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Archived Newsletters

Weekly Economic Update - 11.28.16

STOCKS SETTLE AT ALL-TIME HIGHS

An abbreviated trading week was also a historic week on Wall Street, as the four key U.S. equity indices all reached new peaks. At Friday’s closing bell, the Russell 2000 settled at a record 1,347.20 after its fifteenth straight day of gains; it was up 2.37% for the week. The Dow advanced 1.47% on the week to a Friday close of 19,152.14. Adding 1.42% in three-and-a-half days, the Nasdaq ended the week at 5,398.92. The S&P 500, which finished Friday up more than 3% since the election, rose 1.40% on the week to 2,213.35.1,2,5

   

EXISTING HOME SALES RISE, NEW HOME SALES FALL

The National Association of Realtors announced a 2.0% gain for resales in October. Existing home sales have kept their momentum, even with inventory down 4.3% and the median sale price up 6.0% in the past year. According to the Census Bureau, new home sales declined 1.9% in October, but were still up 12.7% year-over-year.3

   

CONSUMER SENTIMENT IMPROVES

At a final November mark of 93.8, the University of Michigan’s household sentiment index surpassed the consensus forecast of economists polled by MarketWatch, who expected a 92.0 reading. The index’s initial November edition had a reading of 91.6.4

 

DURABLE GOODS ORDERS RISE 4.8%

October’s gain in capital goods orders was the largest measured by the Department of Commerce in a year. A 94% increase in commercial aircraft orders was a major factor. Business investment rose 0.4% in October.3,4

    

THIS WEEK: Shoe Carnival and Thor Industries announce earnings on Monday. On Tuesday, the federal government releases its second estimate of Q3 growth, the Conference Board’s November consumer confidence index and the September S&P/Case-Shiller home price index both appear, and Autodesk and Tiffany present Q3 results. Wednesday brings ADP’s November employment change report, October consumer spending figures, the October PCE price index, a new Beige Book from the Federal Reserve, the NAR’s latest pending home sales index, and earnings from American Eagle Outfitters, Guess, and La-Z-Boy. Thursday, investors look at the latest initial jobless claims figures, the November Challenger job-cut report, November’s ISM manufacturing PMI, and earnings from Dollar General, Express, Five Below, Kroger, Land’s End, Sears Holdings, and Smith & Wesson. The November employment report from the Department of Labor arrives Friday, along with earnings from Big Lots and Fred’s.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+9.91

+7.52

+14.10

+5.60

NASDAQ

+7.82

+5.53

+24.23

+11.94

S&P 500

+8.29

+5.96

+18.21

+5.80

REAL YIELD

11/25 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.47%

0.62%

0.05%

2.27%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 11/25/165,6,7,8

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.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. 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 indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, 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 an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 - marketwatch.com/story/dow-poised-for-fresh-record-highs-black-friday-boost-in-view-2016-11-25/ [11/25/16]

2 - google.com/finance?q=INDEXSP:.INX&ei=TqE4WIO4F4eu2AaDyayACQ [11/25/16]

3 - usatoday.com/story/money/business/2016/11/23/economy-manufacturing-durable--goods-jobless-claims/94329992/ [11/23/16]

4 - marketwatch.com/economy-politics/calendars/economic [11/25/16]

5 - markets.wsj.com/us [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F25%2F15&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F25%2F15&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F25%2F15&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F25%2F11&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F25%2F11&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F25%2F11&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F24%2F06&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F24%2F06&x=0&y=0 [11/25/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F24%2F06&x=0&y=0 [11/25/16]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/25/16]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/25/16]


Weekly Economic Update - 11.21.16

YELLEN HINTS STRONGLY AT A RATE HIKE

Thursday, Federal Reserve chair Janet Yellen told Congress that the central bank could raise the benchmark interest rate “relatively soon,” calling current monetary policy merely “moderately accommodative.” She added that Fed officials envision “only gradual increases in the federal funds rate over time to achieve and maintain maximum employment and price stability.” Friday, the Fed Rate Monitor Tool at Investing.com put the possibility of a December rate hike at 91%.1,2

  

FRESH SIGNS OF a HEALTHY ECONOMY

Two economic indicators really stood out last week. Headline and core retail sales increased 0.8% in October, according to the Census Bureau (which also revised the September retail sales gain north to 1.0%). Housing starts advanced 25.5% last month, the Bureau also noted; this more than offset a 9.5% September dip.3

   

CONSUMER PRICES ROSE 0.4% in october

This change in the Consumer Price Index took its year-over-year increase to 1.6%. A mere 0.1% monthly gain in the core CPI left its 12-month advance at 2.1%. Producer prices were flat last month, with core prices retreating 0.2%; in the year ending in October, the headline Producer Price Index rose only 0.8% with the core PPI advancing 1.2%.3

 

BIG THREE SEE ANOTHER WEEK OF GAINS

Wall Street was still very bullish last week, and the Nasdaq Composite set the pace among the three major indices. The tech benchmark added 1.61% in five days to settle at 5,321.51 Friday. Smaller weekly gains came for the Dow Jones Industrial Average (0.11% to 18,867.93) and S&P 500 (0.81% to 2,181.90). WTI crude ended the week at $45.56 on the NYMEX; gold, at $1,208.50 on the COMEX.4

    

THIS WEEK: On Monday, Jack in the Box, Palo Alto Networks, Tyson Foods, and Weibo present earnings. October existing home sales figures are out Tuesday, along with earnings from Barnes & Noble, Burlington Stores, Campbell Soup, Chico’s FAS, Cracker Barrel Old Country Store, Dollar Tree, DSW, GameStop, Hormel Foods, Hewlett Packard Enterprise, Kirkland’s, Medtronic, Urban Outfitters, and Valspar. Wednesday is filled with major reports: Wall Street looks at October new home sales and capital goods orders, initial jobless claims, the final November household sentiment index from the University of Michigan and the minutes from the November Federal Reserve policy meeting, along with Q3 results from Deere & Co. On Thursday, U.S. stock and bond markets are closed for Thanksgiving. Friday, Wall Street returns for a half-day of trading with no major earnings reports or news releases scheduled.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+8.28

+6.38

+11.99

+5.29

NASDAQ

+6.27

+4.85

+21.37

+11.76

S&P 500

+6.75

+4.72

+15.90

+5.57

REAL YIELD

11/18 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.44%

0.71%

0.05%

2.33%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 11/18/164,5,6,7

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.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. 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 indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, 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 an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 - marketwatch.com/story/yellen-says-fed-may-hike-interest-rates-relatively-soon-2016-11-17 [11/17/16]

2 - nasdaq.com/article/us-stocks-slip-as-investors-contemplate-future-fed-rate-hikes-cm711485 [11/18/16]

3 - investing.com/economic-calendar/ [11/18/16]

4 - markets.wsj.com/us [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/18/16]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/18/16]


Weekly Economic Update - 11.14.16

BLUE CHIPS HIT ALL-TIME HIGHS

Donald Trump’s unexpected presidential election win did not rattle Wall Street. Instead, bulls saw the prospect of greater federal outlays and less business regulation in the near future. The Dow Jones Industrial Average closed at a new record Friday: 18,847.66. The Dow 30 had its finest week since 2011, gaining 5.36%. As for the S&P 500, it advanced 3.80% in five days to 2,164.45. Settling at 5,237.11 Friday, the Nasdaq Composite rose 3.78% on the week.1,2

  

FED’s FISCHER: TIME FOR GRADUAL TIGHTENING

Stating that the central bank “appears reasonably close to achieving both inflation and employment components of its mandate,” Federal Reserve vice chairman Stanley Fischer noted Friday that “the case for (raising interest rates) gradually is quite strong, keeping in mind that the future is uncertain and that monetary policy is not a preset course.” Some analysts believe sizable infrastructure spending under a Trump administration could spur inflation. On Friday, Fed fund futures contracts implied an 81% chance of a hike at the central bank’s December meeting.3

   

CONSUMER SENTIMENT ROSE BEFORE ELECTION

Displaying a reading of 91.6, the University of Michigan’s preliminary November household sentiment index climbed 4.4 points off its final October mark. Analysts polled by Bloomberg forecast an initial November reading of 87.9 for the gauge.4

  

CRUDE, GOLD PRICES DECLINE

As Wall Street rallied, key commodities had a tough week. Oil and gold were among them. The yellow metal settled at $1,227.40 an ounce on the COMEX Friday, leaving it down 3.75% at the end of this second week of the month. Oil ended the week at $43.12 a barrel on the NYMEX; it has sunk 7.78% so far in November.5

     

THIS WEEK: Advance Auto Parts and Smart & Final present Q3 results Monday. October retail sales numbers arrive Tuesday, plus earnings from Agilent Technologies, Aramark, Beazer Homes, Dick’s Sporting Goods, Diebold, and Home Depot. Wednesday, investors consider earnings from Cisco, L Brands, Lowe’s, NetApp, and Target, plus the October Producer Price Index. Thursday, Federal Reserve chair Janet Yellen testifies on the economic outlook in Congress, the October Consumer Price Index is released, October groundbreaking and building permit numbers are announced, and America's Car-Mart, Applied Materials, Best Buy, Bon-Ton, Gap, Intuit, J.M. Smucker, Ross Stores, Spectrum Brands, Staples, Stein Mart, Walmart, and Williams-Sonoma offer earnings. Abercrombie & Fitch and Foot Locker announce Q3 results Friday.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+8.16

+6.13

+11.69

+5.57

NASDAQ

+4.59

+3.03

+19.90

+11.92

S&P 500

+5.90

+3.97

+14.92

+5.67

REAL YIELD

11/10 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.27%

0.77%

-0.04%

2.25%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 11/11/162,6,7,8

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.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. 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 indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, 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 an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 - reuters.com/article/us-usa-stocks-idUSKBN13619K [11/11/16]

2 - markets.wsj.com/us [11/11/16]

3 - usatoday.com/story/money/2016/11/11/fischer-case-gradual-rate-hikes-quite-strong/93618568/ [11/11/16]

4 - bloomberg.com/news/articles/2016-11-11/u-s-consumer-sentiment-hits-five-month-high-before-election [11/11/16]

5 - money.cnn.com/data/commodities/ [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F10%2F15&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F10%2F15&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F10%2F15&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F10%2F11&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F10%2F11&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F10%2F11&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F10%2F06&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F10%2F06&x=0&y=0 [11/11/16]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F10%2F06&x=0&y=0 [11/11/16]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/11/16]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/11/16]


Weekly Economic Update - 11.7.16

NEW DATA SHOWS BRIGHTER JOBS PICTURE

Unemployment fell to 4.9% in October as firms added 161,000 net new workers, but that was just one positive from the Department of Labor’s latest summary of the U.S. employment situation. Year-over-year wage growth reached 2.8%, the best number seen since June 2009, as average hourly pay rose ten cents last month. The U-6 rate (underemployment + unemployment) fell 0.2% to 9.5%. In addition, hiring totals across August and September were revised higher by 44,000.1

  

CONSUMER SPENDING ROSE IN SEPTEMBER

The ninth month of 2016 saw gains of 0.5% in personal spending and 0.3% in personal incomes, the Commerce Department reported last week. Adjusted for inflation, consumer spending advanced 0.3% for September, as opposed to retreating 0.2% in August.2

   

MORE EXPANSION AMONG SERVICE & FACTORY FIRMS

The Institute for Supply Management’s twin barometers of the U.S. manufacturing and non-manufacturing sectors were both comfortably above the 50-mark showing growth in October. ISM’s factory purchasing managers index came in at 51.9, up 0.4 points; its service sector PMI declined 2.3 points to 54.8.3

 

STOCKS PULL BACK

The Federal Reserve left interest rates alone last week, just as many analysts predicted – but investors were more concerned with the upcoming presidential election and earnings, and those anxieties certainly impeded the bulls. Across five days, the Dow Jones Industrial Average fell 1.50% to 17,888.28; the S&P 500, 1.94% to 2,085.18; and the Nasdaq Composite, 2.77% to 5,046.37.1,4

   

THIS WEEK: Earnings from AMC Entertainment, Dean Foods, Hertz Global, Marriott International, MGM Resorts, Priceline, Rosetta Stone, and Scripps Networks arrive Monday. Tuesday is Election Day, with CVS Health, D.R. Horton, and TripAdvisor joining the fall earnings parade. Wednesday, Wall Street looks at earnings from AmeriGas, Clear Channel Outdoor, Coty, Energizer, Green Dot, Magellan Health, NetEase, Norwegian Cruise Line, Popeye’s, Viacom, and Wendy’s. A new initial claims report comes out Thursday, plus earnings from Kohl’s, Macy’s, Michael Kors, Nordstrom, Nvidia, Ralph Lauren, Sigma Labs, and Walt Disney Co. This Friday is Veterans Day: the stock market is open, the bond market is closed, November’s initial University of Michigan consumer sentiment index appears, and J.C. Penney and Weibo release Q3 results.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+2.66

+0.12

+9.86

+4.92

NASDAQ

+0.78

-1.87

+17.57

+11.65

S&P 500

+2.02

-0.81

+13.28

+5.28

REAL YIELD

11/4 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.11%

0.68%

-0.06%

2.40%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 11/4/164,5,6,7

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.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. 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 indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, 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 an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 - tinyurl.com/hmn5mnb [11/4/16]

2 - reuters.com/article/us-usa-economy-idUSKBN12V1BM [10/31/16]

3 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm [11/3/16]

4 - markets.wsj.com/us [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F4%2F15&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F4%2F15&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F4%2F15&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F4%2F11&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F4%2F11&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F4%2F11&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F3%2F06&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F3%2F06&x=0&y=0 [11/4/16]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F3%2F06&x=0&y=0 [11/4/16]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/4/16]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/4/16]


Monthly Economic Update - November 2016

THE MONTH IN BRIEF
Bulls were reined in during October. The S&P 500 lost 1.94% as Wall Street responded unenthusiastically to the fall earnings season. Even though much of the economic news that emerged in October was good, investors saw an interest rate hike on the horizon and remained concerned about an increasingly controversial presidential race. Consumer confidence waned, but improved manufacturing, consumer spending, and retail sales numbers all factored into stronger growth. New and existing home sales accelerated. The price of oil rose, then quickly fell; the price of gold slipped, then recovered just a bit. Overseas, a timeline was set for the Brexit. In the big picture, appetite for risk waned as investors remained cautious.1

   

DOMESTIC ECONOMIC HEALTH
Economic indicators flashed clear signals that the economy was picking up. Household spending rose a healthy 0.5% during September, the most since June. Household incomes rose 0.3% in the ninth month of the year. Retail sales were up 0.6% for September, with core retail purchases rising 0.5%.2,3

 

Important twin gauges of business activity showed both manufacturing and service sector growth. The Institute for Supply Management’s non-manufacturing purchasing manager index jumped up to a reading of 57.1 in September, improving 5.7 points. ISM’s factory PMI also recovered from an August spent in contraction territory, rising 2.1 points to 51.5 in September; even more encouragingly, ISM’s new factory orders index increased by 6.0 points.3,4 

 

Complementing all this, the federal government said that the economy grew 2.9% in the third quarter – a real upturn from the 1.4% GDP recorded for Q2.5

 

Had full employment been reached? Perhaps it was close at hand, since the hiring pace seemed to be moderating. The Department of Labor said that companies had added 156,000 net new jobs in September, while revising the August gain north to 167,000. The jobless rate rose slightly to 5.0%; the U-6 rate including the underemployed remained at 9.7%. Average hourly wages improved another 0.2%.3

 

Was inflation pressure mounting? Not really. The PCE price index advanced 0.2% in September, which left the core PCE index up 1.7% year-over-year, the same as in August. The Consumer Price Index showed a 1.5% annual gain in September, up from 1.1% a month earlier; core consumer prices were up 2.2% in 12 months, ticking down from 2.3% in August. Producer prices rose 0.3% in September, but that still left them up just 0.7% year-over-year.2,3

   

Some indicators did descend, most notably those measuring consumer confidence. The Conference Board’s monthly barometer dipped 4.9 points in October to a respectable 98.6 mark, while the University of Michigan consumer sentiment index fell to 87.2 at month’s end. Headline capital goods orders also declined 0.1% for September, with core orders down 1.2%.5

     

GLOBAL ECONOMIC HEALTH
In London, United Kingdom prime minister Theresa May announced definite plans for the Brexit. The U.K. will invoke Article 50 of the Lisbon Treaty no later than the end of March 2017. Assuming this occurs, the U.K. will leave the European Union in the summer of 2019. Until then, it intends to remain a player in all E.U. summits and member state negotiations. Speaking of the broader E.U., Eurostat reported economic growth of 0.3% for the euro area in Q3 and estimated annualized inflation for the euro area at 0.5% in October.6,7

    

The World Bank projected 6.7% growth for China in 2016, declining to 6.5% in 2017, and then 6.3% in 2018. It believes that the second-fastest growing economy in Asia this year will be that of the Philippines at 6.4%. Malaysia’s 2016 GDP is projected at 4.2%; Indonesia’s, at 4.8%. China aside, the Bank expects growth to pick up across Asia in the near future, projecting 4.8% growth for the rest of the region’s economies this year, 5% GDP in 2017, and 5.1% growth for 2018. Meanwhile, news arrived that Japan’s retail sales and industrial output were flat in September; retail sales were down for a seventh straight month and 1.9% lower over the past 12 months.8,9

   

WORLD MARKETS
Many foreign indices outperformed ours. To our respective north and south, the TSX Composite advanced 0.42% last month; the Bolsa, 1.62%. Argentina’s MERVAL rose 7.16%. European indices had a good month – there were gains of 1.47% for the DAX, 1.37% for the CAC-40, 4.81% for the IBEX 35, 0.59% for the Micex, and 0.80% for the FTSE 100. The FTSEurofirst 300 was an exception, losing 0.90%.10

 

The Nikkei 225 soared 5.93% during October to pace the major Asian indices. The Shanghai Composite was not that far behind, rising 3.22%. October also brought gains of 0.66% for India’s Sensex and 2.49% for the FTSE Taiwan 50. Australia’s All Ordinaries retreated 2.22%, and Hong Kong’s Hang Seng, 1.56%. The MSCI World index lost 2.01%, but the MCSI Emerging Market index rose 0.18%.10,11

       

COMMODITIES MARKETS

As the Halloween trading day drew to a close on Wall Street, a look at the COMEX and NYMEX showed monthly losses for both gold and oil. The yellow metal slipped 3.27% for the month, settling at $1,276.70. Light sweet crude dropped to $46.76 at month’s end with oil investors still awaiting finalization of OPEC’s deal to restrain output; futures took a 2.68% fall for October.12

 

Reviewing the performance of other commodities last month, we see solid gains for some key crops. Coffee rose 9.25%; corn, 5.80%; cotton, 4.02%; soybeans, 5.30%; and wheat, 2.86%. Cocoa lost 0.90% in October; sugar, 2.09%. Among metals, silver slipped 7.09%; platinum fell 4.71%; and copper, 0.11%. Silver finished the month at $17.84. Unleaded gasoline futures lost 4.66% in October; heating oil futures, 1.62%. Natural gas futures gained 3.65%. The U.S. Dollar Index settled at 98.32, rising 3.03% in a month.1,12

  

REAL ESTATE
Aside from a drop in groundbreaking, the news out of this sector was decidedly upbeat. New home sales rose 3.1% in the ninth month of 2016, taking the 12-month advance to 29.8% and leaving the pace once again near a 9-year high. Meanwhile, the National Association of Realtors noted a 3.2% monthly advance for existing home sales.3,13

 

Home prices – as measured by the 20-city S&P/Case-Shiller index – were up 5.3% year-over-year as of August, compared with 5.0% in the year ending in July. The Census Bureau said that building permits increased 6.3% for September; though, housing starts did retreat 9.0%. Pending home sales were up 1.5% for September according to NAR.3,5

  

Mortgages grew more expensive last month. By October 27, the mean interest rate for the 30-year FRM was at 3.47%, according to Freddie Mac’s Primary Mortgage Market Survey, while average rates on the 15-year FRM and the 5/1-year ARM respectively stood at 2.78% and 2.84%. Back on September 29, the mean rate on the 30-year loan averaged 3.42%; the average interest on the 15-year fixed was 2.72%; and the mean interest on the 5/1-year adjustable rate mortgage was 2.81%.14

              

LOOKING BACK…LOOKING FORWARD
All three major U.S. equity indices lost ground in October. The blue chips retreated least – the Dow Jones Industrial Average gave back 0.90% for the month. Dropping 2.31%, the Nasdaq Composite exceeded the S&P 500’s 1.94% loss. The Russell 2000 stumbled 5.42%. Unsurprisingly, considering all this, the CBOE VIX soared 29.42% with uncertainty rising on Wall Street. The Halloween settlements: DJIA, 18,142.12; NASDAQ, 5,189.13; S&P, 2,126.15; RUT, 1,191.39; and VIX, 17.06. The VIX outgained all consequential U.S. indices last month by a wide margin; the PHLX Utility Index logged the biggest advance among the equity indices for October, rising 1.12%.1

      

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.12

+2.71

+10.35

+5.02

NASDAQ

+3.63

+2.68

+18.66

+11.93

S&P 500

+4.02

+2.25

+13.93

+5.43

REAL YIELD

10/31 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.11%

0.63%

0.08%

2.34%

 

 


Sources: barchart.com, bigcharts.com, treasury.gov – 10/31/161,15,16,17

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.

        

At this writing, it seems highly unlikely that the Federal Reserve will authorize an interest rate hike at the start of November, as the Federal Open Market Committee has historically preferred to refrain from any policy decisions that could influence presidential elections. According to FactSet data, year-over-year earnings growth is apparent for the first time since Q1 2015 (blended Q3 earnings growth was at 1.6% through Halloween). Still, there is nothing resembling a bull run as we enter November. Hopefully, some risk appetite will return after the election, and investors will view solid economic indicators as validations of an improving economy, first, and as further evidence for a federal funds rate increase, second. Wall Street could see a lot of volatility this month, not merely reflective of the election. We can only hope the evident tension among institutional investors eases and the market surprises to the upside.18 

         

UPCOMING ECONOMIC RELEASES: After the Federal Reserve policy statement on November 2, the rest of the major items on the economic release slate arrives in this order: the ISM October non-manufacturing PMI; September factory orders and the October Challenger job-cut report (11/3); the Department of Labor’s October employment report (11/4); September consumer credit (11/7); the preliminary November consumer sentiment index from the University of Michigan (11/11); October retail sales (11/15); the October PPI and October industrial output (11/16); the October CPI and October housing starts and building permits (11/17); October existing home sales (11/22); the final November University of Michigan consumer sentiment index, October new home sales, October capital goods orders, and the minutes from the November Federal Reserve policy meeting (11/24); the newest consumer confidence index from the Conference Board, the September S&P/Case-Shiller home price index, and the second estimate of Q3 growth (11/29); and then the November ADP payrolls report, a new Federal Reserve Beige Book, and October PCE prices, consumer spending, and pending home sales (11/30).

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. MarketingPro, Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. 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 not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, 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 an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. 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 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 Mexican Stock Exchange commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. 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 IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. The MICEX 10 Index (Russian: Индекс ММВБ10) is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. 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 SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). The FTSE TWSE Taiwan 50 Index consists of the largest 50 companies by full market value, and is also the first narrow-based index published in Taiwan. 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 Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. The PHLX Utility Sector Index is composed of geographically diverse public U.S. utility stocks. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 - barchart.com/stocks/indices.php?view=performance [10/31/16]

2 - marketwatch.com/story/consumer-spending-accelerates-in-september-2016-10-31/ [10/31/16]

3 - investing.com/economic-calendar/ [10/31/16]

4 - news.forexlive.com/!/september-2016-us-ism-manufacturing-pmi-date-report-20161003 [10/3/16]

5 - marketwatch.com/economy-politics/calendars/economic [10/31/16]

6 - bbc.com/news/uk-politics-37710786 [10/22/16]

7 - ec.europa.eu/eurostat [10/31/16]

8 - ibtimes.sg/china-growth-moderate-east-asia-pacific-resilient-world-bank-3722 [10/5/16]

9 - reuters.com/article/us-japan-economy-output-idUSKBN12V02A [10/29/16]

10 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [10/31/16]

11 - msci.com/end-of-day-data-search [10/31/16]

12 - money.cnn.com/data/commodities/ [10/31/16]

13 - foxbusiness.com/markets/2016/10/26/september-new-home-sales-rise-3-1.html [10/26/16]

14 - freddiemac.com/pmms/archive.html?year=2016l [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F30%2F15&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F30%2F15&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F30%2F15&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F31%2F11&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F31%2F11&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F31%2F11&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F31%2F06&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F31%2F06&x=0&y=0 [10/31/16]

15 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F31%2F06&x=0&y=0 [10/31/16]

16 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/31/16]

17 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/31/16]

18 - marketwatch.com/story/stock-market-braces-for-political-jitters-as-fed-likely-to-stand-pat-2016-10-29 [10/29/16]


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