Weekly Commentary: The European Funk & Other Maladies…

June 5, 2012

06.05.12

Markets had their second-worst weekly performance for 2012 as ongoing concerns regarding Europe and China weighed on investors’ confidence.  Adding to the gloomy mood was an ugly U.S. jobs report on Friday.  Markets are likely oversold at these levels, but history has shown that they could stay at these levels for a while.

European leaders continue to drag their feet as the banking and liquidity concerns in Europe fester.  China reported tepid manufacturing data as they continue to grapple with slowing growth.  U.S. non-farm payrolls came in at their weakest level since May 2011 as payrolls grew by just 69,000 last month … less than half of what was expected.  No doubt, slowing global growth is beginning to impact growth in the United States.

The good news is that the markets have corrected over 10% and that much of the bad news is reflected in today’s prices.  Low interest rates, low inflation and declining oil/gas prices should help businesses and consumers to weather the economic storm.


Source: Standard & Poor’s, FactSet, J.P. Morgan Asset Management

Where are our world leaders?  Policy makers need to step-up and provide investors and tax-payers with a bit of certainty.  Until then, markets will likely remain in a funk.

Here are the closing index levels and weekly returns from last week:

Dow Jones 30               12,119              – 2.7%
S&P 500                         1,278              – 3.0%
Nasdaq                           2,747              – 3.2%
MSCI EAFE                   1,333              – 1.3%

10-year Treasury           1.47% (ugh!)

“You cannot escape the responsibility of tomorrow by evading it today.”
-Abraham Lincoln