Economic Update August 10, 2015

Phillip Allen Inc.

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE
              
“The greatest good you can do for another is not just share your riches, but to reveal to him his own.”

– Benjamin Disraeli

WEEKLY TIP
             
Encourage your children to start off on the right financial footing: tell them to save 10% of what they make.
 

WEEKLY RIDDLE
            
There is a 7-letter word that starts with BR and ends in G, and if you put an E in it, you get an 8-letter word that sounds the same yet has a different meaning. Name these two words.
 

Last week’s riddle:
Simply talk about it, and you will break it. What is it?  

Last week’s answer:
Silence.

 

 

 

 

 

August 10, 2015

   

A GREEN LIGHT FOR A RATE HIKE?
According to the latest Labor Department report, employers hired 215,000 new workers in July – 77,000 of them in professional, business, education, and health care occupations. The jobless rate held steady at 5.3% while the U-6 rate (unemployment + underemployment) ticked down to 10.4%. Monthly hiring totals have averaged 235,000 since May compared to 195,000 in Q1, and even with continued lackluster wage growth, some analysts see a stronger argument for the Federal Reserve to adjust short-term interest rates next month.1
 
PERSONAL SPENDING IMPROVED 0.2% IN JUNE
This minor gain followed the 0.7% increase measured by the Commerce Department for May. Personal wages, however, rose 0.4% in June. A consensus MarketWatch forecast had both indicators advancing 0.3%.2
    
ISM SERVICE SECTOR PMI REACHES HISTORIC PEAK
With 15 of 18 service fields reporting growth, the Institute for Supply Management’s non-manufacturing PMI rose 4.3 points to reach 60.3 in July, the highest mark in its 7-year history. ISM’s factory PMI lost 0.8 points in July, slipping to 52.7. Better news emerged from the manufacturing sector, however: the Commerce Department noted a 1.8% gain for factory orders in June.2,3
    
A DOWN WEEK FOR STOCKS
The July employment report did little to ease concerns that the Fed might raise interest rates in September. That factor and some earnings disappointments sent the major indices south last week. Across August 3-7, the DJIA lost 1.79% to fall to 17,373.38. The S&P 500 slipped 1.25% in that time span to settle at 2,077.57 while the Nasdaq fell 1.65% to 5,043.54. Oil’s grim summer continued as futures lost 6.33% on the NYMEX for the week on the way to a Friday close of $43.81. Gold declined 0.28% for the week, settling Friday at $1,091.80 on the COMEX.4,5
          
THIS WEEK: Dean Foods, Live Nation, Shake Shack, and Take-Two Interactive report earnings Monday. Tuesday, the Street eyes Q2 results from Fossil, Red Robin, and Symantec. On Wednesday, earnings arrive from News Corp., Alibaba, Aramark, Cisco, and Macy’s. Thursday, July retail sales figures and a new initial jobless claims report complement earnings from Advance Auto Parts, Applied Materials, Dillard’s, El Pollo Loco, Kohl’s, Nordstrom, and Tribune Media. The initial August University of Michigan consumer sentiment index and the July Producer Price Index appear Friday, along with a report on July industrial output, and Q2 results from JCPenney.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -2.52 +6.14 +12.62 +6.49
NASDAQ +6.49 +16.35 +24.08 +13.30
S&P 500 +0.91 +8.80 +17.05 +6.99

REAL YIELD

4/3 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.52% 0.19% 1.04% 2.02%

 

Sources: online.wsj.com, bigcharts.com, treasury.gov – 12/26/145,6,7,8

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.

 

 

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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 – marketwatch.com/story/us-creates-215000-jobs-in-july-setting-stage-for-rate-hikes-2015-08-07 [8/7/15]
2 – marketwatch.com/economy-politics/calendars/economic [8/7/15]
3 – usnews.com/news/business/articles/2015/08/05/growth-at-us-services-firms-surges-to-record-in-july [8/5/15]
4 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [8/7/15]
5 – markets.on.nytimes.com/research/markets/commodities/commodities.asp [8/7/15]
6 – markets.wsj.com/us [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F7%2F14&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F7%2F14&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F7%2F14&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F6%2F10&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F6%2F10&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F6%2F10&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F8%2F05&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F8%2F05&x=0&y=0 [8/7/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F8%2F05&x=0&y=0 [8/7/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/7/15]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/7/15]

 

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