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Archived Newsletters

Weekly Economic Update - 3.27.17

NEW HOME SALES GO ONE WAY, RESALES ANOTHER

Rising 6.1% in February, new home sales reached a 7-month peak. The Census Bureau said that this gain occurred with just 5.4 months of inventory on the market, less than half that available in 2006 during the height of the last residential real estate boom. In contrast, the National Association of Realtors reported a 3.7% retreat for existing home sales last month, with increasing mortgage rates, high prices, and limited supply as major factors.1

    

A GAIN FOR DURABLE GOODS ORDERS

A Census Bureau report noted a 1.7% improvement in February, following January’s 2.3% advance. Core hard goods orders did retreat 0.1% last month.2

    

LIGHT SWEET CRUDE BREAKS 4-DAY LOSING STREAK

Friday’s small gain in the price of oil marked the first daily advance for the commodity since March 17. Across March 20-24, crude prices declined 1.7% as news broke of record stockpiles; it was the third losing week for oil in the past month. WTI crude settled at a NYMEX price of $47.97 Friday.3

  

VOLATILITY RETURNS, MAJOR INDICES DECLINE

Investors were less confident last week than they had been in some time. Across five trading days, the Dow Jones Industrial Average fell 1.52% to 20,596.72; the Nasdaq Composite, 1.22% to 5,828.74; and the S&P 500, 1.44% to 2,343.98. The CBOE VIX gained 14.89% for the week, which still left it down 7.69% for the year.4

 

THIS WEEK: Monday, nothing major is scheduled. Tuesday, Federal Reserve chair Janet Yellen speaks at an economic development conference in Washington, D.C., the Conference Board releases its March consumer confidence index, the January S&P/Case-Shiller home price index arrives, and in addition, Wall Street will look at earnings from Carnival, Darden Restaurants, and Sonic. On Wednesday, U.K. prime minister Theresa May is expected to officially trigger Article 50 of the Lisbon Treaty, formally beginning the Brexit; stateside, the NAR issues its February pending home sales report, complementing earnings news from Lululemon Athletica and Paychex. Thursday brings both a new initial jobless claims report and the third estimate of Q4 growth from the federal government, along with Q4 results from Dell Technologies. Friday offers the University of Michigan’s final March consumer sentiment index, February consumer spending figures, and the latest PCE price index.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.22

+17.59

+11.49

+6.50

NASDAQ

+8.28

+22.11

+18.00

+13.80

S&P 500

+4.70

+15.13

+13.55

+6.32

REAL YIELD

3/24 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.42%

0.34%

-0.11%

2.19%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 3/24/174,5,6,7

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. 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 - foxbusiness.com/markets/2017/03/23/u-s-jobless-claims-unexpectedly-rise-labor-market-still-strong.html [3/23/17]

2 - thestreet.com/story/14057593/1/stock-futures-edge-higher-as-health-care-vote-drama-continues.html [3/24/17]

3 - marketwatch.com/story/crude-oil-breaks-4-day-losing-streak-after-saudis-slash-exports-to-us-2017-03-24/ [3/24/17]

4 - markets.wsj.com/us [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F24%2F16&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F24%2F16&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F24%2F16&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F23%2F12&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F23%2F12&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F23%2F12&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F23%2F07&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F23%2F07&x=0&y=0 [3/24/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F23%2F07&x=0&y=0 [3/24/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/24/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/24/17]


Weekly Economic Update - 3.20.17

FED HIKES, LEAVES 2017 FORECAST UNCHANGED

As expected, the Federal Reserve raised the target range for the federal funds rate by a quarter-point last week to 0.75-1.00%. “The simple message is, the economy is doing well,” Fed chair Janet Yellen explained to the media following the move. The central bank’s dot-plot table still projects two more rate increases during the balance of 2017, with three rate hikes envisioned for both 2018 and 2019.1

    

INFLATION PRESSURE EASEs

February’s Consumer Price Index displayed only a 0.1% gain, compared to 0.6% in January. Core consumer prices moved 0.2% higher. The small February increase still left the headline CPI up 2.7% in the past 12 months. The Producer Price Index rose 0.3% for February, putting its yearly advance at 2.2%.2

    

SMALL GAINS IN SENTIMENT, RETAIL SALES

The initial March University of Michigan consumer sentiment index came in at 97.6 Friday, 1.3 points above its final February mark. Thanks mainly to “improved personal finances” among households, the index’s current economic conditions component hit a 17-year high. A Census Bureau report showed retail purchases up 0.1% in February, 0.2% with car and gasoline buying factored out.2,3

  

CALM WEEK SEES SMALL STOCK MARKET ADVANCE

Wall Street saw the March 15 Federal Reserve policy decision as an affirmation of the economy’s health; equities investors were not at all riled. Ending the week at 5,901.00, the Nasdaq Composite gained 0.67% in five days. The S&P 500 rose 0.24% in the same period to settle at 2,378.25 Friday, while the Dow Jones Industrial Average added just 0.06% across five trading sessions on the way to a Friday close of 20,914.62. Losing 3.26% in five days, the CBOE Volatility Index ended the week at 11.28.4

 

THIS WEEK: Monday, nothing major is scheduled. Earnings announcements from FedEx, General Mills, Lands’ End, Nike, and Steelcase appear Tuesday. Wednesday, Wall Street reviews February existing home sales and earnings reports from Cintas, Five Below, Perry Ellis, and Winnebago. Thursday morning, Federal Reserve chair Janet Yellen delivers a keynote address at a Fed conference in Washington, D.C.; in addition, investors will eye the latest initial claims report, February’s new home sales report, and earnings news from Accenture, GameStop, KB Home, Micron Technology, Shoe Carnival, and Sportsman’s Warehouse. Friday offers a report on February hard goods orders and Q4 results from Finish Line.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+5.83

+19.64

+11.61

+7.27

NASDAQ

+9.62

+23.58

+18.63

+14.87

S&P 500

+6.23

+16.55

+13.87

+7.15

REAL YIELD

3/17 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.49%

0.34%

-0.09%

2.16%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 3/17/174,5,6,7

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. 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 - marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15 [3/15/17]

2 - investing.com/economic-calendar/ [3/17/17]

3 - sca.isr.umich.edu/ [3/17/17]

4 - markets.wsj.com/us [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F17%2F16&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F17%2F16&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F17%2F16&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F16%2F12&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F16%2F12&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F16%2F12&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F16%2F07&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F16%2F07&x=0&y=0 [3/17/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F16%2F07&x=0&y=0 [3/17/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/17/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/17/17]


Weekly Economic Update - 3.13.17

COMPANIES HIRED READILY IN FEBRUARY

U.S. firms added 235,000 net new jobs last month, and the latest Department of Labor employment report showed the largest growth occurring in the construction and education/health care sectors. The DoL also revised January’s job gains upward by 11,000 to 238,000. Payroll expansion has averaged 209,000 per month since December. The headline (U-3) jobless rate ticked down 0.1% to 4.7%, and the total (U-6) jobless rate, counting the underemployed, fell 0.2% to 9.2%.1

    

FED FUTURES MARKET: MARCH RATE HIKE A GIVEN

The CME Group’s FedWatch Tool, which tracks the prices of 30-day Fed Fund futures to get a bead on traders’ reactions to potential monetary policy moves, put the chance of a March 15 quarter-point interest rate hike at 93% Friday. The odds of another quarter-point move in June were put at 51%.2

    

OIL SLUMPS 9.1% IN A WEEK

During March 6-10, WTI crude had its worst week since November, retreating to a Friday close of $48.49 on the NYMEX. News of rising output and plentiful stateside inventory hurt prices. In other oil news, a billion-barrel crude reserve was just found in the Alaskan interior – the largest such discovery since the 1980s.3,4

  

STOCKS RETREAT, BUT JUST SLIGHTLY

As the bull market turned eight years old, the S&P 500 turned a bit south, losing 0.44% in five days. At the closing bell Friday, it stood at 2,372.60. The Nasdaq Composite also fell for the week, declining 0.15% to 5,861.73. The Dow Jones Industrial Average gave back 0.49% in the same interval, settling at 20,902.98 Friday.5

 

THIS WEEK: Monday, Del Taco and Jamba report Q4 results. The February PPI arrives Tuesday, along with earnings from Bon-Ton Stores, DSW, and Hostess Brands. Wednesday, investors worldwide react to the Federal Reserve’s latest monetary policy statement, plus the February CPI, February retail sales figures and earnings news from GUESS, Jabil Circuit, Oracle, and Williams-Sonoma. On Thursday, Wall Street reviews initial jobless claims, and the Census Bureau’s report on February construction activity; investors also consider earnings from Adobe Systems and Dollar General. The preliminary March University of Michigan consumer sentiment index appears Friday, complementing the Fed’s report on February industrial output and Q4 results from Tiffany & Co.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+5.77

+22.99

+12.35

+7.03

NASDAQ

+8.89

+25.73

+19.23

+14.55

S&P 500

+5.97

+19.25

+14.61

+6.91

REAL YIELD

3/10 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.57%

0.45%

-0.24%

2.25%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 3/10/175,6,7,8

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. 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 - equities.com/news/a-strong-jobs-report-and-a-growing-divergence-between-jobs-and-employment [3/10/17]

2 - cmegroup.com/trading/interest-rates/countdown-to-fomc.html [3/10/17]

3 - marketwatch.com/story/oil-moves-cautiously-higher-remains-under-50-a-barrel-2017-03-10/ [3/1/17]

4 - money.cnn.com/2017/03/10/investing/alaska-oil-discovery-repsol-spain/index.html [3/10/17]

5 - markets.wsj.com/us [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F10%2F16&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F10%2F16&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F10%2F16&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F9%2F12&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F9%2F12&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F9%2F12&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F9%2F07&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F9%2F07&x=0&y=0 [3/10/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F9%2F07&x=0&y=0 [3/10/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/10/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/10/17]


Weekly Economic Update - 3.6.17

YELLEn: RATE MOVE MAY HAPPEN THIS MONTH

In Chicago Friday, Federal Reserve chair Janet Yellen said that if hiring and inflation indicators continue to meet the central bank’s expectations, an interest rate hike “would likely be appropriate” at its March policy meeting. She also noted that, barring unforeseen events, the pace of tightening in the near term “likely will not be as slow as it was during the past couple of years.” After these statements, the Fed futures market put the chance of a March rate increase at 82%.1

    

RISING CONFIDENCE, TEMPERED SPENDING

At a mark of 114.8, the Conference Board consumer confidence index reached its highest point in 14½ years in February. Just 20.3% of Americans found jobs “hard to get,” the smallest percentage in eight years. A Department of Commerce report, however, showed only average consumer spending in January: personal spending rose just 0.2% in that month, and it actually slipped 0.3% when adjusted for inflation. Personal incomes grew by 0.4% in the first month of the year.2,3

    

FACTORIES HUM IN FEBRUARY

The Institute for Supply Management’s manufacturing purchasing manager index rose 1.7 points to 57.7 last month. That was its best reading since August 2014. ISM’s services gauge also improved; it moved north 1.1 points in February to 57.6.3,4

   

HOME VALUES RISE NEARLY 6% in 12 MONTHS

December’s S&P/Case-Shiller 20-city house price index showed a 5.8% yearly gain in home appreciation. In the November edition, the advance was 5.6%.4

      

ANOTHER DOW MILESTONE

The Dow Industrials closed above 21,000 for the first time last week, adding 0.88% across five days to settle at 21,005.71 Friday. The S&P 500 rose 0.67% for the week to 2,383,12; the Nasdaq Composite, 0.44% to 5,870.75.5

  

THIS WEEK: Monday brings earnings from Analogic, Casey’s General Stores, and Thor Industries. Tuesday, investors consider quarterly results from Alamo Group, Dick’s Sporting Goods, H&R Block, Navistar, and Urban Outfitters. Wednesday sees the release of ADP’s February payrolls report and earnings from Bob Evans Farms, Hovnanian, Stein Mart, and Valspar. The latest initial unemployment claims figures appear Thursday, plus earnings from El Pollo Loco, Real Goods Solar, Smith Micro, and Verifone. Friday offers the February jobs report from the Department of Labor and Q4 results from Kirkland’s.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+6.29

+23.97

+12.37

+7.34

NASDAQ

+9.06

+24.71

+19.45

+14.79

S&P 500

+6.44

+19.55

+14.80

+7.18

REAL YIELD

3/3 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.45%

0.30%

-0.24%

2.15%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 3/3/175,6,7,8

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. 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 - usatoday.com/story/money/2017/03/03/yellen-signals-likely-rate-hike-march-meeting/98657322/ [3/3/17]

2 - marketwatch.com/story/consumer-confidence-hits-15-year-high-2017-02-24 [2/28/17]

3 - cnbc.com/2017/03/01/us-personal-income-jan-2017.html [3/1/17]

4 - marketwatch.com/economy-politics/calendars/economic [3/3/17]

5 - markets.wsj.com/us [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F3%2F16&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F3%2F16&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F3%2F16&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F2%2F12&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F2%2F12&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F2%2F12&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F2%2F07&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F2%2F07&x=0&y=0 [3/3/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F2%2F07&x=0&y=0 [3/3/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/3/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/3/17]


Monthly Economic Update - March 2017

THE MONTH IN BRIEF
February was a great month for stocks and a historic month for the Dow Jones Industrial Average. The blue chips closed at record highs for 12 straight trading sessions, a feat unmatched for 30 years. The S&P 500 gained 3.72% for the month. Readings on consumer confidence and purchasing manager indices remained impressive, and a key home price index hit a 30-month high. The latest Consumer Price Index showed mounting inflation pressure, and the Federal Reserve hinted at an oncoming rate move.1,2

    

DOMESTIC ECONOMIC HEALTH
In January, inflation spiked to a degree unseen in nearly five years as the Consumer and Producer Price Indexes both rose 0.6%. The CPI’s monthly gain was its largest since March 2012, and the PPI’s advance was its greatest since September 2012. Yearly consumer inflation reached 2.5%, a 4-year peak; annualized wholesale inflation rose to 1.6%.3,4

   

It was little wonder, then, that the Federal Reserve considered the possibility of another rate hike. Minutes from its January 31-February 1 meeting revealed that “many participants” in the Federal Open Market Committee felt a quarter-point move might be warranted “fairly soon” if the labor market showed further strength and inflation pressure held. Would March be too early for an interest rate adjustment? After the minutes were released, market expectations put the chance of a March move at less than 25%, but that jumped to 50% by the end of the month.1,5

 

Both purchasing manager indices maintained by the Institute for Supply Management were above the 55 level in January: ISM’s factory gauge improved 1.5 points to 56.0, and its services index ticked down but a tenth of a point to 56.5. Factory orders were up 1.3% for January, partly countering December’s 2.3% fall. The first month of 2017 also saw a 1.8% gain in hard goods orders. Industrial output tapered off by 0.3% in January after a (revised) increase of 0.6% in December.6,7

  

Hiring picked up in January as firms added 227,000 net new workers, compared with (a revised) 157,000 in December. Both the U-3 and U-6 jobless rates went north, however: the former ticked up 0.1% to 4.8%; the latter increased 0.2% to 9.4%. The average wage rose 0.1%.6

      

Consumers remained upbeat. Analysts polled by MarketWatch projected the Conference Board’s consumer confidence index to rise to 112.0 in February, but it hit 114.8 instead (a gain of 3.2 points). As for the University of Michigan’s consumer sentiment index, it went from 98.5 at the end of January to an initial February mark of 95.7, then a final February reading of 96.3.6,7

      

Households were spending freely, at least according to two critical indicators. Retail sales advanced 0.4% in January, with core retail purchases up 0.8%. Personal spending had risen 0.5% in December; personal incomes, 0.3%. January figures had yet to be released as February ended. Meanwhile, the Bureau of Economic Analysis made its second estimate of Q4 growth, and the number stayed the same: 1.9%.6,7

 

By executive order, President Donald Trump scheduled a review of the Dodd-Frank Act, calling for significant alterations to the financial regulations it imposed. The Trump administration seeks to improve borrowing conditions for businesses by overhauling large portions of the legislation.8

 

GLOBAL ECONOMIC HEALTH
With the Trans-Pacific Partnership collapsing, representatives from 16 Asia-Pacific countries – including China – met in late February to discuss an alternative. The Regional Comprehensive Economic Partnership could forge an eventual trade accord between Australia, Brunei, Cambodia, China, India, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Prior to last month’s RCEP talks in Kobe, Japan, Japanese Prime Minister Shinzo Abe had stated that he hoped President Trump would reconsider the U.S. withdrawal from the TPP.9

      

New European Commission data showed that the economies of all 28 European Union member nations grew in 2016. Growth across the E.U. had not happened since 2007. The Commission forecasts inflation-adjusted economic expansion of 1.8% for the E.U. in both 2017 and 2018, and it also believes the region’s jobless rate will hit an 8-year low before 2017 ends. Euro area annualized inflation jumped 0.7% in January to 1.8%. A year earlier, yearly inflation was at just 0.3%.10,11

         

WORLD MARKETS
With exceptions, February was a good month for stock benchmarks. The major exception was the Russian Micex, which sank 10.16%. Japan’s Nikkei 225 gave back 1.79%; Canada’s TSX Composite, 1.13%; and Mexico’s Bolsa, 1.19%.12

  

Now, the gains. Brazil’s Bovespa rose 1.25%; the United Kingdom’s FTSE 100, 1.10%; the FTSE Eurofirst 300, 0.82%; France’s CAC 40, 0.38%; Spain’s IBEX 35, 0.54%; and Germany’s DAX, 0.17%. Hong Kong’s Hang Seng gained 1.63%; China’s Shanghai Composite, 2.64%; The South Korean KOSPI added 0.39%; the Indian Sensex, 3.09%. MSCI’s World Index went north 2.58% for the month, while its Emerging Markets index climbed 2.99%.12,13

         

COMMODITIES MARKETS

Oil ended February at precisely $54.00 on the NYMEX, rising 2.27% during the month. Gold gained 3.15%, concluding February at a COMEX price of $1,248.80. Beyond oil and gold, some other marquee commodities advanced nicely.14

  

Finishing February at $18.30, silver improved 4.21%. The price of platinum rose 3.22%; although, the value of copper slipped 0.48%. Heating oil futures added 1.60%; unleaded gasoline, a striking 12.52%. Natural gas futures plummeted 11.59%. Corn futures rose 1.60%, but soybeans (-0.83%), wheat (-0.77%), coffee (-6.65%), sugar (-6.41%), and cocoa (-3.59%) were among the ag losers.14

      

REAL ESTATE
Prices were rising. Supply was tight. Who expected the pace of home buying to pick up in January? It did, though. The National Association of Realtors said that existing home sales rose 3.3%, while Census Bureau data pointed out a 3.7% advance for new home sales. The 12-month numbers were also strong: new home sales, +5.5%; resales, +3.8%. Demand simply overcame other factors. The latest S&P/Case-Shiller home price index (December) affirmed that this winter was a good time to sell: home values had risen 5.8% across the country’s 20 largest cities during 2016, taking the index to a two-and-a-half-year peak.15,16

 

In contrast, pending home sales fell off in the first month of the year – the NAR reported a 2.8% drop. Mortgage rates descended a bit during February: the average interest on a conventional home loan declined 0.03% to 4.16% between January 26 and February 23, according to Freddie Mac. Freddie’s Primary Mortgage Market Survey showed similar small retreats for average interest rates on 15-year FRMs (down 0.03% to 3.37%) and 5/1-year ARMs (down 0.04% to 3.16%).7,17 

 

As for construction activity, the Census Bureau said that housing starts slipped 2.6% for January after December’s 11.3% gain; building permits rose 4.6%, complementing their 1.3% advance a month earlier.6

        

LOOKING BACK…LOOKING FORWARD
As the S&P 500 advanced 3.72% last month, the Dow Industrials gained 4.77%, and the Nasdaq Composite, 3.75%. Their respective February 28 closes: S&P, 2,363.64; Dow, 20,812.24; Nasdaq, 5,825.44. February was also a solid month for the small caps – the Russell 2000 added 1.83% to go up 2.18% on the year, finishing out the month at 1,386.68. The CBOE VIX rose 7.76% on the month to a February 28 settlement of 12.92; that still left it down 7.98% YTD.1,2

      

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+5.31

+26.01

+12.01

+6.96

NASDAQ

+8.22

+27.81

+19.01

+14.11

S&P 500

+5.57

+22.33

+14.45

+6.80

REAL YIELD

2/28 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.34%

0.32%

-0.31%

2.20%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov – 2/28/171,2,18,19,20

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.

        

Some analysts look at the current rally in terms of irrational exuberance, while others wonder if the next phase of a historic mega-bull might be unfolding. The market will cool off at some point, that we know. Will we see that point in March? Wall Street’s confidence is such that it could probably take a quarter-point rate hike in stride this month, should one happen. So far in 2017, investors haven’t been ruffled by much – not the disconnect between a stock market at record highs and 2% economic growth, not the P/E ratio of 21 on the Dow as February ended. Will their confidence send the blue chips even higher this month? March promises to be interesting and, perhaps, historic.21

         

UPCOMING ECONOMIC RELEASES: The roll call of major scheduled items for the rest of March starts with February factory orders (3/6) and then includes February’s ADP payrolls report (3/8), the February jobs report from the Department of Labor (3/10), the February PPI (3/14), a Federal Reserve policy decision, the February CPI and February retail sales figures (3/15), the Census Bureau’s latest data on groundbreaking and building permits (3/16), the initial March University of Michigan consumer sentiment index and February industrial output (3/17), February existing home sales (3/22), February new home sales (3/23), February hard goods orders (3/24), the March Conference Board consumer confidence index (3/28), February pending home sales (3/29), the third estimate of Q4 GDP (3/30), and the final March University of Michigan consumer sentiment index, the February PCE price index, and data on February personal income and personal spending (3/31).

 

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. 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 (Russian: Индекс ММВБ10) is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. 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 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 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 FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The FTSE Eurofirst 300 measures the performance of Europe's largest 300 companies by market capitalization and covers 70% of Europe's market cap. 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 DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. 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 SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. 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 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 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. 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 - marketwatch.com/story/us-stocks-struggle-to-resume-record-run-as-traders-wait-for-trumps-speech-2017-02-28/ [2/28/17]

2 - markets.wsj.com/ [2/28/17]

3 - reuters.com/article/us-usa-economy-idUSKBN15U1NB [2/15/17]

4 - tradingeconomics.com/united-states/producer-prices [2/17/17]

5 - cnbc.com/2017/02/22/fed-minutes-trump-policies-could-lead-to-rate-hike-fairly-soon.html [2/22/17]

6 - investing.com/economic-calendar/ [2/28/17]

7 - marketwatch.com/economy-politics/calendars/economic [2/28/17]

8 - nytimes.com/2017/02/03/business/dealbook/trump-congress-financial-regulations.html [2/3/17]

9 - seattletimes.com/business/asia-economies-hold-trade-pact-talks-after-trump-dumps-tpp/ [2/26/17]

10 - qz.com/909088/for-the-first-time-in-a-long-time-every-eu-economy-is-growing-at-the-same-time/ [2/14/17]

11 - ec.europa.eu/eurostat [2/28/17]

12 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [2/28/17]

13 - msci.com/end-of-day-data-search [2/28/17]

14 - money.cnn.com/data/commodities/ [2/28/17]

15 - constructiondive.com/news/new-home-sales-rebound-in-january-as-demand-solidifies/436867/ [2/24/17]

16 - cnbc.com/2017/02/28/us-home-prices-rise-56-in-december-sp-corelogic-case-shiller.html [2/28/17]

17 - freddiemac.com/pmms/archive.html?year=2017 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F29%2F16&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F29%2F16&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F29%2F16&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F28%2F12&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F28%2F12&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F28%2F12&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F28%2F07&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F28%2F07&x=0&y=0 [2/28/17]

18 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F28%2F07&x=0&y=0 [2/28/17]

19 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/28/17]

20 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/28/17]

21 - thehill.com/blogs/pundits-blog/finance/321267-the-bull-market-is-still-riding-high-on-optimism-how-long-will-it [2/27/17]


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