Weekly Economic Update

A RISE IN HOME BUYING

Existing home sales were up 2.4% in December and 3.5% for 2014. In its latest report, the National Association of Realtors noted a median sale price of $208,500, 5.8% above a year before. The sales pace in the last half of 2014 was 8% better than in the first half, with cheaper mortgages certainly a factor. (Last week, a 30-year FRM averaged just 3.66% interest.) December saw a 1.9% dip in building permits, but the Census Bureau also noted a 4.4% boost for housing starts. Starts for 2014 totaled 1.01 million, a 9-year high. Last year, groundbreaking increased 8.8%.1,2

 

ECB FIGHTS DEFLATION RISK WITH STIMULUS

Thursday, the European Central Bank unveiled a plan to ease: a massive stimulus that will purchase 60 billion euros (about $69 billion) of bonds per month through September 2016. The tipping point for the move appeared to be the 0.2% December retreat in the eurozone inflation rate. All this easing will weaken the euro even more, thereby offering relief to the export-reliant economies of many eurozone nations.3

 

NASDAQ GOES POSITIVE YTD; GOLD TOPS $1,300

Across four days, the tech-heavy benchmark rose 2.68% to settle Friday at 4,757.88. The S&P 500 ended the week at 2,051.82, the Dow at 17,672.60; those settlements resulted from 4-day gains of 1.63% for the S&P and 0.94% for the Dow. Thursday, gold closed above $1,300 on the COMEX for the first time since August; it settled Friday at $1,292.60, up 1.2% for the week. A barrel of West Texas crude was valued at just $45.83 at Friday’s NYMEX close.4,5

 

THIS WEEK: Monday, investors react to Greece’s elections and earnings from Microsoft, D.R. Horton and Texas Instruments. Tuesday, reports on December hard goods orders and new home sales accompany the Conference Board’s consumer confidence index, the latest S&P/Case-Shiller home price index and earnings from Apple, AT&T, 3M, American Airlines, Amgen, Bristol-Myers Squibb, Lockheed Martin, Pfizer, Novartis, Yahoo!, Procter & Gamble, Electronic Arts and Caterpillar. Wednesday, the Federal Reserve issues a policy statement and earnings arrive from General Dynamics, Facebook, Qualcomm and St. Jude Medical. NAR’s December pending home sales report comes out Thursday, as do new initial claims numbers and earnings from Sherwin-Williams, Stanley Black & Decker, Google, Time Warner Cable, Unisys, Viacom, Visa, Whirlpool, Wynn Resorts, Abbott Labs, Amazon.com, Colgate-Palmolive, ConocoPhillips, Dow Chemical, Harley-Davidson, Ford Motor Co., Hershey, JetBlue, Northrop Grumman, Occidental Petroleum, Raytheon, Royal Caribbean Cruises and Royal Dutch Shell. Friday brings the first estimate of Q4 GDP and the final University of Michigan January consumer sentiment index.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.84 +9.11 +14.74 +7.04
NASDAQ +0.46 +12.78 +23.15 +13.69
S&P 500 -0.34 +12.22 +17.59 +7.63
REAL YIELD 1/23 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.21% 0.66% 1.31% 1.68%

Sources: online.wsj.com, bigcharts.com, treasury.gov – 1/23/156,7,8,9

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 – consumeraffairs.com/news/a-strong-finish-for-sales-of-existing-homes-012315.html [1/23/15]

2 – dailyfinance.com/2015/01/21/new-home-construction-rises-december/ [1/21/15]

3 – latimes.com/business/la-fi-ecb-stimulus-euro-quantitative-easing-20150122-story.html [1/22/15]

4 – proactiveinvestors.com/companies/news/59465/gold-retreats-06-to-1292-wti-down-brent-up-59465.html [1/23/15]

5 – fxstreet.com/news/forex-news/article.aspx?storyid=4edca382-02d3-4d7b-8766-c764b9def512 [1/23/15]

6 – markets.wsj.com/us [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F23%2F14&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F23%2F14&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F23%2F14&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F22%2F10&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F22%2F10&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F22%2F10&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F24%2F05&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F24%2F05&x=0&y=0 [1/23/15]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F24%2F05&x=0&y=0 [1/23/15]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/23/15]

9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/23/15]

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