Friday, May 13, 2011

Violence - The Week In Review

It was more world focus this week than US focus. That is, US debt and equity prices were to a large extent driven by offshore events.

S&P was unkind to Greece on Monday, but then nobody cares about the periphery, except the periphery (and of course California).

Not a problem; later in the week here comes the EU with its Q1 GDP print far through expectations, due to strength in Germany and France (the rest in the trough). It’s ancient history but everybody got excited anyway; until that is they all recalled that central banks are just no fun.

China worried world markets when its Industrial Output, although vigorous, was just less vigorous than expected. That didn’t stop the Bank of China from lifting reserve requirements another 50 basis points a day later. This really worried the world’s markets, those of the US especially.

Commodity prices gyrated wildly but ending lower, partly on some corny view of a world slowing. So much for our February prediction that WTI would print 120 tagged to Middle Eastern violence. Of course in the time-tested way of economists, once our prediction comes true, even if a decade later, we’ll be sure to brag about it.


Robert Craven

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