More Americans than expected filed for unemployment benefits. A sign the labour market is struggling to improve. Market expected 375,000, actual 388,000.

Fed Chairman, Ben Bernanke, mentioned further easing would not be likely, yet  if necessary the Fed will be ready to inject more liquidity if needed. Coupled with strong corporate earnings from Apple, the stock market rallied as the Fed stayed committed to maintain low rates into 2014. The reality is the economy has to start performing without government financing which may be creating unrealistic results. The economy must demonstrate consistency but my concern is, will the house of cards crumble before the economy has a chance to recover. I don’t believe they can continue printing money without severe consequences.

In Europe consumer confidence declines showing signs of deepening. England declared its’ economy has entered into another recession (double dip). While other countries are having a difficult time imposing austerity measures  to meet EU demands. This week the government of Holland dissolved as they could not come to a consensus. Anger is growing across Europe. Interest rates for bond issues are rising fast compounding the debt issues governments are facing. Watch out for the upcoming French elections, because if the Socialists win, they are threatening to re-work the austerity measures already negotiated. This could send the Euro spiralling.

The Bank of Canada held rates steady @ 1% but the Bank Governor warned an increase may be coming if inflation rises. He remains uncomfortable with super low rates that encourage Canadians to borrow more than they should. “Home equity extracted through additional borrowing cannot find higher consumption indefinitely.”