3 Stories in the global economy that should not go un-noticed
The market experienced another tumultuous week as investors responded to fear about the looming debt ceiling and hope about a possible resolution. The government shutdown continued for another week, reaching its 11th day on Friday. Currently, about 500,000 federal employees are still furloughed, after many essential personnel were returned piecemeal to their jobs.
Despite the volatility, markets rebounded on Friday as hopes of a deal circulated in the media. For the week, the S&P 500 gained 0.75%, the Dow increased by 1.09%, and the NASDAQ lost 0.42%.
Here are the 3 stories this week that rose above the noise:
Greek Bond Yields Hit Post-Crisis Lows
Most recent evidence suggests that the Eurozone economy continues to emerge from its prolonged contraction, with the latest composite leading indicator readings showing a mild acceleration in economic momentum. An additional piece of evidence that suggests that near-term risk of a renewed European sovereign debt crisis has diminished is the yield on Greek debt, which has recently hit multi-year lows. A recent Financial Times article details the signs of stabilization in the troubled country, which provides further evidence that the Eurozone recovery appears to be gaining momentum.
40 Years after OPEC Embargo, U.S. Energy Is Giant
The growth in U.S. production of oil and natural gas over the past few years has received much attention and a Bloomberg article traces the roots back to the OPEC embargo which began 40 years ago. In addition to some good historical perspective on how U.S. energy supply has evolved, the article provides some interesting facts detailing how the risk of an energy supply shock for the U.S. has been reduced over the past 40 years.
More importantly, the article also outlines why the United States is likely to continue to become more energy independent in the coming decade, a very positive development which helps to offset some of the secular headwinds the country faces from demographic and debt concerns.
Low Gasoline Prices May Put $30 Billion in Consumers' Wallets
U.S. consumers are finally getting some relief at the pump. Gas prices are at their lowest level since January and have dipped below $3/gallon in some areas of the country. Overall, the national average is $3.34/gallon, which is 50 cents lower than 12 months ago.
The boost to consumers from lower gas prices may add as much as 0.2 percentage points to fourth-quarter GDP, according to economists at RBC Capital Markets. Gas prices have fallen from a combination of increasing supply of oil and lower demand following the end of the peak summer driving season.
Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team.
