My name is Gregory Gadzinski and some months ago, at the Melange Team request, I had the duty and extraordinary challenge to come up with a weekly wrap. Dedication is what you need in those gloomy days. Thus, after a spring break, weekly wrap is coming back and more ready than ever to shed a summer light on what makes the financial news and what moves the markets.
The markets showed a yo-yo behaviour fed by some news shocks, namely the consumer confidence and unemployment numbers. Who said that unemployment was a lagging indicator? Well, it is indeed but the pace is clearly not decelerating, and analysts (Reuters survey) expect it to stabilize only next year !
One should not easily forget that we may be suffering the worst crisis in a century and nonetheless green shoots here and there, ?the economy is still in a recession mode. The markets remains unpredictable, or in Extremistan as N.N. Taleb would say. The markets, as a human system, can cheer one day and go down the day after, just like a human can dance on stage one day and pass away the next one. Does it mean that after its best quarter in 20 years, global stock markets are heading for another dip ? The odds have just increased.
Man of the week: Bernard Madoff
Cheers followed the 150 year sentence pronounced against Madoff. ?I?leave a legacy of shame for my children and grandchildren? Madoff said, but the trouble is that he?s already a successor, namely Allen Stanford. Fraud is not going to disappear for life, there is nothing to cheer about?
Word of the week: Inconclusive
The economic data showed?both positive and negative numbers, which led to more confusion about the state of the economy. Accordingly, the markets reacted in a yo-yo fashion this week while yesterday bad unemployment numbers increased the odds of a delayed recovery. Welcome back to Volatility land !
Phrase of the week: ?Where are the jobs??
Study Committee Chairman Tom Price (R-GA), after the Bureau of Labor Statistics announced that 467,000 more jobs were lost in June, far more than expected, pushing the unemployment rate up to 9.5% – a 25 year high.?
Number of the week: 100 %
This is the increase in unemployment in the US, since the recession began, the U.S. economy has lost 6 ? million jobs and continues to lose jobs at a rapid pace.
Come back of the week: Rogue trader
After Jerome Kerviel of Socgen, we have now PVM Oil Associates broker Steve Perkins. PVM, the world?s largest over-the-counter oil brokerage, said on Thursday it had been the ?victim of unauthorised trading? that triggered almost $10m (?7m) of losses for the company due to massive bets in the Brent oil market. On Tuesday, everyone wondered why oil prices spiked to their highest level this year?yeah, surprising, commodities never witnessed speculation before?
Reform of the week: ?Banking Bailout out by PE
?Private equity that want to buy troubled banks would have to maintain significant capital levels and promise not to ?flip?? investments for at least three years. The proposed rules, which would require private equity companies to maintain a tier one capital ratio of at least 15 per cent ? three times what is typically required of other banks ? for at least three years?. (FT)
I guess that banks on the verge of collapsing did not really welcome the proposals by the US regulators. As a reminder, 52 banks went belly up in 2009 (compared to 25 in 2008). More to come?
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