Our New Obsession
Quick Market Stats
S&P 500 was up 1% on the week. Year to date we are up 1.6%.
Around the world since January 1st: China is down 1.6%, Europe and Japan are down just about 1%, Gold is up 3.4%.
What Drove Markets this Week?
There was better economic news in the U.S. and European Central Bank (ECB) activity has been viewed as positive.
In the U.S., the Jobs Report (read: Jobs Report: 101) was good. Unemployment fell to 8.5%. German unemployment also fell to the lowest level since 1991 at 6.8%.
In Europe, news has been light. Which is generally hard for Europe since there are so many leaders who all love to talk. That has been positive.
Also, the ECB has been, effectively, lending banks money. They are doing this though a facility call the LTRO. Shocker, we have another acronym. It stands for Long Term Refinancing Operation.
How do they do this? Well they create money first. This is akin to the U.S. printing money during quantitative easing (read: Quantitative Easing- Explained in Talking Cartoons).
While this is good for banks, this is not good for their home currency, the Euro. As such, we have seen the Euro falling in value versus the dollar (1.27 dollars to every Euro). This level is a 16-month low. See chart here. Maybe start planning that European summer holiday as many analysts suggest this trend is going to continue. We recommend Nammos Beach in Mykonos, Greece. And you do need the Euro to fall as we paid about $13 for a thimble sized coffee.
Housing: A Bright Spot?
Housing stocks (measured by the Homebuilders ETF: XHB) were up about 5% this week—and they are up about 50% from their October lows. Why?
Housing data has been showing some positive signs. And there is speculation there will be a government home refinance plan—this would hurt mortgage bondholders but help housing prices and, by corollary, the economy.
Another Bright Spot: Truffle Honey
We were gifted some of this truffle honey. This will now be essential for any cheese plate we make.
The perfect hostess gift: truffle honey and Bull & Bear Flash Cards.
