Weekly Market Wrap Up, October 3-7, 2011

Spain and Italy

As the European debt crisis concern worsens the U.S. stocks retreated last week marking another week that Europe has affected the American Indexes. The Financial industry has had the biggest decline in the S&P 500. The S&P 500 fell nearly 1% lowering its weekly gain to just above 2% and the Dow sliding 20 points. This all coming after Spain and Italy, the euro zone’s fourth and third largest economies (respectively), were downgraded. Spain was cut from a AA+ to a AA- and Italy was downgraded to an A+ form a AA-, these downgrades have reflected “the intensification of the euro zone crisis” Fitch Ratings stated in a Bloomberg report.

Moving forward Italy needs to work on two things, one is reacquiring a sufficient level of international credibility to maintain its financial house in order and the second is that they need to increase the purchasing capability of the Italian public, all this according to Fiat CEO Sergio Marchionne. Fitch expects Spain to grow at under 2% a year through 2015 while the nation’s debt burden will be expected to peak at 72% of GDP according to Fitch.

– Charles Stack

Hollywood continues to search for new distribution channels

This week internet giants Netflix Inc and Amazon.com Inc took an additional step towards cementing their leadership position in online streaming. By securing separate deals with major Hollywood studios DreamWorks Animation and Twentieth Century Fox respectively, these companies aim to prolong the trend of moving people towards watching more TV content online.

This year both companies have already struck deals with other studios like CBS or Discovery Communications, and in the case of Netflix, had actively pursued the renovation of its contract with the paid TV channel Starz.

The move comes from both companies to increase their content. For Amazon it represents an increase of 22% over its existing content as it tries to improve its competitiveness in this field. In the same note, it is a strategic move for Netflix who has seen its stock price tumble ever since they announce a 60% increase in their subscription fees in the recent weeks.

– Wellington Rodriguez


Article submitted by: Charles Stack and Wellington Rodriguez of the Capital Markets Lab (CML). To learn more about the Capital Markets Lab (CML) please visit https://business.fiu.edu/capital-markets-lab/.

About Capital Markets Lab

The Capital Markets Lab (CML) provides students, faculty, and the South Florida community with unparalleled educational and technological resources relating to finance. By utilizing the most current financial research platforms available, students are given an opportunity to supplement academic theory with the real world analytical tools used by leading financial institutions. Visit us at http://business.fiu.edu/capital-markets-lab/.

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