Wednesday Morning Cheat Sheet: 3 Stories Moving Markets
The markets were mixed in Asia overnight. The S&P/ASX 200 climbed nearly half a percent while the Hang Seng was off fractionally. Japan’s Nikkei fell sharply, losing over 2.5 percent on fears that the country’s new stimulus plan may overheat the economy. The drop nearly erases the index’s gains over the past four days.
European markets were all trading down heading in to the opening bell on Wall Street. Brent crude oil was up slightly at $110.47 per barrel, while gold moved down to $1,675.00 per ounce.
At 8:30 a.m.: S&P: -0.34%, Dow: -0.34%, NASDAQ: -0.03%.
The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers was unchanged in December, and up 1.7 percent for the past 12 months. The core rate for all items less food and energy rose 0.1 percent.
1) The U.S. Treasury has said that the only way it can prevent default is to siphon retirement funds from government workers. In a letter to U.S. House of Representatives Speaker John Boehner (R-Ohio), Treasury Secretary Timothy Geithner said that the government will have to temporarily stop investing in the Government Securities Investment Fund in order to finance operations until the debt ceiling is (hopefully) raised.
Writing to Boehner and other leaders of Congress, Geithner reiterated that failure to raise the debt ceiling “would cause irreparable harm to the American economy and to the livelihoods of all Americans.”
2) “Four years after the onset of the global financial crisis, the worst appears to be over,” begins a report by the World Bank. “However, the global economy remains fragile, as high-income countries continue to suffer from volatility and slow growth.”
The World Bank estimates that global GDP grew 2.3 percent in 2012, and forecasts 2.4 percent growth in 2013, 3.1 percent growth in 2014, and 3.3 percent growth in 2015. High-income countries grew just 1.3 percent in 2012, compared to 5.1 percent growth for developing countries.
3) China’s trade surplus with the U.S. may be as much as a quarter smaller than current estimates, according to a new analysis by the Organisation for Economic Co-operation and Development and the World Trade Organization. The analysis uses a value-added approach that takes every country in a supply chain or manufacturing process, and offers a more complete picture of the commercial relationship between countries.
For example, the OECD-WTO study found that China’s bilateral trade surplus with the U.S. is actually about 25 percent smaller than currently reported because of foreign-sourced content in Chinese exports. Another example is that as much as one-third of the total value of cars exported for Germany is sourced from other countries.
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