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View from Wall Street

By ANTHONY HALL, United Press International   |   Oct. 17, 2012 at 9:56 AM   |   Comments

Moody's Investors Service put a positive spin on markets Wednesday, refusing to drop Spain's credit rating.

Last week, Standard & Poor's provided the opposite spin with a report that downgraded Spanish debt to near junk status.

Moody's gave stocks in Asia a boost Wednesday but the soap opera in Madrid is made less clear with Wednesday's report, given some investors would like to see consistently bad news coming from Spain so Prime Minister Mariano Rajoy is persuaded to apply for international assistance. His prolonged hesitation is exactly what world leaders are wont to do -- put off asking for help under the assumption that this makes them appear weak at home.

But that's only half of it.

Besides appearing weak, applying for international aid means giving up control of the country's budget and, as U.S. President Barack Obama said recently, what's in a budget reflects a nation's priorities. Giving that up is tough pill to swallow.

In Washington, recent economic data would tend to favor Obama's re-election bid. Although the primary reason is not positive -- more people quit looking for work than found jobs -- the unemployment rate did drop to 7.8 percent in September, the lowest it has been since January 2009.

September's retail sales brought stock markets out of a five-day slump, as receipts rose 1.1 percent. Moreover, the housing market is showing a sustained turnaround with foreclosures at a five-year low in September, RealtyTrac reported.

In Southern California, one of the areas hardest hit by the near-collapse of the housing market, home prices are on the rise with foreclosure sales dropping to 16.4 percent of all home sales in the area.

The median price for homes rose 12.5 percent in September from September 2011 and current inventory of homes for sale is down sharply, "so people are going crazy -- they can't find anything to buy," the Los Angeles Times quoted a real estate broker as saying.

Home builders' confidence rose for the sixth consecutive month in October to a six-year high, the National Association of Home Builders said.

Moreover, a researcher at the International Monetary Fund said the rich are, indeed, getting richer with the inequality gap widening between the rich and everyone else.

The top 10 percent of the nation's wealthiest households now earn about half of the country's total, research done by Jonathan Ostry of the IMF told The New York Times.

Slicing that thinner, the top 1 percent of all households in terms of income earn more than 16 percent of the country's total income.

The recovery also favors the wealthy. From June 2009 to June 2010, the first year following the recession, the wealthiest 1 percent accounted for 93 percent of income increases, the Times reported.

How this plays out with President Obama's plan to raise taxes on those earning more than $250,00 per year versus Republican candidate Mitt Romney's pledge to lower taxes remains to be seen.

In international markets Wednesday, the Nikkei 225 index in Japan added 1.21 percent while the Shanghai composite index in China gained 0.32 percent. The Hang Seng index in Hong Kong rose 0.99 percent while the Sensex in India climbed 0.18 percent.

The S&P/ASX 200 in Australia rose 0.82 percent.

In midday trading in Europe, the FTSE 100 index in Britain added 0.47 percent while the DAX 30 in Germany was flat, rising 0.06 percent. The CAC 40 in France gained 0.15 percent while the Stoxx Europe 600 gained 0.13 percent.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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