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Weekly Economic Update_2.25.2019

In this week’s recap: the Dow extends its win streak, Fed minutes reveal a little uncertainty, and home sales weaken again.

Weekly Economic Update

 

 

February 25, 2019

 

THE WEEK ON WALL STREET

Stocks rallied last week as optimism about a potential U.S.-China trade deal grew. The S&P 500 advanced 0.80% for the week to 2,792.67. The Nasdaq Composite improved 0.86% to 7,527.54, and the Dow Jones Industrial Average gained 0.64% to 26,031.81.

The renewed prospects for a trade pact were not the only development investors found appealing last week. There were indications that the Federal Reserve might be a bit less committed to its plans to raise interest rates further this year.1,2

 

A Look at the Fed Minutes

There were no surprises from the Federal Reserve's Board of Governors, who released the transcript from their January meeting on Tuesday. Investors pore over the meeting minutes looking for clues about the Fed’s next move on short-term interest rates.

Fed policymakers appeared split on what might be next. Some felt another rate hike was needed to help slow the strong economy, while others favored a “wait-and-see” approach.3 

 

Home Sales Slump

In January, existing home sales were at their slowest pace since November 2015 and down 8.5% year-over-year. One factor: rising home values. Last month, the median single-family home sale price was $247,500, almost $7,000 higher than a year ago.

Mortgage rates have now fallen for three consecutive weeks, a development that may influence home buying decisions in coming months. Thursday, a Freddie Mac survey found the average interest rate on a 30-year, fixed-rate loan at just 4.35%. (A 30-year, fixed-rate mortgage is a conventional home loan meeting the lending requirements of Fannie Mae and Freddie Mac, but it is not guaranteed or insured by any government agency.)4,5

 

FINAL THOUGHT

The Dow Jones and Nasdaq have posted gains for nine straight weeks and are now at levels unseen since early November. Concerns over volatility have decreased, but that does not mean it is off the table. Whatever the market does in the coming weeks and months, remember your investing strategy should be based on your goals, risk tolerance, and time horizon.2

 

 

 

T I P   O F   T H E   W E E K
 

 


Many companies that sponsor employee retirement plans offer matching contributions, sometimes even dollar for dollar. If your employer will match, make sure you contribute enough to get it. The match amounts to free money.

 

 

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Fed chair Jerome Powell begins two days of testimony on monetary policy in the Senate.

Wednesday: The National Association of Realtors releases its latest pending home sales index.

Thursday: The federal government provides its first estimate of fourth-quarter economic growth.

Source: Econoday / MarketWatch Calendar, February 22, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: AutoZone (AZO), Home Depot (HD), Medpace (MEDP)

Wednesday: Apache (APA), Best Buy (BBY), Office Depot (ODP)

Thursday: Anheuser-Busch (BUD), Dell Technologies (DELL), Splunk (SPLK)

Source: Morningstar.com, February 22, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

 

Q U O T E   O F   T H E   W E E K

 

 

Discipline is the bridge between goals and accomplishment.”

JIM ROHN

 

 

 

 

 

 

T H E   W E E K L Y   R I D D L E

 

 

I can point in every direction, but I cannot reach a destination by myself. What am I?

 

LAST WEEK’S RIDDLE: Nancy was born in summer, yet she was born in January, how is this possible?

ANSWER: She was born in the southern hemisphere, which experiences summer during our winter.

 

 

 

«representativename» may be reached at «representativephone» or «representativeemail»
«representativewebsite»
 

Know someone who could use information like this?
Please feel free send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

CITATIONS:

1 - quotes.wsj.com/index/SPX [2/22/19]

2 - marketwatch.com/story/dow-reclaims-26000-and-ends-at-3-12-month-peak-as-stock-market-levitates-on-tariff-hope-2019-02-22 [2/22/19]

3 - bloomberg.com/news/articles/2019-02-20/fed-minutes-show-officials-unsure-on-need-for-rate-hikes-in-2019 [2/20/19]

4 - tradingeconomics.com/united-states/existing-home-sales [2/21/19]

5 - washingtonpost.com/business/2019/02/21/mortgage-rates-fall-third-week-row [2/21/19]

 

CHART CITATIONS:

quotes.wsj.com/index/SPX [2/22/19]

markets.wsj.com [2/22/19]

quotes.wsj.com/index/XX/990300/historical-prices [2/22/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/22/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/22/19]

 


Weekly Economic Update_2.18.2019

In this week’s recap: solid gains for U.S. equities, a second shutdown avoided, and interesting developments regarding inflation and retail sales.

Weekly Economic Update

 

 

February 18, 2019

 

THE WEEK ON WALL STREET

Stocks ended a good week on a high note, as hints of progress in U.S.-China trade talks encouraged investors.

When the closing bell rang Friday, the S&P 500 settled at 2,775.60, after rising 2.50% in five days. The Dow Industrials gained 3.09% to close Friday at 25,883.25. The Nasdaq Composite improved 2.39% to 7,472.41.1,2

 

SHUTDOWN AVERTED

Wall Street breathed a sigh of relief late last week as Congress passed a bill to keep the federal government funded. President Trump signed the measure on Friday. 

The development is expected to have a positive effect on consumer sentiment, which may influence the financial markets. During the shutdown, consumer confidence hit an 18-month low.3,4 

 

Retail Sales Unexpectedly Slip

Thursday, the Census Bureau announced that retail sales fell 1.2% in December. This was the largest monthly decline in more than nine years and fell short of expectations. Economists polled by Bloomberg anticipated a small gain.

Was the slow December mostly a reflection of consumer anxieties about the shutdown and the stock market? If so, it is possible that retail spending may see an uptick. (It should be noted that these monthly numbers are often revised later.)5

 

Inflation Holds Steady

The Consumer Price Index, the most widely followed measure of inflation, was flat in January for a third consecutive month. Year-over-year, overall inflation is running at just 1.6%.

The CPI is one of the key factors the Fed considers when assessing the economy and determining what lies ahead for interest rates.6

 

WHAT’S AHEAD

U.S. and Chinese negotiators face a March 1 deadline to reach a deal to extend the current tariff truce. In March, tariffs on many Chinese imports could rise to 25% from 10%. President Trump said Friday that he is open to postponing the March deadline if it appears an agreement may be near.7

 

 

 

T I P   O F   T H E   W E E K
 

 


Remember that state tax laws sometimes differ from federal ones. When you prepare your state tax return, keep an eye out for any differences between new federal law and your state’s requirements.

 

 

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Presidents’ Day holiday (U.S. financial markets closed).

Wednesday: Minutes of the January Federal Reserve policy meeting are released.

Thursday: January existing home sales.

Friday: Federal Reserve Vice Chairman Richard Clarida speaks in New York.

Source: Econoday / MarketWatch Calendar, February 15, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Devon Energy (DVN), Walmart (WMT)

Wednesday: Analog Devices (ADI), CVS Health (CVS)

Thursday: Domino’s (DPZ), Fluor (FLR), Intuit (INTU), Kraft Heinz (KHZ)

Source: Morningstar.com, February 15, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

 

Q U O T E   O F   T H E   W E E K

 

 

“We cannot control the evil tongues of others; but a good life enables us to disregard them.”

CATO THE ELDER

 

 

 

 

 

 

T H E   W E E K L Y   R I D D L E

 

 

Nancy was born in summer, yet she was born in January, how is this possible?

 

LAST WEEK’S RIDDLE: I have no eyes, ears, tongue, or nose, yet I have the power to see, hear, taste, and smell everything. What am I?

ANSWER: Your brain.

 

 

 

«representativename» may be reached at «representativephone» or «representativeemail»
«representativewebsite»
 

Know someone who could use information like this?
Please feel free send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

CITATIONS:

1 - markets.wsj.com [2/15/19]

2 - quotes.wsj.com/index/SPX [2/15/19]

3 - washingtonpost.com/politics/trumps-border-emergency-the-president-plans-a-10-am-announcement-in-the-rose-garden/2019/02/15/f0310e62-3110-11e9-86ab-5d02109aeb01_story.html [2/15/19]

4 - bloomberg.com/news/articles/2019-01-29/u-s-consumer-confidence-declines-to-18-month-low-amid-shutdown [1/29/19]

5 - bloomberg.com/news/articles/2019-02-14/u-s-retail-sales-fall-most-in-nine-years-amid-stock-plunge [2/14/19]

6 - reuters.com/article/us-usa-economy-inflation/lower-gasoline-prices-restrain-u-s-consumer-inflation-idUSKCN1Q21N1 [2/13/19]

7 - apnews.com/c322842d356248d2860bb77e84641ca3 [2/15/19]

 

CHART CITATIONS:

quotes.wsj.com/index/SPX [2/15/19]

quotes.wsj.com/index/XX/990300/historical-prices [2/15/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/15/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/15/19]

 


Weekly Economic Update_2.11.2019

In this week’s recap: minor gains for major stock indices, a March deadline looms for U.S.-China trade talks, and good news about the service industry.

Weekly Economic Update

 

 

February 11, 2019

 

THE WEEK ON WALL STREET

Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.

The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17%, while the S&P 500 Index gained 0.05%. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.1,2

 

eARNINGS SCORECARD

As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections.3

Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies. For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both. 3 

 

tariff TENSIONS

March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.

The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We do not expect that to become clear until the deadline nears.

 

STate of THE SERVICE SECTOR

Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector.

The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.4

 

FINAL THOUGHT

Over the next several weeks, we are expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view. If you have any questions, do not hesitate to contact us.

 

 

 

T I P   O F   T H E   W E E K
 

 


New parents should seek to create an emergency fund equivalent to 3-6 months of living expenses. Sticking to a budget can help a household save over time.

 

 

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: January’s Consumer Price Index, which measures monthly and yearly inflation.

Thursday: December retail sales figures (a delayed release due to the government shutdown).

Friday: January’s preliminary University of Michigan consumer sentiment index, a gauge of consumer confidence levels.

Source: Econoday / MarketWatch Calendar, February 8, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Loews Corp (L)

Tuesday: Activision Blizzard (ATVI), HubSpot (HUBS), Occidental Petroleum (OXY)

Wednesday: Cisco (CSCO), Hilton Worldwide Holdings (HLT), Yelp (YELP)

Thursday: Applied Materials (AMAT), CBS (CBS), Coca-Cola (KO)

Friday: Deere & Co. (DE), PepsiCo (PEP)

Source: Morningstar.com, February 8, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

 

Q U O T E   O F   T H E   W E E K

 

 

“In all affairs it is a healthy thing now and then to hang a question mark on the things you have long taken for granted.”

BERTRAND RUSSELL

 

 

 

 

 

 

T H E   W E E K L Y   R I D D L E

 

 

I have no eyes, ears, tongue, or nose, yet I have the power to see, hear, taste, and smell everything. What am I?

 

LAST WEEK’S RIDDLE: You can throw a ball 25’ and make it come right back to you, without the ball hitting anything or being caught by anyone. How can you make this happen?

ANSWER: Throw the ball straight up in the air.

 

 

 

«representativename» may be reached at «representativephone» or «representativeemail»
«representativewebsite»
 

Know someone who could use information like this?
Please feel free send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - markets.wsj.com [2/8/19]

2 - quotes.wsj.com/index/XX/990300/historical-prices [2/8/19]

3 - insight.factset.com/earnings-season-update-february-8-2019 [2/8/19]

4 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [2/5/19]


Monthly Economic Update_2.2019

In this month’s recap: equities rally here and around the world, economic fundamentals look solid, the pace of home sales slows, and oil surges.

Monthly Economic Update

 

February 2019

 

THE MONTH IN BRIEF

During a month marked by political impasses in the United States and United Kingdom, equities performed well around most of the world. On Wall Street, the S&P 500 advanced 7.87% in January, with a new earnings season as well as trade and monetary policy developments providing tailwinds. Most of the economic data that rolled in was good; the partial federal government shutdown may have negatively impacted some of the numbers. Home sales fell off abruptly. Many commodities advanced. All in all, investors focused on the potential of the markets more than disputes.1

 

 

 

DOMESTIC ECONOMIC HEALTH

The Congressional Budget Office believes that the 35-day federal government shutdown cost the economy about $11 billion. The silver lining is that roughly $8 billion of that loss is potentially recoverable, presuming federal spending and consumer spending bounce back in the coming months.2

Due to the length and breadth of the shutdown, a few key economic reports did not appear last month. Nevertheless, there were plenty of attention-getting news items.

As expected, the Federal Reserve left interest rates alone in January. What really intrigued investors was the dovish tone of the Fed’s latest policy statement. It noted that the Federal Open Market Committee would be “patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate” for the economy. The central bank appeared newly cautious: language implying that rate hikes might be merited was now absent.3

In mid-January, China made a move in the U.S.-China trade dispute. It offered a plan to address the U.S. trade deficit, with an objective of cutting it to $0 by 2024. China would undertake a strategy to buy greater amounts of American goods: $45 billion more during 2019, and gradually, more in each of the following five years, with the multiyear increase reaching $1 trillion. Bloomberg News reported that U.S. negotiators wanted China to try and wipe out the trade imbalance within two years, not six. American demand for Chinese-made products is so strong, however, that making any real dent in the trade deficit might be a tall order, given current free market conditions.4

Main Street seemed a bit unsettled by the shutdown and recent stock market volatility. The most respected U.S. monthly consumer confidence gauge, maintained by the Conference Board, fell sharply in January to 120.2, a good reading that still represented its lowest level since July 2017. Its future expectations sub-index hit a 27-month low. At mid-month, the University of Michigan’s consumer sentiment index slipped from its final December mark of 98.3 to 90.7.5,6

The Institute for Supply Management’s twin purchasing manager indices also fell; those numbers exclusively concerned December. In the last month of 2018, ISM’s manufacturing sector index slipped 5.2 points to 54.1; its services sector PMI declined 3.1 points to 57.6. Both readings indicated solid sector expansion, just to a lesser degree than a month before.7

One word summed up the latest jobs report from the Department of Labor: fantastic. In December, employers added 312,000 net new workers to their payrolls. The main unemployment rate rose 0.2% to 3.9%, but that was an effect of more Americans looking for work. The U-6 rate, counting both the unemployed and underemployed, held at 7.6%. Wages were up 3.2% year-over-year, the best annual advance in a decade.8

The Consumer Price Index retreated 0.1% during December after a flat November; the core CPI rose 0.2% in the final month of 2018, replicating its November move. December also brought a slight slip for both the headline (0.2%) and core (0.1%) Producer Price Index.6

As January drew to a close, some significant data was still pending: the first estimate of Q4 GDP, plus the latest reports on personal spending as well as income and durable goods orders. This backlogged data could appear in the first half of this month.

 

GLOBAL ECONOMIC HEALTH

Would the Brexit be delayed? After the crushing 230-vote defeat of Prime Minister Theresa May’s withdrawal deal in Parliament, the United Kingdom faced six possible options: an extension of the March 29 Brexit deadline set by the European Union, a renegotiation of May’s withdrawal deal, a general election that could bring about a change in U.K. leadership, a “hard” Brexit with no trade agreements with the E.U., another national vote on the matter, or no Brexit at all with the U.K. staying in the E.U. As January ended, May faced a February 13 deadline to return to Parliament with either an altered deal or a statement of which other course of action she wanted the U.K. to pursue. While European Council President Donald Tusk tweeted that the Brexit agreement was “not open for renegotiation,” U.K. Foreign Secretary Jeremy Hunt said that a delayed Brexit could be in order. One key sticking point has been the flow of trade between Ireland and Northern Ireland, which could be disturbed if Northern Ireland leaves the E.U.9,10

China’s factory sector shrunk for a second straight month in January; the reading on the nation’s official manufacturing PMI improved 0.2 points to 49.5. The Chinese economy grew 6.6% in 2018 – a striking advance by global standards, but its smallest expansion since 1990. The effect of that slowdown was being felt in America (where major tech and heavy equipment firms reported declining sales in China) and in Japan, South Korea, and Australia, three of its other major trading partners. (Tariffs on a variety of Chinese imports to the U.S. are slated to rise from 10% to 25% before the end of the first quarter.)11,12

 

WORLD MARKETS

Investors felt bullish around the world last month, and the performance numbers of major equity benchmarks reflected their optimism. Europe saw broad gains: Russia’s MICEX improved 6.41% in January; Spain’s IBEX 35, 6.05%; the FTSE Eurofirst 300, 5.99%; Germany’s DAX, 5.82%; France’s CAC 40, 5.54%. Even in London, the FTSE 100 gained 3.58%.13

 

Indices in the Asia-Pacific region, Canada, and South America recorded even larger monthly jumps. Canada’s TSX Composite outperformed the Dow and S&P 500, surging 8.50%. The MSCI Emerging Markets index climbed 8.71% for the month, and MSCI’s World index added 7.68%. Look what two South American benchmarks did: Brazil’s Bovespa soared 11.14%, and Argentina’s Merval, 18.97%. Mexico’s Bolsa posted a monthly advance of 5.64%. Hong Kong’s Hang Seng and South Korea’s Kospi set the pace in the east, with respective gains of 8.11% and 8.03%. Australia’s All Ordinaries rose 3.99%; China’s Shanghai Composite, 3.96%; Japan’s Nikkei 225, 3.79%. The only notable retreats were minor: India’s Nifty 50 lost 0.29%; Malaysia’s KLSE Composite, 0.42%.13,14 

 

COMMODITIES MARKETS

Oil got off to a great start for 2019. By the closing bell on January 31, a barrel of WTI crude was worth $54.04 on the NYMEX, after a 17.94% YTD gain. While natural gas futures lost 4.53% last month, unleaded gasoline improved 4.94%, and heating oil soared 11.71%.15

 

Among the softs, while cocoa took a 10.50% drop, other major crops rose. Sugar gained 4.16%; soybeans, 3.83%; cotton, 2.99%; wheat, 2.68%; corn, 0.47%; coffee, 0.34%. Copper led the key metals, rising 5.75%. Platinum advanced 4.35%, and silver and gold respectively added 4.05% and 3.03%. Gold ended the month at $1,319.50 on the COMEX; silver, at $16.06. The U.S. Dollar Index lost 0.80% in January.15,16

 

REAL ESTATE

First, the good news. January brought a significant dip in mortgage rates. In Freddie Mac’s last Primary Mortgage Market Survey of 2018 (December 27), a conventional home loan carried 4.55% interest on average. By January 31, that average interest rate had declined to 4.46%. The trend carried over to 15-year, fixed rate loans (4.01% to 3.89%) and 5/1-year, adjustable loans (4.00% to 3.96%).17,18

Additionally, delayed new home sales data from the Census Bureau showed a 17.0% jump in November to an 8-month high. (The Bureau’s report on January housing starts is still pending as a result of the shutdown.)19

Now, the bad news: existing home sales slowed. The National Association of Realtors announced that resales were down 6.4% month-over-month in December, after improving 2.1% in November. In 2018, existing home sales lagged 3.1% behind their 2017 pace; last year was the poorest year for home buying since 2015.6,20

In other real estate news, the 20-city composite S&P CoreLogic Case-Shiller home price index showed 4.7% annual appreciation in its latest edition (November), which was the slimmest gain in almost four years. The yearly advance had been 5.0% a month earlier. The NAR’s pending home sales index, which measures monthly housing contract activity, fell 2.2% to 99.0 in December; that was its worst reading since April 2014.5,20

 

 

 

T I P   O F   T H E   M O N T H
 

 


Recent college graduates are certainly challenged to save for the future, what with student loans, rent, and entry-level jobs. It can be tough to set anything aside. Still, saving and investing something is better than nothing, and the effort must be made. Given the power of compounding over time, starting early is smart.

 

 

 

LOOKING BACK, LOOKING FORWARD

Equities got off to a flying start this year. While the big three all gained 7% or better last month, the small caps outran those bullish starts: the Russell 2000 soared 11.19% in January. At the closing bell on January 31, their settlements were: Dow Industrials, 24,999.67; Nasdaq Composite, 7,281.74; S&P 500, 2,704.10; Russell 2000, 1,499.42. Leading the pack among U.S. benchmarks in terms of monthly performance, the PHLX Oil Service Sector index climbed 19.28%. The CBOE VIX declined 34.82% in January, down to 16.57 at the end of the month.1

MARKET INDEX

Y-T-D CHANGE

1-MO CHANGE

2018

DJIA

7.17

7.17

-5.63

NASDAQ

9.74

9.74

-3.88

S&P 500

7.87

7.87

-6.24

       

TREASURY

1/31 RATE

1 MO AGO

1 YR AGO

10 YR NOTE

2.63

2.69

2.72

 

Sources: wsj.com, bigcharts.com, treasury.gov - 1/31/191,21,22

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

Patient investors sighed with relief at January’s major Wall Street advance. The S&P 500 had not rallied so strongly in January since 1987. It just goes to show that when the bears come out, the bulls are quite capable of coming right back. Going into February, investors have three preoccupations: earnings, the rate of progress in the trade negotiations between the U.S. and China, and the lingering risk of a shutdown in Washington. In the best-case scenario, this month would see a return to business as usual on Wall Street: a leveling out of extreme volatility, a fading memory of December and its anxieties. With luck, maybe we will see that this month instead of a retreat inspired by poor quarterly results or sudden headlines.23

 

 

 

Q U O T E   O F   T H E   M O N T H

 

 

Cherish all your happy moments: they make a fine cushion for old age.”

Christopher morley

 

 

 

UPCOMING RELEASES

What will investors interpret during the rest of 2019’s shortest month? Besides earnings, they will look at the January Consumer Price Index (2/13), the January Producer Price Index (2/14), the preliminary February University of Michigan consumer sentiment index, recent retail sales data, and January industrial output (2/15), minutes from the January Federal Reserve policy meeting as well as new and delayed reports on homebuilding activity (2/20), January existing home sales and leading indicators (2/21), a new Conference Board consumer confidence index, January new home sales, and the December S&P CoreLogic Case-Shiller home price index (2/26), January pending home sales and hard goods orders (2/27), and then, an estimate of Q4 growth (2/28). January personal spending data, the January PCE price index, and the final February University of Michigan consumer sentiment index are slated to appear on March 1.

 

 

 

T H E  M O N T H L Y   R I D D L E

 

 

Many things can make one, it can be of any shape or size, it is created for various reasons, and it can shrink or grow with time. What is it?

 

LAST MONTH’S RIDDLE: You can see right through me. Different lights make me strange, and for each one, my size may change. What am I?

ANSWER: A pupil.

 

 

 

«representativename» may be reached at «representativephone» or «representativeemail»
«representativewebsite»
 

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The MICEX 10 Index is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The DAX 30 is a Blue-Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE).  The Nikkei average is the most watched index of Asian stocks. The Nifty 50 (NTFE 50) is a well-diversified 50-stock index accounting for 13 sectors of the Indian economy. It is used for a variety of purposes such as benchmarking fund portfolios, index-based derivatives and index funds. The FTSE Bursa Malaysia KLCI Index comprises of the largest 30 companies by full market capitalization on Bursa Malaysia's Main Board. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - markets.wsj.com/us [1/31/19]

2 - tinyurl.com/ybuyqd79 [1/28/19]

3 - nbcnews.com/business/economy/federal-reserve-leaves-interest-rate-unchanged-first-meeting-2019-n964726 [1/30/19]

4 - bloomberg.com/news/articles/2019-01-18/china-is-said-to-offer-path-to-eliminate-u-s-trade-imbalance [1/18/19] 

5 - reuters.com/article/us-usa-economy/us-consumer-morale-at-one-and-a-half-year-low-house-price-gains-slow-idUSKCN1PN271 [1/29/19]

6 - investing.com/economic-calendar/ [1/31/19]

7 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [1/7/19]

8 - time.com/5493913/december-jobs-numbers/ [1/4/19]

9 - cnbc.com/2019/01/15/theresa-may-loses-brexit-vote-what-happens-next.html [1/15/19]

10 - apnews.com/dcaa3bafbc474b0ca2f1a2ef43b450fd [1/31/19]

11 - cnbc.com/2019/01/31/china-economy-manufacturing-january-pmi-.html [1/31/19]

12 - hawaiipublicradio.org/post/asia-minute-slowing-chinese-economy-hits-neighboring-countries [1/29/19]

13 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [1/31/19]

14 - msci.com/end-of-day-data-search [1/31/19]

15 - money.cnn.com/data/commodities/ [1/31/19]

16 - marketwatch.com/investing/index/dxy/historical [1/31/19]

17 - freddiemac.com/pmms/archive.html [1/31/19]

18 - freddiemac.com/pmms/archive.html?year=2018 [1/31/19]

19 - marketwatch.com/story/new-home-sales-soar-17-in-november-hit-an-8-month-high-2019-01-31 [1/31/19]

20 - tinyurl.com/yd25wvyd [1/30/19]

21 - markets.wsj.com/us [12/31/18]  

22 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

23 - marketwatch.com/story/what-does-the-stock-markets-monster-january-rally-mean-for-february-2019-01-31 [1/31/19]  


Weekly Economic Update_2.4.2019

In this week’s recap: a hiring surge, a noteworthy remark from Jerome Powell, a dip for a respected household confidence index, and gains on Wall Street.

Weekly Economic Update

 

 

 February 4, 2019

 

February BEGINS WITH SOME EXCELLENT ECONOMIC DATA

Payrolls swelled with 304,000 net new jobs last month, according to the Department of Labor’s February employment report. (A Bloomberg survey of economists had projected a gain of 165,000.) The number of Americans temporarily laid off or working part time for economic reasons increased greatly in January as a consequence of the partial federal government shutdown; that left the unemployment rate (4.0%) and underemployment rate (8.1%) higher. Average hourly wages were up 3.2% year-over-year. Additionally, the factory sector expanded at a faster pace last month: the Institute for Supply Management’s purchasing manager index improved 2.5 points to a mark of 56.6.1,2

       

FED HINTS AT THE POSSIBILITY OF PAUSING RATE HIKES

The Federal Reserve made no interest rate move last week, but at its January 30 press conference, Fed chairman Jerome Powell had an interesting comment for the media: “We believe we can best support the economy by being patient before making any future adjustment to policy.” To investors large and small, that remark sounded like a declaration that the central bank was ready to exercise extra caution in considering future rate increases. Powell noted the recent emergence of “some crosscurrents and conflicting signals about the [economic] outlook” as a factor.3

     

HOW ARE CONSUMERS FEELING?

The latest readings on the country’s two most-watched consumer confidence indices look good, but one just took a major fall. The Conference Board’s monthly index went from a December mark of 126.6 to 120.2 in January. In its final January edition, the University of Michigan’s consumer sentiment gauge displayed a 91.2 reading, up 0.5 points from its preliminary version.2

     

MAJOR INDICES MAKE ANOTHER WEEKLY ADVANCE

Last week, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all gained more than 1.3%, thanks in part to some of the developments mentioned above. The S&P rose 7.87% during January. Oil ended the week at $55.31 on the NYMEX; gold, at $1,322.60 on the COMEX.4,5

       

 

 

T I P   O F   T H E   W E E K
 

 


Does your employer offer long-term disability coverage in its benefits package? Do you know how much income that coverage would pay out if you become disabled? Check to see if the income would be adequate; if it appears inadequate, consider arranging supplemental coverage.

 

 

 

THIS WEEK

Alphabet, Beazer Homes, Clorox, Gilead Sciences, Panasonic, Seagate Technology, Sysco, and The Hartford release earnings news Monday. | On Tuesday, ISM’s January non-manufacturing PMI complements earnings from Allstate, AmeriGas, Anadarko Petroleum, Archer Daniels Midland, BP, Chubb, Electronic Arts, Estee Lauder, Genworth Financial, Mitsubishi, Pitney Bowes, Ralph Lauren, Snap, Viacom, Voya Financial, and Walt Disney Co. | Wednesday, earnings arrive from Chipotle, Cummins, Eli Lilly, General Motors, GlaxoSmithKline, Humana, MetLife, Prudential Financial, Spotify, Take-Two Interactive, and Valvoline; in the evening, Federal Reserve chair Jerome Powell takes questions at a Washington, D.C. town hall meeting. | On Thursday, the earnings roll call includes news from ArcelorMittal, Dunkin’ Brands, Fiat Chrysler, Kellogg, L’Oréal, Marathon Petroleum, Mattel, Motorola Solutions, News Corp., Philip Morris, Twitter, Tyson Foods, and Yum! Brands. | Friday, Exelon, Hasbro, and Phillips 66 present Q4 results.

 

 

 

Q U O T E   O F   T H E   W E E K

 

 

“Have patience with all things, but chiefly have patience with yourself.”

St. Francis de Sales

 

 

MARKET INDEX

CLOSE

WEEK

Y-T-D

DJIA

25,063.89

+1.32

+7.44

NASDAQ

7,263.87

+1.38

+9.47

S&P 500

2,706.53

+1.57

+7.97

       

TREASURY

CLOSE

WEEK

Y-T-D

10 YEAR NOTE

2.70

-0.06

+0.01

 

Sources: wsj.com, treasury.gov - 2/1/194,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. Weekly and year-to-date market index returns are expressed as percentages. 10-year Treasury note yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and year-to-date 10-year Treasury note yield differences are expressed in basis points.

 

 

 

T H E   W E E K L Y   R I D D L E

 

 

You can throw a ball 25’ and make it come right back to you, without the ball hitting anything or being caught by anyone. How can you make this happen?

 

LAST WEEK’S RIDDLE: All around you in the day, and you will notice it in the dark. You can see it, but you will never hear it. What is it?

ANSWER: Light.

 

 

 

«representativename» may be reached at «representativephone» or «representativeemail»
«representativewebsite»
 

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - fortune.com/2019/02/01/jobs-numbers-january/ [2/1/19]

2 - marketwatch.com/economy-politics/calendars/economic [2/1/19]

3 - washingtonpost.com/business/2019/01/30/federal-reserve-says-it-will-be-patient-rate-hikes-change-likely-please-trump/ [1/30/19]

4 - markets.wsj.com [2/1/19]

5 - us.spindices.com/indices/equity/sp-500 [1/31/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/1/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]


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