Weekly Economic Update – October 5, 2015

WEEKLY QUOTE
“Character is much easier kept than recovered.”
– Thomas Paine

WEEKLY TIP
Maintain an emergency fund in retirement. It can help you in a crisis. It can be tapped if income taxes from your RMDs turn out to be higher than anticipated. It could also help you avoid drawing down your tax-advantaged accounts to meet unplanned expenses.

WEEKLY RIDDLE
What wintry thing flies as it is born, lies when alive, and runs when dead?

Last week’s riddle:
Take a letter out of it, and it stays put and the same; remove all the letters from it and it still stays put and stays the same. What is it?

Last week’s answer:
A mailbox.

142,000 NEW JOBS CREATED IN SEPTEMBER

Is a global slowdown impacting the U.S. economy? The latest Labor Department jobs report seemed to say yes. Hiring last month fell far short of the 200,000 total projected by economists in a MarketWatch survey. Moreover, job gains across July and August were revised down by 59,000.There was some good news – the U-6 (underemployment) rate declined 0.3% to 10.0%. The headline jobless rate stayed at 5.1%. After the report’s release, just 2% of futures investors on the Chicago Mercantile Exchange felt the Federal Reserve would raise interest rates in October; only 29% thought the Fed would do so in December.1,2

CONSUMER SPENDING, CONFIDENCE BOTH RISE

Good news from the Commerce Department – August brought an 0.4% rise in personal spending and an 0.3% rise in personal wages. A day later, another encouraging number arrived from Main Street – the Conference Board’s consumer confidence index rose 1.5 points in September to 103.0.2

ISM MANUFACTURING PMI SINKS TO 50.2

As 50 is the Institute for Supply Management’s line between sector growth and contraction, the September reading for this globally watched factory index was troubling. In another disconcerting development, the Commerce Department said factory orders declined 1.7% in August.2

PENDING HOME SALES INDEX SLIPS

The National Association of Realtors announced a 1.4% reduction in the number of home sale contracts in September. That followed a 0.5% increase in August. July’s edition of the S&P/Case-Shiller home price index showed an overall 5.0% yearly advance, ticking up from 4.9% in the June edition.2

INVESTORS SEE LESS CAUSE FOR FED TO TIGHTEN

The subpar job report spurred a rally, and so the S&P 500 ended up 1.04% higher for the week, closing Friday at 1,951.36. The Dow and Nasdaq settled Friday at 16,472.37 and 4,707.78 after respective weekly gains of 0.97% and 0.45%.3

THIS WEEK: ISM’s service sector Purchasing Managers Index appears Monday, along with quarterly results from The Container Store. PepsiCo and Yum! Brands report earnings on Tuesday. Wednesday offers earnings from Constellation Brands and Monsanto. Minutes from the Federal Reserve’s September policy meeting arrive Thursday, along with initial jobless claims numbers and earnings from Alcoa, Domino’s and Ruby Tuesday. Nothing major is slated for Friday.

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
-7.58
-1.96
+10.42
+5.64
NASDAQ
-0.60
+6.27
+19.72
+11.84
S&P 500
-5.22
+0.27
+14.05
+5.90
REAL YIELD
10/2 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
0.51%
0.49%
0.75%
1.84%

Sources: wsj.com, bigcharts.com, treasury.gov – 10/2/154,5,6,7

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

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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Disclosure

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 – forbes.com/sites/samanthasharf/2015/10/02/jobs-report-u-s-added-142000-jobs-in-september-unemployment-rate-steady-at-5-1/ [10/2/15]
2 – marketwatch.com/economy-politics/calendars/economic [10/2/15]
3 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [10/2/15]
4 – markets.wsj.com/us [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F2%2F14&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F2%2F14&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F2%2F14&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F1%2F10&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F1%2F10&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F1%2F10&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F3%2F05&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F3%2F05&x=0&y=0 [10/2/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F3%2F05&x=0&y=0 [10/2/15]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/2/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/2/15]