The Banking and Strategy Initiative

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The Deal Economy and US Economic commentary from week of April 22 : Facebook listing to help the NASDAQ 100

The week past had a lot of misplaced Housing “crisis” data and Jobless claims data so you possibly did not miss much as I forced myself on a holiday.  As expected April Jobless claims data tracked 400k. it has been seen however that a bump up in March and April is normal and if 2011 runs true again it would just be a better beginning for the decreasing claims to impact in the rest of the year. Q1 GDP at 2.2% may seem lower enough according to the pessimistic drops in forecast that came in January but almost everyone agreed it is more like tracking the December 3% forecast and the US recovery is well underway. Samsung’s 45 mln smart phones and another 36 mln from Apple decimated the microsft/Nokia/google market recoveries for Q1 but even they trend positively this year nonetheless as investors fear the worst from the top for Samsung and Apple (market capitalisations if nothing else)

A couple of good healthcare deals again happened while we were away with Leukemia medicine and Atavis Pharmaceuticals for Watson. China’s banks, profligate with loan issuance for three years are able to be equally profligate in capital raising larger issues not going anywhere near the edges as many other IPOs tend to. BTG Pactual managed the largest listing of all time in Financial Servicess and the US financial services recovery was also intact.

The Bydureon maker Amylin was on the run from Carl Icahn and the $22 a share bid by BMS as Victoza from Novo Nordisk took away the $2.5 bln pedestal for most sales for anti diabetic formulations and Pfizer gave away leadership in Nutrition ( Infant formula) in China to Nestle with a $12 bln sale of its Nutrition and Animal Health divisions

Spain was in trouble as unemployment, we predict, is likely to trend to 33% of the labor force, already at 24.5% in Q1 at 5.6 mln unemployed while yields above 6% keep everyone busy after the recovery newss petered out ahead of the bank results season. Israel did not attack Syria/Iran/Libya and the Economic data till june at least is going to be ruled by the down trending Oil prices average across the globe from Brent to WTI. Meanwhile Italy joined cries for higher fiscal support in 2012 , pushing back its balanced budget target by a year to 2014

Economic data worth taking to heart was how Boeing orders took down the durable Goods orders down more than 6.5% from a +2.2% number for February. Transportation orders fell 12%  after non Defense aircraft orders fell 47.6%. However, even ex Transportation Durable Orders are down -1.1% in March 2012

The FOMC meeting was a non event again with only 1 out of 9 supporting low interest rates now. Current policy was supported by a 9 to 1 vote and Bernanke was largely uncontested as he recommended  Fiscal causes be probed further for the degradation in growth and govt cutbacks look to be easy targets for the non achievement of the 2.5% GDP growth target. Also, no, Bernanke assured us “exceptionally low” rates did not mean a hike to 1% but only the current low rates.

Meanwhile, Amazon lit up market interest with  a phenomenal Q1 $40 bln revenue and a beat by most publishers as they got cornered on the price fixing and market collusion allegations and settled, giving hope to the “$9.99” one price Amazon heralded for nearly three years before the advent of the iPad in the ebooks market. iPad sold only 12 mln in Q1 while Kindle Fire took 54% of the share for Android based devices ( which would be nearly 30% from 20% expected by us iPad fans)

The Chicago and Richmond indices did nothing to quell uneasiness coming from across the pond in big droves leaving next week to a positive scramble for Auto sales and China PMI among others, exactly leaving expectations where they were in November before the LTRO eased up pressures globally and equities started 2012 nose upward. The UK recession and the China PMI reported at week end was not much of a buzzkill either as China’s improvement overshadowed the later news from Europe which everyone rightfully keeps discounting , hopefully as inane inter family feuding more than Economic impact of any worthwhile on the US or Asia which power independently. Even continental Business confidence data was mostly positive from France to Swiss (Consumption Index) . The week ended much sober however after the early reports on German manufacturing and Services declines ( PMIs to 46 and 47.5(services) ) and the last reports on the heftier increases in wages keeping much behind Consumer growth in inflation and the Great Britain report of a 0.2% contraction for the quarter to a 0% Y/Y growth should largely be ignored. US manufacturing data may be trending downward again but is just self correcting over enthusiasm from Q1 and is largely above year ago data in all regions.

Last but not the least US Treasury reported another $8 bln reduction in MBS holdings in the Fed balance sheet as Money supply was a busy $26 bln and BoJ finally added another 5 T Yen to the Asset purchase program taking it to 70 T yen

Meanwhile , in the Corporate rat race, the latest race to be is Apple vs Nasdaq as Nasdaq gets ready to include Facebook in the Nasdaq 100 in just three months after listing.

 

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