In this week’s recap: the Fed disappoints the markets, more
homes move, consumer spending and sentiment look solid, and oil falls.
Weekly Economic Update
Presented by Troy L Thompson, CFP, December 27,
2018
FED
FAILS TO CALM WALL STREET
Federal Reserve policymakers
voted unanimously last week to raise the benchmark interest rate by another
0.25%, putting the main overnight lending rate in the 2.25-2.50% range. Investors
hoped for a hint of a pause in the Fed’s tightening plans, yet no such signal
emerged. The central bank’s latest dot-plot showed a consensus projection of
two hikes rather than three next year, but at the press conference following
the rate move, Fed chairman Jerome Powell commented that monetary policy “does
not need to be accommodative,” and noted that the Fed would continue to thin
its balance sheet by up to $50 billion per month. Stocks dropped significantly
in the wake of those statements. During an abysmal week for equities, the Dow
Industrials fell 6.87% to 22,445.37; the Nasdaq Composite, 8.36% to 6,332.99; the
S&P 500, 7.05% to 2,416.62.1,2
LATEST
KEY HOUSING INDICATORS LOOK BETTER
The National Association of Realtors just reported
a 1.9% gain for existing home sales in November; that follows a 1.4% October
increase. In addition, builders started more projects last month. The Census
Bureau said that groundbreaking improved 3.2% in November as the pace of
building permits picked up 5.0%.3
ON
MAIN STREET, THE DATA IS GOOD
Households boosted their spending by 0.4% in
November, according to the Department of Commerce; October’s gain was revised
to 0.8%. The final December University of Michigan consumer sentiment index
(released Friday) showed a reading of 98.3, which was 0.8 points higher than
its preliminary mark for the month. Analysts polled by MarketWatch had projected
a final December reading of 97.2.3,4
OIL
SETTLES UNDER $46
WTI crude also had a tough time last week. Futures
settled down at $45.59 on the NYMEX Friday. Oil fell 11% week-over-week, a
slide aided by a Baker Hughes report showing a jump in the number of active
rigs.5
T I P O F
T H E W E E K
If you receive an email about your taxes from the Internal Revenue Service, chances are it is fake. As a rule, the I.R.S. does not initially contact people about tax issues over the Internet.
THIS WEEK
U.S. stock and bond markets wrap up their
trading sessions early on Monday, with no significant economic news scheduled. |
Tuesday, all U.S. financial markets are closed for the Christmas Day holiday. |
The October S&P CoreLogic Case-Shiller Home Price Index appears on Wednesday.
| Thursday brings the Conference Board’s December consumer confidence index,
the November new home sales snapshot from the Census Bureau, and a new initial
jobless claims report from the Department of Labor. | The National Association
of Realtors presents its November pending home sales index on Friday.
Q U O T E O F T H E W E E K
“You can’t
help someone get up a hill without
getting closer to the top yourself.”
Norman Schwarzkopf
MARKET
INDEX
|
Y-T-D
CHG
|
1-MO
CHG
|
1-YR CHG
|
DJIA
|
-9.20
|
-7.58
|
-9.42
|
NASDAQ
|
-8.26
|
-8.73
|
-9.08
|
S&P
500
|
-9.61
|
-8.20
|
-9.98
|
REAL
YIELD
|
12/21
RATE
|
1 MO
AGO
|
1 YR
AGO
|
10 YR TIPS
|
1.02
|
1.09
|
0.55
|
Sources:
wsj.com, bigcharts.com, treasury.gov - 12/21/182,6,7,8
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: Dave says that the small city he lives in has a municipal
building with more than a hundred stories. What building is this?
ANSWER:
The library.
Troy L Thompson, CFP may be
reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA: Thompson Financial, Inc.
and Hanson Asset Strategies
Securities offered through
FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with
FIRST HEARTLAND CAPITAL, INC.
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
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product or service, and should not be relied upon as such. All market indices
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Indices do not incur management fees, costs, or expenses. Investors cannot
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not indicative of future results. The Dow Jones Industrial Average is a
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Additional risks are associated with international investing, such as currency
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CITATIONS:
1 - reuters.com/article/us-usa-fed/fed-lifts-rates-now-sees-some-further-hikes-ahead-idUSKBN1OI0DV
[12/19/18]
4 -
marketwatch.com/story/consumer-sentiment-index-rises-to-983-2018-12-21-1091226
[12/21/18]
5 - marketwatch.com/story/us-oil-futures-settle-at-lowest-since-july-2017-down-over-11-for-the-week-2018-12-21
[12/21/18]
6 -
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F21%2F17&x=0&y=0
[12/21/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F21%2F17&x=0&y=0
[12/21/18]
6 -
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F21%2F17&x=0&y=0
[12/21/18]
7 -
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
[12/21/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/21/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/21/18]