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Weekly Economic Update for March 3, 2014

WeeklyMarketUpdate.jpgMIXED RESULTS FROM CONSUMER INDICES

Wet, cold weather didn’t dampen the consumer outlook in February – at least according to the month’s final University of Michigan consumer sentiment index, which came in at 81.6. The index finished January at 81.2. On the other hand, February’s Conference Board consumer confidence index slipped 1.3 points to 78.1 (January’s reading was revised down to 79.4).1,2

  

PACE OF NEW HOME SALES PICKS UP

Wall Street and Main Street cheered the Census Bureau’s announcement of a 9.6% jump in new home buying in January – the rate of new home sales was the best in any month since July 2008. The National Association of Realtors’ pending home sales index rose 0.1% in January, a nice change from the 9% fall it took in the past year. December’s S&P/Case-Shiller Home Price Index showed a 13.4% yearly gain in home values, down from a 13.7% improvement in the November edition.2,3

  

Q4 GDP REVISED SIGNIFICANTLY DOWNWARD

Last week, the Bureau of Economic Analysis lowered its fourth-quarter growth estimate from 3.2% to 2.4%. This did not shock economists – in a MarketWatch poll, the consensus was for a 2.4% reading. Lagging economic indicators released in February were worse than anticipated. In news pertaining to Q1 GDP, January saw a 1.0% drop in overall durable goods orders.2

 

Weekly Economic Update for March 3, 2014

WeeklyMarketUpdate.jpgMIXED RESULTS FROM CONSUMER INDICES

Wet, cold weather didn’t dampen the consumer outlook in February – at least according to the month’s final University of Michigan consumer sentiment index, which came in at 81.6. The index finished January at 81.2. On the other hand, February’s Conference Board consumer confidence index slipped 1.3 points to 78.1 (January’s reading was revised down to 79.4).1,2

  

PACE OF NEW HOME SALES PICKS UP

Wall Street and Main Street cheered the Census Bureau’s announcement of a 9.6% jump in new home buying in January – the rate of new home sales was the best in any month since July 2008. The National Association of Realtors’ pending home sales index rose 0.1% in January, a nice change from the 9% fall it took in the past year. December’s S&P/Case-Shiller Home Price Index showed a 13.4% yearly gain in home values, down from a 13.7% improvement in the November edition.2,3

  

Q4 GDP REVISED SIGNIFICANTLY DOWNWARD

Last week, the Bureau of Economic Analysis lowered its fourth-quarter growth estimate from 3.2% to 2.4%. This did not shock economists – in a MarketWatch poll, the consensus was for a 2.4% reading. Lagging economic indicators released in February were worse than anticipated. In news pertaining to Q1 GDP, January saw a 1.0% drop in overall durable goods orders.2

 

Weekly Economic Update for February 24, 2014

WeeklyMarketUpdate.jpgMORE MILD INFLATION

Consumer prices ticked up 0.1% for January while wholesale prices rose 0.2%. Analysts polled by MarketWatch expected both the headline Consumer Price Index and Producer Price Index to advance 0.1%. The bigger news item (perhaps) is that the Labor Department altered its calculation of producer prices for the first time in 36 years. The definitive PPI is now called the PPI Final Demand index, and it measures prices received for exports, services, federal government purchases and construction in addition to those of finished goods.1,2

   

POOR HOME SALES TO START THE YEAR

The annual pace of existing home sales hit an 18-month low in January; the National Association of Realtors announced 5.1% monthly and yearly declines in residential resales. The good news? Inventory continues to expand (+2.2% in January) and the median existing home price was $188,900 last month, up 10.7% from a year ago.3

   

OIL TOPS $102, GOLD ADVANCES FOR A THIRD WEEK

NYMEX crude for April delivery settled at $102.20 a barrel Friday, rising 1.9% for the week. Unrest in Ukraine, Venezuela, Turkey and other emerging markets also influenced the 0.4% gain for COMEX gold futures last week – the precious metal settled Friday at $1,323.60 per ounce.4

 

Weekly Economic Update for February 17, 2014

WeeklyMarketUpdate.jpgFREEZING TEMPERATURES COOL RETAIL SALES 

While the fourth quarter saw the strongest consumer spending in 3 years, the pace of retail purchases slowed last month. The Commerce Department reported a 0.4% drop in retail sales in January, and it revised December’s gain of 0.2% to a loss of 0.1%. Severe cold, reduced hiring and the end of long-term unemployment benefits were likely influences. There was one bit of reassurance in the Commerce Department’s report: minus auto buying, retail sales were actually flat last month.1

  

CONSUMER SENTIMENT IS UNCHANGED

The University of Michigan’s preliminary consumer sentiment index for February came in at 81.2, precisely where it had finished January. Analysts polled by Briefing.com had expected it to decline a full point.2

  

GOLD FUTURES HIT A 3-MONTH HIGH

Bearish sentiment (and dissatisfying economic indicators) encouraged a rally in precious metals last week. Gold gained 4.4% on the COMEX in five days to settle at $1,318.60 Friday – a level unseen since Halloween. Silver futures climbed 7.5% on the week to $21.42, the best price since early November. Copper futures gained 0.6% last week, platinum futures 3.7% and palladium futures 4.1%.3

 

Weekly Economic Update for February 10, 2014

WeeklyMarketUpdate.jpgWAS IT THE WEATHER, OR THE ECONOMY?  

For a second straight month, hiring was weak. Employers added 113,000 jobs in January, and while the unemployment rate ticked down to 6.6%, the Labor Department’s latest report came with some caution flags. Private-sector payrolls expanded by 142,000 new positions, but 29,000 federal workers were let go and there were actually job cuts in the booming health care sector. In 2013, the U.S. workforce expanded by an average of 194,000 jobs a month. The February jobs report will either reject or confirm suspicions of a weakening labor market.1

   

ISM INDICES FLASH DIFFERENT SIGNALS

Wall Street did not expect the Institute for Supply Management’s January manufacturing PMI to drop to 51.3 from the (revised) December reading of 56.5. Economists surveyed by Briefing.com forecast a January reading of 56.0. ISM’s service sector PMI improved a full point to 54.0 in January.2

   

FACTORY ORDERS SLIP; SO DO AUTO SALES

The Census Bureau recorded a 1.5% December retreat in factory orders, offsetting an equal December gain. Although Chrysler and Nissan reported January sales gains, other major automakers did not as fewer Americans purchased cars last month due to the miserable weather across much of the nation. In January, auto sales were down 3.0% year-over-year.2,3

 

Weekly Economic Update for February 3, 2014

WeeklyMarketUpdate.jpgCONSUMER MORALE, CONSUMER SPENDING IMPROVE  

On Friday, the Commerce Department announced that consumer spending rose 0.4% in December, even as consumer incomes stayed flat. The University of Michigan’s final January consumer sentiment index came in at 81.2 (up 0.8 points from December) and the Conference Board’s January consumer confidence index posted a reading of 80.7 (up 3.2 points from last month). Analysts surveyed by Briefing.com thought both indices would be flat for January.1

   

HOME SALES DIP, BUT PRICES RISE

Brutal weather sent pending home sales down 8.7% in December to a 43-month low, as reported by the National Association of Realtors. The Census Bureau measured a 7.0% drop in new home buying last month. In better news, November’s Case-Shiller Home Price Index showed a 13.7% yearly advance (the best 12-month gain in housing values since February 2006), and new home prices rose 8.4% in 2013.2,3

                 

FEWER ORDERS FOR BIG-TICKET ITEMS

Durable goods orders fell 4.3% in December, but the Census Bureau said the retreat was only 1.6% when transportation orders were factored out. This was a switch from the (revised) 3.4% gain in hard goods orders in November.1

 

Weekly Economic Update for January 27, 2014

WeeklyMarketUpdate.jpgMORE HOMES MOVE IN DECEMBER

Last month saw a 1.0% gain in existing home sales, a nice change for this key economic indicator after a few subpar months. Analysts surveyed by Dow Jones Newswires anticipated sales improving 0.6%. The National Association of Realtors did revise November’s sales decline to 5.9% (it had been 4.3%).1,2

   

GAUGE OF NEAR-TERM PROSPECTS EDGES HIGHER

The Conference Board’s index of leading indicators – intended to assess economic prospects for the next 3-6 months – ticked up 0.1% for December. Additionally, the CB revised the November gain of the index from 0.8% to 1.0%.1

                 

GOLD RALLY CONTINUES

Futures advanced for a fifth straight week, settling Friday at $1,264.30 an ounce on the COMEX after rising 1.0% in 5 days, helped by a wave of disappointing economic news from overseas. The precious metal hasn’t had such a long winning streak since September 2012.3

 

STOCKS STAGE A MAJOR RETREAT

Weak manufacturing data from China and an exit from emerging market currencies triggered a 2-day global selloff at the end of last week. The Argentine peso dropped 15% in 5 days, and the Russian ruble, South African rand and Brazil real also slumped. As a result, the DJIA had its poorest week in more than 2 years (-3.52%). The Nasdaq lost 1.65% for the week while the S&P 500 fell 2.63%. At the close Friday, here was where the big three stood: S&P, 1,790.29; DJIA, 15,879.11; NASDAQ, 4,128.17.4,5

Weekly Economic Update for January 20, 2014

WeeklyMarketUpdate.jpgINFLATION RISES IN DECEMBER

Labor Department reports showed the Consumer Price Index up 0.3% last month (with core CPI rising 0.1%) and the Producer Price Index advancing 0.4% (core PPI went north 0.3%). If these spikes foreshadow greater inflation for 2014, they do little to alter the big picture of 2013 – a year in which consumer prices increased only 1.5% and wholesale prices rose just 1.2%. Annualized consumer inflation is beneath the Federal Reserve’s 2.0% target and hasn’t exceeded 2% for two years. The last two consecutive years in which consumer prices rose less than 2% were 1997-98.1,2

   

A MILD LIFT FOR RETAILERS

Economists polled by Briefing.com thought retail sales would be flat in December. They rose 0.2% instead (0.7% with auto buying factored out). The Census Bureau revised November’s 0.7% advance down to 0.4%.3

               

CONSUMER SENTIMENT MISSES EXPECTATIONS

The initial January consumer sentiment index from the University of Michigan took a major dip, dropping to 80.4 from the final December figure of 82.5. The consensus forecast of analysts surveyed by Briefing.com was for a much higher reading – 83.0.3

 

Weekly Economic Update for January 13, 2014

WeeklyMarketUpdate.jpgINTERPRETING A PERPLEXING JOBS REPORT

Why did the economy generate only 74,000 new jobs last month? Why did 347,000 people drop out of the job hunt to leave the labor participation rate at 62.8%, the lowest in 35 years? Was it the weather? Maybe. As a note from Capital Economics mentions, the Labor Department found that 273,000 people were unable to work last month because of weather conditions, well above the December average of 166,000. The jobless rate fell to a 5-year low of 6.7% in the final month of 2013, but that was largely due to older workers retiring and the thinning ranks of job seekers. November’s job growth was revised upward by 38,000 to 241,000.1,2

 

A BIT LESS GROWTH IN THE SERVICE SECTOR

December’s non-manufacturing PMI from the Institute for Supply Management came in at 53.0, down from the prior 53.9 mark. Although 53.0 is the weakest reading in six months, it signifies expansion. Data from Markit showed service-sector PMIs in China (50.9) and the euro area (51.0) also down slightly last month.3

                                                                       

FACTORY ORDERS REBOUND IN DECEMBER

The latest report from the Commerce Department noted a 1.8% monthly rise in orders placed with U.S. manufacturers. November’s retreat in factory orders was revised down to 0.5%.3

 

Quarterly Economic Update for Q4, 2013

Icon_QuarterlyEconomicUpdate_Q42013.jpgTHE QUARTER IN BRIEF

The last three months of 2013 were relatively placid on Wall Street. Interestingly, the day that many investors dreaded turned out to be the best trading day of the quarter. The Dow rose 292 points on December 18, when the Federal Reserve announced the oncoming tapering of its economic stimulus. The DJIA gained 9.56% in Q4, and the Nasdaq and S&P 500 did even better. Key foreign indices mostly advanced, even though economic indicators from Europe and China were decidedly mixed. Mortgage rates increased and the housing market cooled down a bit. Gold sank and oil rebounded. Consumers grew more optimistic about the economy, but also grew frustrated with both Congress and the Affordable Care Act.1,2

   

DOMESTIC ECONOMIC HEALTH
Arguably the biggest headlines in Q4 2013 came out of the nation’s capital. The federal government shut down for 16 days in October, and though it merely paused the bull market, Standard & Poor’s estimated that it put a $24 billion dent in the economy. In better news, the House and Senate arrived at a 2-year budget agreement in December, quelling fears of another shutdown for January.3

 

The Fed elected to reduce its monthly asset purchases from $85 billion to $75 billion starting in January, with the chance of further “measured reductions” this year. It made no move with interest rates. While the Congressional Budget Office projected 7 million Americans would sign up for their own health care via the health insurance exchanges by the end of 2013, the reality was in the vicinity of 2 million due to technical difficulties. Additionally, 4 million insured Americans found out that their coverage was being cancelled because it did not meet ACA standards.3,4

 

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