Wednesday, July 18, 2018

Economic Update for the week of July 18th, 2018


In this week’s recap: inflation pressure mounts, a household sentiment index dips, gold settles lower, and stocks rally as a new earnings season begins.
Weekly Economic Update

Presented by Troy Thompson, CFP , July 18, 2018

INFLATION NEARS 3%
The federal government’s Consumer Price Index rose 2.9% across the 12 months ending in June, a level of annualized inflation last seen in February 2012. Yearly inflation has now increased for five straight months (although the headline CPI went north only 0.1% last month). The core CPI, which removes food and fuel costs, rose 0.2% in June, bringing its 12-month gain to 2.3%. Over the past 12 months, the cost of fuel oil climbed 30.8%; the cost of gasoline, 24.3%. Feeling the effect of those advances, the Producer Price Index rose 3.4% in the year ending in June.1,2

UNIVERSITY OF Michigan CONSUMER SENTIMENT GAUGE DECLINES
At a mark of 97.1, the preliminary July edition of this consumer sentiment index came in 1.1 points underneath its final June reading. Still, it was close to its average reading over the past year (97.7). One year ago, the index stood at 93.4. Thirty-eight percent of consumers felt tariffs would negatively affect the economy, an increase from 21% in June and 15% in May.3

GOLD FALLS TO A 12-MONTH LOW
With a strengthening dollar providing a stiff headwind for the metals market, it was unsurprising that the key precious and base metals (gold, silver, copper, palladium, platinum) all retreated last week. Gold suffered the least, declining 1.2% to a Friday settlement of $1,241.20, its lowest COMEX close since July 17, 2017.4

DOW CLIMBS BACK ABOVE 25,000
Finishing Friday’s trading session at 25,019.41, the blue chips rose 2.30% for the week, and outperformed the Nasdaq Composite and the S&P 500 over five days. The Nasdaq gained 1.79% to close out the week at 7,825.98, while the S&P advanced 1.50% to end the week at 2,801.31.5


T I P   O F   T H E   W E E K


There are multiple reasons why you should avoid taking a loan from your workplace retirement plan. One excellent argument against this move: you will deprive the funds you borrow of compounding power.


THIS WEEK
Earnings take center stage: Bank of America, BlackRock, J.B. Hunt, and Netflix lead the way on Monday, when investors will also consider June retail sales figures. | Federal Reserve chair Jerome Powell begins two days of testimony before Congress on monetary policy on Tuesday; on the earnings front, Charles Schwab, Comerica, CSX, Fidelity National, Goldman Sachs, Johnson & Johnson, and UnitedHealth all announce. | Wednesday, earnings news rolls in from Abbott Labs, Alcoa, American Express, eBay, Grainger, IBM, Morgan Stanley, Northern Trust, Novartis, and U.S. Bancorp, and complementing all this, analysts consider June housing starts and building permits and a new Fed Beige Book. | On Thursday, BoNY Mellon, BB&T, Blackstone Group, Capital One, Celanese, Cintas, Dominos, E*TRADE, Fifth Third, GATX, KeyCorp, Microsoft, Nucor, Philip Morris, Snap-On, Sonoco, Travelers Companies, Unilever, and Union Pacific present earnings, and a new initial jobless claims report arrives. | Friday, earnings appear from Baker Hughes, General Electric, Honeywell International, Manpower, Regions Financial, Schlumberger, Stanley Black & Decker, State Street, and SunTrust Bank.


Q U O T E   O F   T H E   W E E K

"Always aim at complete harmony of thought and word and deed."
MAHATMA GANDHI


% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
1.21
16.08
12.36
12.63
NASDAQ
13.36
24.73
23.48
25.37
S&P 500
4.78
14.44
13.35
12.81
REAL YIELD
7/13 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.72
0.58
0.55
1.43

Sources: wsj.com, bigcharts.com, treasury.gov - 7/13/185,6,7,8
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.


T H E   W E E K L Y   R I D D L E


LAST WEEK’S RIDDLE: Regina is about to meet her cousin Lydia for the first time. Regina has no idea what she looks like. She arrives at Lydia’s house at night. The door opens, and she sees a mail carrier, a UPS driver, and a police officer watching television. She immediately hugs Lydia. How does she know which one of the three is her cousin?
ANSWER: Two of the three are men.


Troy Thompson, CFP may be reached at 515-432-5421 or troy@thompsonfinancialinc.com
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«RepresentativeEmailDisclosure»
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 - tradingeconomics.com/united-states/inflation-cpi [7/12/18]
2 - investing.com/economic-calendar/ [7/13/18]
3 - sca.isr.umich.edu/ [7/13/18]
4 - marketwatch.com/story/gold-retreats-on-track-for-lowest-settlement-in-a-nearly-a-year-2018-07-13 [7/13/18]
5 - markets.wsj.com/us [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F13%2F17&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F13%2F17&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F13%2F17&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F12%2F13&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F12%2F13&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F12%2F13&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F14%2F08&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F14%2F08&x=0&y=0 [7/13/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F14%2F08&x=0&y=0 [7/13/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/13/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/13/18] 


Wednesday, July 11, 2018

Economic Update for the week of July 9th, 2018


In this week’s recap: impressive hiring, healthy service and factory sectors, the Fed’s view of the present and near future, and gains for equities.

Weekly Economic Update

Presented by Troy Thompson, CFP       July 9, 2018

another STRONG MONTH FOR THE LABOR MARKET
Employers hired 213,000 more workers than they laid off in June, according to the Department of Labor. Analysts surveyed by Bloomberg had forecast a gain of 195,000. In the second quarter, net monthly job growth averaged 211,000. As the labor force participation rate increased 0.2% last month, so did the headline jobless rate: it rose 0.2% to 4.0%, moving north for the first time in almost a year. The U-6 rate, which includes underemployed Americans, also increased 0.2% to 7.8%. Annualized wage growth remained at 2.7%.1

BOTH ISM INDICES IMPROVED IN JUNE
The Institute for Supply Management’s twin purchasing manager indices came in at or near 60, last month. ISM’s manufacturing gauge rose to 60.2 from the previous reading of 58.7; its service sector index increased 0.5% to 59.1. MarketWatch projected both PMIs at 58.3 for June.2

FED MINUTES SHOW OPTIMISM, CONCERNS
Minutes from the Federal Open Market Committee’s June policy meeting were released Thursday, and noted that the economy’s expansion is “progressing smoothly” and at “a solid rate.” Policymakers also had some downside risks on their minds, noting the “possible adverse effects of tariffs and other proposed trade restrictions” and “political and economic developments in Europe.” Some FOMC members were concerned that rapid growth could breed “heightened inflationary pressures” and “financial imbalances” that might eventually provoke “a significant economic downturn.”3

TARIFFS TAKE EFFECT, BUT INVESTORS FOCUS ON FUNDAMENTALS
Strong jobs and manufacturing data helped to give the major indices a lift last week. In three-and-a-half trading days, the Nasdaq Composite advanced 2.37% to 7,688.39. Gaining 1.52%, the S&P 500 closed at 2,759.82, Friday; the Dow Jones Industrial Average rose 0.76% on the week to 24,456.48. Additionally, the Russell 2000 small-cap index improved 3.10% across the week to 1,694.05.4


T I P   O F   T H E   W E E K


When was the last time you checked the beneficiary designations on your IRA, your life insurance policy, or your brokerage account? If you have not looked at them in a few years, review them this week to make sure they are up to date.


THIS WEEK
Nothing major is slated for Monday. | Tuesday, PepsiCo shares Q2 results. | The June Producer Price Index appears Wednesday, plus earnings from Fastenal. | Investors will pay attention to the June Consumer Price Index and the latest initial unemployment claims figures on Thursday. | Friday, a new earnings season begins: Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo announce Q2 results, and in addition, the University of Michigan offers its initial July consumer sentiment index.


Q U O T E   O F   T H E   W E E K

"The end is nothing. The road is all."
WILLA CATHER


% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
-1.06
14.71
12.32
11.77
NASDAQ
11.37
26.26
24.19
24.27
S&P 500
3.22
14.53
13.82
12.04
REAL YIELD (%)
7/6 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.70
0.61
0.66
1.43

Sources: wsj.com, bigcharts.com, treasury.gov - 7/6/184,5,6,7
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.


T H E   W E E K L Y   R I D D L E


LAST WEEK’S RIDDLE: You see them every day, but never together. They appear everywhere, but never at the same time. What are they?
ANSWER: Day and night.


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


«RepresentativeEmailDisclosure»
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 - fortune.com/2018/07/06/june-2018-jobs-report/ [7/6/18]
2 - marketwatch.com/economy-politics/calendars/economic [7/6/18]
3 - cnbc.com/2018/07/05/fed-meeting-minutes-from-june.html [7/5/18]
4 - markets.wsj.com/us [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F6%2F17&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F6%2F17&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F6%2F17&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F5%2F13&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F5%2F13&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F5%2F13&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F7%2F08&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F7%2F08&x=0&y=0 [7/6/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F7%2F08&x=0&y=0 [7/6/18]
6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/6/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/6/18]