Recap: Week Ending August 16, 2013

August 18, 2013

New Undergraduate trading courses at the GTF

Throughout the week, global equity markets pushed lower, with both the Dow Jones and S&P 500 seeing their biggest drop in what appears to be months followed by a decline in the UK’s FTSE 100. As mentioned in last week’s edition of MarketWatch, if global markets continue to move in tandem, conviction will be seen to the downside, this was the case this past week. The market continues to be rocked by news and rumors out of Federal Reserve Open Market Committee, FOMC, about the potential end of Quantitative Easing, QE. When QE begins to slow down, as stated in last week, the markets could take a huge hit. Investors woke up to this opportunity following words from Richard Fisher, alternative member from Dallas, who continues to be negative about the future of QE and FED buying programs. Investors still have their eye on the next FOMC announcement which is scheduled for September. In the meantime, a central banking conference in Jackson Hole, Wyoming may provide a possible preview of the September scheduled FOMC meeting. With this being said, it is significant to note that Ben Bernanke as well as Mark Carney, will not be attending as well as 4 of the 7 FED board governors. Even though FED programs may start to end, investors should be satisfied with the over the 150% gain in the S&P since the lows of 2009.

This week major us retailer Wal-Mart (WMT) reported earnings of $1.24 a share compared to analysts estimates of $1.26. On top of this, WMT said that in store sales declined by 30 basis points. WMT, with over 150 million customers, is considered American’s retailer. On top of WMT’s miss, Macy’s, a US department store also missed estimates, sending the price lower alongside Wal-Mart. With the decline in two predominate US retailers, many economics are focusing more on the consumer, warning that another potential miss in both retailers could spark serious trouble for the US economy. The release to the downside in both Wal-Mart and Macys which are members of the S&P 500, did not assist in any drives to the upside in the index this past week. It appears that volatility may have entered the market; however, it is not the way many expected, through losses in major retailers.

This week the TSX pointed north as both the price of oil and gold continued to climb. Mining, extracting and refining companies are very predominate on the TSX. The TSX has formed a nice bottom off its 50 day simple moving average. It will be necessary to watch oil in the upcoming week following an up rise in civil unrest Egypt. Currently the most violent protests appear to be in Cairo; however, if protests widen and increases, the chance of slow downs in the Suez Cannel are possible. The Suez is a significant route for oil traveling by freighter, any disruption in delivery times could cause oil to spike even higher. On the other hand, gold gained a bit of confidence as many believe inflation may be starting up in the economy following monthly increases in the S&P/Case-Shiller Home Price Index.