4/21/2015
By Jennifer Coombs

Domestically, the session of Tuesday, April 21st was virtually void of economic data save for Redbook’s weekly overview of same store sales, although this is far from a major market mover. This year’s shift to an early Easter is greatly distorting store sale comparisons as Redbook noted same store sales were up only 0.8% in the week over last year, following the prior week’s rate of +1.1% which was distorted by the calendar effect. Ultimately with these distortions past, we should see same store sales return to their normal 3.0%-3.5% pace over last year.

Internationally, there was some notable news out of Germany, as Europe’s largest economy noted that investor confidence smashed expectations for the month of April. Germany’s ZEW Index measures both the current situation and the general economic sentiment of investors. Any positive reading suggests that confidence is net positive and as with most sentiment readings, the higher the better. The current situation figure completely blew away investor expectations, rising to a reading of 70.2 versus 55.1 in March and analysts’ expectation for 56. This is the highest recorded reading in the component since 2011. However the overall economic sentiment figure was a little weaker (charted below). For the month of April, economic sentiment dipped slightly to 53.3 from the March reading of 54.8, and ultimately negated economist expectations for a slight improvement.

Greece debt concerns are likely the culprit behind the marginal slowdown in sentiment, as the European Central Bank (ECB) is planning to restrict funding to Greek banks. This week, the ECB’s staff produced a proposal that would increase the haircuts banks take on the collateral they post when borrowing from the Bank of Greece. Ultimately, the country’s self-imposed deadline for securing a cash bailout is quickly approaching (this Friday) and it is very unlikely that the need will be met. This leaves many to wonder who will be picking up the tab when Greece can no longer afford dinner.

Jennifer Coombs
Wall Street Strategies

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