Economic Update July 6, 2015

Phillip Allen Inc.

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE
              
“Whatever you fear most has no power – it is your fear that has the power.”

– Oprah Winfrey

WEEKLY TIP
             
If you and your child are visiting some prospective colleges this summer, ask if you can chat with someone in their financial aid offices. The contacts you make (and the notes you take) could prove important for the future.

WEEKLY RIDDLE
            
What has no arms, legs or form, yet goes up without ever coming down?

Last week’s riddle:
Constantly hungry, I must always be fed – and any finger I touch will soon turn red. What am I?  

Last week’s answer:
Fire.

 

 

 

 

 

June 29, 2015

   

WALL STREET HANGS ON AS GREECE DEFAULTS
When Greece revealed it would miss its July 1 debt payment to the International Monetary Fund last Tuesday, the Dow lost 2% for the day while the CBOE VIX gained more than 35%. (To add to the drama, the commonwealth of Puerto Rico stated that its debts were “not payable” on the same day.) Any further bailout of Greece may hinge on its July 5 national popular vote, in which Greeks will decide whether or not to stay in the euro. Stocks did rebound mildly, resulting in the following weekly performances for the major indices: DJIA, -1.22% t0 17,730.11; NASDAQ, -1.90% to 5,009.21; S&P 500, -1.29% to 2,076.78.1,2,5
     
ANOTHER SOLID JOBS REPORT, WITH AN ASTERISK
Employers added 223,000 more jobs in June, Labor Department data revealed Friday. The headline jobless rate fell to 5.3% and the U-6 rate measuring “total” unemployment declined to 10.5%, but that was partly due to the labor force participation rate hitting a 38-year low of 62.6.3
    
FACTORIES WERE A BIT BUSIER IN JUNE
So indicated the Institute for Supply Management’s newest manufacturing purchasing manager index. ISM’s factory PMI rose 0.7  points in May to a mark of 53.5, another indication of an economy picking up momentum in spring.4
 
KEY CONFIDENCE BAROMETER RISES
The Conference Board’s consumer confidence index beat expectations by topping the century mark in June. It rose 6.8 points from its (revised) May level to 101.4.4
 
NAR, CASE-SHILLER INDICES DISAPPOINT

Last week’s real estate indicators were a touch underwhelming. Analysts polled by Briefing.com thought April’s 20-city Case-Shiller home price index would show a 5.6% overall yearly gain; instead, the 12-month improvement was 4.9%. The National Association of Realtors said its pending home sales index rose 0.9% in May; the consensus in the same poll was for a 1.4% increase.4

THIS WEEK: Monday, Wall Street will react to the Greek bailout referendum and consider ISM’s June non-manufacturing PMI. Nothing major is slated for Tuesday. Wednesday, the June Federal Reserve policy meeting minutes arrive and Alcoa releases Q2 results to kick off the new earnings season. On Thursday, the Street looks at new initial claims figures plus earnings from PepsiCo, Barracuda Networks and PriceSmart. Friday, Fed chair Janet Yellen speaks on the U.S. economic outlook in Cleveland; also, a Census Bureau report on May’s wholesale inventories appears.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.52 +4.44 +16.61 +7.21
NASDAQ +5.77 +12.37 +27.89 +14.35
S&P 500 +0.87 +5.17 +20.62 +7.39

REAL YIELD

4/3 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.49% 0.38% 1.27% 1.75%

 

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 – cbsnews.com/news/rising-grexit-risk-is-beating-down-stocks/ [6/30/15]
2 – thestreet.com/story/13207489/1/stocks-close-lower-ahead-of-greek-vote-on-bailout.html [7/2/15]
3 – tinyurl.com/nquvoqy [7/2/15]
4 – briefing.com/investor/calendars/economic/2015/06/29-03 [7/2/15]
5 – markets.wsj.com/us [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F2%2F14&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F2%2F14&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F2%2F14&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F2%2F10&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F2%2F10&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F2%2F10&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F1%2F05&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F1%2F05&x=0&y=0 [7/2/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F1%2F05&x=0&y=0 [7/2/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/2/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/2/15]

 

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