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Weekly Newsletter

August 14, 2017 – Weekly American Wealth Review 

By | Weekly Newsletter

Weekly Letter

In recent weeks, the Trump administration has become increasingly outspoken about North Korea’s advances in nuclear weapons technology, setting a clear shift away from the prior policy described as “strategic patience.” Both U.S. and foreign stocks were under pressure last week as tensions between North Korea and the U.S. rose.

Though investor fears spiked last Thursday, following a volley of words between the Trump Administration and North Korean leadership, those fears subsided over the weekend, as other countries, such as China, have stepped up to apply additional pressure on North Korea. Between last Friday and Monday of this week, the major market averages have recovered most of last Thursday’s losses, as investors continue to buy the dips.

With congress on vacation for the month of August and daily trading volume seasonally below average, we don’t expect the major averages to do much more this month than hold onto their gains.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

TAME INFLATION PERSISTS

Can the Federal Reserve justify another interest rate hike in the second half of 2017? Given weak inflation pressure, maybe not. The central bank has set a 2% yearly inflation target, but the Consumer Price Index rose only 0.1% in July, resulting in a 1.7% year-over-year gain. Core consumer prices rose 0.1% for a fourth consecutive month in July, so annualized core inflation was also at 1.7%. The Producer Price Index fell 0.1% last month; analysts polled by Briefing.com expected a 0.2% rise.1,2
ANALYSIS: EARNINGS GROW AT A 10% PACE
More than 90% of companies in the S&P 500 have now reported second-quarter results. FactSet, the respected financial analytics firm, now projects a blended earnings growth rate of 10.2% for the S&P 500 for the second quarter, along a with 5.1% blended sales growth rate. S&P component firms generating less than 50% of their sales outside the U.S., however, are set to record 14.0% blended earnings growth and 6.0% blended revenue growth.3

THE PRICE OF GOLD RISES

At Friday’s close, the yellow metal hit a 2-month high of $1,294.00 on the COMEX as investors looked away from equities. Gold gained 2.3% on the week.4

TURBULENCE FOR WALL STREET

Diplomatic tensions sent stocks lower last week. Across August 7-11, the Dow Jones Industrial Average declined 1.06% to 21,858.32; the S&P 500, 1.43% to 2,441.32; the Nasdaq Composite, 1.50% to 6,256.56. Volatility certainly came back: the CBOE VIX jumped 53.44% to end the week at 15.39.5

THIS WEEK

On Monday, Cumulus Media and Sysco report quarterly results. Tuesday brings July retail sales numbers and earnings from Advance Auto Parts, Agilent, Coach, Dick’s Sporting Goods, Home Depot, TJX, and Urban Outfitters. On Wednesday, minutes from the July Federal Reserve policy meeting appear; Wall Street will also interpret a report on July housing starts and building permits and earnings news from Cisco, L Brands, NetApp, Stein Mart, and Target. Fresh reports on initial jobless claims and industrial production roll in Thursday, complemented by earnings from Alibaba Group, America’s Car-Mart, Applied Materials, Bon-Ton Stores, Gap, Ross Stores, Sportsman’s Warehouse, Stage Stores, and Walmart. Friday, investors consider earnings from Deere & Co. and Estee Lauder and the preliminary August consumer sentiment index from the University of Michigan.

August 7, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

For the first week of August, the stock market muddled along with investors generally showing a lack of enthusiasm to push prices up or down. Though financial stocks enjoyed a brief flurry of buying early in the week, even that fizzled out as inflation fears subsided. Except for Thursday, trading volume on the New York Stocks Exchange was below the daily average over the past year, an indication that investors are sitting on their hands for now.

Unless you have been traveling outside the U.S. lately, you may not have noticed that the U.S. dollar has been in decline since the start of the year. Weakness in the dollar has given a boost to foreign stocks so far this year, but that tide may be turning, at least for now. The U.S. dollar has recently found support at its two-year low and should attempt to rally, even if the dollar resumes its decline later this year.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

LATEST JOBS REPORT BRINGS GOOD NEWS

U.S. payrolls swelled with 209,000 net new workers in July, according to the Department of Labor. That beat the 183,000 estimate by analysts surveyed by Reuters. About 53,000 of the hires were at restaurants and bars, with another 49,000 in the professional and business services category. While yearly wage growth remained at 2.5%, the headline jobless rate ticked back down to 4.3%. The U-6 rate (which includes the underemployed) stayed at 8.6%.1

A MEAGER GAIN IN CONSUMER SPENDING

The 0.1% June advance reported by the Department of Commerce matched the (low) expectations of economists surveyed by MarketWatch. Consumer incomes were flat in June; the same group of forecasters thought they would improve 0.3%. Personal spending had increased 0.2% in May, with income up 0.3%.2

ISM & PMI SHOW CONTINUED BUSINESS GROWTH

In June, both purchasing manager indices at the Institute for Supply Management were above 57. Their July readings were lower, but still indicated significant sector expansion as both numbers were well above 50. The manufacturing PMI fell 1.5 points to 56.3, and the service sector PMI dropped 3.5 points to a mark of 53.9.3

BLUE CHIPS TOP 22,000

In a mixed week for the major Wall Street indices, the Dow Jones Industrial Average seized the headlines. It reached a new milestone, thanks to its 5-day advance of 1.20%, settling Friday at 22,092.81. The S&P 500 finished the week at 2,476.83, adding 0.19%; the Nasdaq Composite fell 0.36% to settle at 6,351.56 Friday.4

THIS WEEK

Avis Budget Group, CBS, Marriott International, and Tyson Foods post earnings Monday. Andeavor, CVS Health, Dean Foods, Discovery Communications, GoDaddy, Green Dot, Hertz Global, Hostess Brands, Icahn Enterprises, Lions Gate, Michael Kors, Monster Beverage, Norwegian Cruise Line, Priceline, Ralph Lauren, Sunoco, TripAdvisor, Valeant Pharmaceuticals, Vivint Solar, and Walt Disney Co. present earnings news on Tuesday. Crocs, Kelly Services, Live Nation, Office Depot, Planet Fitness, Real Goods Solar, Starwood Hotels & Resorts, 21st Century Fox, Weibo, and Wendy’s offer earnings Wednesday. On Thursday, the July PPI and a new initial claims report arrive, plus earnings from Blue Apron, Brinker International, Camping World, Kohl’s, Macy’s, Nordstrom, Nvidia, and Snap. On Friday, the July CPI appears, and JC Penney reports Q2 results.

July 31, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Stocks were little changed last week as investors followed two major headlines. First was the FOMC meeting where the Federal Reserve held rates unchanged, as many had expected, leaving the funds target range set at 1.00 to 1.25 percent. As part of the Fed announcement, investors were hoping for “hints” on when the Fed would start unwinding its $4.5 trillion balance sheet. However, the most they got was “relatively soon,” which some are interpreting to mean either September or December. The reason why this matters to bond investors is that the removal of dollars form the bond market would mean a cut in demand for bonds which could begin to move interest rates higher. Second, was the Senate vote to repeal and replace Obamacare which so far has failed to pass. Healthcare stocks declined slightly into the vote and continued lower the remainder of the week, as investors cast their doubts on congress’ ability to fix the current problems in healthcare.

As we begin the month of August, we don’t expect much from Wall Street. Like most Americans Wall Street’s employees are still trying to get their last few days of vacation in before school starts, which typically results in lower trading volume this time of year. Of course, there are still several large companies yet to release their earnings in the coming week, and we certainly don’t want to count out their ability to give the market a boost.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HOUSEHOLDS ARE FEELING OPTIMISTIC

Unemployment is at a 16-year low, and the Conference Board’s consumer confidence index is near a 16-year high. It reached 121.1 in July, rising 3.8 points; analysts polled by MarketWatch expected a reading of 116.9. The University of Michigan’s consumer sentiment index rose to 93.4.1,2

HAVE HOME SALES REACHED A PLATEAU?

Last week, the National Association of Realtors announced a 1.8% June retreat for existing home sales. New home buying only advanced 0.8% for June by Census Bureau calculations. Analysts point to tight supply limiting resales and a scarcity of affordably priced new developments discouraging new home shoppers.3

GROWTH PICKED UP IN THE SECOND QUARTER

According to the Bureau of Economic Analysis, the economy expanded at an annual rate of 2.6% in Q2, with the yearly personal spending rate at 2.8%. As it presented its Q2 estimate, the BEA also revised Q1 consumer spending up from 1.1% to 1.9%.2

THE DOW LEADS THE WAY ON WALL STREET

Ascending 1.16% in five days, the Dow Industrials closed at 21,830.24 Friday. In contrast, both the S&P 500 and Nasdaq Composite staged minor weekly retreats. The S&P declined 0.02% to 2,472.08; the Nasdaq, 0.20% to 6,374.68.4

THIS WEEK

On Monday, NAR releases its June pending home sales index, and CNA Financial, Loews Corp., Pandora Media, and Papa John’s announce earnings. Tuesday offers earnings from Allstate, Apple, Archer Daniels Midland, Beazer Homes, Big 5 Sporting Goods, Cummins, Denny’s, Extended Stay America, HanesBrands, Herbalife, Pfizer, Phillips 66, Pitney Bowes, Sprint, Under Armour, Unisys, and Xerox, plus June consumer spending figures and ISM’s July factory PMI. A new ADP payrolls report appears Wednesday, along with earnings news from AmeriGas, AutoNation, Choice Hotels, Container Store, Cumulus Media, Energizer Holdings, Exelon, Fitbit, Garmin, Groupon, Humana, Icahn Enterprises, Marathon Oil, Square, Symantec, Take Two Interactive, Tesla, Time Warner, Transocean, and Vulcan Materials. On Thursday, investors review earnings from AMC Networks, Activision Blizzard, Aetna, Allergan, Avon, Berkshire Hathaway, Callaway Golf, Chesapeake Energy, Duke Energy, Fluor, GoPro, Hyatt, iHeartMedia, Kellogg, Kraft Heinz, Motorola, Noble Energy, Parker-Hannifin, RE/MAX Holdings, Shake Shack, TiVo, Viacom, Western Union, Wingstop, Wyndham Worldwide, Yelp, and Yum! Brands, plus new initial claims numbers and ISM’s July services PMI. The Department of Labor’s latest jobs report arrives Friday, along with earnings from Cigna, ITT, Revlon, and Sempra Energy.

July 24, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

By now you may have received your quarterly statement and noticed our new quarterly reports. We hope you find our new reports more informative and easier to read. Due to the new format, some clients have asked whether there has been a change to our billing procedures. We wanted to let you know that there are no changes to our procedures, and we will include a short sentence in future quarterly reports for more clarity.

The stock market maintained its resiliency over the past week, as corporate earnings continued to roll out with generally better than expected results. Though large cap growth companies have reasserted their dominance over the past week, they no longer appear to be singing a solo, as they were just a few weeks ago. Recently, large cap growth stocks have been joined by a chorus of other areas of the stock market that have been making new highs, that includes smaller companies. This is a good sign for the stock market in the short term, but we are not yet out of the woods.

On Wednesday of this week, the FOMC will consider whether to raise short term interest rates. The majority of analysts do not expect the Fed will raise interest rates at this time, though, further hikes are expected later this year. This lack of concern for rising interest rates can be seen in the bond market where rates remained in the same range they have been in over the past six years. Increasing employee wages are believed to be one of the leading indicators of rising inflation, but so far this has not materialized.

Though we are currently in the summer months when many on Wall Street are on vacation, and stock prices usually drift sideways, we are encouraged by both the corporate earnings results, so far this season, along with investor’s buying the dips.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

WILL STOCKS GET AN EARNINGS BOOST?

While the first full week of the Q2 earnings season saw no pronounced rallies, there were also no shocks. By Friday’s closing bell, 20% of S&P 500 member firms had reported calendar Q2 results, and a FactSet analysis showed 77% had topped sales projections and 73% had beaten earnings-per-share forecasts – a good sign in an earnings-driven market climate. The Nasdaq Composite gained 1.19% last week and settled at 6,387.75 Friday; the S&P 500 rose to 2,472.54 after a 5-day gain of 0.54%. As blue chips fell 0.27% across five trading days, the Dow Jones Industrial Average closed at 21,580.07 Friday. All three indices hit record highs during the week.1,2

CONSTRUCTION ACTIVITY SURGED IN JUNE

According to a new Census Bureau report, housing starts rose 8.3% last month, while building permits were up 7.4%. That counteracts the 2.8% fall for starts and the 4.9% drop for permits in May.3

GOLD TOPS $1,250

Settling at $1,254.90 Friday, the yellow metal hit its highest COMEX close since June 23, up 2.2% in five days. Silver rose 3.3% last week to a Friday close of $16.46.4

THIS WEEK

On Monday, Alphabet, Anadarko Petroleum, Celanese, Halliburton, Hasbro, and Stanley Black & Decker present earnings, and Wall Street also considers June existing home sales numbers. Tuesday offers a new Conference Board consumer confidence index and earnings from 3M, AT&T, Ameriprise Financial, Amgen, Biogen, Caterpillar, Chipotle, Chubb, Domino’s, Eli Lilly, Express Scripts, Freeport-McMoRan, General Motors, JetBlue, McDonald’s, Mondelez, PulteGroup, Quest Diagnostics, Smart & Final, Supervalu, Texas Instruments, U.S. Steel, and Universal Health. The Federal Reserve makes a policy statement Wednesday; investors will also look at June new home sales data and earnings from Anthem, Boeing, Coca-Cola, Corning, D.R. Horton, Discover, Facebook, Ford Motor Co., General Dynamics, Gilead Sciences, Hilton Worldwide, Ingersoll-Rand, O’Reilly, PayPal, Public Storage, Rent-A-Center, Rockwell Automation, Ryder System, State Street, Waste Management, West Marine, Whirlpool, and Whole Foods. Data on initial claims and June hard goods orders appears Thursday, plus earnings from Aflac, Ally Financial, Altria Group, Amazon, Baidu, Bristol-Myers Squibb, ConocoPhillips, Dow Chemical, Dr. Pepper Snapple, Dunkin’ Brands, Edison International, Expedia, Intel, Procter & Gamble, Raytheon, Revlon, Southwest Airlines, Spirit Airlines, Starbucks, Twitter, UPS, Valero Energy, Verizon, W.R. Grace, and Xerox. July’s final University of Michigan consumer sentiment index and the first Q2 GDP estimate appear Friday, plus earnings from American Airlines, Chevron, ExxonMobil, Magellan Health, and Merck.

July 17, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Investors were in a good mood last week as the bulls wrestled back control of the stock market, lifting some of the major market averages to new closing highs. For the first time in a few weeks, a broad-based advance has continued over more than a couple of days, opening the door for small-cap stocks to reassert a leadership role. Historically, the stock market performs best when small companies are leading, something we haven’t seen since January of this year.

This past week, Federal Reserve President, Janet Yellen, gave her semiannual monetary policy statement before the House Financial Services Committee. There were no major policy revelations, with her testimony comprised primarily of direction from recent FOMC statements. This included how rate hikes would continue at a gradual pace over the coming years, and that tapering of the Fed’s balance sheet will begin sometime this year. She also commented on inflation being held down by unexpected factors to include cell phones, drugs, and gasoline. The Fed believes that eventually inflation will rise, due to our current high level of employment. She also noted that the global economy has improved.

This week 70 of the S&P 500’s largest companies will disclose their earnings for the second quarter. Not only will this give investors a glimpse at each corporation’s individual profits, but will begin to paint a broader picture of the strength of the U.S. economy. With Washington focused on healthcare reform the next couple of weeks, Wall Street will be focused on earnings.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

INFLATION PRESSURE WEAKENS

The Consumer Price Index was unchanged in June, according to the Bureau of Labor Statistics. That left its yearly advance at only 1.6%, nearly half a point below the Federal Reserve’s target (the core CPI was up 1.7%). After the announcement, some economists and market strategists wondered whether the Fed would rethink its plans for a third interest rate hike in 2017. The Producer Price Index rose 0.1% in June, leaving its yearly increase at 2.0%.1,2

RETAIL SALES, CONSUMER SENTIMENT INDEX DECLINE

For the second month in a row, households scaled back their retail purchases – retail sales were down 0.2% in June following a 0.1% May decline. Core sales fell 0.2% after a May retreat of 0.3%. The University of Michigan’s preliminary July consumer sentiment index lost 2.0 points off its final June mark to a reading of 93.1.1,2

OIL RALLIES

A projection of rising demand and news of a pipeline shutdown in Nigeria sent the price of light sweet crude 5.2% higher in a week. WTI crude settled at $46.54 on the NYMEX Friday, its best close since July 3.3

DOW ENTERS RECORD TERRITORY AGAIN

Friday, the Dow 30 notched its third straight record close: 21,637.74. At the same time, the S&P 500 also settled at a new record of 2,459.27. The Nasdaq Composite finished Friday’s market day at 6,312.47, a half-percent away from its all-time peak. For the week, the Dow rose 1.04%; the S&P, 1.41%; the Nasdaq, 2.59%.4,5

THIS WEEK

Monday’s earnings parade includes announcements from BlackRock, Charles Schwab, J.B. Hunt, and Netflix. On Tuesday, Wall Street examines earnings from Bank of America, CSX, Comerica, Goldman Sachs, Harley-Davidson, IBM, Johnson & Johnson, Lockheed Martin, TD Ameritrade, and UnitedHealth Group. Wednesday sees data on June housing starts and building permits, plus earnings from American Express, Fidelity National Financial, Morgan Stanley, Northern Trust, Qualcomm, T-Mobile, U.S. Bancorp, United Rentals, and W.W. Grainger. A new weekly initial claims report arrives Thursday, plus earnings news from Abbott Labs, Alliance Data Systems, American Airlines Group, BB&T, BoNY Mellon, Capital One, Cintas, eBay, E*TRADE, GATX, KeyCorp, Microsoft, NCR, Nucor, Philip Morris, Sherwin-Williams, Skechers, Snap-On, Travelers Companies, Union Pacific, Visa, and Whirlpool. On Friday, Colgate-Palmolive, Fifth Third Bancorp, General Electric, Honeywell International, Regions Financial, Schlumberger, and SunTrust Banks present earnings.

July 10, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

This past week investors appeared to be suffering either from a post 4th of July holiday hangover or the beginning of the summer doldrums, with U.S. stocks little changed over the shortened trading week. However, even with just three and a half days of trading, there was plenty of economic data for investors to digest.

Some of the positive economic reports for June included manufacturing and employment. For the month of June, the ISM manufacturing report leaped almost 3 points to 57.8, the strongest report since August 2014. Any reading of 50 or above indicates an expansion in the economy. Some of the highlights of the report included strong readings in new orders, production and backlog orders. The recent acceleration in this report, and others, points to a potential surge in the manufacturing sector in the second half of the year. So far, evidence of a surge has yet to show up in government data.

For the month of June non-farm payrolls rose by 222,000 jobs, well above expectations, while Mays’ payroll report was revised higher by 14,000 jobs to 152,000. Though the growth in jobs is positive for the economy, it is not having the desired effect on wages which have only risen a mere 2.5 percent over the past twelve months. This means that the job growth over the past year has been primarily low wage, low productivity jobs. Higher wages are necessary to boost inflation, which at the moment has yet to improve much.

Beginning this week, investors will be focusing on second quarter earnings reports. So far this year, technology stocks have lead the major market averages higher. Of note, in recent weeks investors have begun taking some of their profits in the technology sector off the table, possibly concerned that some technology shares have come too far too fast. This rotation in the market may provide an opportunity for the healthcare sector to take the lead over the next six months, particularly if Congress can agree upon a health care reform bill.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HIRING PICKS UP AGAIN

The Department of Labor announced some good news Friday: the creation of 222,000 net new jobs in June, the largest hiring gain in four months. Approximately 4.7 million people reentered the labor force and found work in June, a peak unmatched in 27 years of monthly data. Wages rose 0.2% for an annualized gain of 2.5%. The main unemployment rate ticked north to 4.4% as more Americans joined the job hunt; the U-6 rate, including the underemployed, increased 0.2% to 8.6%, its first rise since January.1

ISM FACTORY PMI HITS 3-YEAR PEAK

In June, the Institute for Supply Management’s globally watched manufacturing purchasing manager index improved 2.9 points to 57.8, its highest reading since August 2014. ISM’s non-manufacturing PMI rose to 57.4 after a half-point gain; its June reading signaled the 90th straight month of expansion for the country’s service sector.2,3

GOLD SETTLES AT ITS LOWEST PRICE SINCE MARCH

The yellow metal fell to a COMEX close of $1,209.70 Friday. It is now on a 5-week losing streak. The price of gold sank 2.6% last week, while the price of silver dropped 6.9%; silver ended the week down at $15.43.4

MAJOR INDICES MAKE SMALL WEEKLY GAINS

Across a stretch of choppy trading days, the S&P 500 added just 0.07% to close at 2,425.18 Friday. The Nasdaq Composite and Dow Jones Industrial Average posted respective, 5-day advances of 0.21% and 0.30%. The Nasdaq wrapped up Friday’s market day at 6,153.08; the Dow, at 21,414.34.5

THIS WEEK

Monday, Barracuda Networks and WD-40 present earnings. On Tuesday, earnings appear from PepsiCo and Yum! Brands.Wednesday, Federal Reserve chair Janet Yellen visits Capitol Hill to begin two days of testimony on monetary policy in Congress; in addition, the Fed releases a new Beige Book, and Fastenal reports Q2 results. Thursday, Wall Street considers a new initial jobless claims report, plus the June Producer Price Index. On Friday, a river of data arrives: a new earnings season begins with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo, complementing the initial July University of Michigan consumer sentiment index, the June Consumer Price Index, and June retail sales and industrial production reports.

June 26, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

The first half of 2017 has generally been led by technology and growth stocks, but for the past few weeks market leadership has been in flux. Specifically, during the month of June growth and technology stocks have become increasingly volatile, a sign that a growing number of investors are more concerned with short term losses versus longer term gains. What we may be witnessing is a change in market leadership, an event that can be good for the stock market as long as the market laggards can keep from being a drag on the broad market averages and hold on to their gains.

One example of potential new market leadership is in health care stocks. With the senate attempting to pass a health care bill this week, some investors appear to be trying to get ahead of the vote by reallocating a portion of their funds to the health care sector. This has elevated the S&P 500 Health Care index by 2.38 percent over the past five trading days, while leaving the S&P 500 Technology sector nearly flat, up only 0.01 percent over the same period. Of course, we don’t know how long this new market leadership will last, but if congress can work together and agree upon a health care reform bill, it’s possible that health care stocks could have much further to run.

However, the bigger question surrounding health care reform has more to do with how well congress can work together to help the American people. The success or failure of congress to pass a health care reform bill will send a huge message to investors of the likelihood of tax reform later this year. Tax reform is where the real stimulus is at, but if congress can work together volatility may spread beyond just technology and growth stocks.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

MORE HOMES MOVED IN MAY

In a pleasant surprise for economists, both new and existing home sales picked up last month. The National Association of Realtors announced a 1.1% gain for resales, with the average house for sale spending only 27 days on the market. New home buying increased 2.9% in May, resulting in an annualized gain of 8.9%. The average sale price for a new home was $406,400, a record.1

LEADING INDICATORS IMPROVE

The Conference Board’s Leading Economic Index rose 0.3% for May, following gains of 0.2% for April and 0.4% for March. Most of the index’s components were positive for May and a steepening interest rate spread, a climb for the Institute for Supply Management’s new orders index, and greater consumer optimism about business and economic conditions were major factors. The LEI was up 3.5% year-over-year through May.2

CRUDE IS ON ITS LONGEST LOSING STREAK IN 2 YEARS

WTI crude settled at $43.01 at Friday’s closing bell, down 4.4% from the end of last week. This decline marked the fifth straight weekly retreat for oil; an 8-week losing streak ended in August 2015. Oil is now in a bear market.3

STOCKS ADVANCE

All three of the major U.S. equity indices had made 5-day gains by the time trading wrapped up on Friday. The Dow Jones Industrial Average had added just 0.05%, advancing to 21,394.76, and the S&P 500 had improved 0.21% to 2,438.30. In contrast, the Nasdaq Composite rose 1.84% to 6,265.25. Even after this last sideways week, the Dow 30 ended Friday’s session up 1.49% month-over-month.4

THIS WEEK

On Monday, the Census Bureau shares data on May hard goods orders. Tuesday sees the release of the latest consumer confidence index from the Conference Board, plus earnings reports from Darden Restaurants and KB Home. Wednesday, the NAR puts out its May pending home sales report, and Franklin Covey, General Mills, Monsanto, Paychex, and Pier 1 announce earnings. The third estimate of Q1 GDP appears Thursday along with a new initial unemployment claims report and earnings announcements from ConAgra Brands, Constellation Brands, Micron Technology, Nike, and Walgreens Boots Alliance. The final June University of Michigan consumer sentiment index, May consumer spending figures, and the May PCE price index arrive on Friday.

June 12, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

This week the markets are waiting on the Fed’s move later this week. Markets spent the past week weighing political excitement by home and abroad, ending up with the S&P 500 down just 0.27% for the week.

We think that with Father’s Day coming up this week that it is a good time to remember that the constants of our family relationships are some of the most valuable and important parts of our lives.

What Makes a Dad
God took the strength of a mountain,
The majesty of a tree,
The warmth of a summer sun,
The calm of a quiet sea,
The generous soul of nature,
The comforting arm of night,
The wisdom of the ages,
The power of the eagle’s flight,
The joy of a morning in spring,
The faith of a mustard seed,
The patience of eternity,
The depth of a family need,
Then God combined these qualities,
When there was nothing more to add,
He knew His masterpiece was complete,
And so, He called it … Dad
-Author Unknown

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

AN UPBEAT REPORT ON THE SERVICE SECTOR

The Institute for Supply Management’s May non-manufacturing purchasing manager index displayed a reading of 56.9 last week, showing expansion in U.S. service industries for an eighty-ninth straight month. Although the gauge declined 0.6 points from its April mark, it signaled a solid pace of growth. The index’s employment component rose 6.4 points to a mark of 57.8, as 15 industries added workers in May. The PMI has averaged a reading of 55.9 over the past 12 months.1

FACTORY ORDERS DECLINED IN APRIL

According to a new Census Bureau report, they decreased 0.2%. That marked their first month-over-month retreat of 2017. The 0.2% gain for March factory orders, however, was revised up to 1.0%. Orders increased by an average of 0.7% per month in the first quarter.2

ABUNDANT SUPPLY HURTS OIL

WTI crude lost 3.8% during June 5-9, tumbling to a $45.83 settlement on the NYMEX Friday. The U.S. rig count rose again last week, as it has every week for the past five months. While OPEC has vowed to reduce production by 1.2 million barrels per day, daily American oil output has increased by almost 600,000 barrels, so far, this year.3

TWO MAJOR INDICES RETREAT; A THIRD RISES

Last week, the Nasdaq Composite fell 1.55% to 6,207.92, while the S&P 500 dipped 0.30% to 2,431.76. On the other hand, the Dow Jones Industrial Average managed to gain 0.31% on its way to a Friday close of 21,271.28. The CBOE VIX volatility index soared 17.03% for the week, settling Friday at 11.41.4

THIS WEEK

Nothing major is scheduled for Monday. The Bureau of Labor Statistics releases the May Producer Price Index on Tuesday; in addition, H&R Block and Wiley announce quarterly results. Wednesday, investors react to the Federal Reserve’s latest monetary policy decision, the May Consumer Price Index, the May retail sales report, and quarterly results from Jabil and Liberty Tax. A new initial jobless claims report arrives on Thursday, plus a report on May industrial output and earnings announcements from Bob Evans Farms and Kroger. On Friday, the University of Michigan’s preliminary June consumer sentiment index appears, along with data on May housing starts and building permits.

June 5, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

The bull market in U.S. stocks is getting old. This bull has been charging, standing, or sitting for more than eight years. In April, it became the second longest bull market in American history, according to CNN Money.

There are some good reasons the stock market in the United States has continued to trend higher. For one, companies have become more profitable. During the first quarter of 2017, companies in the Standard & Poor’s 500 Index reported earnings increased by 14 percent, year-over-year. That was the highest earnings growth rate since 2011, according to FactSet.In addition, the economy in the United States has been chugging along at a steady pace. CIO Charles Lieberman wrote in Bloomberg View:

“…U.S. economic growth is continuing at a moderate pace, an economic recovery is finally underway in Europe, inflation is under control, corporate profits are rising, and there is some prospect for tax reform and deregulation, even if whatever gets implemented is less than what is really needed. These conditions imply continued growth in corporate profits.”

Last week’s employment report boosted both stock and bond markets. Financial Times opined the report was weak enough to ease pressure on bond rates and strong enough to boost share prices higher.

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

JOB CREATION, JOBLESS RATE DOWN IN MAY

A day after ADP’s employment change report estimated a hiring gain of 253,000 in May, the Department of Labor’s latest jobs report told a far different story. It said employers added just 138,000 workers last month. The U-3 jobless rate fell to a 16-year low of 4.3% in May, partly because of people dropping out of the labor force. The U-6 rate, counting the underemployed, decreased to a 10-year low of 8.4%. Annualized wage growth improved 0.2% to 2.5%.1,2

CONSUMER CONFIDENCE INDEX DECLINES

The Conference Board’s monthly consumer confidence gauge remained well north of 100 in May. It came in at 117.9. The index actually descended 1.5 points from its (downwardly revised) April reading of 119.4.1

FACTORY GROWTH MAINTAINS ITS PACE

Rising a tenth of a percentage point to 54.9, the Institute for Supply Management’s manufacturing purchasing manager index showed healthy sector expansion in May. ISM last measured a sector contraction (a reading below 50) in August.3

PERSONAL SPENDING INCREASES

In April, consumer spending grew by 0.4% according to the Bureau of Economic Analysis. Additionally, the BEA revised the previously flat March personal spending number up to a 0.3% gain. Personal incomes also rose 0.4% in the fourth month of the year, twice the improvement seen in March.1

NO REINING IN THE BULLS

Rising 0.93% across four trading days, the S&P 500 ended last week at 2,439.07. The Nasdaq Composite continued its red-hot run, gaining 1.50% for the week to a June 2 close of 6,305.80. Settling at 21,206.29 Friday, the Dow Jones Industrial Average added 0.56% across its last four trading sessions. The CBOE VIX “fear index” closed at a remarkably low 9.79 Friday, down 30.27% YTD.4,5

THIS WEEK

ISM’s May non-manufacturing PMI appears Monday, along with data on April factory orders, and earnings from Casey’s General Stores, Dave & Buster’s, and Thor Industries. Conn’s, Fred’s, and Michaels Companies announce earnings on Tuesday. Navistar reports quarterly results on Wednesday. Thursday, Wall Street examines new initial jobless claims figures and earnings news from Dell Technologies, J.M. Smucker, and Verifone. Nothing major is slated for Friday.

May 30, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Is preparing for the future more important than enjoying the present? There is a lot to enjoy today. Last week, Financial Times wrote:

“Wall Street ended an impressive week on a steady note – eking out a tiny gain to a fresh record close – as oil prices recouped some of the previous day’s steep losses and the latest U.S. Gross Domestic Product data reinforced expectations for a June rate rise.”

In fact, U.S. equities have been performing well for some time. The Standard & Poor’s (S&P) 500 Index achieved new highs 18 times during 2016 and, so far in 2017, we’ve scored 20 closing highs, including three last week.

While it’s important to enjoy current gains in U.S. stock markets, it’s equally important to prepare for the future. Bull markets don’t continue forever. They often experience corrections. A correction during a bull market is a 10 percent decline in the value of a stock, bond, or other investment. Often, corrections are temporary adjustments followed by additional market gains, but they can be a signal a bear market or recession is ahead.

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

CONSUMER SENTIMENT DECLINES JUST A BIT

Ending May at a mark of 97.1, the University of Michigan’s consumer sentiment index fell 0.6 points from its preliminary reading for the month. Economists polled by MarketWatch had forecast the gauge to remain at 97.7.1

FEWER HOMES WERE BOUGHT IN APRIL

Both new and existing home sales tapered off last month. The National Association of Realtors said that resales fell 2.3% for April, while the Census Bureau announced an 11.4% retreat for new home purchases. While demand was high, tight supply reduced the number of buyers.2

FED MINUTES: Q1 SLUMP “LIKELY TO BE TRANSITORY”

With the Federal Open Market Committee expressing that exact opinion in the record of its May 2-3 meeting, investors saw little that would delay the central bank from raising interest rates in June. Still, the minutes sounded a cautious note. Fed policymakers “generally judged that it would be prudent to await additional evidence,” confirming that the winter economic slowdown was short lived prior to tightening further. The Bureau of Economic Analysis did revise its Q1 GDP estimate up to 1.2% last week, compared with an initial evaluation of 0.7%.1,3

MORE RECORD HIGHS FOR NASDAQ, S&P 500

A great week for stocks saw gains of 2.08% for the Nasdaq Composite, 1.43% for the S&P 500, and 1.32% for the Dow Jones Industrial Average. Friday’s settlements: Dow, 21,080.28; S&P, 2,415.82; Nasdaq, 6,210.19. Friday’s S&P and Nasdaq closes were historic peaks for both indices. The S&P advanced for a seventh straight trading session to end the week, something it had not done since February. The Nasdaq 100 ended last week up 19.01% YTD.4,5

THIS WEEK

Monday is Memorial Day – U.S. stock and bond markets will be closed. Tuesday, the April personal spending report and PCE price index appear. A new Federal Reserve Beige Book and the NAR’s April pending home sales report surface Wednesday, plus earnings from Analog Devices, Hewlett-Packard Enterprise, Michael Kors, and Palo Alto Networks. Thursday is heavy on jobs data, as investors look at the ADP payroll and Challenger job-cut reports and the latest initial claims numbers; ISM’s May factory PMI also arrives, along with earnings from Boot Barn, Broadcom, Dollar General, Express, Five Below, and Lululemon Athletica. Friday, the Department of Labor issues its May employment report, and Hovnanian announces earnings.