Weekly Economic Update

WHAT HAPPENED TO RETAIL SALES?

Wall Street was surprised by the news of December’s 0.9% retreat, especially given November’s (revised) 0.4% advance. Minus auto buying, the decline was 1.0%. Economists surveyed by Briefing.com had forecast a gain of 0.1%. The plunge came even with holiday sales, cheap gas, strong hiring and increasing optimism about household economic prospects (see below). This disappointment raises concerns about the strength of Q4 consumer spending.1,2

 

CONSUMER PRICES TAKE A BIG DIP

December saw the Consumer Price Index decrease 0.4%, its largest monthly pullback since December 2008. That brought its 2-month decline to 0.7%. Falling gas prices were a major influence, of course – on Friday, AAA announced a nationwide average price of just $2.08 for a gallon of regular unleaded. The University of Michigan’s consumer sentiment index hit an 11-year peak last week with a preliminary mark of 98.2.1

 

DRAMA FOR CURRENCIES, A BIG GAIN FOR GOLD

The Swiss National Bank rocked the currency markets Thursday by abruptly lifting its cap on its franc. In the minutes after the announcement, the Swiss franc gained 25% on the dollar and 30% against the euro while Germany’s DAX index fell 250 points. Perhaps the SNB anticipates a stimulus from the European Central Bank. COMEX gold futures were up 4.5% last week to $1,276.90 at Friday’s close; WTI crude settled at $48.69 on the NYMEX Friday.3,4

 

NO WEEKLY GAIN FOR THE S&P 500

It lost 1.24% across five volatile days to close at 2,019.42 Friday. No 5-day advances came for the Nasdaq or Dow either: the former gave back 1.48% to end the week at 4,634.38, the latter 1.27% to settle at 17,511.57 at Friday’s final bell.5

 

THIS WEEK: On Monday, U.S. financial markets are closed in observance of the birthday of Dr. Martin Luther King, Jr. Tuesday sees IBM and Netflix release earnings. Wednesday, earnings from U.S. Bancorp, eBay and Deluxe Corp. complement the Census Bureau’s December report on housing starts and building permits. Thursday offers earnings from Southwest Airlines, Verizon, Key Corp., Starbucks and Union Pacific and new initial claims figures. Friday brings December existing home sales data from NAR, the Conference Board’s latest leading indicator index and earnings from Honeywell, GE, State Street Corp. and McDonald’s.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -1.75 +6.67 +13.01 +6.48
NASDAQ -2.15 +9.85 +20.51 +12.01
S&P 500 -1.92 +9.40 +15.55 +6.89
REAL YIELD 1/16 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.23% 0.61% 1.34% 1.71%

Sources: online.wsj.com, bigcharts.com, treasury.gov – 1/16/156,7,8,9

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.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. 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 – businessweek.com/news/2015-01-16/consumer-sentiment-in-u-dot-s-dot-surges-to-11-year-high-as-fuel-drops [1/16/15]

2 – briefing.com/investor/calendars/economic/2015/01/12-16 [1/16/15]

3 – tinyurl.com/kyk96kq [1/15/15]

4 – proactiveinvestors.com/companies/news/59328/gold-gains-1-to-1276-wti-up-at-4869-59328.html [1/16/15]

5 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [1/16/15]

6 – markets.wsj.com/us [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F16%2F14&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F16%2F14&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F16%2F14&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F15%2F10&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F15%2F10&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F15%2F10&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F18%2F05&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F18%2F05&x=0&y=0 [1/16/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F18%2F05&x=0&y=0 [1/16/15]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/16/15]

9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/16/15]

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