United States: The week ended January 28, 2011 revealed a strong fourth quarter as key macroeconomic indicators were released. First estimates on fourth quarter GDP, personal consumption and PCE core were revealed. Fourth quarter GDP was recorded at 3.2 per cent, up from 2.6 per cent in the third quarter, while personal consumption rose 4.4 per cent compared to 2.4 per cent in the previous quarter. Consumption was a key driver of growth in the fourth quarter. The 4.4 per cent gain represented the strongest quarter for consumption in four years. Inventory levels slowed considerably especially among retailers and auto dealers, in line with the increased consumption in the quarter.
Domestic prices remained constrained yet again, consistent with low monthly inflation levels experienced through the quarter. The inflation rate was unchanged at 0.4 per cent from the previous quarter. Other releases during the week included the consumer confidence index and home sales data.
The consumer confidence index rose to 60.6 in January, up from 53.3 a month earlier; the highest in eight months. Growing optimism, combined with an improving labor market and tax relief have aided in boosting consumption spending. New home sales increased by 17.5 per cent during the month of December, the highest pace since April. This is positive for the economy as resurgence in the housing market will build stronger confidence in the economic recovery.
For the week ending February 4:
A number of economic data releases are expected. December performance indicators in terms of personal income, personal spending and PCE Core are all expected to be consistent with the strengthening in growth of the economy, with the exception of inflation which is still low. ISM manufacturing and ISM Non-manufacturing are expected to be relatively the same from the prior month, still a positive sign of business activity levels in the US. The end of the week will be the highlight though as the performance of the labour market in December will be revealed. Although the unemployment rate is expected to remain high, the additions to payrolls will be encouraging as more persons continue to be hired; a trend which started in the fourth quarter of 2010. Steady growth is anticipated and the economic data will be closely looked at for any deviations.
Philippines: The Philippine economy recorded an expansion of 7.10 per cent in the fourth quarter of 2010 from the previous year. This brings the annual growth rate for 2010 to 7.30 per cent. Philippine imports continued to exhibit strong growth in November with a 35.3 per cent increase form November 2009.
Russia: The Russian economy expanded by 4.0 per cent at the end of 2010 from December 2009.
The expansion follows a 7.8 per cent contraction in 2009. Russian industrial production grew by an estimated 6.30 per cent in December echoing similar growth in retail sales of 3.40 per cent (YoY). Russia's foreign exchange reserves have continued to expand and now stands at US$482 billion.
United Kingdom: The UK economy experienced growth of 1.70 per cent in the fourth quarter of 2010. Growth slowed from 2.7 per cent recorded in the previous quarter. The slower growth was attributed to the inclement weather in December which resulted in a fall off in construction, retailing and services.
Japan: Japan's foreign currency credit rating was cut from AA to AA- by Standard & Poor's on 27 January as persistent deflation and political gridlock continues to undermine efforts to reduce their US$11 trillion debt burden. According to S & P's, the government lacks a "coherent strategy" to address the nation's debt.
Egypt: Moody's Investor Services has downgraded Egypt's foreign currency credit rating from Ba1 to Ba2. The move follows widespread unrest as protesters push for the removal of President Hosni Mubarak who has governed Egypt for the last 30 years. Moody's also identified the risk of looser fiscal policy as the government tries to contain public discontent.
Weekly International Equity Watch
The S&P 500 fell slightly during the week of January 24 to 28 as mixed fourth quarter company earnings and economic data pushed international indices to highs not seen since 2008. Over the period, the S&P was down 0.54 per cent closing at 1,276.34 marking a year-to-date return of 1.49 per cent. Fourth quarter earnings controlled the market at the start of the week as some earnings reports beat analyst expectations. The service and product provider, Halliburton, reported earnings of US$0.68 per share with revenue reaching US$5.2 billion. Analysts were expecting US$0.63 per share. Reports indicate that the company "got a boost from increased oil drilling which helped its net income more than double."
McDonald's fourth quarter earnings were also better than expected but only by one cent. Even with a better than expected report on consumer confidence, the S&P remained relatively unchanged as the home price index revealed that things are still tough in the housing market with home prices falling by 1.6 per cent in November.
By the middle of the week, President Obama's promise to focus on job creation and lower tax rates gave the stock market a boost and pushed the Dow Jones above the 12,000 mark for the first time since 2008. The President was also in support of a five-year freeze on discretionary spending which will result in the deficit being lowered by US$400 billion over the next 10 years. By the end of the week, news that the economy grew by 3.2 per cent in the fourth quarter, slightly lower than expected, dampened the stock market rally as the report did not meet analyst's expectations. We continue to see the impact that economic data has on the market as investors react strongly to better or worse than expected data even as GDP growth is the most it has been in five years at 2.9 per cent for all of 2010.
T&T Stock Market
The Composite Index increased during the week ending January 28 rising by 2.83 per cent to a value of 880.93 as 10 stocks advanced and two declined. The total volume of shares traded saw a large spike over the week as volumes totaled 1,299,376 with the largest volumes seen in GHL (206,780), TCL (143,697) and CCFG (109,119). RBL saw the largest price increase during the week rising by TT$3.74 to close at TT$81.00 with a total of 18,040 shares trading for the week at a value of TT$1,428,475.77.