President Barack Obama will speak today at the White House at 11:20 a.m. Washington time on steps he plans to make the U.S. government leaner, smarter and more consumer-friendly, a White House official said business card templates.
Debt-crippled Greece’s budget deficit is expected to hit 9.6 percent of economic output in 2011, about half a percentage point above target, the development minister said Wednesday.
Michalis Chryssochoidis said that an increase in the use of European Union structural development funds had contributed to lowering government overspending from 10.6 percent of gross domestic product in 2010.
“The good news is that absorption of European Union funds has exceeded all expectations,” Chryssochoidis said at an economic forum where the government hopes to attract investment from the United Arab Emirates.
But Greece, which is relying on billions in rescue loans from its European partners and the International Monetary Fund to keep afloat, had pledged to cut the 2011 deficit to 9 percent of GDP.
Greece ran up high budget deficits for years, building a suffocating debt load set to exceed 160 percent of GDP in 2011. In exchange for a vital euro110 billion ($140 billion) international bailout in May 2010, the country implemented a harsh austerity program, slashing pensions and salaries while repeatedly hiking taxes and raising retirement ages.
The country’s interim coalition government is rushing to pass a new batch of reforms and cutbacks, to secure a second, euro130 billion bailout package approved in October but not yet finalized instant personal loans guaranteed.
Fitch Ratings warned on Wednesday that Greece’s financial troubles could still worsen the eurozone crisis if it can’t work out a debt reduction deal with creditors, part of the second bailout package.
Fitch’s head of sovereign ratings David Riley said Greece “still has lots of potential to plunge Europe into crisis” and that “time is running out.”
Greece is in talks with private investors about a voluntary 50 percent reduction in their Greek bond holdings.
It needs to agree the deal before it can get another installment in its rescue loans, which it will need to repay euro14 billion in bonds that come due in March.
Riley said one complicating factor in the private creditors’ deal was the European Central Bank’s refusal to write down its estimated euro45 billion in Greek bonds. That means private bondholders have to be asked to take on more losses to reach a given reduction in Greece’s debt load.
Hildebrand will submit e-mails to parliament today that show his wife acted alone in making foreign currency trades that led to calls for him to resign, Der Sonntag reported yesterday, without saying where it got the information. SNB spokeswoman Silvia Oppliger declined to comment.
Everybody knows that January predicts the stock market’s direction for the year and that the best time to sell stocks is at their spring peak. And among stock market experts, it’s a sure bet that the market will soar in the year before an election.
But what passes for stock market wisdom is suspect when given a closer look. The most common error comes when people spot two events and assume that one causes the other.
And it drives economists, math geeks and plenty of money managers nuts.
“If you look at enough data in enough different ways, you’re going to find something that isn’t really true,” says Edward Keon, who leads a mathematics team at Prudential Financial.
The same seasonal patterns seem to pop up year after year. Some are valuable and some meaningless, Keon says _ like saying stocks tend to rise or fall depending on the month, the temperature in New York City or who wins the Super Bowl.
People “are simply being fooled by randomness,” says Burton Malkiel, professor of economics at Princeton University and author of the finance classic “A Random Walk Down Wall Street.”
Spend enough time digging through numbers and you’re bound to find some that always take the same path, he says. “But none can reliably predict the future.”
Here’s an examination of some of the oldest Wall Street aphorisms.
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The claim: As goes January, so goes the year.
The idea is that January works as a barometer for the stock market’s full-year performance: A strong first month often leads to a year of gains, and a weak one to a year of losses.
It comes from Yale Hirsch, father of the Stock Trader’s Almanac, and looks reliable. Since 1929, the calendar year has followed January’s lead 60 out of 83 times, according to Howard Silverblatt, senior index analyst at Standard & Poor’s. That’s a .723 batting average.
The suggestion that January somehow directs the course of the next 11 months is what irks economists and investors, including Dan Greenhaus, chief market strategist at the brokerage BTIG.
Expecting to hear praise for January’s forecasting powers, Greenhaus attacked the idea on his blog Jan. 2, the day before U.S. markets opened for 2012. He took the S&P 500 index’s returns since 1950, including dividends, and found that the four months following January also appeared to work magic. When April is down, the next 12 months return a negative 0.2 percent. When April is up, the S&P 500 returns 12.8 percent. It’s a similar story with February, March and April. But why?
“It’s true that if January is up, the year is up most of the time,” he says. “But if you look at any month, you’ll find the market tends to be up over the next 12 months. And the reason is very simple: the market tends to be up.”
The S&P 500 has climbed in three out of every four years since 1950. Pick nearly any month in which stocks rose and most of the time you’ll find that the year was headed in the same direction.
But what if stocks fall in January? It doesn’t mean the next 11 months will follow. Sometimes, the stock market starts the year in a hole and digs its way out. In 1992, the S&P 500 dropped 2 percent in January, then ended the year with a modest gain of 4.5 percent.
“If you’re starting in the hole, then the 12-month period is starting in the hole,” Greenhaus says. “That should be intuitive. Instead it gets treated as some sort of prognostication tool. It’s just what happens.”
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The claim: Sell in May and go away.
Like a flock of migrating birds, the stock market tends to travel south or north depending on the season. It rises through the winter months and falls late in the spring. Investors struggle through the summer until November rolls around and the market picks up again.
“Sell in May and go away” is a well-worn saying, but the numbers seem to back it up. Since 1990, the three months starting in July have been the worst quarter for the S&P 500. Last year, the S&P hit its peak on April 29, then hit bottom Oct. 3, right on cue.
Even many skeptics think “sell in May” probably has something going for it _ but they can only guess why.
“It’s harder to debunk this one,” says Nick Colas, chief market strategist at ConvergEx Group.
The flow of money into retirement plans and mutual funds may have something to do with it. Colas says databases that track cash moving into stock funds show patterns similar to the stock market trend: A strong start that evaporates as the year progresses.
In the first four months of 2011, Americans added $13 billion to U.S. stock funds, according to the Investment Company Institute. But they pulled $6.5 billion in May and then began withdrawing much more. By the end of the year, retail investors had pulled $131.8 billion out of U.S. stock funds.
Some tie the summer sluggishness to vacation season. Trading desks are thinly staffed in the weeks before Labor Day. Fewer traders means a drop in trading volume, which makes it easier for markets to take bigger swings, often down.
Here’s where that explanation falls short. Traders return to their desks after Labor Day in September and trading picks up. But for all major stock indexes, September is historically the worst month of the year. Since 1950, it’s the only month in which the stock market has fallen more than it has risen.
In a story Jan. 4 about The Boeing Co.’s announcement that it is closing its plant in Wichita, Kan., The Associated Press reported erroneously that the closure will cost 2,160 workers their jobs. An unspecified number of those workers will be allowed to transfer to the company’s plants in other states cheap pay day loans.
Consumer confidence in the U.S. rose last week to the highest level in more than five months and the pace of firings declined, showing an improving job market is bolstering the biggest part of the economy.
The Bloomberg Consumer Comfort Index (COMFCOMF) climbed to minus 44.8 in the period ended Dec. 31, the best reading since mid-July, from minus 47.5 the prior week. Applications for jobless benefits (INJCJC) decreased by 15,000 during the same time to 372,000, according to Labor Department figures.
A pickup in hiring will further lift Americans
Greece’s prime minister says his debt-crippled country faces a disorderly default in March if it fails to secure a continued flow of international rescue loans.
Prime Minister Lucas Papademos says decisions made in the next few weeks, ahead of a new visit by international debt inspectors, will determine whether Greece will remain in the 17-nation eurozone or revert to its pre-2002 currency, the drachma.
According to a transcript from his office, Papademos told union leaders and employer representatives Wednesday that Greece’s international creditors have called for a re-examination of labor costs to boost lagging competitiveness and fight high unemployment.
He warned that, unless significant reforms are made, Greece will not receive its next installment of rescue funds.
Construction spending surged to a near 1-1/2 year high in November as investment in public and private projects rose solidly, cementing expectations of
strong economic growth in the fourth quarter.
Construction spending increased 1.2 percent to an annual rate of $807.1 billion, the highest level since June 2010, the Commerce Department said on Tuesday.
Spending in October was revised to a 0.2 percent fall, after initially reported as a 0.8 percent rise.
Economists polled by Reuters had expected construction spending to rise 0.5 percent in November.
Overall construction spending was up 0.5 percent compared to November 2010.
Private construction spending rose 1.0 percent, advancing for a fourth straight month. Spending on residential projects increased 2.0 percent, with solid gains in both multifamily and single family homes.
The housing market is showing some signs of recovery, with builders breaking more ground on new projects to meet growing demand for rental apartments. It is becoming less of a drag on the economy and is expected to significantly add to growth in 2012.
Private nonresidential construction was flat in November after declining 0.6 percent the prior month.
Spending on public sector construction rebounded 1.7 percent in November as outlays on federal projects jumped 5.3 percent after dropping 7.5 percent in October.
State and local government spending rose 1.3 percent after falling 1.2 percent the prior month.
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