Summary
For the week, 10-year government bond yields in the troubled countries of Spain and Italy settled down to the 5% range. By contrast, the U.S. 10-Year Treasury Bond yield jumped up about 6% to close at 1.76 while precious metals dropped another 3%. U.S. stocks were flat for the week. Interestingly, despite QE-Infinity, since its peak at the start of 2012, the Fed balance sheet has steadily declined.
Week in Review
Monday, stocks in Asia traded flat. Positive economic data out of China cheered traders. Stocks rose in Europe 0.5% in in the U.S. 0.8% on low volume. Tuesday, stocks in Asia followed the trend from Monday in the West, rising 0.7%. The big positive driver was said to be bank earnings. Stocks shot up 1.4% in Europe on hope. U.S. stocks rose about 1.1% for no particular reason. Moody’s refrained from rating Spanish government bonds as junk but did assign a negative outlook.
Wednesday, Asian stocks continued their rise, moving up 0.9%. Stocks in Europe closed up just slightly. IBM took a well-deserved dive below 200 before recovering slightly on suspect revenue performance, various “one-time charges,” and currency excuses. Despite the 5% drop in IBM, the U.S. stock market managed remarkable strength—climbing 0.7%. Even turkey Facebook climbed over 20 again but retreated a few cents before the close. It really feels like the risk-on euphoria had taken hold again—at least for the moment.
Stocks in Asia Thursday continued on the momentum of Wednesday, gaining 1%. Stocks in Europe rose just slightly. Despite an 8% drop in Google on an earnings miss, stock in the U.S. closed flat on moderately low volume. From the turkey-stock department, IBM and Facebook continued their respective well-deserved descents—dropping to $195 and $19 respectively. Fear remained nowhere to be found with the VXO sitting at a very tame 14.3.
Stocks in Asia closed mixed but overall lost about 0.3% on Friday. In Europe, stocks dropped 0.8%. The 25-year anniversary of the 1987 crash, as well as disturbing quarterly reports from McDonald’s, GE, and Microsoft, shocked some brain-dead traders into reality. Stocks in the U.S. gave back the bogus gains recorded earlier in the week, falling 1.4% on moderate volume.
