Economic Update, October 16, 2017

 

Phillip Allen Inc.

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE
              
“The ordinary acts we practice every day at home are of more importance to the soul than their simplicity might suggest.”

– Thomas Moore

WEEKLY TIP
             
If you are past 50 and you worry that your retirement savings are insufficient, the best financial response may be to work longer. Even working part time for a few more years could lessen the need to draw down your retirement money.

WEEKLY RIDDLE
            
A Saab travels along an avenue at 50mph; a Subaru, at 30mph. The Subaru passes by the Saab, without speeding up to do so. How is this possible?  
   
 
Last week’s riddle:
Christine wants to know how far she can hike into a rugged badlands that is 6 miles wide. How far can she possibly go into the badlands?  
  
Last week’s answer:
3 miles. If she hikes in any further, she will actually begin to hike out.

 

 

 

 

 

October 16, 2017

   

RETAIL SALES, SENTIMENT NUMBERS IMPRESS
Two economic indicators stood out last week. Retail purchases rose 1.6% during September as households and businesses replaced cars and trucks damaged in hurricanes. This was the best monthly advance recorded by the Department of Commerce since March 2015, and the gain was 1.0% even with auto buying removed. The University of Michigan’s initial October consumer sentiment index displayed a reading of 101.1, which was nearly a 14-year high. Economists polled by Briefing.com had forecast just a half-point improvement to 95.6.1,2
 
GAS PRICES DRIVE UP INFLATION
A 13.1% spike in retail gasoline costs accounted for 75% of the 0.5% September increase in the Consumer Price Index. Not since January has the CPI risen so much in a month. Still, the core CPI was up just 0.2%. In yearly terms, headline inflation now stands at 2.2%; core inflation, at 1.7%.3
   
SOCIAL SECURITY BENEFITS TO INCREASE 2% IN 2018
Friday, the Social Security Administration announced the largest cost-of-living adjustment to retirement benefits since 2012. Next year, Social Security payments will get a 2.0% boost, meaning the average retired Social Security recipient will receive $27.40 more per month.4
 
MINOR ADVANCES BY MAJOR INDICES
From October 9-13, that was the story on Wall Street. The Dow 30 rose 0.43% to 22,871.72, the Nasdaq Composite added 0.24% to 6,605.80, and the S&P 500 gained 0.15% to 2,553.17. The CBOE VIX ended the week down at 9.66.5
    
THIS WEEK: Netflix presents Q3 results on Monday. On Tuesday, Comerica, CSX, Goldman Sachs, W.W. Grainger, Harley-Davidson, Johnson & Johnson, and UnitedHealth offer earnings news. Earnings emerge from Abbott Labs, Alcoa, American Express, and U.S. Bancorp Wednesday, and Wall Street will also review September housing starts and building permits and a new Federal Reserve Beige Book. On Thursday, BB&T, KeyCorp, Philip Morris International, Quest Diagnostics, Travelers Companies, and Verizon join the earnings parade, and a new initial claims report surfaces. September existing home sales numbers appear Friday, plus earnings from BHGE, Daimler AG, General Electric, Schlumberger, and SunTrust Bank; also, Fed chair Janet Yellen speaks on monetary policy Friday night in Washington, D.C.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA 15.73 26.37 14.32 6.23
NASDAQ 22.71 26.71 23.4 13.54
S&P 500 14.04 19.72 15.74 6.35
REAL YIELD 7/7 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.43% 0.12% -0.78% 2.36%

 

Sources: wsj.com, bigcharts.com, treasury.gov – 7/8/166,7,8,9
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/2017/10/09-13 [10/13/17]
2 – tinyurl.com/ychmlgup [10/13/17]
3 – reuters.com/article/us-usa-economy-inflation/gasoline-boosts-u-s-consumer-prices-underlying-inflation-tame-idUSKBN1CI1NZ [10/13/17]
4 – marketwatch.com/story/social-security-checks-expected-to-increase-2-in-2018-2017-10-13/ [10/13/17]
5 – markets.wsj.com/us [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/13/17]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/13/17]

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