Weekly Economic Update – August 27, 2018

In this week’s recap: a milestone for the current bull market, new record highs for two equities benchmarks, a dip in home sales, and a win for oil.

BULL MARKET MAKES HISTORY

At the close on August 22, the current bull marked its 3,453th day, a record by S&P Dow Jones standards. Between March 9, 2009 and last Wednesday, the S&P 500 advanced 323%, with an annualized return of about 19%. Besides optimism, four other factors drove the market higher in the last nine-and-a-half years: easing by the Federal Reserve, earnings growth (corporate profits have improved in 30 of the past 35 quarters, with the only slump happening in 2015-16), share repurchases, and dip-buying on the assumption that stocks would recover from declines.1

HOME SALES WEAKEN

New National Association of Realtors data shows existing home sales fell 0.7% during July. Last month, the sales pace was the slowest recorded since February 2016. New home buying declined 1.7% in July after a 2.4% June drop, with the sales rate hitting a 9-month low.2,3

OIL FUTURES JUMP 5% IN FIVE DAYS

Crude just left its 7-week losing streak behind. Oil rose 5.4% on the NYMEX last week, settling at $68.72 after a 1.3% advance during the Friday trading session. News indicating Iran’s output might fall with the imposition of U.S. sanctions helped the commodity.4

S&P 500, NASDAQ SETTLE AT NEW PEAKS

The S&P gained 0.86% last week to finish at 2,874.69, surpassing its record close of January 26. Entering fresh record territory of its own, the Nasdaq Composite pushed toward the 8,000 level, closing at 7,945.98 on Friday after advancing 1.66% across five days. The week was good to the blue chips as well: the Dow Jones Industrial Average added 0.47%, settling Friday at 25,790.35. The CBOE VIX fell 4.67% across the week to 12.05.5,6

TIP OF THE WEEK

Certain life insurance policies now offer long-term care riders. If premiums for a standalone LTC policy seem too expensive, consider these policies as alternatives.

THIS WEEK

Monday, nothing major is scheduled. | BMO Financial Group and Best Buy present earnings on Tuesday, while the Conference Board’s August consumer confidence index and the latest S&P CoreLogic Case-Shiller home price index also arrive. | The federal government’s second estimate of Q2 economic growth appears Wednesday, as do the NAR’s July pending home sales index and quarterly results from Dick’s Sporting Goods. | Thursday offers July personal spending figures, the July PCE price index, and a new initial unemployment claims report. | On Friday, the University of Michigan releases its final August consumer sentiment index.

QUOTE OF THE WEEK

“He who learns but does not think, is lost. He who thinks but does not learn is in great danger.” – Kong Qiu (CONFUCIUS)

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA 4.33 18.39 14.36 12.65
NASDAQ 15.10 26.70 23.45 23.59
S&P 500 7.52 17.86 14.56 12.69
         
REAL YIELD 8/24 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.73 0.44 0.69 1.64

Sources: wsj.com, bigcharts.com, treasury.gov – 8/24/185,7,8,9

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.

THE WEEKLY RIDDLE

It drapes the hills in white, it does not swallow, but it does bite. What is it?

LAST WEEK’S RIDDLE: What is ready when you add a letter at its end?

ANSWER: The word “read.”

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@soliswealth.com
E-Mail: bob@soliswealth.com
CA Insurance License #0795867 & 0C05523

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

The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

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. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 – businessinsider.com/stock-bull-market-longest-on-record-4-main-reasons-for-longevity-2018-8 [8/22/18]
2 – marketwatch.com/story/housing-is-another-brick-in-the-wall-of-worry-stock-analyst-says-2018-08-24 [8/24/18]
3 – investing.com/economic-calendar/ [8/23/18]
4 – marketwatch.com/story/us-oil-futures-climb-more-than-5-for-the-week-2018-08-24 [8/24/18]
5 – markets.wsj.com/us [8/24/18]
6 – cnbc.com/2018/08/24/us-stocks-china-trade-talks-end-powell-to-speak-at-jackson-hole.html [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F24%2F17&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F24%2F17&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F24%2F17&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F23%2F13&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F23%2F13&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F23%2F13&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F25%2F08&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F25%2F08&x=0&y=0 [8/24/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F25%2F08&x=0&y=0 [8/24/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/24/18]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/24/18]