Weekly Economic Update – August 31, 2015

WEEKLY QUOTE
“Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity.”
– Socrates

WEEKLY TIP
Ideally, a college student should have just one credit card with a reasonable interest rate, a good rewards program, and no annual fee.

WEEKLY RIDDLE
What force and strength cannot get through, it with gentle touch can do. People in many halls would stand were it not in their hand. What is it?

Last week’s riddle:
I am a port city in Canada, a state in southeast Australia, a big lake in Africa, and a renowned queen. What is my name?

Last week’s answer:
Victoria.

STOCKS CORRECT, THEN REBOUND

After the record 1,000-point plunge the Dow Jones Industrial Average took Monday morning, all three major U.S. benchmarks ended up falling below correction levels – but then an impressive recovery began. Bargain-hunters, an interest rate cut by China’s central bank, and a surge in gasoline and oil prices helped turn things around, and the big three all managed weekly gains. The S&P 500 rose 0.89% for the week to 1,988.87, the Nasdaq advanced 0.32% to 4,828.33, and the Dow added 1.10% to reach 16,643.01. WTI crude had its best week since 2009, climbing 11.8% to a NYMEX close of $45.22 Friday.1,2

GOOD NEWS FROM MAIN STREET

Personal spending improved 0.3% in July, matching the June increase. Commerce Department data also showed personal incomes rising 0.4% for a fourth straight month. The Conference Board’s consumer confidence index jumped 10.5 points to a 101.5 reading for August; the University of Michigan’s final August consumer sentiment index declined just a point from its initial reading to 91.9.2,3

ASSORTED GAINS IN THE HOUSING SECTOR

New home buying increased 5.4% in July, the Commerce Department stated last week; the median new home price was up 2.0% year-over-year. Existing home prices (as measured by the 20-city S&P/Case-Shiller home price index) were up 5.0% annually through June. The National Association of Realtors noted a 0.5% rise for its pending home sales index in July, taking its annual advance to 7.4%.4,5

Q2 GROWTH REVISED TO 3.7%

The Bureau of Economic Analysis’ second estimate of Q2 Gross Domestic Product was 1.4% higher than its first, reflecting reassessments of government and personal spending, business investment and inventories. Orders for capital goods also surprised to the upside last week: they rose 2.0% overall in July, 0.6% minus transportation orders.3,5

THIS WEEK: On Monday, China releases its official factory and service sector PMIs for August. ISM issues its August manufacturing PMI on Tuesday, which is also when Bob Evans, Dollar Tree, and H&R Block report earnings. On Wednesday, Wall Street looks at ADP’s August employment change report, July factory orders data, a new Federal Reserve Beige Book, and Q2 results from Five Below and Navistar. Thursday, ISM’s August service sector PMI and the latest Challenger job cuts report accompany new initial claims figures and earnings from Campbell Soup, Lands’ End, and VeriFone. The August Labor Department jobs report arrives Friday.

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
-6.62
-2.56
+12.79
+5.91
NASDAQ
+1.95
+5.94
+24.84
+12.59
S&P 500
-3.40
-0.39
+17.36
+6.41
REAL YIELD
8/28 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.58%
0.23%
1.05%
1.79%

Sources: wsj.com, bigcharts.com, treasury.gov – 8/28/156,7,8,9

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.

Best regards,
Greg R. Solis, AIF®
President

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

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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Disclosure

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 – reuters.com/article/2015/08/28/us-markets-global-idUSKCN0QX01U20150828 [8/28/15]
2 – thestreet.com/story/13270473/1/stocks-end-frantic-week-with-only-modest-gains.html [8/28/15]
3 – briefing.com/investor/calendars/economic/2015/08/24-28 [8/28/15]
4 – usatoday.com/story/money/business/2015/08/25/new-home-sales-july/32295169/ [8/25/15]
5 – news.morningstar.com/articlenet/article.aspx?id=713100 [8/27/15]
6 – markets.wsj.com/us [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F28%2F14&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F28%2F14&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F28%2F14&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F27%2F10&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F27%2F10&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F27%2F10&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F29%2F05&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F29%2F05&x=0&y=0 [8/28/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F29%2F05&x=0&y=0 [8/28/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/28/15]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/28/15]