Economic Update for the week of September 26th, 2018

In this week’s recap: the Dow returns to record territory, home sales flatten, housing starts surge, and the price of oil rises.

Weekly Economic Update

Presented by Troy L. Thompson, CFP, September 24, 2018

BLUE CHIPS HIT A 2018 HIGH

On Thursday, the Dow Jones Industrial Average saw its best close since January. Friday took the index even higher, to another record settlement of 26,743.50. That capped a 2.25% weekly advance. The Dow was not the only major benchmark shattering records last week. The S&P 500 also settled at a historic peak Thursday before drifting slightly lower to 2,929.67 a day later; in five days, it rose 0.85%. For the Nasdaq Composite, the story was different: it declined 0.29% last week to 7,986.96.^1,2

 

AUGUST WAS A FLAT MONTH FOR HOME BUYING

The National Association of Realtors declared the pace of existing home sales unchanged from July in its August snapshot of the residential real estate market. Economists surveyed by Reuters anticipated an advance of 0.3% after four consecutive months of retreats. Sales were down 1.5%, year-over-year, through August, but existing home inventory grew 2.7% during the same 12 months; that marked the first annualized increase in the supply of homes for sale since 2015. The median existing home price in August: $264,800, 4.6% higher than a year ago.³

 

HOUSING STARTS JUMP; BUILDING PERMITS FALL

Starts and permits went opposite ways during August, according to the Census Bureau’s latest look at U.S. residential construction activity. Groundbreaking increased 9.2% in the eighth month of the year, but permits for new developments declined by 5.7%.⁴

 

OIL CLIMBS TO A 2-MONTH PEAK

WTI crude settled at $70.78 per barrel on the New York Mercantile Exchange on Friday, charging 2.6% for the week. This was crude’s best closing price since July 13, preceding a critical meeting of OPEC nations and their allies to address potential supply problems in the fourth quarter.⁵

 

T I P   O F   T H E   W E E K

In a two-parent household, both parents may want to consider life insurance coverage, even if one of them does not work. Money from the life insurance policy can help a surviving spouse pay for child care and education expenses.

THIS WEEK

Monday offers no major earnings calls or economic reports. | The Conference Board’s latest consumer confidence index arrives Tuesday, plus a new S&P CoreLogic Case-Shiller home price index and earnings from Cintas, Jabil, KB Home, and Nike. | The Federal Reserve makes an interest rate decision Wednesday; in addition, August new home sales figures and earnings from Bed Bath & Beyond, CarMax, and Worthington Industries appear. | Accenture, ConAgra Brands, and Rite Aid present earnings Thursday, complementing the latest initial jobless claims numbers, the third estimate of Q2 economic expansion, and reports on August housing contract activity and hard goods orders. | Friday, August personal spending figures are released, plus the August PCE price index, the final September consumer sentiment index from the University of Michigan, and earnings from BlackBerry.

Q U O T E   O F   T H E   W E E K

“Learning to ignore things is one of the great paths to inner peace.”

Robert J. Sawyer

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	8.19	19.61	14.62	14.28
NASDAQ	15.70	24.36	22.32	26.65
S&P 500	9.58	17.16	14.27	14.27
REAL YIELD	9/21 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.92	0.44	0.52	1.85

Sources: wsj.com, bigcharts.com, treasury.gov - 9/21/18^2,6,7,8

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

You go into the forest and get it, you sit down to find it, and then you go home, just wanting to get it out. What is it?

LAST WEEK’S RIDDLE: It takes eight workers four hours to dig a 30’ hole in the ground. How long would it take them to dig half a hole?

ANSWER: No time at all, for you cannot dig half a hole.

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

troy@thompsonfinancialinc.com 

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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 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/stock-futures-point-to-added-gains-after-record-day [9/21/18]

2 - markets.wsj.com/us [9/21/18]

3 - reuters.com/article/us-usa-economy-housing/u-s-existing-home-sales-unchanged-in-august-idUSKCN1M026A [9/20/18]

4 - investing.com/economic-calendar/ [9/21/18]

5 - marketwatch.com/story/us-oil-ends-week-at-2-month-high-books-second-straight-weekly-advance-2018-09-21 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F21%2F17&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F21%2F17&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F21%2F17&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F20%2F13&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F20%2F13&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F20%2F13&x=0&y=0 [9/21/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F22%2F08&x=0&y=0 [9/21/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F22%2F08&x=0&y=0 [9/21/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F22%2F08&x=0&y=0 [9/21/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/21/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/21/18]