Friday Morning Cheat Sheet: 3 Stories Moving Markets

Stocks advanced in Asia on Friday. Japan’s Nikkei index climbed 0.67 percent, once again hitting a fresh five-year high. The yen weakened slightly, trading at 102.5350 to the dollar. In Hong Kong, the Hang Seng index edged up 0.17 percent, while the S&P/ASX 200 climbed 0.29 percent in Australia.

European markets were also up in mid-day trading following news that car registrations picked up in April for the first time since 2011. Germany’s DAX was up 0.18 percent, London’s FTSE 100 was up 0.35 percent, and the STOXX 50 index was up 0.19 percent.

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U.S. futures at 8:40 a.m.: DJIA: +0.32%, S&P 500: +0.25%, NASDAQ: +0.37%.

Here are three stories to keep an eye on:

1) The U.S. Has Good Growth Prospects, but Europe Does Not: A new Bloomberg survey of investors, analysts, and traders around the world reveals that 69 percent of respondents think that the U.S. economic recovery is currently on a sustainable trajectory. Just 27 percent anticipate a recession in the next two years. The largest share of participants, 36 percent, believe that Europe’s debt crisis is the biggest risk to the global economy, while 31 percent think that the slowing Chinese economy is the biggest risk. Just 16 percent think that the size of U.S. debt is the biggest risk.

Drilling down, 61 percent of respondents think that Europe’s economy is deteriorating, while the same percent think that the U.S. economy is improving. Likewise, the European markets are seen to offer investors the worst opportunities, while U.S. markets are seen to offer the best.

2) Fed Increasingly Divided Over Asset Purchases: The conversation about Federal Reserve asset purchases got a lot of attention this week. The presidents of the Richmond, Philadelphia, and Dallas reserve banks all delivered speeches suggesting that bond buying should be tapered immediately — hardly a new argument, but one with increasing traction as economic conditions continue to improve. San Francisco Fed President John Williams suggested that purchases could be curbed as early as this summer.

Meanwhile, the International Monetary Fund published a study that confirmed the beliefs of several QE critics — chiefly that while central bank bond-buying programs may have helped stabilize national economies and markets immediately in the wake of the financial crisis, they have since begun to produce diminishing returns.

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3) European New Car Registrations Increase: New car registrations — a proxy for vehicle sales — increased 1.7 percent in April in Europe, the first increase since September of 2011. While this is good news, the report is quick to point out that the region counted two more working days this year compared to the year-ago period. In absolute terms, registrations were at the third lowest level for any April on record, and the historic low was reached in 2012.

For the first four months of the year, new car registrations are still down 7.1 percent compared to the year-ago period.

New Car Europe

Source: ACEA

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