WrapManager’s Weekly Summary of Market and Economic News
Eurozone Exits Longest Recession in Over 40 Years>
Initial reports have the Eurozone posting 0.3% growth in the second quarter, signaling the Eurozone may have exited its longest recession in over 40 years. France and Germany helped pull the Eurozone up with 0.7% and 0.5% GDP growth, respectively, however Spain, Italy, and the Netherlands still posted negative GDP numbers.
In spite of potentially having exited its longest recession in 40 years, the Eurozone still carries a 12.1% unemployment rate as of June.1 That is almost double the current unemployment rate in the U.S., which as of July stood at 7.4%.2
Japanese Debt Tops 1 Quadrillion Yen
Japan’s outstanding debt (including borrowings) rose to a record 1,008.6 trillion yen, representing the most debt held by any country in the world. The fact that Japanese debt tops 1 quadrillion yen also means it’s debt burden is larger than the economies of Germany, France, and the UK—combined.
Japan is considering raising their sales tax from 5% to 8% in April of next year, followed by an increase to 10 percent in October 2015 to try to boost government revenues. The problem is potentially compromising growth as a result.3
Wal-Mart and Cisco Earnings Guidance Disappointed
Even though Wal-Mart hauled in revenue of $116.9 billion in the second quarter, this figure trailed analyst estimates of $118.5 billion. Wal-Mart cited the impact of the 2% increase in Social Security tax on its customers, and also lowered its profit forecast for the year.4
Cisco earnings guidance also disappointed, as the computer infrastructure equipment maker said it expects to cut 4,000 jobs, or 5% of its workforce, while also forecasting an increase in current quarter revenue of no more than 5% from the same quarter a year ago. Analysts had expected a gain of 7 percent.5
As always, if you have any questions about the above market commentary or would like to discuss the markets or your portfolio in more detail, please call one of our Wealth Managers at 1-800-541-7774.
Have a great weekend,
The Investment Policy Committee
Sources:
1 CNBC
