Weekly Economic Update – August 22, 2016

WEEKLY QUOTE

“Because we don’t think about future generations, they will never forget us.” – Henrik Tikkanen

WEEKLY TIP

If you have recently divorced, be sure to review your will, your legal documents, and the beneficiary forms for your retirement accounts and insurance policies. All of them may need to be revised.

WEEKLY RIDDLE

It floats gently when it is born, lies still when it is alive, and runs when it is dead. What is it?

Last week’s riddle:

Three women leave work with only one umbrella to share between them. They all try to fit under the one umbrella as they walk to a cafe. When they reach the cafe, none of them are the least bit wet. Why?

Last week’s answer:

It never rained as they were walking.

IS A 2016 INTEREST RATE HIKE STILL POSSIBLE?

According to the minutes from the Federal Reserve’s July monetary policy meeting, some Federal Open Market Committee members felt “that economic conditions would soon warrant taking another step in removing policy accommodation.” Others favored waiting longer to adjust rates, contending that the strong hiring seen in recent months would presently moderate. Fed officials broadly agreed that more economic data would be needed before any action.1

NO CPI ADVANCE IN JULY

The federal government’s Consumer Price Index went nowhere last month, leaving yearly inflation at a mere 0.8%. The core CPI advanced another 0.1%, which put the 12-month gain in core consumer prices at 2.2%. In the year ending in June, annual headline inflation was at 1.0%; core inflation, at 2.3%.2

HOUSING STARTS RISE 2.1%

This gain comes on the heels of the 5.1% advance for June (first recorded by the Census Bureau as a 4.8% gain). July’s improvement sent the seasonally adjusted annual rate of groundbreaking to a 5-month high. The pace of building permits ticked down 0.1% last month.3

CALM TIMES ON WALL STREET

As the trading week wrapped up, the S&P 500 settled almost precisely where it had seven days earlier. For the week, the index lost 0.01% on its way to a Friday close of 2,183.87. The Dow gave back just 0.13% on the week, settling at 18,552.57 Friday. A 0.10% weekly advance left the Nasdaq at 5,238.38 at Friday’s closing bell.4

THIS WEEK: Nothing major is slated for Monday. Tuesday, Wall Street considers July new home sales figures and earnings from Best Buy, Intuit, J.M. Smucker, Kirkland’s, La-Z-Boy, Regis Corp., and Toll Brothers. Wednesday, July existing home sales numbers arrive plus earnings from Express, Guess?, HP, and Williams-Sonoma. Reports on initial jobless claims and July durable goods orders complement earnings announcements from Autodesk, Burlington Stores, Dollar General, Dollar Tree, GameStop, Medtronic, Michaels Companies, and Tiffany & Co. on Thursday. Federal Reserve chair Janet Yellen delivers a speech on the central bank’s monetary policy toolkit Friday morning in Wyoming; away from Jackson Hole, the University of Michigan’s final August consumer sentiment index and the second estimate of Q2 GDP will both arrive Friday, plus earnings from Big Lots.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+6.47

+6.94

+14.30

+6.30

NASDAQ

+4.61

+4.37

+24.74

+14.21

S&P 500

+6.85

+5.01

+18.87

+6.77

REAL YIELD

8/19 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.10%

0.55%

0.02%

2.26%

Sources: wsj.com, bigcharts.com, treasury.gov – 8/19/164,5,6,7

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.

Best regards,

Greg R. Solis, AIF®
President and CEO

Bob Medler, CRPC, CMFC, AIF®
Wealth Advisor / Investment Analyst

78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181

www.soliswealth.com
E-Mail: greg.solis@lpl.com
E-Mail: robert.medler@lpl.com
CA Insurance License #0795867

The Wealth Advisors of Solis Wealth Management are also Registered Representatives with and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC

 

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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.

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 – cnbc.com/2016/08/17/fed-minutes-fomc-signals-door-still-open-for-2016-rate-hike.html [8/17/16]
2 – investing.com/economic-calendar/ [8/19/16]
3 – tradingeconomics.com/united-states/housing-starts [8/19/16]
4 – markets.wsj.com/us [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F19%2F15&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F19%2F15&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F19%2F15&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F19%2F11&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F19%2F11&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F19%2F11&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F18%2F06&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F18%2F06&x=0&y=0 [8/19/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F18%2F06&x=0&y=0 [8/19/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/19/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/19/16]