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February 28, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Not many anticipated the stock market rally that began here in the U.S. following the Presidential election last November. If anything, the prevailing expectation by investors was more of the same slow growth economy and choppy stock market like we had seen the past couple of year under President Obama. To be fair, as President Obama’s term was coming to an end, the U.S. economy was beginning to see some green shoots of new growth, such the 2016 third quarter GDP reading of 3.5 percent, though this fell back to 1.9 percent in the fourth quarter of last year.

Unlike President Obama who took over the leadership of our country at one of the worst economic times in history, now known as “the great recession”, President Trump is taking the reins at a point of relative economic stability, but which lacks the growth necessary to provide jobs to the many Americans who would like to work but are still unemployed. Under the Obama administration the Federal Reserve responded to the economic crisis with three separate stimulus programs that essentially lifted the stock market up while keeping interest rates low. This allowed the economy and corporate profits to improve over time and justify stock valuations.

During their service as head of the Federal Reserve both Mr. Greenspan and Mr. Bernanke testified before congress that monetary policy wasn’t enough to reignite the economy, but that it also took fiscal policy from the legislative and executive branches of government to provide a more sustainable growth trajectory to the economy. At the time, the legislative branch didn’t have the will to craft such a plan. Today however, the Trump administration is promising to outline their fiscal stimulus plan in the coming weeks, the centerpiece of which includes an ambitious overhaul to the U.S. tax code. Though the plan has its skeptics, the administration is hopeful their fiscal stimulus package can be passed by August of this year, resulting in a more normalized economic growth rate of 3.0 percent or greater going forward.

Just like a sail boat using the wind to power its voyage, stock investors are attempting to get in front of this new source of stimulus, in hopes it will power their portfolios higher. When and if it occurs, the Trump tax plan could be a significant boom to the U.S. economy and the stock market, just as it was during the Regan years. However, the next several months will likely be a challenge for those investors who were hoping for an easy ride.

From election day (Nov. 8th) through last Thursday the Standard and Poor’s 500 had gained 10.48 percent, a respectable return in a little less than four months. As of Thursday, the Dow Jones Industrial Average had closed higher 10 days in a row, an accomplishment that suggests the advance is due at least for a pause. Though the stock market trends are pointing higher, without any new reason to reignite investor’s enthusiasm, the major market averages are more likely to consolidate their gains for a period before heading much higher.

Also on investors minds lately is the growing likelihood that interest rates are headed higher in the coming months. Recent comments by Federal Reserve President Janet Yellen have left the door open for a rate increase at the next FOMC meeting in March. However, as of Thursday, the Fed Fund Futures are projecting only a 38 percent probability of an increase at the March meeting, versus a 62.7 percent probability of an increase when they meet in May. Currently, U.S. Treasury bond prices are in a trading range, as bond investors attempt to navigate between a stock market that may be headed for a period of weakness and higher interest rates in the near future.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

A LITTLE LESS OPTIMISM AMONG CONSUMERS

February’s final University of Michigan consumer sentiment index came in at 96.3, down from its January mark of 98.5, but well above the 91.7 reading of a year earlier. Despite the descent, the index just had its best three months since early 2004.1FED

MINUTES SUGGEST RATE MOVE MAY BE NEAR

At the last Federal Reserve policy meeting, “many participants” in the Federal Open Market Committee felt it “might be appropriate to raise the federal funds rate again fairly soon” if inflation and hiring data are strong enough. Even with that language appearing in the latest FOMC minutes, the CME Group’s FedWatch Tool forecasts just a 22% chance of a quarter-point hike when the FOMC convenes in March.2,3

HOME SALES IMPROVED AT START OF 2017

According to reports from the Census Bureau and National Association of Realtors, new home sales advanced 3.7% in January, while existing home sales rose 3.3%. Tight inventory notwithstanding, new home purchases were up 5.5% from January 2016; resales were up 3.8% year-over-year.4

DOW EXTENDS ITS NOTEWORTHY WIN STREAK

Friday, the Dow Jones Industrial Average recorded its eleventh straight daily gain. The last time that happened? 1992. For the week, it rose 0.95% to 20,821.76. The Nasdaq Composite improved 0.11% in four trading days to 5,845.31; the S&P 500, 0.69% to 2,367.34. The S&P and Dow ended the week at all-time highs.5,6

THIS WEEK

Monday offers reports on January durable goods orders and pending home sales, and earnings from Frontier Communications, Hertz Global Holdings, Horizon Pharma, and Priceline Group. The Conference Board’s February consumer confidence index appears Tuesday, plus the second estimate of Q4 GDP and earnings news from Acadia Pharmaceuticals, AutoZone, Big 5, Domino’s, La Quinta Holdings, Palo Alto Networks, Ross Stores, SeaWorld Entertainment, Sempra Energy, Target, and Universal Health Services. On Wednesday, investors consider the latest ISM factory PMI, January’s PCE price index, January consumer spending, a new Federal Reserve Beige Book, and earnings from American Eagle Outfitters, Best Buy, Broadcom, Dollar Tree, Icahn Enterprises, Lowe’s, Monster Beverage, Office Depot, and Shake Shack. Thursday brings a new Challenger job-cut report, new initial claims numbers, and earnings from Abercrombie & Fitch, Autodesk, Barnes & Noble, Costco, Kroger, Staples, and Wingstop. Friday, Fed chair Janet Yellen speaks on the economic outlook in Chicago, ISM issues its latest non-manufacturing PMI, and Big Lots reports Q4 results. (The Department of Labor’s February jobs report arrives on March 10.)

February 21, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

After the long holiday weekend, investors appeared to return to the markets with renewed optimism on Tuesday. U.S. stocks gapped higher at the opening bell, following the pre-market release of better than expected earnings news from a few of the U.S.’s top retailers. Within the first half hour of the trading day, investors received an additional boost of confidence as the February PMI Manufacturing Index flash reported a reading of 54.3. Any reading of 50 or above signifies expansion in the manufacturing sector, so even though the February reading was slightly below the prior month’s reading of 55.1, it still signifies a decent rate of growth. The Flash report is usually released about a week prior to the final report and gives investors some heads up on what to expect for the current month.

All the major market averages closed at new all-time highs on Tuesday with the Standard and Poor’s 500 rising 0.60 percent and the Nasdaq Composite gaining 0.47 percent. More importantly, Tuesday’s rally was broad based, with the Russell 2000 Small Cap Index leading the way higher, up 0.78 percent on the day.

In some ways, the stock market’s advance looks completely healthy, such as the resent highs in the New York Stock Exchange’s advance decline line. However, for some subsets of the market such as small companies, other indicators are beginning to show that that number of small company stocks participating in the recent rally is beginning to decline. This means that fewer companies are lifting the indexes, and just one sign that a rally is running out of steam.

Another indication that the recent rally in long in the tooth is the recent outperformance of two typically defensive sectors. On Tuesday, the Dow Jones U.S. Real Estate Index rose 1.26 percent and the Dow Jones U.S. Utilities Index gained 1.01 percent on the day.

We will continue to watch and see what happens with the various government and economic announcements in the next couple of weeks.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

RETAIL SALES ROSE 0.4% IN JANUARY

Consumer spending on household electronics and appliances powered this gain. Analysts polled by Reuters had expected a 0.1% advance. Core retail purchases also rose 0.4% last month. The Department of Commerce revised the December increase for retail sales upward to 1.0%. Across the 12 months ending in January, retail sales advanced 5.6%.1

INFLATION PRESSURE MOUNTS

In January, the headline Consumer Price Index climbed 0.6%. That was its greatest monthly gain in four years, and it took annualized inflation to a 4-year high of 2.5%. Producer prices also jumped 0.6% in January, in the largest monthly increase seen since September 2012; that development left them up 1.6% year-over-year.1,2

BUILDING PERMITS UP, HOUSING STARTS DOWN

Unsurprisingly, groundbreaking declined in January. The Census Bureau recorded a 2.6% fall for housing starts in the winter weather. The rate of permits issued for future projects, however, increased by 4.6%.3

FURTHER GAINS IN A BULLISH FEBRUARY

The S&P 500 pulled off another weekly advance, adding 1.51% from February 13-17 on its way to a Friday settlement of 2,351.16. Its 5-day performance actually lagged both the Dow and the Nasdaq: the blue chips gained 1.75%, to 20,624.05, as the broad tech sector benchmark rose 1.82%, to 5,838.58.4

THIS WEEK

Monday is Presidents Day, so U.S. stock and bond markets are closed; America’s Car-Mart and Dillard’s report Q4 results. Tuesday, Advance Auto Parts, Cracker Barrel, HealthSouth, Home Depot, Kaiser Aluminum, La-Z-Boy, Macy’s, Medtronic, Newmont Mining, Nautilus, Papa John’s, Red Robin, and Walmart all join the earnings parade. On Wednesday, earnings from Cheesecake Factory, Chico’s FAS, DISH Network, Fitbit, Garmin, Green Dot, HP, Jack-in-the-Box, L Brands, Popeyes, Public Storage, Six Flags Entertainment, Square, Sunoco, Tesla, TJX, Toll Brothers, Transocean, and Weibo complement minutes from February’s Federal Reserve policy meeting and January existing home sales numbers. A new initial claims report arrives Thursday, along with earnings from AMC Networks, Baidu, Chesapeake Energy, Gap, Herbalife, Hewlett Packard Enterprise, Hormel Foods, iHeartMedia, Intuit, Kohl’s, Live Nation, Mitel, Nordstrom, Pinnacle Foods, Sears Holdings, Sprouts, and Toro. Friday, earnings from Berkshire Hathaway, Boise Cascade, Foot Locker, JCPenney, Magellan Health, and Revlon emerge, plus the final February University of Michigan consumer sentiment index and the January new home sales report.

February 13, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

The big news on Monday was the value of stocks listed on the Standard and Poor’s 500 surpassing $20 trillion for the first time, due to expectations of rising U.S. economic growth and improving corporate profits.

The major market averages continued their assent on Monday led by the Dow Jones Industrial Average up 142 points or 0.70 percent on the day. Though larger company stocks received the largest boost from Monday’s rally, the advance was still broad based with the Russell 2000 small company index gaining 0.25 percent and closing at a new all-time high. Both the Standard and Poor’s 500 and the Nasdaq Composite rose 0.52 percent on the day. Monday’s gains are a continuation of the rally that began last Thursday after President Trump said he would unveil a “phenomenal” business tax package very soon.

According to Credit Suisse, smaller companies like those that make up the Russell 2000 have less access to international tax loopholes. As a result, smaller companies typically have to pay a 32 percent effective tax rate, versus the larger companies that make up the S&P 500 and pay a roughly 26 percent rate. For this reason, many investors believe smaller companies will benefit more if President Trump is successful in convincing congress to lower the corporate tax rate from 35 percent, the highest rate of any developed nation.

Investors appear to be anticipating the U.S. economy heating up in the coming months by how they are investing today. The top performing sectors on Monday were led by the Dow Jones U.S. Basic Materials index up 1.00 percent, followed by the Dow Jones U.S. Financial index gaining 0.92 percent on the day. These sectors appear to be anticipating inflation which includes not only rising commodity prices, but rising interest rates as well.

We will be watching to see what happens with the various tax announcements in the next couple of weeks.

Sincerely,
Laif E. Meidell, CMT

Happy Valentine’s Day! We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

CONSUMER SENTIMENT SLIPS A BIT

The University of Michigan’s preliminary February index of consumer sentiment came in at a reading of 95.7 Friday, compared with a final January mark of 98.5 (which was a 13-year peak). Economists polled by Bloomberg had expected a slight decline to 98.0. While this was the index’s lowest level in three months, it still topped many of the monthly readings from 2016.1HOW IS

EARNINGS SEASON GOING?

Nearly two-thirds of S&P 500 members have issued Q4 results so far. As Zacks Investment Research noted Wednesday, more than 69% of these S&P components have beaten earnings-per-share estimates; more than 54% have surpassed revenue forecasts. Total Q4 earnings for S&P firms are projected to rise 7.3% over Q4 2015, the strongest annual earnings growth since Q4 2014.2

GOLD GAINS AS OIL WAVERS

Gold futures advanced 1.12% on the COMEX during a choppy week to a Friday settlement of $1,233.30. Light sweet crude for March delivery dipped at midweek, but then rebounded, settling at $53.81 Friday for a 5-day retreat of just 0.09%.3

STOCKS PUSH HIGHER

Wall Street rallied strongly Friday after President Trump (and the White House) mentioned an upcoming outline for business and individual income tax reform. For the week, the S&P 500 gained 0.81% to 2,316.10; the Nasdaq, 1.19% to 5,734.13; and the Dow, 0.99% to 20,269.37.4,5

THIS WEEK

On Monday, Noble Energy, Rent-A-Center, and Snyder’s-Lance offer earnings news. Tuesday, Federal Reserve chair Janet Yellen begins two days of testifying to Congress on monetary policy; the January PPI also arrives, plus earnings from Agilent Technologies, AIG, Devon Energy, Dr. Pepper Snapple, Express Scripts, Molson Coors, and T-Mobile. Reports on January retail sales and industrial output appear Wednesday, along with the January CPI and earnings announcements from Analog Devices, Applied Materials, Avis Budget Group, CBS, Choice Hotels, Cisco, Denny’s, GoDaddy, Groupon, Hilton Worldwide Holdings, Huntsman, Kraft Heinz, Marathon Oil, Marriott International, NetApp, NetEase, PepsiCo, TiVo, TripAdvisor, and Wyndham Worldwide. Thursday offers fresh data on building permits, housing starts, and initial claims; investors also review earnings from Avon, Boise Cascade, Cabela’s, Dean Foods, DISH Network, Duke Energy, Hyatt, and Waste Management. Bloomin’ Brands, Campbell Soup, Deere, Fluor, J.M. Smucker, and Spectra Energy announce earnings Friday.

February 6, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Though the major market averages briefly closed at new all-time highs during the month of January, those rallies ended almost as quickly as they began, leaving the market averages with little upward progress. However, all of this waiting and hoping for the stock market to continue higher may be causing some investors to grow impatient. As of Monday’s close, the Standard and Poor’s 500 hadn’t exceeded a daily range of over 1.0 percent for 35 consecutive days, making this the longest run of low volatility, of this type, going back to 1974, according to Thompson Reuters data.

Some believe that stocks can go through both price corrections and time corrections. A price correction is when stocks move for a period of time in the opposite direction of the primary trend. In other words, if the price has been moving higher for a period of time, it typically declines for a short spell, before resuming its trend and moving higher once again. On the other hand, if price have moved too quickly in one direction, price can appear to stall out, as it trades horizontally for a time, before once again resuming its primary trend.

With the major market averages so far stubbornly holding on to their gains, the stock market appears to be in a time correction. The major averages were little changed on Monday with the Standard and Poor’s 500 down 0.21 percent on the day.

As we begin the new month, earnings season continues. As of Monday, earrings season is a little over half way completed with 279 of the companies that make up the S&P 500 having reported their fourth quarter earnings.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

POSITIVES & NEGATIVES IN JANUARY’S JOB DATA

The Department of Labor’s latest jobs report showed 227,000 net new hires last month. Unfortunately, wages grew just 0.1% in January as the headline jobless rate rose slightly to 4.8%. The U-6 rate, counting the underemployed, rose 0.2% to 9.4%.1

STRONG CONSUMER CONFIDENCE & SPENDING

While the Conference Board’s monthly consumer confidence index declined 1.5 points in January, it remained at a high level with a 111.8 reading. Personal spending improved 0.5% in December, with personal incomes up 0.3%.2

ISM INDICES SHOW FURTHER SECTOR EXPANSION

The Institute for Supply Management’s purchasing manager indices were at high levels in January. ISM’s factory index gained 1.5 points to 56.0. Its service sector gauge ticked down 0.1 points to 56.5, but that still signaled solid growth.3

DODD-FRANK ACT FACES A REVIEW

Through an executive order issued Friday, President Donald Trump authorized a review of this law aimed at regulating activities of big banks. According to the New York Times, the directive also calls for major sections of Dodd-Frank to be revised.4

MINOR PROGRESS FOR THE S&P 500

The Federal Reserve stood pat on interest rates, bank shares rose on the Dodd-Frank news, and January hiring totals exceeded forecasts. These developments helped stocks make small weekly gains. In five days, the S&P 500 rose 0.12% to 2,297.42, and the Nasdaq 0.11%, to 5,666.77. The Dow lost 0.11% to settle at 20,071.46 Friday.5

THIS WEEK

CNA Financial, Hasbro, Loews Corp., Sysco, Tesoro, 21st Century Fox, and Tyson Foods announce earnings Monday. Tuesday’s earnings roll call features results from Akamai, Aramark, Archer Daniels Midland, Buffalo Wild Wings, Container Store, General Motors, Genworth Financial, Gilead Sciences, Lennox, Michael Kors, Mosaic, NETGEAR, O’Reilly, Panera Bread, Penske, Spirit Airlines, Take-Two Interactive, Vulcan Materials, and Walt Disney Co. Wednesday, earnings emerge from Alaska Air, Allergan, Exelon, GlaxoSmithKline, Goodyear, Humana, Prudential Financial, Time Warner, W.R. Grace, and Whole Foods. New initial claims numbers arrive Thursday, plus earnings from Activision Blizzard, Advance Auto Parts, Beazer, Coca-Cola, Cummins, CVS Health, Dunkin’ Brands, Expedia, Gannett, Kellogg, Kemper, NCR, Nvidia, Occidental Petroleum, Pandora, Skechers, Twitter, Viacom, Western Union, Yelp, Yum! Brands, and Zynga. Friday, the University of Michigan’s latest household sentiment index appears, plus Q4 results from CBRE Group.

January 30, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

If there was any doubt that the U.S. stock market was following both policy expectations and news coming from the new White House administration, the markets response on Monday should have put some of those doubts to rest. Stocks gapped lower at the opening bell, after a tumultuous news cycle over the weekend, following President Trump’s executive order to restrict immigration from seven countries and temporary suspend the refugee program for four months, among other things.

Roughly 90 minutes into the trading day the major market averages reached their low point for the day as selling subsided. Though still finishing lower on the day, the major averages went on to recoup roughly half over their early losses, with the Standard and Poor’s 500 declining 0.60 percent by the closing bell. The new administration has been hard at work its first week in office making good on its campaign promises, but Monday’s declines in the stock market is a reminder that it won’t always be smooth sailing for the Trump Team.

Most investors have been anxiously awaiting the new administration’s economic promises such as tax reform, but after this weekend’s events may be realizing that they will have to exercise more patience than they expected.

A large number of companies will be reporting their quarterly earnings this week, which will give investors a better sense of the strength of the U.S. economy. On Wednesday of this week, following the FOMC meeting, the Federal Reserve will release its guidance on interest rates. Though there is little chance the Fed will raise interest rates at this time, investors will be listening for any changes to the Fed’s expectation of raising interest rates roughly three times later this year.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

HOUSEHOLD SENTIMENT GAUGE RISES AGAIN

The University of Michigan’s Index of Consumer Sentiment gained 0.4 points from its preliminary reading this month to reach a final January mark of 98.5. That represents a 12-year peak for the index, which stood at 92.0 in January 2016.1,2HOME SALES

FELL IN DECEMBER

Given costlier mortgages, rising prices, and tight inventory, the December retreat for resales was not surprising. The National Association of Realtors said that existing home sales slipped by 2.8% last month. New home sales dropped 10.4%, but the Census Bureau stated that they increased 12.2% for 2016, marking the best year for new home buying since 2007.3

FIRST ESTIMATE OF Q4 GDP: 1.9%

If that Department of Commerce appraisal holds, it will mean that the economy grew just 1.9% for all of 2016, contrasting with 2.6% expansion in 2015. Hard goods orders fell 0.4% in December, but rose 1.7% minus defense orders.2
DOW TOPS 20,000, STOCKS REGAIN MOMENTUM
Leaving some mid-January doldrums behind, the major indices rallied nicely last week. The Dow advanced 1.34% to 20,093.78; the Nasdaq Composite, 1.90% to 5,660.78; and the S&P 500, 1.03% to 2,294.69. The CBOE VIX “fear index” finished the week down at 10.53.4

THIS WEEK

Monday offers reports on December personal spending and pending home sales. The Conference Board’s monthly consumer confidence index and a new Case-Shiller home price index appear Tuesday, along with earnings from Aetna, Aflac, Ally Financial, Anadarko Petroleum, Apple, Chubb, Coach, Eli Lilly, ExxonMobil, Harley-Davidson, MasterCard, Nucor, Pfizer, Sprint, Under Armour, UPS, U.S. Steel, Valero Energy, and Xerox. Wednesday, the Federal Reserve wraps up a policy meeting, ADP’s January payrolls report and ISM’s January manufacturing PMI arrive, and Allstate, Altria, AmeriGas, Ameriprise Financial, Anthem, Avery Dennison, Celanese, Energizer Holdings, Exelon, Facebook, Ingersoll-Rand, MetLife, Pitney Bowes, and Symantec all announce earnings. Thursday’s earnings parade includes results from Amazon, Amgen, Callaway Golf, Chipotle, Cigna, ConocoPhillips, Coty, Estee Lauder, GoPro, Hanesbrands, International Paper, Motorola Solutions, Parker, Philip Morris, Merck, Ralph Lauren, Ryder, Sirius XM, SkyWest, Snap-On, and Visa; also, Challenger issues January job-cut data, and new initial claims figures are released. Investors consider the January ISM services PMI and January hiring figures Friday, plus earnings from AutoNation, Clorox, Hershey, Phillips 66, Regis, and Weyerhaeuser.

January 23, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Investors value a sense of predictability and security, but no new presidential administration comes to the White House with enough transparency to eliminate all concerns from investors’ minds. This was the case this past weekend as well, as investors watched the reception of our 45th president from his inauguration last Friday, to the dust up between the Trump administration and the media over the weekend, followed by his much anticipated first executive orders.

As the Trump administration hit the ground running on Monday, investors were no doubt thinking about the pace of change that would be coming from the White House, and how it may affect not only the U.S. economy but other economies around the world. The major market averages traded lower at the opening bell, with caution and concern being the overarching tone for both the stock and bond markets on Monday.

However, as coverage of President Trump’s meetings on Monday were released, first, with top U.S. CEO’s, then later with top union leader’s, that concern seemed to dissipate while lifting the stock market into the close.

As the pollical fever in Washington de-escalates in the coming weeks, investors will return to their focus to earnings season which still has a few weeks left. Many analysts still have high expectations for this earnings season, with some forecasting 4th quarter earnings growth of 32 percent. This rate of growth has not been seen since 2010 when the economy was still rebounding from the financial crisis.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

LARGEST INFLATION ADVANCE IN 5 YEARS

The Consumer Price Index rose 2.1% in 2016, marking its greatest annual gain since 2011. During 2015, consumer prices only increased by 0.7%. December saw a 0.3% rise for the headline CPI and a 0.2% gain for the core CPI (which excludes food and energy costs). The core CPI gained 2.2% last year.1

MUCH MORE GROUNDBREAKING IN DECEMBER

Cold had little impact on residential construction as 2016 ended. Housing starts advanced 11.3% last month and rose 5.7% for the year. Single-family starts declined 4.0% in December, but they still improved 3.9% in 2016. Building permits were down 0.2% last month and posted a yearly gain of 0.7%.2

GOLD GOES BACK ABOVE $1,200

The yellow metal rose 1.84% week-over-week to settle Friday at $1,210.00 on the COMEX. (Silver ended the week at $17.12.) On the NYMEX, oil ended up at $52.33 as Wall Street rang its closing bell Friday, retreating 0.19% week-over-week.

MAJOR INDICES DRIFT LOWER

Stocks retreated last week, but just slightly. Across four trading days, losses trimmed the Dow Industrials by 0.30%, the S&P 500 by 0.15%, and the Nasdaq Composite by 0.32%. Friday’s settlements: Dow, 19,827.25; Nasdaq, 5,555.33; S&P, 2,271.31.

THIS WEEK

On Monday, Halliburton, McDonalds, and Yahoo! report Q4 results. December existing home sales numbers arrive Tuesday, complementing earnings from 3M, Alibaba, Capital One, Corning, D.R. Horton, Discover, Fifth Third Bancorp, Johnson & Johnson, Kimberly-Clark, Lockheed Martin, Seagate Technology, Stryker, Texas Instruments, Travelers, and Verizon. Wednesday’s earnings parade features Abbott Labs, AT&T, Boeing, Briggs & Stratton, Brinker International, Dolby Labs, Citrix, Freeport-McMoRan, eBay, Norfolk Southern, Qualcomm, Raymond James, Rockwell Automation, United Rentals, W.W. Grainger, and Western Digital. New initial claims data appears Thursday, plus December new home sales figures and earnings from Alphabet, Biogen, Bristol-Myers Squibb, Caterpillar, Celgene, Comcast, Dow Chemical, E*TRADE, Ford, Intel, JetBlue, Microsoft, Northrop Grumman, PayPal, Praxair, PulteGroup, Quest Diagnostics, Raytheon, Regis, Royal Caribbean, Sherwin-Williams, Southwest Airlines, Stanley Black & Decker, and Starbucks. Friday offers the first estimate of Q4 GDP, December durable goods orders, the final January University of Michigan consumer sentiment index, and earnings from Chevron, American Airlines, Colgate-Palmolive, Honeywell, NextEra Energy, and Whirlpool.

January 18, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

After the long holiday weekend, U.S. investors awoke on Tuesday to geopolitical news out of the U.K. as British Prime Minister Theresa May laid out plans for avoiding a “Hard Brexit” from the European Union. Investors around the globe appeared to take comfort in her speech where she said, “We are leaving the European Union but we are not leaving Europe.” In her plan, she promised to put the final deal to vote in both Houses of Parliament, and said that she would be working toward a “bold and ambitious free-trade agreement” with the EU that would include partial membership in the EU customs union and continued tariff-free trade during the “implementation phase” of the new plan.

As Mrs. May gave her speech the British pound rose roughly 2.9 percent against the U.S. Dollar, the largest one day gain for the currency since 2008.

Here in the U.S., investors appear to be growing more cautious as the U.S. presidential inauguration get’s closer, with U.S. markets flattening out this week. Previously, the stock market has rallied into inauguration day, and this year the stock market still has a couple of days left if it chooses to push higher.

However, this Presidential election has been anything but usual, so its probably wise not to assume that the stock market will behave the same way this time around. This would mean that the major market averages could go against tradition of falling off some once the inauguration is past, and potentially rally next week. Such a move higher next week would really catch a lot of investors off guard.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

RETAIL SALES RISE 0.6%

All of this December gain can be attributed to increased car buying and gasoline purchases; in fact, retail sales were flat with those two categories removed. Analysts surveyed by MarketWatch had projected a 0.8% December advance. Census Bureau data shows that online sales rose 13.2% in 2016, while department store sales fell 8.4%.

CONSUMERS MAINTAIN OPTIMISM AS 2017 BEGINS

The University of Michigan’s preliminary January consumer sentiment index was little changed from the final December edition – just a tenth of a point lower at 98.1. In January 2016, the index was at 92.0. The current conditions component of the index reached 112.5, its highest mark since 2004.3

PRODUCER PRICES CLIMB AGAIN

After heading north 0.4% in November, the Producer Price Index advanced another 0.3% in December, perhaps hinting that an extended period of minimal wholesale inflation is now history. The December increase left both the headline and core PPI up 1.6% year-over-year.1

A GOOD WEEK FOR TECH SHARES

Across January 9-13, the Nasdaq Composite added 0.96% to settle at 5,574.12. Wall Street’s other two major indices went red for the week – the Dow Jones Industrial Average shed 0.39%; the S&P 500, 0.10%. Friday, the Dow settled at 19,885.73; the S&P, at 2,274.64.4

THIS WEEK

Wall Street observes Martin Luther King, Jr. Day Monday – U.S. stock and bond markets are closed. Morgan Stanley and UnitedHealth Group announce earnings Tuesday. On Wednesday, Federal Reserve chair Janet Yellen speaks about monetary policy goals in San Francisco, the December CPI and a new Fed Beige Book appear, and investors examine earnings from Charles Schwab, Citigroup, Fastenal, Goldman Sachs, Netflix, Northern Trust, Raymond James, and U.S. Bancorp. Earnings from Alaska Air, American Express, BB&T, Celanese, IBM, J.B. Hunt, Nautilus, and Union Pacific arrive Thursday, along with new data on initial claims, housing starts, and building permits; that night, Janet Yellen talks about the U.S. economic outlook in a California speech. Friday is Inauguration Day: federal offices in Washington, D.C. and its vicinity are closed, but Wall Street is open for business as General Electric, Regions Financial, Schlumberger, and SunTrust Banks present earnings.

January 10, 2017 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

We wish you and your loved ones health, prosperity and happiness in the new year. As we begin the new year, some investors may be watching last year’s biggest winners to see if they will continue to lead the stock market higher, while others may be focused on the broadly followed Dow Jones Industrial Average to see if it will surpass its 20,000 level and signal potential further gains. However, just like the magician’s sleight of hand, it’s easy to get distracted and miss the Nasdaq Composite’s recent gains, closing at new all-time highs for the fourth day in a row on Tuesday, and up 3.13 percent year to date.

Though market moving reports were sparse on Tuesday, investors could take comfort in the December NFIB Small Business Optimism index whose reading of 105.8 was well both above consensus and the prior month. In fact, the December reading of 105.8 was the highest since December of 2004. The NFIB reported that roughly half of business owners expect better economic conditions, with the largest contributions to the index coming from increased readings in both higher real sales expectations and a view that now is a good time to expand.

Sincerely,
Laif E. Meidell, CMT

We hope you have a wonderful week and a great start to a new year,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

RISING WAGES, MODERATE HIRING IN DECEMBER

The Department of Labor’s latest employment report shows the average hourly wage at $26.00 last month, up 2.9% in a year. That is the largest annualized wage increase seen since June 2009. Payrolls expanded by 156,000 additional hires in December, leaving total 2016 job growth at a 5-year low of 2.2 million. (This could be a sign of the labor market reaching full employment.) The headline jobless rate ticked up to 4.7%, while the U-6 rate encompassing the underemployed was at 9.2%.1

MANUFACTURING ACTIVITY PICKED UP AS 2016 ENDED

Investors liked what they saw in the Institute for Supply Management’s December purchasing manager indices. ISM’s manufacturing PMI rose 1.5 points to 54.7, its best reading in two years. The Institute’s service sector PMI held steady at an impressive 57.2 last month.2,3

FED OUTLOOK: CAUTIOUSLY OPTIMISTIC

Minutes from the December Federal Reserve policy meeting noted that Federal Open Market Committee members were reasonably confident about the economy for 2017, while citing some “uncertainty about the timing, size and composition” of future policy moves. In other words, the Fed may or may not ultimately follow through on its 2017 forecast of three interest rate hikes. FOMC members saw “only a modest risk” of a “sharp acceleration in prices” this year.4

DOW ENDS WEEK AT 19,964

The blue chips hit an intraday high of 19,999.63 Friday on the way to a 1.02% weekly advance to 19,963.80. As the Dow flirted with history, the S&P 500 and Nasdaq made history, respectively closing at record peaks of 2,276.98 and 5,521.06. The S&P gained 1.70% for the week; the Nasdaq, 2.56%. Dropping 19.37% in five days, the CBOE VIX “fear index” finished the trading week at 11.32.5,6

THIS WEEK

On Monday, Acuity Brands, Alcoa, and WD-40 report Q4 results. Nothing significant is scheduled on Tuesday. KB Home and SuperValu announce earnings Wednesday. Thursday, the latest initial jobless claims report appears, Federal Reserve chair Janet Yellen addresses teachers at a Washington, D.C. town hall meeting, and Delta Air Lines shares Q4 results. The week’s major news items all arrive Friday – investors will consider the December retail sales report from the Census Bureau, December’s Producer Price Index, the initial January University of Michigan consumer sentiment index, and earnings reports from Bank of America, BlackRock, JPMorgan Chase, PNC, and Wells Fargo.

December 29, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

As our client, you may have received a letter this week from Securities America Financial Corporation stating that they are your “new broker/dealer.” These letters were distributed in error by Securities America, and are inaccurate. I have spoken with their management and they are in process of sending out a letter correcting their mistake, but in the mean time I wanted to extend our apologies for any confusion this may have caused. You do not have to do anything in response to this letter.

2016 has been an action-packed year with the S&P 500 going from being down roughly 10% in February to up nearly 10% as of the end of last week. We have also seen crude oil drop to lows of $26 then rise to nearly double that price as of this week. Finally, though many did not expect Brittan to vote in favor of exiting the European Union, it was even a greater surprise to watch markets rally just two days after the vote.

2017 is now just days away, and as we transition into the New Year, both U.S. stock and bond markets appear to be anticipating economic growth. On one hand the major stock market averages are in a positive trend while long term U.S. Treasury bonds are in a negative trend, however the world is generally not this simple. Though the stock market has been in a honeymoon phase on hopes of lower taxes, fewer regulations, and economic growth since the presidential election, that should change once the inauguration has taken place and investors realize that any expected change won’t happen right away.
We wish you and your loved ones health, prosperity and happiness in the new year.

Sincerely,
Laif E. Meidell, CMT

We hope you have a wonderful week and a great start to a new year,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HOUSEHOLD SPENDING SLOWS IN NOVEMBER

Last month, consumer spending increased 0.2%, while consumer incomes were flat. November was the first month in nine in which household incomes failed to rise, and the consumer spending advance was half that of October. Even so, with consumer confidence indices and other economic indicators becoming stronger, the November figures may represent an anomaly. Another Department of Commerce report revised third-quarter growth up to 3.5%.1

CONSUMER OPTIMISM AT A 13-YEAR PEAK

The University of Michigan’s last consumer sentiment index of 2016 came in at 98.2, 4.4 points above its final November mark. It has not been that high since January 2004. Economists polled by Thomson Reuters expected an advance to 98.0.2

HOME SALES RISE AS TEMPERATURES DROP

Resales were up 0.7% last month, according to the National Association of Realtors. The Census Bureau recorded a 5.2% November gain in new home buying. In October, new home sales fell 1.4%, while existing home sales improved 1.5%.3

CORE PCE PRICE INDEX SHOWS 1.6% YEARLY ADVANCE

The Federal Reserve’s preferred inflation meter was flat in November after ticking up 0.1% in October. The annualized gain was thereby reduced 0.2% to a number well under the central bank’s 2.0% target.1,3

SMALL WEEKLY GAINS FOR STOCKS

Across the last five trading days, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all gained a little ground. The blue chips rose another 0.46% to 19,933.81; the S&P, another 0.25% to 2,263.79. As for the Nasdaq, the tech benchmark gained 0.47% to settle at 5,462.69 Friday. More consequential, perhaps, was the descent of the CBOE VIX. The “fear index,” gauging market volatility, ended the week at a remarkably low 11.44, falling 6.23% in five days.4

THIS WEEK

U.S. stock and bond markets will be closed Monday in observance of the Christmas Day holiday. Tuesday, the Conference Board releases its last consumer confidence index of 2016 and the October S&P/Case-Shiller 20-city home price index appears. The NAR issues its November pending home sales report on Wednesday. Investors consider the latest initial unemployment claims figures on Thursday. Nothing major is slated for Friday.

December 19, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Investors came back to the market in a good mood and ready to move stock prices higher on Monday. Though the major market averages closed higher on the day, prices were off their intraday highs reached in the first half of the day. By the closing bell the Standard and Poor’s 500 was still holding on to gains of 0.20 percent and the Nasdaq Composite was higher by 0.37 percent. Though over the past four trading days the S&P 500 has closed with higher lows, a positive sign, it has also generally had lower highs, which can be a problem.

Monday’s market behavior seems to fit within the recent pattern that indicates the major averages are consolidating, or coiling, in preparation for their next major move. Though we never know exactly what direction or how long the next major market move will be, at the moment the odds favor prices resuming their trend once the consolidation is over, which is higher.

The only real news on Monday came from a speech given by Federal Reserve President, Janet Yellen, at the University of Baltimore’s mid-year commencement. In her comments, Ms. Yellen
said that wage growth is picking up “and weekly earnings for younger workers have made strong gains over the past couple of years.” She went on to say that job prospects for young workers are “very good” right now for new graduates, saying that layoffs are low and job openings are high, while pointing to the 4.6 percent unemployment rate.

Nervous investors interpreted President Yellen’s comments as a call for inflation. Bond prices experienced a sharp selloff shortly after Ms. Yellen’s comments, but bonds generally recovered by the closing bell as prices tried to form a bottom.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

FED RAISES RATES, PLOTS THREE 2017 HIKES

Federal Reserve policymakers unanimously chose to raise the benchmark interest rate by a quarter point last week. That was expected; less expected was the central bank’s adjustment to its 2017 dot-plot. Fed officials now see three rate hikes next year instead of two. The move to the new target range of 0.50-0.75% sent the dollar and bond yields higher Wednesday – the yield on the 2-year note quickly touched a peak unseen since August 2009. Stocks suffered only moderate losses after the announcement. Federal Open Market Committee members now forecast economic growth of 2.1% in 2017 and 2.0% in 2018.1

RETAIL SALES TICK UP, PRODUCER PRICES RISE

Economists, polled by Briefing.com, had expected a 0.4% October advance for retail purchases; the gain was only 0.1% instead, and 0.2% minus car and truck sales. The Producer Price Index rose 0.4% last month after a flat October; the core PPI also posted a 0.4% increase. Inflation pressure remained steady for the consumer: both the headline and core Consumer Price Index advanced 0.2% in November.2

HOUSING STARTS FALL FROM 9-YEAR PEAK

Groundbreaking declined 18.7% last month as winter arrived, with single-family starts down 4.1%. The Census Bureau also reported a 4.7% November decline in building permits.3

DOW ADVANCES, WHILE NASDAQ, S&P 500 RETREAT

A relatively calm trading week ended with the Dow Jones Industrial Average at 19,843.41, 0.44% higher than it had closed the previous Friday. Both the S&P 500 and Nasdaq Composite saw small weekly losses; the Nasdaq descended 0.13% to 5,437.16, while the S&P declined 0.06% to 2,258.07. Over on the NYMEX, light sweet crude settled at $51.94 a barrel Friday; gold at $1,135.60 an ounce.4

THIS WEEK

Lennar announces Q4 results Monday. CarMax, Darden Restaurants, FedEx, General Mills, Nike, Steelcase, and Valspar all report earnings on Tuesday. Wednesday, investors assess the latest existing home sales numbers and earnings from Accenture, Bed Bath & Beyond, Finish Line, Micron Technology, Red Hat, and Winnebago. Thursday offers new initial claims data, reports on November consumer spending and durable goods orders, the November core PCE price index, the last estimate of Q3 GDP, and earnings from Cintas. Friday brings November new home sales figures and the final University of Michigan consumer sentiment index of 2016.