Super Stock Blog

Posts Tagged ‘debt crisis’

Wall Street led investors on a wild ride in 2011.

Buffeted by concerns over the European debt crisis, erratic energy pricing and fears that the federal government was doing more harm than good for the U.S. economy, stocks were all over the map.

In the end – despite all of that volatility – Wall Street ended 2011 pretty much where it began. But as we ease further into 2012, there have been some positive signs.

On Thursday, a trio of reports brought good news – weekly unemployment benefit applications have fallen to levels last seen more than three years ago, holiday sales were solid and service companies grew a little faster in December.

Friday delivered more welcome news. Employers added 200,000 jobs in December and the nation’s unemployment rate fell to 8.5 percent, its lowest level in three years.

But an ominous undercurrent is lurking beneath those numbers. November’s job gains have been revised downward, and December’s decline in unemployment was fueled, in part, by the fact that the U.S. labor force shrank by 50,000.

So where does all of this leave investors and businesses for 2012?

“I’m highly uncertain about the results for 2012,” said Jim Hotvet, president of Jim Hotvet Financial Advisors in Pasadena. “It could be a good year, but two things concern me – the political campaign and the situation in Europe. If things go right we could have a nice year where earnings are up 10 percent because companies have good earnings and good balance sheets. And it looks good from a hiring perspective.”

But if economic factors conspire to turn the other way investors could just as easily see their investments decline by 10 percent, Hotvet said.

“If I had to guess, I’d say we’ll have another flat year,” he said. “And I think we’ll have another year of volatility.”

Alan Fluhrer, CEO of Fluhrer & Bridges, an executive search firm in Pasadena that specializes in technology and energy, also figures investors will weather some more erratic ups and downs.

“The thing is that our economy has become so global,” he said.

Few would disagree that Europe’s financial crisis has weighed heavily on investors. And it’s a known fact that the U.S. economy is increasingly global and therefore affected by economic events that happen throughout the world.

European leaders are scrambling again to stem the march of the crisis, which pushed the euro to a 16-month low against the U.S. dollar on Friday, drove Italy’s borrowing rates to unsustainable levels and is threatening France’s prized AAA credit rating.

With the debt jitters regarding core economies, economic indicators show that even powerhouse Germany hasn’t been spared. Economic sentiment and retail sales are falling across the region, according to new data released Friday, while unemployment in the 17-nation eurozone is stuck at 10.3 percent.

Many U.S. companies have taken a beating amid all of this uncertainty. But locally there have been some gains.

STAAR Surgical co., a Monrovia-based maker of implantable lenses for the correction of cataracts and other disorders of the eye, began 2011 with a stock price of $6.30. But it ended the year at $10.49 and has so far remained above $10 in 2012.

Edison International, the Rosemead-based parent of Southern California Edison, also saw its shares rise. Edison’s stock began last year at $37.40 and ended at $41.40.

But other companies, including La Canada Flintridge-based Sport Chalet inc., haven’t fared so well. Over the past 52 weeks the retail chain’s stock has ranged from a high of $4 to a low of $1.87. on Friday shares of Sport Chalet closed at $2.19.

In November, Chairman and CEO Craig Levra announced the company’s fiscal 2012 second quarter results.

Sport Chalet’s net income rose $1.1 million to $600,000 compared with a net loss of $500,000 in the second quarter of fiscal 2012.

“This quarter marked our second profitable quarter in the last three quarters and we continued to experience positive trends in comparable store sales and online sales,” Levra said in a statement. “Our data suggests our online business is helping drive customers into our stores, while establishing a national footprint online.”

Levra has also said that Sport Chalet will continue to “micro-merchandise” in fiscal 2012 using Action Pass data. the Action Pass is a kind of customer loyalty card that allows shoppers to get discounts on merchandise.

On Friday the Dow Jones industrials closed down 55.78 points, or 0.45 percent, to 12,360. the Nasdaq market managed a slight gain of 4 points to end the day at 2,674 and the S&P 500 lost 3.25 points to close at 1,277.

kevin.smith@sgvn.com

626-962-8811, ext. 2701

<a href="http://www.whittierdailynews.com/news/ci_19695382tag:news.google.com,2005:cluster=http://www.whittierdailynews.com/news/ci_19695382Sun, 08 Jan 2012 06:40:33 GMT”>Experts predict more market volatility for 2012

Europe presents main threat to global recovery, IMF says (The Washington Post) “‘Recent global stability gains are threatened by a confluence of sovereign and banking risks in the euro area that, without continued and concert attention, could spill over to other regions,’ the IMF said in an update released today of its Global Financial Stability Report.” (Bloomberg)

EMU break-up risks global deflation shock that would dwarf Lehman collapse, warns ING: A full-fledged disintegration of the eurozone would trigger the worst economic crisis in modern history, devastate every country in Europe including Germany, and inflict a deflationary shock on the US. there would be no winners, warns the Dutch bank ING in a new report “Quantifying the Unthinkable”. (The Telegraph)

German industry hit by sudden fall in orders — “highlighting a risk that Europe’s mainstay economy could slide towards a new recession.” (Agence France-Presse)

Eurozone growth weak, even before belt tightens (Agence France-Presse)

Trichet Faces Market Rate Threat as Debt Crisis hurts Growth (Bloomberg)

Greek Debt Losses Exceed Stress-Test Level, Swaps Trading Shows — “A default by the Greek government may result in losses of about 60 percent on the country’s bonds, more than three times the level said to be assumed by European banking regulators, trading in derivatives shows.” (Bloomberg)

EU Stress Tests may Include 17% Loss on Greek Debt — “‘This sounds like the softest option possible,’ said Stephen Pope, London-based chief global equity strategist at Cantor Fitzgerald. ‘If that is the indicator how stringent the stress tests will be, then they aren’t worth too much.’” (Bloomberg)

Excessive Debt may Sink Global Stocks to Crisis Lows, Says first State (Bloomberg)

Is deflation the problem that will throw us into a depression? (Fortune blogs) the Rising Threat of Deflation (The American Enterprise Institute)

Auto sales put on the brakes: Industry analysts trim forecasts for 2010 as fewer shoppers show up at dealerships. — “‘The problem is that people are still not sure about their jobs, their retirement accounts or the value of their homes,’ said Jim Hossack, a consultant at AutoPacific Inc., a Tustin automotive market research firm.” (The Los Angeles Times)

Expect lots of government layoffs at state, local level (USAToday)

Wells Fargo to shut subprime lending unit, cut 3,800 jobs: Banking giant is closing 638 storefront offices of Wells Fargo Financial, of which 74 are in California. (The Los Angeles Times)

HP to cut 934 [UK] jobs (Network World)

Fannie Mae, Freddie Mac get new Tickers to Complete Delisting (Bloomberg) ["I was convinced Fannie Mae was a good company -- what was the worst thing that could happen to it?" -- Peter Lynch with John Rothchild in early 1990s best-seller Beating the Street]

How Fannie And Freddie Unloaded Their Trash: due to misconceptions and public ignorance, Main Street was polluted by some of Wall Street’s garbage. (Forbes)

Don’t panic, the Baltic dry is a rubbish indicator! (FT Alphaville)

Economic Signs of the Times: Wednesday roundup (07-07-10)

GOLD PRICE NEWS The gold price fell $16.20 to $1,216.26 Thursday as the spot price of gold finished lower for the third consecutive session. The SPDR Gold Trust (GLD), which acts as a proxy for the gold price, closed down by $1.59, or 1.3%, at $118.98 per share. in spite of todays weakness, the gold price remains modestly higher for the month, by $2.12, but turned negative by $2.09 on the week.

Gold stocks did not follow the gold price lower, with shares of most gold miners rising alongside the broader market. Notable advancers in the gold stocks sector included Agnico-Eagle Mines (AEM), Freeport McMoRan Copper & Gold (FCX), and Gammon Gold (GRS). Shares of AEM, FCX, and GRS posted gains of 1.9%, 5.9%, and 3.4%, respectively.

Weakness in the gold price came as the euro rallied against the U.S. dollar for the third straight day, rising 1.0% to 1.2116 as U.S. equity markets closed. The euro climbed after European Central Bank (ECB) President Jean-Claude Trichet said the European Unions central bank will continue its bond purchase program, a component of the $1 trillion rescue plan announced last month at the height of the Greek debt crisis. Trichet made the remarks during his monthly post-ECB meeting news conference, but declined to provide details on the scope or duration of the purchase program.

The rescue announcement in mid-May fueled concerns of inflation among investors and sent the euro to a four-year low against the dollar. ECB officials have subsequently made great efforts to note that the bond purchases are sterilized i.e., they are offset by other asset sales and result in no increase in liquidity. however, investors have remained skeptical of such assurances, and have fled the euro for the safety of assets tied to the price of gold.

Commenting on the European sovereign debt crisis at a conference in Vienna, Austria, legendary investor George Soros sounded quite skeptical of the measures taken by European policymakers. Soros, who is perhaps best known for founding the Quantum Fund with Jim Rogers in the 1970s, stated that The collapse of the financial system as we know it is real, and the crisis is far from over. indeed, we have just entered Act II of the drama.

The billionaire investor went on to say that the present global economic environment is eerily reminiscent of the 1930s, with governments recently coming under pressure to reduce their budget deficits during a period when the economic recovery remains fragile. when the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide, Soros stated.

Given Soros stellar track record, investors will pay close attention to his comments. If the dire scenario he describes unfolds, the euro is likely to come under additional pressure in the months ahead. Despite the recent three-day rebound, the euro remains near a four-year low against the U.S. dollar, with many investors and traders eyeing the 1.15 or 1.10 as the next likely target. Such a development would most likely be a substantial positive catalyst for the gold price, which has benefited from economic uncertainty and the policy responses to the deflationary aspects of the sovereign debt crisis.

Gold Price Dips, but “Crisis far from over”