1st June 2013
1) It feels as if the huge scale of unemployment finally became a factor in the thinking of Europe’s politicians and Eurocrats this week. The overall rate reached 12.2 per cent for the Eurozone as the BBC reported. That is 19.38 million people. But youth unemployment in Europe is a punishing 24.4 per cent and that translates into 62.5 per cent in Greece, 56.4 per cent in Spain, 42.5 per cent in Portugal and 40.5 per cent in Italy. Mindful Money’s economics writer Shaun Richards has been charting this for some time. On Thursday he noted that at last the idea of quitting the euro was getting serious consideration in Portugal. German website DW has some suggestions and reports on various EU initiatives. But can it move fast enough? The dire situation may begin to have some bearing on some of the more fundamental economic decisions too. The Guardian’s Larry Elliott thinks it may be unemployment not a voracious bond market that breaks up the currency.
2) The FTSE 100 ended May up by 2 per cent, but it feels as if the sort of market realities – the gap between earnings and valuations for instance, have finally come to bear. We have a fascinating situation where institutional investors are still confronted with very low potential yields on fixed interest but also equity markets worried about the scaling back of QE.
3) Neil Woodford attributes at least some of the performance of his Edinburgh Investment Trust to the avoidance – weighting zero – of mining stocks as trade website Investment Week reported this week. However Clive Beagles, manager of the JHOCM UK equity fund has bought back into the sector for the first time since 2009 with a move into Glencore. Of course, one manager is discussing his past performance, the other looking forward. But have miners become so unfashionable, that they could become worth buying again?
4) Another Bric sees a fall. India has posted its worst GDP growth for a decade – at 5 per cent as IndiaToday reports.
5) HSBC, in a bid to avoid business threatening activities such as money laundering across the US-Mexico border has employed the former director general of MI5 Sir Jonathan Evans, as the Herald Scotland reports. It should settle nerves of some investors who may have been more than a little spooked at even a small threat to the global bank’s US banking licence.