Weekly Economic Update – October 17, 2016

WEEKLY QUOTE

“Young is the one that plunges into the future and never looks back.” – Milan Kundera

WEEKLY TIP

If you are trying to rebuild or ramp up your retirement savings in your forties or fifties, avoid grasping at straws. Extremely speculative, high-risk investments are often hard to understand and may drastically underperform compared to their hype.

WEEKLY RIDDLE

I possess a single eye, yet I cannot see. I could, however, hurt you – even if I don’t move. What am I?

Last week’s riddle:

I have 6 faces, but I wear no makeup. I often roll around and bump into things. What am I?

Last week’s answer:

A die (singular of dice).

RETAIL SALES JUMP 0.6%

This September gain was impressive – minus auto sales, the advance was still 0.5%. In August, both headline and core retail sales fell 0.2%. While consumers bought more last month, they were less confident earlier this month – the University of Michigan’s initial October consumer sentiment index fell 3.3 points to 87.9.1

INTEREST RATES MAY SOON RISE

The minutes from September’s Federal Reserve policy meeting affirmed what some investors suspected. One, last month’s decision not to raise the federal funds rate was a “close call.” Two, the Federal Open Market Committee expects to make a move “relatively soon.” Last month, 74% of economists responding to a Wall Street Journal survey thought the central bank would raise rates in December.2

PRODUCER PRICE INDEX UP 0.3%

A 2.5% advance in energy prices became the biggest factor in September’s PPI gain. The headline PPI rose 0.7% in the 12 months ending in September.3

STOCKS PULL BACK AS EARNINGS SEASON BEGINS

During five choppy trading days last week, the Dow Jones Industrial Average retreated 0.56% to 18,138.38; the S&P 500, 0.96% to 2,132.98; and the Nasdaq Composite, 1.48% to 5,214.16. The CBOE Volatility Index closed at 16.00 Friday, up 18.69% for the week.4

THIS WEEK: Monday, Wall Street looks at earnings from Bank of America, Celanese, Del Taco, Hasbro, IBM, J.B. Hunt, Lennox International, and Netflix, plus numbers on September industrial output. On Tuesday, BlackRock, Domino’s Pizza, Goldman Sachs, Harley-Davidson, Intel, Johnson & Johnson, Philip Morris, Yahoo!, Regions Financial, UnitedHealth, and W.W. Grainger join the earnings parade, and the September CPI arrives. Abbott Labs, American Express, BB&T, Citrix, eBay, Mattel, Halliburton, Morgan Stanley, Northern Trust, Seagate, St. Jude Medical, SuperValu, U.S. Bancorp, and United Rentals all report earnings Wednesday; investors will also consider September data on housing starts and building permits, and a new Federal Reserve Beige Book. Thursday offers earnings from Alaska Air, American Airlines, BoNY Mellon, Dunkin’ Brands, E*TRADE, Fifth Third, IMAX, Invacare, Microsoft, Nucor, PayPal, PulteGroup, Quest Diagnostics, Schlumberger, Union Pacific, Verizon, and Walgreens Boots Alliance; reports on initial jobless claims and September existing home sales also appear. Friday, the key earnings reports come from General Electric, Honeywell International, McDonalds, Parker Hannifin, SunTrust, and Whirlpool.

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+4.09
+7.17
+11.15
+5.17
NASDAQ
+4.13
+9.02
+19.09
+12.12
S&P 500
+4.36
+6.96
+14.84
+5.62
REAL YIELD
10/14 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.13%
0.50%
0.28%
2.47%

Sources: wsj.com, bigcharts.com, treasury.gov – 10/14/164,5,6,7

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

The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have receivedthis message in error, please immediately delete.

P.S. You have my permission to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

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 – marketwatch.com/economy-politics/calendars/economic [10/14/16]
2 – tinyurl.com/hhanz42 [10/12/16]
3 – foxbusiness.com/markets/2016/10/14/september-producer-prices-rise-more-than-expected.html [10/14/16]
4 – markets.wsj.com/us [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F14%2F15&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F14%2F15&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F14%2F15&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F14%2F11&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F14%2F11&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F14%2F11&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F13%2F06&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F13%2F06&x=0&y=0 [10/14/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F13%2F06&x=0&y=0 [10/14/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/14/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/14/16]