Weekly Economic Update 6/20/2016

Weekly Economic Update 6/20/2016

RETAIL SALES RISE another HALF-PERCENT

This healthy May increase follows the 1.3% gain recorded by the Department of Commerce for April, and offers more evidence that the economy has rebounded from a sluggish first quarter. Core retail sales (minus auto and gasoline purchases) were up 0.4% last month.1

INFLATION CONTINUES TO FIRM

According to the Bureau of Labor Statistics, consumer prices rose 0.2% in May while producer prices advanced 0.4%. While a drop in food prices tempered the gain in the Consumer Price Index, the core CPI (which strips out energy and food costs) was up 2.2% in a year, exceeding the Federal Reserve’s annualized inflation target. The May wholesale inflation jump still left the Producer Price Index up just 0.8% year-over-year; plunging energy costs have held the PPI in check.1,2

CONSTRUCTION ACTIVITY MODERATES IN MAY

Building permits and housing starts both increased 4.9% in April, but Census Bureau data reveals no such leaps last month. Groundbreaking declined 0.3% in May, while the issuance of permits increased by 0.7%.1

INVESTORS ANXIOUSLY AWAIT U.K. VOTE

As expected, the Federal Reserve refrained from an interest rate move last week; Wall Street was more concerned about the potential of a Brexit. The S&P 500 fell 1.19% in five days to 2,071.22, and the other major indices fell with it. The Nasdaq gave back 1.92% on its way to a Friday close of 4,800.34, while the Dow slipped 1.07% on the week to 17,675.16. Gold is on a 3-week winning streak: it settled at $1,294.80 on the COMEX Friday, rising 1.5% in five days. WTI crude fell 2.2% for the week, closing Friday at $47.98 on the NYMEX.3

THIS WEEK: Nothing major is scheduled for Monday. Tuesday, Federal Reserve chair Janet Yellen begins two days of testimony in the Senate on monetary policy; earnings news emerges from Adobe Systems, CarMax, Carnival, FedEx, KB Home, La-Z-Boy, and Lennar. Wednesday, Wall Street looks at May existing home sales numbers and earnings from Barnes & Noble, Bed Bath & Beyond, Red Hat, and Winnebago. On Thursday, the United Kingdom holds its referendum on whether or not to stay in the European Union; investors will also consider May new home sales figures, the federal government’s latest initial jobless claims report, and quarterly results from Sonic. Friday offers the final June University of Michigan consumer sentiment index, a Census Bureau report on May hard goods orders and earnings from Finish Line.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +1.44 -1.45 +9.45 +6.05
NASDAQ -4.14 -5.22 +16.69 +12.54
S&P 500 +1.33 -1.39 +12.58 +6.55
REAL YIELD 6/17 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.20% 0.42% 0.75% 2.54%

Sources: wsj.com, bigcharts.com, treasury.gov – 6/17/164,5,6,7

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.

WEEKLY QUOTE

“What we anticipate seldom occurs; what we least expected generally happens.”

– Benjamin Disraeli

WEEKLY TIP

When you own a small business, paying estimated taxes is a given. If you are a new business owner, think about creating a dedicated bank account to which you can direct a monthly amount for that purpose.  

WEEKLY RIDDLE

What goes with you wherever you go, often demands an answer, and never asks you a question?

Last week’s riddle:

At the sound of it, you may dream, dance, laugh, weep or even stamp your feet. What is it? 

Last week’s answer:

Music.

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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 – investing.com/economic-calendar/ [6/17/16]

2 – usnews.com/news/articles/2016-06-16/fed-unlikely-to-be-wowed-by-modest-inflation-uptick [6/16/16]

3 – cnbc.com/2016/06/17/us-markets.html [6/17/16]

4 – markets.wsj.com/us [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F17%2F15&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F17%2F15&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F17%2F15&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F17%2F11&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F17%2F11&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F17%2F11&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F16%2F06&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F16%2F06&x=0&y=0 [6/17/16]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F16%2F06&x=0&y=0 [6/17/16]

6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/17/16]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/17/16]

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