WrapManager’s Weekly Summary of Market and Economic News
According to recent data released by the National Bureau of Statistics, the Chinese economy is stabilizing and should be able to meet growth targets on the year of 7.5%. The government has recently introduced policy measures of eliminating taxes on small businesses and increasing investment in urban infrastructure and railways to help give the slowing economy a boost.1
China’s Long-Term Economic Goals
Over the long-term, China continues to indicate that they will tolerate lower growth rates as they move to reform the economy. Their goal is to rely less on exports and debt-finance construction for growth, and focus more on domestic demand while also reducing pollution and social inequality.1
Is the US Economy Slowing Down?
Many analysts were optimistic there would be a pickup in economic activity in the second half of the year, but recent data point to a potential softening in the US economy. Spending, which accounts for approximately two-thirds of the US economy, was fairly weak in July, rising by a modest 0.1%. Inflation for the month was also tame, rising only 0.1% to 1.4%.2
Income, savings, and personal income have been nicely on the rise since 2009 - a solid economic trend. Spending, however, appears to have somewhat peaked around late 2011, and has been declining since.3
Though there are some signs of a moderation in economic activity, these trends were contrasted by the positive revision to second quarter US GDP made this week. Initial reports had estimated GDP growth in the second quarter of 1.7%, however that figure has been revised significantly higher to 2.5% due to stronger export figures and more robust business spending.4
Why Did the Nasdaq Shutdown Last Week?
The NASDAQ stock market shut down for three hours on August 22 due to what officials are referring to as a problem with their software. Nasdaq’s system, known as the Securities Information Processor (SIP), was overloaded with information forcing it to use backup servers, which also experienced flaws. The problem was fixed within 30 minutes, but it took more time to contact regulators and other market operators to notify them of the problem and the fix.5
Syria: The U.S. May Have to Go it Alone
Britain’s parliament voted yesterday to abstain from taking any military action in Syria, in response to the regime’s use of chemical weapons on civilians. This was despite Prime Minister David Cameron’s insistence that Britain get involved.6
Have a great weekend,
The Investment Policy Committee
Sources:
1 Reuters
3 Thompson Reuters
