Stocks close higher for the first time in June on Thursday. World stocks down on Friday.
The U.S. trade deficit dropped nearly 7% in April according to the Department of Commerce and reported by the Washington Post. There was a $43.7 billion shortfall in April down from $46.8 billion in March. Imports were at $219.2 billion compared to exports of $175.6 billion in exports. The Obama administration credits the National Export Initiative which has increased exports by 18% since its inception.
The Associated Press indicates that the positive news boosted the markets up by 75 points, closing at 12,124 on Thursday. Yet news of an increase in Chinese imports is driving the markets lower on Friday.
Equity in homes lowest since WWII
The equity individuals have in their homes is at the lowest point since WWII, according to an article in USA Today. Average home equity was at 61% in 2001 but fell to 38% in the first quarter of 2011. Home prices are at their lowest prices since 2002. Robert Shiller, the economist who cofounded the S&P/Case Shiller Index indicates that further declines in home prices of up to 5-25% within the next five years will not be surprising.
OPEC meeting may lead to split in the cartel
The meeting held by OPEC cartel leaders on Wednesday apparently ended much more abruptly than expected and may lead to a potential split in the cartel. Saudi Arabia, an ally of the U.S., wanted to increase production thus helping to overcome the global recession. Iran, the second most powerful member of the cartel, is a foe of the U.S., and has no desire to assist the U.S., hoping to line its own pockets with increased oil prices. Apparently members are already ignoring limits set by the cartel and pumping more than agreed upon. Saudi Arabia is the leader in ignoring the cartel agreements. Whether a break-up of the cartel would be good or bad is unclear, but oil prices did not react as violently as anticipated.
Apple becoming key store in retail malls
While malls traditionally have relied upon anchor stores such as Macy's or JC Penney to successfully drive business to a mall, the new winner in retail revenue at malls is now Apple, according to the Wall Street Journal. Apple retail stores are averaging $34.1 million per store annually compared to Macy's at $29 million per store and JC Penney's $16.1 million per store. Currently Apple doesn't get any leasing breaks because it is not viewed an anchor, but look for those terms to begin to change in the future.
Hedge funds becoming key lenders for middle market companies
Middle market companies seeking loans have found a new lender, hedge funds, according to the New York Times. With banks tightening their credit requirements and failing to issue new loans, mid-sized companies have borrowed $6 trillion from hedge funds, securing jobs for 32 million employees. Highbridge fund is owned by J.P. Morgan and provides a $1.6 billion fund for mid-sized companies. Blackstone Group, another hedge fund, has loaned over $3 billion. Concerns include the higher interest rates charged by the funds, potentially quicker payoffs demanded, and looser regulation of these entities.
Stalled economy may lead to further violence in Egypt
While the Egyptian revolution provided hope for its citizens in the spring, that hope has disintegrated as the important tourism industry has all but disappeared. The economy is at a halt, according to the New York Times. Potential solutions include a tax on Muslims of 7.5% but not on all citizens which could result in greater clashes between religious groups. The Western nations have pledged $20 billion in aid.
US behind in developing "green" economy
The U.S. has not developed its "green economy" as quickly as some of its European counterparts, according to the New York Times. The clean technology sector is booming in Europe. The $5 trillion business has not been adopted in the U.S. and may impact our competitive position in the future. One of the challenges is the skepticism of many US citizens regarding global climate change.