Economic Update June 29, 2015

Phillip Allen Inc.

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE
              
“The great thing about getting older is that you don’t lose all the other ages you’ve been.”

– Madeleine L’Engle

WEEKLY TIP
             
Are you a sole proprietor? If so, see if any net earned income you receive from your business entity may be subject to self-employment tax. This is also worth looking at if you are a manager in an LLC or an active partner in a partnership.

WEEKLY RIDDLE
            
Constantly hungry, I must always be fed – and any finger I touch will soon turn red. What am I?

Last week’s riddle:
What falls yet does not make noise?  

Last week’s answer:
Night.

 

 

 

 

 

June 29, 2015

   

CONSUMER SPENDING INCREASES 0.9%
This May gain represents quite a change from the mere 0.1% improvement recorded by the Commerce Department for April. It appears households have started to spend some of the money they saved on fuel and energy costs this winter. Consumer incomes rose 0.5% in May, replicating their April advance.1
    
HOUSEHOLDS FEEL MORE OPTIMISTIC
The University of Michigan announced a final June reading of 96.1 for its consumer sentiment index – its highest mark since January. Analysts polled by Briefing.com had expected no change from the final May reading of 94.6.2
 
HOUSING MARKET LEAVES DOLDRUMS BEHIND
A 2.2% increase in May took new home buying to a level unseen since February 2008: an annualized pace of 546,000 units. Moreover, the Census Bureau reported a 19.5% year-over-year gain for new home purchases. Existing home sales rose 5.1% in May according to the National Association of Realtors, nearing a 6-year peak.3
 
SILVER LINING IN DURABLE GOODS, Q1 GDP NUMBERS
America’s economy shrank 0.2% in Q1 according to the final estimate of the federal government, but that was an improvement from the 0.7% setback previously announced. Census Bureau data showed hard goods orders down 1.8% in May, but they were actually up 0.5% last month with transportation orders factored out.1
      
5-DAY LOSSES FOR THE 3 MAJOR INDICES
The impasse between Greece and its creditors weighed on global equity markets last week, including ours. Across five trading days, the Dow gave back 0.38% to settle Friday at 17,947.02. The Nasdaq lost 0.71% on the week to a Friday settlement of 5,080.51 while the S&P 500 slipped 0.40% to wrap the week at 2,101.61.4
       
THIS WEEK: Monday, the NAR offers its May pending home sales index and Paychex reports Q2 results. Tuesday sees the release of the Conference Board’s June consumer confidence index, April’s S&P Case/Shiller home price index and earnings from ConAgra Foods. The third quarter kicks off Wednesday with the arrival of ISM’s June factory PMI, the June Challenger job cuts report, ADP’s June employment change report and earnings from Constellation Brands and General Mills. As the federal government observes the July 4 holiday on Friday, the Labor Department’s June jobs report will appear on Thursday along with the latest initial jobless claims numbers and the Commerce Department’s report on May factory orders. Wall Street will be closed for business on Friday.

 

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +0.70 +6.53 +15.39 +7.44
NASDAQ +7.27 +16.02 +25.70 +14.84
S&P 500 +2.07 +7.38 +19.04 +7.65

REAL YIELD

4/3 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.57% 0.26% 1.21% 1.62%

 

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 – briefing.com/investor/calendars/economic/2015/06/22-26 [6/26/15]
2 – briefing.com/Investor/Calendars/Economic/Releases/mich.htm [6/26/15]
3 – nasdaq.com/article/us-new-home-sales-climb-to-sevenyear-high-in-may-20150623-00645 [6/23/15]
4 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [6/26/15]
5 – markets.wsj.com/us [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F26%2F14&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F26%2F14&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F26%2F14&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F25%2F10&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F25%2F10&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F25%2F10&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F27%2F05&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F27%2F05&x=0&y=0 [6/26/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F27%2F05&x=0&y=0 [6/26/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/26/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/26/15]

 

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