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Weekly Economic Update - 8.21.17

RETAIL SALES RISE IMPRESSIVELY

In July, they were up 0.6% – the largest monthly increase seen so far in 2017. This gain suggests the economy has gathered momentum in the third quarter. Core retail sales (which do not include food, construction, gas, and auto buying) advanced 0.6% for July as well. The Department of Commerce also revised some spring numbers: retail purchases improved 0.3% in June and were flat a month earlier.1

 

AN UPTURN FOR CONSUMER SENTIMENT

The University of Michigan’s monthly gauge of how U.S. households view current and future economic conditions rose 4.5 points in its preliminary August edition to 97.6. Not since January has the index been so high. In the past 12 months, it has gained 8.7 points.2

  

HOUSING STARTS RETREAT

Groundbreaking decreased 4.8% in July, according to the latest monthly Census Bureau snapshot of American construction activity. Building permits were also down for the month, with the pace of permits issued declining by 4.1%.3

 

WALL STREET BENCHMARKS SEE WEEKLY LOSSES

The Barcelona terror attack and concerns over the federal government’s potential to adjust U.S. economic policy impeded equities last week. During August 14-18, the S&P 500 lost 0.65%, settling at 2,425.55 Friday. In its fourth straight weekly retreat, the Nasdaq Composite fell 0.64% to 6,216.53. Like the S&P, the Dow Jones Industrial Average took a second straight weekly loss, ceding 0.84% to reach 21,674.51. In contrast, the Dow Jones Utility Average notched a 1.09% gain across five days. At the end of Friday’s trading session, gold stood at $1,291.60, and WTI crude, at $48.51.4,5

   

THIS WEEK: Ruby Tuesday announces earnings on Monday. Coty, DSW, Intuit, Kirkland’s, La-Z-Boy, Medtronic, Salesforce, and Toll Brothers join the earnings parade Tuesday. Wednesday offers a Census Bureau report on July new home sales and earnings from American Eagle Outfitters, Eaton Vance, Express, HP, Lowe’s, Regis Corp., and Williams-Sonoma. Wall Street learns about July existing home sales Thursday, while also scrutinizing new initial unemployment claims numbers and earnings news from Abercrombie & Fitch, Autodesk, Broadcom, Burlington Stores, Dollar Tree, GameStop, Hormel Foods, Michaels Companies, J.M. Smucker, Staples, Toro, and Ulta Beauty. Federal Reserve chair Janet Yellen speaks on the topic of “financial stability” at the Kansas City Fed’s annual Jackson Hole economic symposium Friday; investors will also consider a report on July hard goods orders.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+9.67

+16.54

+12.65

+6.57

NASDAQ

+15.48

+18.63

+20.41

+14.82

S&P 500

+8.34

+10.90

+14.21

+6.77

REAL YIELD

8/18 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.43%

0.06%

-0.43%

2.45%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 8/18/175,6,7,8

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.

 

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 - reuters.com/article/us-usa-economy-retail-idUSKCN1AV1BZ [8/15/17]

2 - sca.isr.umich.edu/ [8/18/17]

3 - tradingeconomics.com/united-states/housing-starts [8/16/17]

4 - marketwatch.com/story/dow-set-to-fight-for-direction-but-flirts-with-biggest-two-week-drop-in-nearly-a-year-2017-08-18 [8/18/17]

5 - markets.wsj.com/us [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F18%2F16&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F18%2F16&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F18%2F16&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F12&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F12&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F12&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F07&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F07&x=0&y=0 [8/18/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F07&x=0&y=0 [8/18/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/18/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/18/17]

Weekly Economic Update - 8.14.17

TAME INFLATION PERSISTS

Can the Federal Reserve justify another interest rate hike in the second half of 2017? Given weak inflation pressure, maybe not. The central bank has set a 2% yearly inflation target, but the Consumer Price Index rose only 0.1% in July, resulting in a 1.7% year-over-year gain. Core consumer prices rose 0.1% for a fourth consecutive month in July, so annualized core inflation was also at 1.7%. The Producer Price Index fell 0.1% last month; analysts polled by Briefing.com expected a 0.2% rise.1,2

 

ANALYSIS: EARNINGS GROW AT a 10% PACE

More than 90% of companies in the S&P 500 have now reported second-quarter results. FactSet, the respected financial analytics firm, now projects a blended earnings growth rate of 10.2% for the S&P 500 for the second quarter, along a with 5.1% blended sales growth rate. S&P component firms generating less than 50% of their sales outside the U.S., however, are set to record 14.0% blended earnings growth and 6.0% blended revenue growth.3

   

THE PRICE OF GOLD RISES

At Friday’s close, the yellow metal hit a 2-month high of $1,294.00 on the COMEX as investors looked away from equities. Gold gained 2.3% on the week.4

 

TURBULENCE FOR WALL STREET

Diplomatic tensions sent stocks lower last week. Across August 7-11, the Dow Jones Industrial Average declined 1.06% to 21,858.32; the S&P 500, 1.43% to 2,441.32; the Nasdaq Composite, 1.50% to 6,256.56. Volatility certainly came back: the CBOE VIX jumped 53.44% to end the week at 15.39.5

    

THIS WEEK: On Monday, Cumulus Media and Sysco report quarterly results. Tuesday brings July retail sales numbers and earnings from Advance Auto Parts, Agilent, Coach, Dick’s Sporting Goods, Home Depot, TJX, and Urban Outfitters. On Wednesday, minutes from the July Federal Reserve policy meeting appear; Wall Street will also interpret a report on July housing starts and building permits and earnings news from Cisco, L Brands, NetApp, Stein Mart, and Target. Fresh reports on initial jobless claims and industrial production roll in Thursday, complemented by earnings from Alibaba Group, America’s Car-Mart, Applied Materials, Bon-Ton Stores, Gap, Ross Stores, Sportsman’s Warehouse, Stage Stores, and Walmart. Friday, investors consider earnings from Deere & Co. and Estee Lauder and the preliminary August consumer sentiment index from the University of Michigan.

  

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+10.60

+17.43

+13.10

+6.51

NASDAQ

+16.23

+19.66

+21.42

+14.58

S&P 500

+9.04

+11.69

+14.73

+6.79

REAL YIELD

8/11 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.40%

0.10%

-0.60%

2.56%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 8/11/175,6,7,8

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.

 

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 - reuters.com/article/us-usa-economy-inflation-idUSKBN1AR19S [8/11/17]

2 - briefing.com/investor/calendars/economic/2017/08/07-11 [8/11/17]

3 - insight.factset.com/sp-500-companies-with-more-global-exposure-reported-higher-earnings-growth-in-q2 [8/11/17]

4 - marketwatch.com/story/gold-marks-highest-finish-since-early-june-up-more-than-2-for-the-week-2017-08-11 [8/11/17]

5 - markets.wsj.com/us [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F11%2F16&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F11%2F16&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F11%2F16&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F10%2F12&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F10%2F12&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F10%2F12&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F10%2F07&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F10%2F07&x=0&y=0 [8/11/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F10%2F07&x=0&y=0 [8/11/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/11/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/11/17]

Terry and Jason Sustar are investment adviser representatives of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E. Fulton St., Ada, MI 49301. Sustar Financial Group is not affiliated with USA Financial Securities.

Terry and Jason Sustar are authorized to transact securities-related business and investment advisory services only in states where he is properly registered. For investment products and services these states include: (Terry: FL, NJ, OH, WV) (Jason: OH)  For investment advisory services these states include: (Terry: FL, NJ, OH, WV) (Jason: OH) Clients who are not residents of these states cannot be serviced. This website is not intended to provide investment, legal, or tax advice, nor to effect securities transactions or to render personal advice for compensation.

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