Weekly Economic Update – June 22, 2015

WEEKLY QUOTE
“Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful.”
– Samuel Johnson

WEEKLY TIP
June is a time to assess your 2015 financial objectives. In terms of debt reduction, retirement saving and portfolio performance, are you on pace toward your yearly goals?

WEEKLY RIDDLE
What falls yet does not make noise?

Last week’s riddle:
I am the beginning of sorrow, and the end of sickness. You cannot express happiness without me, yet I am always in risk. I am never in danger, though. What am I?

Last week’s answer:
The letter S.

WILL THE FED MAKE A MOVE IN THE FALL?

The Federal Reserve left interest rates alone last week, but its median federal funds rate forecast for the end of 2015 is now at 0.625%. That would seem to suggest multiple adjustments to the key interest rate in the last half of this year, but Fed chair Janet Yellen noted last week that the central bank is looking for “more decisive evidence that a moderate pace of economic growth will be sustained” before making any move. The Fed now projects 2015 Gross Domestic Product at only 1.8-2.0%, down from a range of 2.3-2.7% this spring. Futures markets point to the Fed raising interest rates from historic lows in December, though many economists think the incremental tightening will start in September.1

CPI UP 0.4% IN MAY, BUT INFLATION STILL MUTED

Gas prices soared 10.4% last month, prompting a notable rise in the headline Consumer Price Index. The Federal Reserve might not be too concerned with that one-month advance, however. The core CPI (which strips out energy and food prices) was up only 0.1% for May and just 1.7% year-over-year.2

HOUSING STARTS DOWN, BUILDING PERMITS UP

These volatile indicators moved in drastically opposite directions in May. According to the Census Bureau, building permits rose 11.8% last month to an 8-year peak while groundbreaking declined 11.1%. Starts were up 5.1% and permits up 25.4% from May 2014.3

STOCKS ADVANCE

Rising 1.30% to 5,117.00, the NASDAQ Composite outpaced the S&P 500 and Dow Jones Industrial Average last week. The blue chips added 0.65% in five days to reach 18,015.95 and the S&P 500 rose 0.76% for the week to a Friday settlement of 2,109.99.4

THIS WEEK: On Monday, the National Association of Realtors presents May existing home sales figures and Sonic and Carnival announce Q2 results. Tuesday, May durable goods and new home sales reports arrive. The final estimate of Q1 GDP appears on Wednesday along with earnings from Nike, Lennar, Winnebago, Steelcase, Bed Bath & Beyond and Monsanto. Thursday, Wall Street evaluates May personal spending numbers, a new initial claims report and earnings from Accenture and Barnes & Noble. Friday brings the University of Michigan’s final June consumersentimentindex.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+1.08

+6.47

+14.48

+6.98

NASDAQ

+8.04

+17.38

+24.31

+14.51

S&P 500

+2.48

+7.68

+17.76

+7.35

REAL YIELD

6/19 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.40%

0.39%

1.25%

1.74%

Sources: wsj.com, bigcharts.com, treasury.gov – 6/19/155,6,7,8

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

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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DISCLOSURES

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 – washingtonpost.com/blogs/wonkblog/wp/2015/06/17/federal-reserve-rate-hike-likely-before-year-end/ [6/17/15]

2 – marketwatch.com/story/jump-in-us-consumer-prices-in-may-biggest-since-2013-2015-06-18 [6/18/15]

3 – tradingeconomics.com/united-states/housing-starts [6/16/15]

4 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [6/19/15]

5 – markets.wsj.com/us [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F19%2F14&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F19%2F14&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F19%2F14&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F18%2F10&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F18%2F10&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F18%2F10&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F20%2F05&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F20%2F05&x=0&y=0 [6/19/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F20%2F05&x=0&y=0 [6/19/15]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/19/15]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/19/15]