WrapManager’s Weekly Summary of Market and Economic News
Eurozone Recession Showing Signs of Ending
In a sign the eurozone recession may finally be over, Germany posted robust 3.8% growth in factory orders from May this week, far outstripping estimates for 1.1% growth and marking the best growth in 8 months. Italy added good news into the mix as well, in reporting that their GDP fell by only 0.2% in the second quarter, versus a 0.4% expected contraction. They’re inching towards positive GDP growth, as their GDP in the first quarter was -0.6%. Economic activity is picking up.1
The UK Reporting Strong Numbers in Services and Retail
The UK is also seeing a nice economic boost. The services sector expanded last month at its fastest pace in more than six and a half years, and retail sales also posted strong gains as total sales grew 3.6% in July, marking the best July growth since 2006.3
Australia Cuts Interest Rates in an Effort to Boost Economy
In Australia the economic picture is showing signs of slowing, and in response the Reserve Bank of Australia cut its policy rate to 2.5%, the lowest level ever for Australia. The Aussie economy is growing a bit below trend, which owes some attribution to a slowdown in the mining sector,4 which comprises approximately 13.5% of their GDP.5
Interesting fact of the day: Australia hasn’t had a recession in 21 years.6
US Congress Takes a Five Week Vacation, Leaving Behind Some Unresolved Policy Issues
US Congress is on vacation for five weeks starting last Friday, leaving behind ongoing disputes on spending and debt, the deficit, immigration, and entitlement reform. Of particular importance when they return will be passing the next round of the continuing resolution to raise the debt ceiling so the government can meet their obligations.
Two Big Acquisitions in the Media Industry
The Washington Post and Boston Globe were purchased this week in two blockbuster deals involving print newspaper. Jeff Bezos, founder of Amazon.com, surprised Wall St. when he announced his purchase of the Washington Post for $250 million. He makes this purchase not as a part of the Amazon.com company, but rather as a personal investment.7
In Boston, a similar but smaller deal was struck between Boston Red Sox owner John Henry and the New York Times Company, when he announced his purchase of the Boston Globe newspaper for $70 million. The two deals appear like moves designed to try to save the newspapers, respectively.8
Have a Great Weekend,
The Investment Policy Committee
1 CNN.com
