For the week, the S&P 500 gained 1.07%, the Dow increased 0.64%, and the Nasdaq gained 2.12%.
Here are the 3 stories this week that rose above the noise:
Murky Data Complicate China’s Policy Choices
As China's growth slows toward a 20-year low, economists are calling for consumers to shoulder more of the burden of supporting the world's No. 2 economy. But the country's leaders are increasingly saying Chinese consumers aren't shirking their responsibility — they're just undercounted.
If China’s official data understates the country’s household consumption, a resilient China should continue to be a global growth driver, with stronger consumer demand being a boon for a variety of enterprises — from mobile phone providers selling phones to China's middle class, to copper miners in Chile supplying raw materials for China's expanding electrical grid. If China’s central bank officials are wrong in their assertion regarding the official data, a complacent government holding back from needed reforms risks a sharper slowdown, with global repercussions.
July's Jobs Bummer: Want Fries with That?
The U.S. economy added 162,000 non-farm payrolls in July, which was the 34th consecutive month for positive job growth, but below the average of 197,500 through the first six months of 2013. Additionally, the majority of the jobs added into the economy last month were in low-paying employment sectors including retail, hospitality and food services.
Another negative trend in the employment data is the increase in part-time hires. Last year, 15 percent of new jobs created were part-time, but the percentage increased to 35 percent in 2013. Positively, the unemployment rate is at its lowest level since 2008 (7.4 percent), but a few negative trends are developing in the labor market.
Well Oiled
Europe’s sovereign debt issues have not dominated the headlines since last summer. Over that time, we’ve seen other issues such as the fiscal cliff, the Presidential election, and rising U.S. interest rates get the attention of the press.
However, while things may have stabilized for Europe, a recent piece from The Economist reminds us that not much has been solved. Italy is a great example. Italy has covered 70 percent of its funding requirements for 2013 and foreigners now own less than 40 percent of Italian debt, as opposed to the 50 percent they owned four years ago.
So, while things have improved, is it enough to prepare Italy for its next potential crisis? With a debt-to-GDP of more than 130 percent and more than $325 billion in debt due for redemption over the next year, concerns over Italy and the rest of Europe could quickly resume.
Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team.
