Economic Update March 28, 2016

Phillip Allen Inc.

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE
              
“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.”

– Jack Welch

WEEKLY TIP
             
Canceling an old credit card may be a bad idea if you have a good credit history. Part of that history is based on long you have been borrowing, and if that old card has a good history attached to it, it may be wiser to keep it.
 

WEEKLY RIDDLE
            
You put me on a table. You cut me, yet you will not eat me. What am I?
   
 
Last week’s riddle:
Why is B the coolest letter within the alphabet?
 
Last week’s answer:
It is surrounded by A-C.

 

 

 

 

 

March 28, 2016

   

MIXED NEWS ON HOME SALES
New home buying increased 2.0% in February, with all of the gain attributable to a remarkable 38.5% jump in sales in the West (a region which had witnessed a 32.7% January plunge in new home purchases). In contrast to this Census Bureau data, the National Association of Realtors noted a 7.1% February decline in existing home sales, with tightening inventory a factor. Last month, the median sale price of a new home was $301,400, up 2.6% in a year; the median existing home sale price was $210,800, up 4.4% from 12 months ago.1
    
THE ECONOMY EXPANDED 1.4% IN Q4
Last quarter’s GDP was just revised upward by the Bureau of Economic Analysis. In its previous estimate, the BEA had measured Q4 growth at 1.0%. Analysts polled by Briefing.com had expected no change for the third and final estimate.2
  
HARD GOODS ORDERS DECLINE
Overall orders for capital goods dipped 2.8% for February, according to the Census Bureau. With transportation orders removed, the number looked better; the pullback in core durable goods orders was just 1.0%. In January, overall durable goods orders increased 4.2% while core orders rose 1.2%.2
      
AN EXTENDED RALLY ENDS
Hawkish comments from some Federal Reserve officials held stocks and commodities in check last week, contributing to the end of a 5-week win streak. Across four trading days, the S&P 500 retreated 0.67% to 2,035.94; the Nasdaq Composite, 0.46% to 4,773.50; and the Dow Jones Industrial Average, 0.49% to 17,515.73. Gold had its worst week in more than five months, giving back 2.6% to settle at $1,221.60 on the COMEX Friday. Oil ended the week at $39.46 on the NYMEX.3
   
THIS WEEK: On Monday, Wall Street will consider February consumer spending and pending home sales reports. Janet Yellen speaks on monetary policy Tuesday in New York, and, in addition to her statements, investors will look at the Conference Board’s new consumer confidence survey, January’s S&P/Case-Shiller home price index, and earnings from Dave & Buster’s, Lennar, and Sonic. Wednesday offers the March ADP employment change report and earnings from Lululemon Athletica and Paychex. Thursday, the March Challenger job-cut report and new initial claims figures arrive. The Labor Department’s latest employment report, the final March consumer sentiment report from the University of Michigan, the March ISM manufacturing PMI, and China’s latest manufacturing PMIs all appear Friday.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA 0.52 -1.14 8.67 5.53
NASDAQ -4.67 -2.11 14.8 10.64
S&P 500 -0.39 -1.22 10.99 5.63
REAL YIELD 3/24 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.34% 0.12% 1.02% 2.20%

 

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 – latimes.com/business/la-fi-new-home-sales-20160323-story.html [3/23/16]
2 – briefing.com/investor/calendars/economic/2016/03/21-25 [3/25/16]
3 – cnbc.com/2016/03/24/us-markets.html [3/24/16]
4 – markets.wsj.com/us [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F25%2F15&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F25%2F15&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F25%2F15&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F25%2F11&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F25%2F11&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F25%2F11&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F24%2F06&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F24%2F06&x=0&y=0 [3/25/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F24%2F06&x=0&y=0 [3/25/16]

6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/25/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/25/16]

 

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