Wednesday, October 31, 2018

Economic Update for the week of Oct 31st, 2018


In this week’s recap: a first-rate Q3 GDP reading, mixed housing indicators, slightly weaker household sentiment, and a significant retreat for equities.
Weekly Economic Update

Presented by Troy L Thompson, CFP, October 31, 2018

FIRST ESTIMATE OF Q3 GDP: 3.5%
A 4.0% gain in consumer spending and a 3.3% advance in government spending helped strengthen the economy in the three months ending in September. Bureau of Economic Analysis data shows that the past two quarters represent the best 6-month period for U.S. growth since 2014. It appears likely that the economy will expand more than 3% this year; if that happens, 2018 will enter the history books as the best year for the economy since 2005.1
     
NEW HOME SALES SLUMP, BUT PENDING HOME SALES IMPROVE
According to the Census Bureau, new home buying decreased 5.5% last month, even as the number of new homes on the market hit a nine-and-a-half-year high. The median sale price of $320,000 was 3.5% lower than it was in September 2017. Pending home sales surprised to the upside in September: they rose 0.5%. Economists polled by Briefing.com expected the National Association of Realtors to announce a housing contract activity decline of 0.3%.2,3
    
A SLIGHT DIP FOR CONSUMER SENTIMENT
Friday, the final University of Michigan consumer sentiment index for October appeared, bearing a reading of 98.6. This was 0.4 points below its preliminary October mark, but little cause for concern.3
    
MORE TURBULENCE ON WALL STREET
Investors would love to see the major indices recapture some of their October losses, and perhaps that will happen as the month ends. The Dow Industrials, S&P 500, and Nasdaq Composite all retreated significantly last week after five days of sizable ups and downs, as anxieties about reduced profit margins and rising interest rates lingered. The blue chips gave back 2.97% to settle at 24,688.31 Friday. Losing 3.78% for the week, the Nasdaq fell to 7,167.21 at Friday’s closing bell; across the same stretch, the S&P 500 slipped 3.94% to 2,658.69.4
    

T I P   O F   T H E   W E E K


If you have adult children living with you, it is perfectly fine to ask them to shoulder some financial responsibility in your household. Ask them to regularly pay one expense a month (such as the electric bill) or have them pay rent.


THIS WEEK
Monday, the Department of Commerce presents its snapshot of September personal spending, and the September PCE price index appears; investors will also consider earnings from Akamai, Blackbaud, Bloomin’ Brands, Booz Allen Hamilton, Embraer, Mondelez, Nautilus, Transocean, U.S. Auto Parts, and Wingstop. | Tuesday, Wall Street reviews earnings from Aetna, Allergan PLC, Amgen, Anadarko Petroleum, AutoNation, Baidu, Baker Hughes, Big 5 Sporting Goods, BP, Brinker International, Coca-Cola, Container Store, Cummins, Curtiss Wright, Denny’s, Eaton, eBay, Edison International, Electronic Arts, Extra Space Storage, Facebook, Fiat Chrysler, Fresh Del Monte Produce, GE, Genworth Financial, Herbalife, Honda Motor Co., Huntsman, Hyatt Hotels, Mastercard, MGM Resorts, Pfizer, Public Storage, Regis Corp., Sony, Under Armour, Voya Financial, Vulcan Materials, Waddell & Reed, WestJet, and Wyndham Hotels & Resorts; the latest Conference Board consumer confidence index and Case-Shiller home price index also arrive. | On Wednesday, the corporations announcing earnings include Air Canada, Allstate, AIG, Anthem, Chesapeake Energy, Clorox, Diebold Nixdorf, Estee Lauder, Express Scripts, Fitbit, Garmin, General Motors, GlaxoSmithKline, Kellogg, Molson Coors, Sprint, Taylor Morrison, Yum! Brands, and Zynga, and ADP releases its September payrolls report. | The October ISM manufacturing PMI comes out Thursday, along with the September Challenger job-cut report, the latest initial unemployment claims numbers, and earnings from AMC Networks, Apple, Arcelor Mittal, Avon, CBRE Group, CBS, Cigna, Cirrus Logic, DowDuPont, Exelon, Fluor, GoPro, Hanesbrands, Kraft Heinz, Live Nation, Marathon Petroleum, MetLife, Motorola Solutions, Pitney Bowes, RE/MAX Holdings, Royal Dutch Shell, Shake Shack, Spotify, Starbucks, Symantec, U.S. Steel, Wayfair, and WW. | Friday, the Department of Labor issues its October employment report, and Alibaba, Chevron, Duke Energy, Enbridge, Exxon Mobil, Seagate Technology, and Willis Towers Watson offer earnings news.


Q U O T E   O F   T H E   W E E K

Education is the ability to listen to almost anything without losing your temper or your self-confidence.”
robert frost

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
-0.13
5.50
11.71
20.20
NASDAQ
3.82
9.31
16.35
37.59
S&P 500
-0.56
3.84
10.22
21.32
REAL YIELD
10/26 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
1.02
0.57
0.35
3.02

Sources: wsj.com, bigcharts.com, treasury.gov - 10/26/184,5,6,7
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: It is removed from mines outside the U.S., then encased in wood, never to be released. Even so, it is still used by millions. What is it?
ANSWER: Graphite (pencil lead).


Troy L Thompson, CFP may be reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com

Know someone who could use information like this?
Please feel free to 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 - marketwatch.com/story/third-quarter-gdp-cools-a-bit-to-a-still-solid-35-rate-2018-10-26 [10/26/18]
3 - briefing.com/investor/calendars/economic/2018/10/22-26 [10/26/18]
4 - markets.wsj.com/us [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/26/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/26/18]
    

Thursday, October 25, 2018

Economic Update for the week of October 25th, 2018




In this week’s recap: home sales lag, retail sales barely improve, new Fed minutes discuss staying the course, and major equity indices advance.
Weekly Economic Update

Presented by Troy L Thompson, CFP   October 25, 2018

HOMES MOVE AT THE SLOWEST PACE IN 3 YEARS
Existing home sales slumped 3.4% in September as the annualized sales rate decelerated to a degree unseen since November 2015. In reporting this, the National Association of Realtors cited the usual factors: climbing mortgage rates, tight inventory, and ascending prices (the median sale price in September was $258,100, up 4.2% in 12 months). The NAR’s chief economist, Lawrence Yun, now projects a 1.6% reduction in resales for 2018; economists at Fannie Mae are forecasting a 2.0% retreat. In other real estate news, the Census Bureau said that housing starts fell 5.3% last month, while building permits declined 0.6%.1,2
     
AGAIN, RETAIL SALES RISE JUST 0.1%
The Census Bureau said that the overall gain for September matched that of August. With fuel and auto sales factored out, retail sales were flat last month. Core sales retreated 0.1%.2
    
FED MINUTES NOTE POSSIBILITY OF FURTHER GRADUAL RATE HIKES
The Federal Reserve released minutes from its September policy meeting Thursday, and they relayed the consensus opinion that a “gradual approach” to tightening monetary policy will be warranted if inflation, labor, and GDP readings keep indicating a thriving economy. Policymakers noted that raising rates too quickly could prompt “an abrupt slowing in the economy and inflation moving below the committee’s objective.” Then again, the minutes also acknowledged “the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances.”3
    
A POSITIVE WEEK FOR EQUITIES
All three major Wall Street benchmarks advanced last week. The S&P 500 registered the smallest gain, adding just 0.02% as it reached 2,767.78. Improving 0.41% for the week, the Dow Jones Industrial Average settled at 25,444.34. Rising 1.64% in five trading days, the Nasdaq Composite ended the week at 7,449.03.4
    

T I P   O F   T H E   W E E K


As a small business grows, a relationship with a good tax professional becomes vital. A thorough tax professional can help you file correctly and see that you take the deductions to which you are legally entitled.


THIS WEEK
Monday’s earnings calendar lists announcements from Halliburton, Hasbro, Kimberly-Clark, Lennox International, Sify, TD Ameritrade, and Zions Bancorp. | On Tuesday, earnings roll in from 3M, Ameriprise Financial, Avery Dennison, Biogen, Capital One, Caterpillar, Corning, Fifth Third, GATX, Harley-Davidson, JetBlue, Lockheed Martin, McDonald’s, NextEra Energy, Pulte Group, Quest Diagnostics, Regions Financial, Six Flags Entertainment, Texas Instruments, and Verizon. | Wall Street considers September new home sales data and a new Beige Book from the Federal Reserve on Wednesday, along with earnings from Aflac, AT&T, Boeing, CoreLogic, Ford Motor Co., Freeport-McMoRan, General Dynamics, Hilton Worldwide Holdings, Ingersoll Rand, Microsoft, Norfolk Southern, Northrop Grumman, O’Reilly Auto Parts, Raymond James, Sirius XM Holdings, Smith Micro, Visa, Whirlpool, and W.R. Grace. | Thursday, investors react to earnings from Alaska Air Group, Ally Financial, Alphabet, Altria Group, Amazon, American Airlines, Anheuser-Busch, Briggs & Stratton, Bristol-Myers, Celgene, Chipotle, Comcast, Conoco-Phillips, Discover, Dunkin’ Brands, Expedia, First Solar, Gilead Sciences, GrubHub, Hershey Co., IMAX, Intel, International Paper, Mattel, Merck, Netgear, Nokia, Penske Auto Group, Raytheon, Sherwin-Williams, Snap, Southwest Airlines, Stanley Black & Decker, Stryker, T. Rowe Price, The Hartford, Twitter, Union Pacific, Valero Energy, Verisign, Waste Management, and Western Digital, plus new initial jobless claims numbers, September pending home sales, and a new report on durable goods orders. | The federal government’s first estimate of Q3 GDP arrives Friday along with the final September University of Michigan consumer sentiment index and earnings announcements from AON, Charter Communications, Colgate-Palmolive, Goodyear, Phillips 66, Ryder Systems, and Weyerhaeuser.


Q U O T E   O F   T H E   W E E K

“The way you overcome shyness is to become so wrapped up in something that you forget to be afraid.”
lady bird johnson

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
2.93
9.85
13.05
17.46
NASDAQ
7.90
12.78
18.06
32.08
S&P 500
3.52
8.03
11.73
18.09
REAL YIELD
10/19 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
1.09
0.49
0.42
2.76

Sources: wsj.com, bigcharts.com, treasury.gov - 10/19/184,5,6,7
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: It gives you information and control, and without it, no work can be done – yet it costs you nothing. What is it?
ANSWER: Your brain.


Troy L Thompson, CFP may be reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com

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


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 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 - marketwatch.com/story/existing-home-sales-slump-to-a-near-3-year-low-as-buyers-back-out-2018-10-19 [10/19/18]
2 - investing.com/economic-calendar/ [10/19/18]
3 - tickertape.tdameritrade.com/market-news/investors-seem-to-continue-digesting-fed-minutes-17062 [10/18/18]
4 - markets.wsj.com/us [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]
5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]
6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/19/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/19/18]