Weekly Economic Update 2/15/2016

OIL JUMPS 12%, BUT STOCKS RETREAT FOR THE WEEK

On Friday, WTI crude closed at a NYMEX price of $29.44 after a 12.32% surge. However, it fell 4.69% on the week, and major U.S. stock benchmarks fell as well. Across five days, the Dow Jones Industrial Average declined 1.43% to 15,973.84; the Nasdaq Composite, 0.58% to 4,337.51; and the S&P 500, 1.95% to 1,864.78. Gold closed Friday at $1,239.00 on the COMEX, capping its best week since 2008 and its first four-week win streak since last April. (1,2)

BETTER NEWS ABOUT RETAIL SALES
Commerce Department data showed retail purchases increasing 0.2% last month, with impressive 0.6% growth for core retail sales (a category excluding auto, home improvement, and restaurant purchases). The 0.1% pullback in headline retail sales in December was revised to a 0.2% advance. (3)

A HINT OF CONSUMER PESSIMISM
The University of Michigan’s initial February consumer sentiment index displayed a 90.7 reading compared to 92.0 at the end of January. Its future expectations component fell 1.7 points to a 6-month low, a major reason for the decline. (3)

MORTGAGE RATES REACH 10-MONTH LOW
On February 11, Freddie Mac’s Primary Mortgage Market Survey showed the average interest rate on a 30-year home loan at 3.65%, moving lower for the sixth straight week. The recent rush to Treasuries by investors has helped keep rates low. Last week, the average interest for the 15-year fixed rate home loan was 2.95%. (4)

THIS WEEK: Monday is Presidents Day, so U.S. financial markets will be closed. On Tuesday, Cheesecake Factory, Dean Foods, Express Scripts, Fossil Group, Hormel, Kaiser Aluminum, and Public Storage announce earnings. Minutes from the January Federal Reserve policy meeting arrive Wednesday, along with the January PPI, reports on January housing starts, building permits and industrial output, and earnings from Denny’s, Domino’s, Dr. Pepper Snapple, Gannett, Jack in the Box, Garmin, La-Z-Boy, Marathon Oil, Marriott, Newmont Mining, Noble Energy, Nvidia, NetApp, Priceline, Progressive, and T-Mobile. Thursday, new initial claims figures arrive along with earnings from America’s Car-Mart, Applied Materials, Cabela’s, BJ’s Restaurants, Boise-Cascade, Choice Hotels, DISH Network, Duke Energy, Fluor, Hyatt Hotels, MGM Resorts, Six Flags Entertainment, Novatel Wireless, Nordstrom, Starwood Hotels & Resorts, Virgin America, and Wal-Mart. The January CPI will be out Friday, along with quarterly results from Deere & Co.

WEEKLY QUOTE
“Laughter is the closest distance between two people.”
– Victor Borge

WEEKLY TIP
Some people moonlight for extra income, but getting that second job may just be a response to uncontrolled spending. Added income will not correct that problem; it may even encourage it.

WEEKLY RIDDLE
Switch one letter each from the words “plus” and “minus” to the other word, and you have two entirely new words. What are they?

Last week’s riddle:
When you lack me, you feel a sort of gloom. When you use me, it is time you consume. What am I?

Last week’s answer:
Sleep.

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Citations.
1 – foxbusiness.com/markets/2016/02/12/wall-street-surges-but-caps-week-in-red.html [2/12/16]
2 – markets.wsj.com/us [2/12/16]
3 – investors.com/news/economy/retail-sales-looked-stronger-in-january-as-consumer-stays-solid/ [2/12/16]
4 – usatoday.com/story/money/personalfinance/2016/02/11/mortgage-rates-housing-freddie-mac/80231032/ [2/11/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F12%2F15&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F12%2F15&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F12%2F15&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F11%2F11&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F11%2F11&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F11%2F11&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F13%2F06&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F13%2F06&x=0&y=0 [2/12/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F13%2F06&x=0&y=0 [2/12/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/12/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/12/16]

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