Weekly Economic Update – July 5, 2016

WEEKLY QUOTE

“Not the power to remember, but its very opposite, the power to forget, is a necessary condition for our existence.” – Sholem Asch

WEEKLY TIP

How large should an emergency fund be? Large enough to cover at least three months of expenses in cash. In fact, building your emergency fund to twice that size is a worthy goal.

WEEKLY RIDDLE

How can you make a sofa, a motorcycle, and a tent liquid?

Last week’s riddle:

When is L greater than XL?

Last week’s answer:

When it is a Roman numeral.

SOLID GAINS IN CONSUMER SPENDING, CONFIDENCE

Personal spending rose 0.4% in May, according to the Department of Commerce, complemented by a 0.2% advance for personal incomes. April’s consumer spending increase was revised up to 1.1%. The Conference Board’s monthly consumer confidence index also improved in June, heading north 5.6 points to a reading of 98.0.1

BEST ISM MANUFACTURING PMI IN 16 MONTHS

The factory purchasing manager index, maintained by the Institute for Supply Management, reached 53.2 in June, a gain of 1.9 points to its highest reading since February 2015. As recently as February of this year, the PMI was below the 50 level, demarcating growth from contraction. In other news concerning economic output, the federal government revised Q1 GDP up 0.3% to a final estimate of 1.1% last week.1,2

HOUSING CONTRACT ACTIVITY SLOWS

The National Association of Realtors reported a dip in pending home sales: they declined 3.7% in May. Turning to other housing news, the 20-city composite Case-Shiller home price index showed a 5.4% annualized gain in its April edition, ticking down from 5.5% in March.1

STOCKS REBOUND IMPRESSIVELY

Recovering in the wake of the Brexit vote, Wall Street had its best week of 2016. In fact, the S&P 500 recorded its best week since last November, adding 3.22% in five trading days to take the index positive year-over-year. The Dow Jones Industrial Average advanced 3.15% for the week; the Nasdaq Composite, 3.28%. The big three settled Friday as follows: DJIA, 17,949.37; NASDAQ, 4,862.57; S&P, 2,102.95. Gold futures closed Friday at $1,339.00 on the COMEX. Light sweet crude ended the trading week at $48.99 on the NYMEX.3

THIS WEEK: Monday is Independence Day: Wall Street is closed for trading. Nothing major is slated for Tuesday.ISM’s service sector PMI arrives Wednesday, along with minutes from the June Federal Reserve policy meeting and earnings from Walgreens Boots Alliance. Thursday, the June Challenger job-cut report and June ADP employment report both appear; plus, earnings from Barracuda Networks, PepsiCo, and WD-40. Friday, the Department of Labor issues its latest jobs report.

Sources: wsj.com, bigcharts.com, treasury.gov – 7/1/16^4,5,6,7

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 – investing.com/economic-calendar/ [7/1/16]
2 – instituteforsupplymanagement.org/ismreport/mfgrob.cfm [7/1/16]
3 – cnbc.com/2016/07/01/us-markets.html [7/1/16]
4 – markets.wsj.com/us [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F1%2F15&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F1%2F15&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F1%2F15&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F1%2F11&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F1%2F11&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F1%2F11&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F30%2F06&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F30%2F06&x=0&y=0 [7/1/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F30%2F06&x=0&y=0 [7/1/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/1/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/1/16]