Global challenges

For the third straight year, summer is being welcomed in by a slumping stock market. This is something we warned about in our update on April 3.

Here is the latest on the situation:

Last week:

-By now I am sure you have heard plenty about the dreadful U.S. jobs report on Friday. There was an increase of just 69,000 jobs in May compared to expectations of 160,000 jobs added.
http://www.ft.com/cms/s/0/0a3ed818-abe2-11e1-a8a0-00144feabdc0.html#axzz1wmgbTXND

-Manufacturing activity in Spain plummeted to a three-year low. Germany and France also posted manufacturing figures at or near three-year lows.

-European Union statistics agency Eurostat said there were 17.4 million people without jobs in the 17 nations that use the euro in April. This is the highest level of unemployment ever recorded in the history of the European Union. The rise in unemployment is likely to add to discontent with the austerity programs underway in the euro member states.

-Brazil’s manufacturing sector showed contraction for a second straight month.

-Manufacturing activity in China slowed dramatically in May.

-This weekend, German Chancellor Angela Merkel doubled down on her opposition to joint debt sharing in the form of the euro bonds. If she does not change her mind it is hard to see how this crisis gets solved as it is apparent Spain, Italy, Greece and the others have no intention of real reform.
http://www.bloomberg.com/news/2012-06-02/merkel-rejects-debt-sharing-as-obama-urges-end-to-crisis-cloud.html

On the horizon:

-It appears to be a matter of time before the European Central Bank or the Federal Reserve attempts to ride to the rescue with some sort of stimulus plan.

-Will Spain’s 10 year treasury bond rise to 7%, a rate that would signal serious trouble

-Oil prices are down more than 20% in the last month. This should be a boost for consumers as well as for companies’ profit margins.

As always, we will continue to manage risk and look for opportunities!