Newsletter of Economic and Market Events
Best Investments in 2007
U.S. Total stock market returned 6% in 2007, Stocks have underperformed while Bonds were above their historic average and inflation was above average 4.1%. Gains were punctuated by sell-offs in February/March (NASDAQ -7.9%), July/August (NASDAQ -12.4%) and November (NASDAQ -11.2%).
Of the 5 largest sectors in the U.S. Economy: Natural Resources performed best 36.7%, Technology 15.5% and Health 7.1% while Financials -18.9% and Real Estate -19% returns were negative. By size: Mid Cap 6.7%, Large Cap 3.5% while Small Cap -1.2% and Micro Cap -9.4% lost. Gold rose 31.6% and oil 57.4% had historic gains with commodity prices (CRB) 16.7%.
Global markets rose 21.8% of the World's largest economic regions: Asia driven by China (Shenzen 167.7% / Shanghai 96.6% / Hong Kong 39%) and India 47.1%, followed by Latin America 48.5% and Europe 7.0%. Of the World's largest Developed non-U.S. Economies: Germany returned 22.3%, Canada 7.1%, Britain 3.8%, France 1.3% while Japan -11.1% was negative. In the Emerging markets which returned 56%: Brazil 43.6% and Russia 19.2%. Hedge funds returned on average less than 5% with Private Equity outperforming hedge funds (PE had problems in Q4 acquiring funding).
Those who diversified with MPT did best, a trend which should accelerate – indicative are the returns of non-U.S. markets just mentioned. U.S. returns in 2007 were muted because of the 'credit crisis' caused by non-performing, non-prime U.S. mortgage loans.
Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
2007 complete News
2007-09 PANIC facts (click)
Federal Reserve loosening cycle - FOMC cut inter-meeting 8/17 - the 'discount rate' to 5.75% from 6.25% citing tighter credit and shaken financial markets. Central banks in the U.S., Europe and Asia had injected more then $400 billion (Aug 9-16) into the banking system providing liquidity to global credit markets. Libor traded up to 240 bps over 3-month Fed funds rate. Fed Funds rate currently stands at 4.25%.
Congress, Federal Reserve and other Federal agencies proposed new guidelines for subprime mortgage loans (7.5 million and approximately 5 million Alt-A or non-traditional / non-prime loans) because of growing delinquencies, foreclosures and bankruptcies. Effecting over 2 million Americans with over $1.9 trillion of subprime mortgage loans.
U.S. 10 yr Treasuries end the year at 4.02%. Inverted Yield curve of U.S. Treasuries ends Jun 7 '07 it began on Dec 27 '05 (75 weeks) - the last U.S. Bond yield inversion was from Feb 24, '00 - Dec 22, '00, 8th time since 1980. Investors shied away from shorter U.S. Treasury maturities impacting global debt markets (10 yr typically exceeds 2 yr yields by aprox. 90 bps). Inversions had averaged 30 weeks (9 to 59 weeks) and -46 bps (-8 to -133 bps). The "carry-trade" (borrowing in low-interest rate countries) fueled M&A activity worldwide.
- U.S. Treasuries returned an average of 8.7% in 2007 - compared with 3.0% in 2006, 2.9% in 2005, 3.5% in 2004 and 2.3% in 2003. U.S. 10 yr. Treasuries rallied 27.8% from 5.32% (Jun 13) to 3.84% (Nov 26) - in 23 weeks.
Dollar ends the year at $1.46 - traded $1.49 (Nov 23) to the Euro – falling from $1.17 (Dec '05) a 26% depreciation in 2 years. British pound hits a 26-year high trading above $2.11 to the dollar while the Canadian dollar traded above $1.10.
U.S. GDP in 2007 advanced by 2.2%. GDP advanced by 3.3% in 2006, 3.2% in 2005, 4.4% in 2004, 3.0% in 2003 and 1.9% in 2002.
Earnings for S&P 500 companies in the 3rd quarter of 2007 was negative for the first time since Q4 2001 - Q1 2002.
2007 sales of single-family homes declined 13% and prices dropped 1.8% - the first decrease since 1968 and probably since the 1930's (NAR records began in 1968).
$100 billion in reported losses at more than 20 of the world's largest banks and securities firms holding SIVs (Structured Investment Vehicles holding non-performing, non-prime U.S. motgage loans).
U.S. venture capital climbed to a 6 year high of $29.4 billion in 2007 (3,813 deals), $26.6 billion in 2006 up from $19.7 billion in 2003 - $40.6 billion in 2001 (4,500 deals).
Gold ends the year at $838 - traded $848 (Nov 7) - highest in 27 years (when it traded 2 days above $800, 1/18/80, $835 and 1/21/80, $850). Platinum trades at all-time high of $1551.50 (Dec 26). Silver traded $15.90 matching its highest level in December 1980. Uranium traded at an all-time high of $136.
- Oil ends the year at $96 - traded at an all-time high of $99.29 (Nov 21) - up almost 100% from Jan '07 lows.
- Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $479.50 (Dec 31) up 26% in 2007.
Total global foreign-exchange reserves surpass $6 trillion - the U.S. dollar accounts for 63% while the Euro accounts for 27%.
ECB raised interest rates to 4% - the 8th increase for the Euro since Dec '05. The Bank of England raised rates up to 5.75% and the Bank of Japan raised interest rates from 0.25% to 0.50%.
Global mergers and acquisitions exceed $4.4 trillion - a record surpassing the $3.55 trillion in 2006.
Europe (24 markets, including Russia and eastern Europe) at $15.7 trillion passes U.S. in stock market value ($15.6 trillion) for the first time since WWI.
BRIC emerging markets - Brazil became the last member to reach $1 trillion in overall stock market value. Russia surpassed $1 trillion in September of 2006, then China (January '07) and India (May '07).
China's CSI 300 index surged 161% - the Chinese stock market overtook the Japanese market (8/07) in capitalization. Shanghai Composite Index rallied from below 1000 (Jun 6 '05) to 6,124 (Oct 16, '07) more than 512%, in little more than 2.3 years - as over $2.3 trillion of Chinese savings (earning less than 3%) flooded into Chinese stocks.
- PetroChina became the first $1 trillion company as it debuted on the Shanghai Exchange, 11/5 (Exxon Mobil is valued at $475 billion). The People's Bank of China raised borrowing and lending rates in order to cool inflation. Additionally, the Chinese government reduced the tax on personal savings and raised bank reserve requirements to encourage savings and curb a possible asset bubble. 60 million brokerage accounts were opened in 2007.
- China adds gold (also aluminum and steel) becoming the world's largest producer - 276 metric tons of gold in 2007 overtaking South Africa (largest producer since 1905).
Sovereign wealth funds 2007 high-profile purchases: China $20 billion in China Development Bank (Dec. 31), Singapore up to $5 billion in Merrill Lynch (Dec. 24), Singapore $9.75 billion and undisclosed Middle Eastern $1.8 billion in UBS (Dec. 10), Abu Dhabi $7.5 billion in Citigroup (Nov. 26), China $2.7 billion in China Everbright Bank (Nov. 7), Abu Dhabi $1.1 billion in Och-Ziff (Oct. 29), China $1 billion in Bear Stearns (Oct. 22), Qatar 20% of the London Stock Exchange and 10% in the Nordic bourse (Sept. 20), Abu Dhabi $1.35 billion in Carlyle Group (Sept. 20), China $3 billion and Singapore $2 billion in Barclays (July 23), Abu Dhabi $750 million in ICICI Bank (India's largest bank) (July 13), China $3 billion in Blackstone Group (May 20) and Abu Dhabi undisclosed stake in HSBC (May 2).
- Sovereign wealth fund (SWF) first established in the 1950s (Kuwait's Kiribati, the oldest) estimated value of $1.8 trillion. 31 SWFs from 23 nations, the largest is Norway's Government Pension Fund ($326 billion) - 13 are based in the Middle East / North Africa, 10 Asia-Pacific, 4 Sub-Saharan Africa, 3 Non-Pacific Asia and Norway, about half the funds were established since 2000.
UAW workers at General Motors, Ford & Chrysler (Cerberus Capital Management) divested their multi-billion dollar health care obligation to a UAW-run VEBA trust.
Steriods dominated Major League, Olympic and International sports as Barry Bonds, Marion Jones, Flyod Landis and many other faced accusations / reprisals.
Month of December 2007
Dow: 13,264
Dow month: -0.80%, 6 mo: -1.07%, ytd: 6.43%
S&P 500: 1,468
S&P 500 month: -0.88%, 6 mo: -2.33%, ytd: 3.53%
NASDAQ: 2,652
NASDAQ month: -0.30%, 6 mo: 1.88%, ytd: 9.81%
FOMC Easing move - December 11 - Fed Funds rate to 4.25% from 4.50%.
Federal Reserve announces an agreement with the European Central Bank, Bank of England, Bank of Canada and the Swiss National Bank creating a (temporary) auction facility (establishing temporary swap arrangements) providing reserves for up to 6 months - to "help promote the efficient dissemination of liquidity" when other lines of credit are "under stress."
European Central Bank (ECB, Dec 17) injects a record €348.6 billion ($501.5 billion) lending (unlimited) to all banks submiting bids of at least 4.21% for 2-week funds at its weekly refinancing auction.
Wheat trades at all-time high above $10-a-bushel (Dec 17).
U.S. home prices fell for the sixth consecutive quarter 5.8% (NAR, compared to 4Q06) sixth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 185.03.
China adds gold (also aluminum and steel) becoming the world's largest producer - 276 metric tons of gold in 2007 overtaking South Africa (largest producer since 1905).
U.S. Mortgage lenders have agreed to freeze the interest rates on adjustable-rate (subprime) mortgages for 5 years for mortgages written between January 2005 and July 2007 - FHASecure also offers relief to borrowers.
Month of November 2007
Dow: 13,371
Dow month: -4.01%, 6 mo: -1.88%, ytd: 7.29%
S&P 500: 1,481
S&P 500 month: -4.39%, 6 mo: -3.20%, ytd: 4.44%
NASDAQ: 2,660
NASDAQ month: -6.96%, 6 mo: 2.15%, ytd: 10.14%
U.S. 10 yr. Treauries rally 27.8% from 5.32% (Jun 13) to 3.84% (Nov 26) - in 23 weeks.
Oil trades at an all-time high of $99.29 - up over 43% in 10 weeks.
Gold trades $848 - highest in 27 years when it traded 2 days above $800 (1/18/80, $835 and 1/21/80, $850). Silver trades $15.90 matching its highest level (December 1980).
Shanghai Composite Index loses 21.9% from its high of 6,124 (Oct 16) to 4,778 (Nov 28) and Hong Kong Hang Seng Index loses 19% from its high of 31,958 (Oct 30) to 25,861 (Nov 22). PetroChina becomes the first $1 trillion company (as it debuted on the Shanghai exchange, 11/5) - Exxon Mobil is valued at $475 billion.
Month of October 2007
Dow: 13,930
Dow month: 0.25%, 6 mo: 6.65%, ytd: 11.77%
S&P 500: 1,549
S&P 500 month: 1.51%, 6 mo: 4.52%, ytd: 9.24%
NASDAQ: 2,859
NASDAQ month: 5.85%, 6 mo: 13.23%, ytd: 18.39%
FOMC Easing move - October 31 - Fed Funds rate to 4.50% from 4.75%.
Uranium falls from an all-time high of $136 to $75 - a 45% drop in 4 months.
Royal Bank of Scotland offers $101 billion for ABN Amro ($3.1 trillion of assets) - in the largest bank takeover ever.
Earnings season for 3Q07 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 3Q07 is -4.5%, negative for the first time since Q401-Q102.
Month of September 2007
Dow: 13,895
Dow month: 4.03%, 6 mo: 12.47%, ytd: 11.49%
S&P 500: 1,526
S&P 500 month: 3.60%, 6 mo: 7.46%, ytd: 7.62%
NASDAQ: 2,701
NASDAQ month: 4.04%, 6 mo: 11.57%, ytd: 11.84%
FOMC Easing move - September 18 - Fed Funds rate lowered 50 basis points to 4.75% from 5.25% and the 'discount rate' to 5.25% from 5.75%.
U.S. 10 yr. Treauries rally 18.4% from 5.32% (Jun 13) to 4.30% (Sep 10) - in 12 weeks.
U.S. home prices down -2.0% in 3Q07 (NAR, compared to 3Q06) fifth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 195.68.
73,000 UAW workers strike General Motors for 2 days (first nationwide strike since 1970) - GM removes a $51 billion health care obligation to a UAW-run VEBA trust (funded with $35 billion).
Month of August 2007
Dow: 13,357
Dow month: 1.11%, 6 mo: 8.88%, ytd: 7.17%
S&P 500: 1,473
S&P 500 month: 1.24%, 6 mo: 4.77%, ytd: 3.88%
NASDAQ: 2,596
NASDAQ month: 1.96%, 6 mo: 7.45%, ytd: 7.49%
Federal Reserve cut (inter-meeting, 8/17) the 'discount rate' to 5.75% from 6.25% citing tighter credit and shaken financial markets. Central banks in the U.S., Europe and Asia had injected more then $400 billion (Aug 9-16) into the banking system providing liquidity to global credit markets. Libor trades up to 95bp over 3-month Fed funds rate.
Chinese stock market ($4.72 trillion) overtakes the Japanese market ($4.7 trillion) in capitalisation - Shanghai Composite Index rallies from below 1000 (Jun 6 '05) to 5,235 (Aug 31) more than 423%, in little more than 2 years.
Month of July 2007
Dow: 13,211
Dow month: -1.47%, 6 mo: 4.67%, ytd: 6.00%
S&P 500: 1,455
S&P 500 month: -3.19%, 6 mo: 1.18%, ytd: 2.61%
NASDAQ: 2,546
NASDAQ month: -2.19%, 6 mo: 3.37%, ytd: 5.42%
CME (Chicago Mercantile Exchange) purchases the CBOT (Chicago Board of Trade) consolidating futures and options trading in a $11.9 billion merger.
People's Bank of China raised interest rates to 3.33% from 3.06% and the lending rate to 6.84% from 6.57% - in order to cool inflation (5th increase in 15 months). Additionally, the government reduced the tax on interest income (5% from 20%, effective 8/15) and raised bank reserve requirements to 12% from 11.5% to encourage savings and curb possible asset bubbles.
Ontario Teachers' Pension Plan agreed to purchase a 52% interest in Canada's largest phone company, BCE Inc., in the largest buyout ever, $48.5 billion. Also, Canadian's Alcan agrees to Australia's Rio Tinto bid of $38.1 billion.
J.K. Rowling releases her 7th and final Harry Potter book becoming the first billion dollar author.
Earnings season for 2Q - the growth rate for the S&P 500 index was 7.7%.
Month of June 2007
Dow: 13,408
Dow month: -1.60%, 6 mo: 7.58%, ytd: 7.58%
S&P 500: 1,503
S&P 500 month: -1.76%, 6 mo: 5.99%, ytd: 5.99%
NASDAQ: 2,603
NASDAQ month: -0.04%, 6 mo: 7.78%, ytd: 7.78%
ECB raises interest rates to 4% - the 8th increase for the Euro since 12/05. Bank of England to raise rates to 5.75% next month (5th increase since 8/06).
U.S. home prices down -1.5% in 2Q07 (NAR, compared to 2Q06) fourth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 199.44.
BRIC emerging markets - Brazil becomes the last member to reach $1 trillion in overall stock market value. Russia surpassed $1 trillion in September of 2006, then China (1/07) and India (5/07).
Blackstone Group becomes the first large U.S. private equity firm to go public - valuing the firm at $33.5 billion.
U.S. inverted yield curve ends Jun 7 '07 it began on Dec 27 '05 (75 weeks) - the last U.S. Bond yield inversion was from Feb 24, '00 - Dec 22, '00, 8th time since 1980. Investors shied away from shorter U.S. Treasury maturities impacting global debt markets (10 yr typically exceeds 2 yr yields by apr. 90 bps). Inversions had averaged 30 weeks (9 to 59 weeks) and -46 bps (-8 to -133 bps). The "carry-trade" (borrowing in low-interest rate countries) fuels M&A activity worldwide.
Month of May 2007
Dow: 13,627
Dow month: 4.33%, ytd: 9.34%, 6 mo: 11.50%
S&P 500: 1,530
S&P 500 month: 3.24%, ytd: 7.90%, 6 mo: 9.29%
NASDAQ: 2,604
NASDAQ month: 3.13%, ytd: 7.83%, 6 mo: 7.12%
S&P 500 closes above its all-time closing high - despite the fact that Technology (60% lower) and Telecom (44%) sectors still remain lower than their March 2000 high.
Daimler sells 80.1% controlling interest in Chrysler to private-equity firm Cerberus Capital Management for $7.4 billion.
Shanghai Composite Index rallies 100% in 113 trading days (200% in the past 12 months) - from below 2,000 (Nov 29) to above 4,000 (May 9) as some of $2 trillion of Chinese savings (earning less than 3%) flood into stocks (more than 100 million brokerage accounts are now open, 25 million opened ytd).
Month of April 2007
Dow: 13,062
Dow month: 5.73%, ytd: 4.81% 6 mo: 8.13%
S&P 500: 1,482
S&P 500 month: 4.37%, ytd: 4.51%, 6 mo: 7.63%
NASDAQ: 2,525
NASDAQ month: 4.30%, ytd: 4.55%, 6 mo: 6.72%
U.S. Dollar trades $1.37 to the Euro - falling from $1.17 (12/05) a 17% depreciation in 17 months. British pound hits a 26-year high trading above $2 to the dollar.
Europe (24 markets, including Russia and eastern Europe) at $15.7 trillion passes US in stock market value ($15.6 trillion) for the first time since WWI.
Toyota overtakes General Motors (2.35m cars and trucks sold to 2.26m units) in the first quarter of 2007 - ending GM's 76 year reign as the world's largest carmaker.
Earnings season for 1Q - the growth rate for the S&P 500 index was 7.9%. The 1Q07 marks the end of 3.5 years of double-digit earnings growth. In U.S. corporate history 14 quarters of consecutive double-digit earnings growth for the S&P 500 index was a record.
Month of March 2007
Dow: 12,354
Dow month: 0.70%, ytd: -0.87% 6 mo: 5.78%
S&P 500: 1,420
S&P 500 month: 1.00%, ytd: 0.14%, 6 mo: 6.37%
NASDAQ: 2,421
NASDAQ month: 0.21%, ytd: 0.25%, 6 mo: 7.22%
U.S. home prices down -1.4% in 1Q07 (NAR, compared to 1Q06) third consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 201.01.
Federal Reserve (and other Federal agencies) propose new guidlines for subprime mortgage loans (7.5 million and aproximately 5 million Alt-A or nontraditional loans) because of growing delinquencies, foreclosures and bankruptcies.
European Central Bank (ECB) raised interest rates to 3.75% from 3.50% (7th time since 12/05) for 13 European nations.
Month of February 2007
Dow: 12,268
Dow month: -2.80%, ytd: -1.56% 6 mo: 7.79%
S&P 500: 1,406
S&P 500 month: -2.23%, ytd: -0.85%, 6 mo: 7.90%
NASDAQ: 2,416
NASDAQ month: -1.91%, ytd: 0.04%, 6 mo: 10.67%
Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $414. Uranium trades $85/lb, Nickel and Lead trade at new record highs.
Bank of Japan raises interest rate from 0.25% to 0.50%.
TXU, the largest power producer in Texas, goes private in largest leveraged buy-out & private equity deal in U.S. corporate history at $45 billion.
Fortress Investment becomes the first U.S. hedge fund to be listed and traded publicly.
The Blackstone Group buys Equity Office Properties Trust for $39 billion - surpassing the HCA deal for $33 billion (Nov '06).
Month of January 2007
Dow: 12,621
Dow month: 1.27%, ytd: 1.27% 6 mo: 12.84%
S&P 500: 1,438
S&P 500 month: 1.41%, ytd: 1.41%, 6 mo: 12.70%
NASDAQ: 2,463
NASDAQ month: 1.99%, ytd: 1.99%, 6 mo: 17.79%
Oil futures trade below $50 for the first time since May '05.
Earnings season for 4Q - the growth rate for the S&P 500 index was 11.6%. The 4Q06 will mark the 14th consecutive quarter of double-digit earnings growth for the S&P 500 index. In U.S. corporate history 14 quarters (of consecutive double-digit earnings growth) is a record.
Best Investments in 2006
U.S. Total stock market returned 14% in 2006, Stocks outperformed while Bonds underperformed and inflation was average. Most gains for the year were accumulated in the second half of 2006.
Of the 5 largest sectors in the U.S. Economy: Real Estate performed best 27.5%, Financial 17.8%, Natural Resources 17.2%, Technology 13.4% and Health 6.6%. By size: Large Cap13.6%, Small Cap 14.1% and Micro Cap 14.4% while Mid Cap stocks returned 9%. Gold 22.8% and oil 1.8% had gains with commodity prices (CRB) falling -7.4%.
Global markets rose 22.4% of the World's largest economic regions: Latin America performed best 38.4% followed by Europe 16.7% and Asia 14.5%. Of the World's largest Developed non-U.S. Economies: Germany returned 22%, France 17.5%, Canada 14.5%, Britain 10.7% and Japan 6.9%. In the Emerging markets which returned 52.9%: China 128.7%, Russia 71.3%, India 46.7 and Brazil 43.6% continue to excel. Hedge funds (8,000, controling $1.3 trillion) and Private Equity firms (over $700 million) - returned on average 13% (PE generally outperformed hedge funds).
Those who diversified with MPT did best, a trend which should accelerate – indicative are the returns of non-U.S. markets just mentioned. Returns in 2006 were strong aided by historic corporate earnings, low unemployment and borrowing costs.
Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
2006 complete News (click)
U.S. residential housing market cools from its record unsustainable (price) growth rate - over $1.9 trillion of ARMs will reset at higher interest rates in 2007-08 ($11 trillion mortgage loans outstanding).
FOMC Tightening Cycle - Fed Funds rate increases to 5.25% (17 consecutive increases). Fed Funds rate began the year at 4.25% (Fed Funds was 1% from Jun '03 - Jun '04 and 6.5% from May '00 - Jan '01).
U.S. 10 yr Treasuries end the year at 4.68% - trades 5.24% (Jul 5). U.S. inverted yield curve tests markets worldwide (began, Dec 27 '05 - first time since Feb 24, '00 - Dec 22, '00, 8th time since 1980). U.S. Treasuries returned an average of 3.0% in 2006 - compared with 2.9% in 2005, 3.5% in 2004 and 2.3% in 2003.
U.S. unemployment rate falls to 4.4%.
United States (as a nation) for the first time since 1915 owns less assets oversees than foreigners own of U.S. assets - a trend which is expected to increase. $8.4 trillion of U.S. Treasuries outstanding.
Dollar ends the year at $1.32 to the Euro – falling from $1.18 at the beginning of the year an 11% depreciation.
U.S. GDP in 2006 advanced by 3.3%. GDP advanced by 3.2% in 2005, 4.4% during 2004, 3.0% during 2003 and 1.9% in 2002.
Oil ends the year at $61 - trades $77.03 (7/10) an all-time cash high - up from $10 (Dec '98). Oil started the year at $60.
- Gold ends the year at $636 - traded $732, highest since February 1980, when Gold spent 3 weeks above $700. Platinum traded $1335 and Copper traded $4.03/lbs at all-time cash highs. Silver traded $15.21 - highest since February 1983. Uranium (actually more common than silver) rose
more than 10-fold from $7.10/lb (1/01) to $72/lb.
- Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $409 (Dec '06).
Global mergers and acquisitions exceed $3.55 trillion - a record surpassing the $3.4 trillion in 2000.
World’s financial stock of the 5 wealthiest: US (35%), the Eurozone (32%), Japan (20%), the UK (8%) and China (5%) - estimated at $150 trillion. Foreign exchange reserves - China's reserves surpass $1 trillion eclipsing Japan's $900 billion - foreign buyers hold $4.4 trillion of $8.4 trillion of U.S. Treasury debt.
European Central Bank (ECB) raised interest rates to 3.5% from 2.00% (6th time since Dec '05) for 12 European nations - Slovenia to become the 13th EU member state to introduce the Euro, Jan. 1. Bulgaria and Romania join the European Union, bringing membership to 27 nations.
Bank of Japan raises interest rate to 0.25% up from 0.0% ends over 7 years of deflation fighting.
China increases interest rates in order to cool domestic economy growing at 9-11%. Industrial and Commercial Bank of China (ICBC) launches the world's largest IPO ever - $21.9 billion.
Russia ($1 trillion economy) invited to join the World Trade Organisation (WTO) of 149 members - China joined the WTO in 2001.
Inter-American Development Bank estimates that 12.6 million U.S. Latin American-born immigrants will send home more than $45 billion — of about $460 billion earned in 2006.
U.S. population exceeds 300 million (China, 1.32B and India, 1.10B) 100 million reached in 1915 and 200 million in 1967.
Ben Bernanke succeeds Alan Greenspan as Chairman (retires after 18½ years) of the Federal Reserve.
NYSE, the world's largest stock market, demutualizes and mergers with Archipelago Holdings Inc. (and Pacific Exchange) then NYSE Group reaches deal to acquire Euronext. NASDAQ purchases a 30% interest in the London Stock Exchange.
Medicare (Part D) Prescription Drug benefit over 38 million of Medicare's 43 million beneficiaries enroll in 2006. 77 million Baby Boomers are estimated to be eligible for Medicare by 2031.
SEC and State Attorney Generals investigate the backdating of corporate options at 140+ companies (resulting in 70+ firings/resignations of corporate officials) - the practice, appears to have originated in Silicon Valley (in companies like Sanmina, Novellus & Juniper Networks pre-9/11).
U.N. Security Council adopts resolutions to impose sanctions on North Korea (for a nuclear-bomb test, Oct 9) and Iran (for its nuclear program, Dec 23).
2006 XX Olympic Winter Games Torino, Italy where German, American, Canadian, Austrian, Russian & Norwegian athletes scoop up medals.
Michael Schumacher retires as the world's first billionaire athlete - Formula One driver. Schumacher, 7-time world champion, 91 race wins & 154 podium finishes - brought wins to Ferrari (2000-04) for the first time since 1979.
Warren Buffett gifts 10 million of Berkshire Hathaway (B shares - over $31 billion) to the Gates Foundation - surpassing Bill and Melinda Gates' endowment of $25.9 billion.