Weekly Economic Update – December 19, 2016

WEEKLY QUOTE

“The heads of strong old age are beautiful beyond all grace of youth.” – Robinson Jeffers

WEEKLY TIP

Need some business capital? Be aware that most banks and credit unions will want you to put 20% down as a condition of a loan. Lenders will probably also ask to see up to three years of your firm’s financial records.

WEEKLY RIDDLE

So gentle it soothes the skin, so forceful it cracks rocks, so light it serves as a mirror to the clouds. What could it be?

Last week’s riddle:

I have roads but no cars, forests but no trees, and cities but no people. What am I?

Last week’s answer:

A map.

FED RAISES RATES, PLOTS THREE 2017 HIKES

Federal Reserve policymakers unanimously chose to raise the benchmark interest rate by a quarter point last week. That was expected; less expected was the central bank’s adjustment to its 2017 dot-plot. Fed officials now see three rate hikes next year instead of two. The move to the new target range of 0.50-0.75% sent the dollar and bond yields higher Wednesday – the yield on the 2-year note quickly touched a peak unseen since August 2009. Stocks suffered only moderate losses after the announcement. Federal Open Market Committee members now forecast economic growth of 2.1% in 2017 and 2.0% in 2018.1

RETAIL SALES TICK UP, PRODUCER PRICES RISE

Economists, polled by Briefing.com, had expected a 0.4% October advance for retail purchases; the gain was only 0.1% instead, and 0.2% minus car and truck sales. The Producer Price Index rose 0.4% last month after a flat October; the core PPI also posted a 0.4% increase. Inflation pressure remained steady for the consumer: both the headline and core Consumer Price Index advanced 0.2% in November.2

HOUSING STARTS FALL FROM 9-YEAR PEAK

Groundbreaking declined 18.7% last month as winter arrived, with single-family starts down 4.1%. The Census Bureau also reported a 4.7% November decline in building permits.3

DOW ADVANCES, WHILE NASDAQ, S&P 500 RETREAT

A relatively calm trading week ended with the Dow Jones Industrial Average at 19,843.41, 0.44% higher than it had closed the previous Friday. Both the S&P 500 and Nasdaq Composite saw small weekly losses; the Nasdaq descended 0.13% to 5,437.16, while the S&P declined 0.06% to 2,258.07. Over on the NYMEX, light sweet crude settled at $51.94 a barrel Friday; gold at $1,135.60 an ounce.4

\THIS WEEK: Lennar announces Q4 results Monday. CarMax, Darden Restaurants, FedEx, General Mills, Nike, Steelcase, and Valspar all report earnings on Tuesday. Wednesday, investors assess the latest existing home sales numbers and earnings from Accenture, Bed Bath & Beyond, Finish Line, Micron Technology, Red Hat, and Winnebago. Thursday offers new initial claims data, reports on November consumer spending and durable goods orders, the November core PCE price index, the last estimate of Q3 GDP, and earnings from Cintas. Friday brings November new home sales figures and the final University of Michigan consumer sentiment index of 2016.

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+13.88
+11.80
+13.44
+5.94
NASDAQ
+8.58
+7.22
+22.55
+12.13
S&P 500
+10.48
+8.92
+17.03
+5.82
REAL YIELD
12/16 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.74%
0.84%
-0.05%
2.29%

Sources: wsj.com, bigcharts.com, treasury.gov – 12/16/164,5,6,7

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/2016/12/14/fed-raises-rates-for-the-second-time-in-a-decade.html [12/14/16]
2 – briefing.com/investor/calendars/economic/2016/12/12-16 [12/16/16]
3 – cnbc.com/2016/12/16/us-housing-starts-nov-2016.html [12/16/16]
4 – markets.wsj.com/us [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/16/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/16/16]