Weekly Economic Update – July 18, 2016

WEEKLY QUOTE

“The only way most people recognize their limits is by trespassing on them.” – Tom Morris

WEEKLY TIP

Young adults who consider debt consolidation should weigh the pros and cons of the idea. Lower monthly payments might free up more cash for saving and investing. Extending a credit card balance for decades, though, may cost a borrower much more in the long run.

WEEKLY RIDDLE

Can you name three consecutive days without using the words Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, or Sunday?

Last week’s riddle:

At times I’m high and low, I never fly but I can rise, and I can creep between your toes. What am I?

Last week’s answer:

The tide.

TWO SIGNS OF A STRONGER ECONOMY

Retail sales improved 0.6% in June, according to the Commerce Department, and the core gain was 0.7% with auto buying and home improvement purchases factored out. Industrial production rose 0.6% in June, making up for a 0.3% May loss. Both indicators could be taken as hints of solid second-quarter growth.1

CORE INFLATION IS OUTPACING HEADLINE INFLATION

In the year ending in June, the headline Consumer Price Index increased just 1.0%. According to the Department of Labor, the average 12-month gain in the past decade is 1.7%. The yearly gain in the core CPI, however, was 2.3% in June; it has averaged 1.9% in the past 10 years. June also saw a 0.5% gain for the Producer Price Index.1,2

SENTIMENT INDEX FALLS 4 POINTS

The drop in the University of Michigan’s monthly consumer sentiment index seemed to reflect anxiety over the Brexit vote; 24% of households with upper-tier incomes cited it in their survey responses. The preliminary July edition of the index came in at 89.5, down from the final June mark of 93.5. Economists polled by MarketWatch had anticipated a 92.5 reading.3

MAJOR INDICES KEEP CLIMBING

Less than a month after the Brexit vote disrupted global markets, both the Dow and S&P 500 reached historic peaks. Across five trading days, the Dow rose 2.04% to a new record close of 18,516.55. The S&P 500 and Nasdaq, respectively, advanced 1.49% and 1.47% for the week to Friday settlements of 2,161.74 and 5,029.59. The S&P closed at four straight all-time highs Monday through Thursday.4,5

THIS WEEK: Bank of America, Charles Schwab, Hasbro, IBM, J.B. Hunt, Netflix, and Yahoo! all present earnings Monday. Tuesday, investors will review June housing starts and building permits and earnings from Discover, Goldman Sachs, Johnson & Johnson, Lockheed Martin, Microsoft, Philip Morris International, Regions Financial, TD Ameritrade, United Continental Holdings, and UnitedHealth. Wednesday, earnings emerge fromAbbott Labs, American Express, eBay, Halliburton, IMAX, Intel, Mattel, Morgan Stanley, Newmont Mining, Qualcomm, Raymond James, St. Jude Medical, and United Rentals. Thursday, Wall Street looks at June existing home sales plus earnings from Alaska Air, AT&T, BONY Mellon, Biogen, Boise Cascade, Chipotle, DISH Network, Domino’s, Dunkin’ Brands, E*TRADE, General Motors, PayPal, Quest Diagnostics, Sherwin-Williams, Skechers, Southwest Airlines, Starbucks, Travelers, Union Pacific, and VISA. American Airlines, GE, Honeywell International, and Whirlpool report earnings Friday.

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+6.26
+2.58
+9.67
+7.24
NASDAQ
+0.44
-1.36
+16.06
+14.69
S&P 500
+5.76
+2.58
+12.85
+7.49
REAL YIELD
7/15 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.11%
0.52%
0.61%
2.50%

Sources: wsj.com, bigcharts.com, treasury.gov – 7/15/164,6,7,8

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 – investing.com/economic-calendar/ [7/15/16]
2 – cnbc.com/2016/07/15/us-consumer-price-index-june-2016.html [7/15/16]
3 – marketwatch.com/story/rich-americans-say-they-were-rattled-by-brexit-driving-consumer-sentiment-lower-in-july-2016-07-15/ [7/15/16]
4 – markets.wsj.com/us [7/15/16]
5 – usatoday.com/story/money/markets/2016/07/15/stocks-dow-friday/87121654/ [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F15%2F15&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F15%2F15&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F15%2F15&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F15%2F11&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F15%2F11&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F15%2F11&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F14%2F06&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F14%2F06&x=0&y=0 [7/15/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F14%2F06&x=0&y=0 [7/15/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/15/16]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/15/16]