversation. In the age of emailing, texting and tweeting– it’s a good reminder! Challenge: Pick up the phone instead of emailing 5 people back today.

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