Reluctance in spending
Talk of recession and negative interest rates is emerging once again as U.S. corporate earnings remain mediocre.
Earthquakes in Japan amid the Finance Minister talking about "necessary" action against the strengthening of the yen was criticized by U.S. Treasury Secretary Lew as unnecessary. The U.S. retail sector weakened in February after a larger decline in January signaling reluctance of consumers to spend even as job "creation" appears to be improving.
Our concern of course is the quality of those jobs "created." We will await Fed Chair Janet Yellen statements as they occur in order to assess the real state of the U.S. economy. We continue to feel we are faced with the spectre of a global recession. Now for some actual information.
The 30-year Treasury bond closed Friday at 166 02/32nds, up 24/32nds with yield declined by 3.9 basis points on Friday to 2.561% but for the week was up 0.4 basis points. Weak U.S. industrial production and consumer confidence data the main impetus to bond trading. We prefer the sidelines.
The Dow Jones closed at 17,897.46, down 28.97 points. The S&P 500 closed at 2,080.73, down 2.05 and the Nasdaq closed at 4,938.22, down 7.67 points. For the week the Dow managed a gain of 1.8%. The S&P and Nasdaq also posted weekly gains. A decline in oil prices and concern over the meeting of major oil producers also weighed on equities and oil. We prefer the sidelines but remind investors that "what goes up must come down" and the extent of the decline we see could be dramatic. I once again suggest the implementation of strategic hedging programs.