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Weekly Newsletter

December 12, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Stock prices retreated and markets cooled some on Monday, after last week’s strong gains took the major market averages to new highs. The Standard and Poor’s 500 slipped 0.11 percent and Nasdaq Composite fell 0.59 percent, as some investors took profits and others appeared content to wait for the outcome of Wednesday’s FOMC meeting announcement.

On Monday, the Dow Jones Industrial Average rose 39.58 points to close at a new all-time high of 19,796.43. The Industrial Average is made up of only 30 companies and is more prone to outperform or underperform the more broadly diversified stock market indexes. In this case, it was energy, consumer staples and health care sectors that gave the Industrial Average its additional lift.

As of Monday evening, the Fed Fund futures were still predicting a 100 percent chance the Fed will raise rates on Wednesday at the conclusion of this week’s FOMC meeting.

Since the last Fed meeting in September the expectations for the economy has shifted. At that time, the Fed reduced their prospects for economic growth and inflations and increased their unemployment expectations into the year end. However, since then the unemployment rate has fallen to 4.6 percent and third quarter economic growth jumped by 2.9 percent, well above expectations. Many use the stock market as a gauge of the economy and investor optimism about the future. The recent market advance has most investors comfortable with a rate increase this week.

With all the good news surrounding the U.S. economy, some are beginning to speculate that the Fed’s rate increase could be as high as 0.5 percent this time around, versus the traditional 0.25 percent hike. Most investors will be paying extra close attention for any indication of the pace of future rate hikes in 2017.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

SERVICE SECTOR LOOKS VERY HEALTHY

The Institute for Supply Management’s monthly services index improved 2.4 points in November to a 57.2 reading. Analysts polled by Briefing.com had expected a small gain to 55.6. It was the PMI’s best reading since October 2015, and it marked the 82nd consecutive month of expansion for the non-manufacturing segment of the economy.1

HOUSEHOLD SENTIMENT SOARS

Rising 4.2 points to a mark of 98.0, December’s initial University of Michigan consumer sentiment index came in just a tenth of a point below its most recent (2015) peak. This was one of the index’s three highest readings in the last 12 years. The main reason, in the words of University of Michigan economist Richard Curtin: “More consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys.”2

OIL FINISHES THE WEEK WITH A FLOURISH

WTI crude advanced 1.22% Friday, reaching $51.46 a barrel as Wall Street ended its trading day. Gold and silver respectively slipped 1.11% and 1.03% on the same day; gold ending the week at $1,159.40 an ounce, and silver, at $16.92 an ounce.3

WILL THE DOW HIT 20,000 BEFORE THE END OF 2016?

Investors are starting to wonder. As stocks closed at record highs Friday, the blue chips settled closer to that potential milestone at 19,756.85. The Dow gained 3.06% on the week. Five-day advances for the S&P 500 and Nasdaq Composite were even greater. The Nasdaq rose 3.59% to 5,444.50 during the week, while the S&P climbed 3.08% to 2,259.53. When the closing bell rang Friday, the S&P was up 4.39% month-over-month, the CBOE VIX volatility index down 17.08% in a month.3

THIS WEEK

Monday, Verifone Systems announces quarterly results. Nothing notable is slated for Tuesday.The Federal Reserve makes an interest rate decision on Wednesday, and in addition to that, Wall Street will react to the November Producer Price Index, reports on November retail sales and industrial output, and earnings from Pier 1 Imports, Progressive and Worthington Industries. November’s Consumer Price Index, and the latest initial jobless claims report arrive Thursday, as well as earnings from Adobe Systems, Jabil Circuit, Navistar, Oracle, and Rite Aid. Friday, the Census Bureau releases data on November groundbreaking and building permits, and Carnival presents a new earnings report.

December 6, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

U.S. stocks index futures traded lower on Sunday after Italy voted not to pass a sweeping referendum on constitutional issues, designed in part to shrink the size of the government and cut government spending. The referendum was spearheaded by Italian prime minister, Matteo Renzi who indicated that he would resign following the “No” vote on the referendum. Though markets were temporarily stunned by the news from Italy, U.S. stock futures quickly regained their footing and recovered their losses.

The major market averages gapped higher at the opening bell on Monday, and held onto most of their gains throughout the trading day. By the market’s close, the Standard and Poor’s 500 was higher by 0.58 percent and the Nasdaq Composite had risen 1.01 percent. What some are noticing is how quickly market are springing back from situations of uncertainty. In the past six months, investors have stared down fears of fallout over the “Brexit” vote, the U.S. presidential election, and now the Italian referendum and each time have recovered more quickly than the last.

There was more good news on the economy Monday as the ISM non-manufacturing index for November leaped 2.4 points to a reading of 57.2. A reading of 50 or greater indicates economic expansion, so the November report indicates an acceleration of growth. The ISM non-manufacturing index is a survey of over 375 firms from various sectors of the economy that includes construction, mining, agriculture, forestry, and fishing and hunting. Some of the highlights from the report included growth in employment, new orders and business activity.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

JOBS REPORT SHOWS UNEMPLOYMENT AT 4.6%

America’s jobless rate fell to a nine-year low in November as companies added 178,000 net new jobs. The U-6 rate (including the underemployed decreased) 0.2% to 9.3%. There were some negatives: yearly wage growth moderated to 2.5%, and the labor force participation rate ticked down to 62.7%, in part because of baby boomer retirements.1

STRONG CONSUMER CONFIDENCE, SPENDING, GDP

As November ended, the Conference Board’s monthly consumer confidence index rose 6.3 points to a mark of 107.1. In October, personal spending increased 0.3%, according to the Census Bureau, with personal incomes up 0.6%. The Bureau of Economic Analysis revised third quarter growth upward by 0.3% to 3.2% last week.2

PENDING HOME SALES, HOME PRICES SEE GAINS

The S&P/Case-Shiller 20-city home price index showed a 5.5% annualized gain in its September edition, improved from 5.2% in August. Housing contract activity rose another 0.1% in October, according to the National Association of Realtors.2

MANUFACTURING INDEX IMPROVES

The Institute for Supply Management’s November purchasing manager index for the factory sector rose 1.3 points to 53.2, indicating another month of expansion. Analysts polled by MarketWatch had projected a reading of 52.5.2

OIL PRICES SKYROCKET; S&P 500 DECLINES

News of OPEC’s oncoming production cut drove WTI crude to its best week since January 2009. Futures settled Friday at $51.68 on the NYMEX, up 12.2% in five days (including a Thursday-Friday leap of almost 13%). Only the Dow Jones Industrial Average advanced among key Wall Street indices last week, rising 0.10% to 19,170.42. The S&P 500 dipped 0.97% on the week to 2,191.95; the Nasdaq Composite, 2.65% to 5,255.65; and the Russell 2000, 2.45% to 1,314.25.3,4

THIS WEEK

November’s ISM non-manufacturing PMI appears Monday. Earnings from Analogic, AutoZone, Bob Evans Farms, Dave & Buster’s, Michaels Stores, and Toll Brothers arrive Tuesday, plus a report on October factory orders. Wednesday’s earnings parade includes results from Casey’s General Stores, Costco, H&R Block, and Lululemon Athletica. A new initial jobless claims report comes out on Thursday, along with earnings from Broadcom, Dell, Hovnanian, and Toro. Friday brings the initial December consumer sentiment index from the University of Michigan.

November 29, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Clearly all the positive vibes that surround a weekend of good food, football, family and friends had worn off by the opening bell on Monday, as U.S. stocks snapped their winning streak after the long holiday weekend. For the major market averages, Monday’s decline was a well-deserved rest after the gains made over the prior week, with the Standard and Poor’s 500 off 0.53 percent and the Nasdaq Composite lower by 0.56 percent. However, for the Russell 2000 small company index, Monday’s decline of 1.29 percent ended the index’s longest winning streak in 20 years, with 15 consecutive daily gains for the index that began the Friday prior to the presidential election.

U.S. crude oil prices jumped 2.2 percent on Monday to $47.08 per barrel, as investors attempt to anticipate the outcome of this week’s meeting of major oil producers in Vienna. Back in September, the members of OPEC agreed to cut oil production to manage the global oil supply glut. However, the details of that commitment such as who is going to cut and by how much, was left to be worked out this Wednesday in Vienna. So far, OPEC has been all talk and no action, so it will be a pleasant surprise if a decision is finally reached.

This week all eyes will be on the November employment report due out this Friday. In prior months, investors would have use the bellwether economic report to determine the likelihood the Federal Reserve will raise interest rates at their next meeting. However, the Fed fund futures are currently predicting a 100 percent chance the Federal Reserve will raise interest rates when they meet on December 14th, so Friday’s employment report will likely have more of an impact on what the Fed does in 2017.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

STOCKS SETTLE AT ALL-TIME HIGHS

An abbreviated trading week was also a historic week on Wall Street, as the four key U.S. equity indices all reached new peaks. At Friday’s closing bell, the Russell 2000 settled at a record 1,347.20 after its fifteenth straight day of gains; it was up 2.37% for the week. The Dow advanced 1.47% on the week to a Friday close of 19,152.14. Adding 1.42% in three-and-a-half days, the Nasdaq ended the week at 5,398.92. The S&P 500, which finished Friday up more than 3% since the election, rose 1.40% on the week to 2,213.35.1,2,5

EXISTING HOME SALES RISE, NEW HOME SALES FALL

The National Association of Realtors announced a 2.0% gain for resales in October. Existing home sales have kept their momentum, even with inventory down 4.3% and the median sale price up 6.0% in the past year. According to the Census Bureau, new home sales declined 1.9% in October, but were still up 12.7% year-over-year.3

CONSUMER SENTIMENT IMPROVES

At a final November mark of 93.8, the University of Michigan’s household sentiment index surpassed the consensus forecast of economists polled by MarketWatch, who expected a 92.0 reading. The index’s initial November edition had a reading of 91.6.4

DURABLE GOODS ORDERS RISE 4.8%

October’s gain in capital goods orders was the largest measured by the Department of Commerce in a year. A 94% increase in commercial aircraft orders was a major factor. Business investment rose 0.4% in October.3,4

THIS WEEK

Shoe Carnival and Thor Industries announce earnings on Monday. On Tuesday, the federal government releases its second estimate of Q3 growth, the Conference Board’s November consumer confidence index and the September S&P/Case-Shiller home price index both appear, and Autodesk and Tiffany present Q3 results. Wednesday brings ADP’s November employment change report, October consumer spending figures, the October PCE price index, a new Beige Book from the Federal Reserve, the NAR’s latest pending home sales index, and earnings from American Eagle Outfitters, Guess, and La-Z-Boy. Thursday, investors look at the latest initial jobless claims figures, the November Challenger job-cut report, November’s ISM manufacturing PMI, and earnings from Dollar General, Express, Five Below, Kroger, Land’s End, Sears Holdings, and Smith & Wesson. The November employment report from the Department of Labor arrives Friday, along with earnings from Big Lots and Fred’s.

November 14, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

The major market averages finished mixed on Monday with the Dow Jones Industrial Average up a mere 0.11 percent and the Nasdaq Composite down 0.36 percent on the day. On the surface, the major market averages gave the appearance that investors needed a rest, after leaping higher following last week’s presidential election. However, just as a story can have both a primary story line and a subplot, on Monday the primary story line drifted while the subplot was still exciting. In the case of the stock market, the subplot was the Russell 2000 small company stock index up 1.26 percent on Monday, and now higher by 9.45 percent over the past five trading days.

The recent move higher in small company stocks tells us two things, first, that the liquidity in the stock market is favorable, and second, that we may be entering a period when the stock market outperforms other assets, thanks to the small company leadership we are seeing now.

Investors shunned bonds for a sixth day in a row on Monday with the Bloomberg 7-10 Year U.S. Treasury Bond Index down 0.58 percent. There has been a major shift in interest rates over the past week with U.S. 10 Year Treasury Yield closing at 2.22 percent on Monday versus 1.86 percent just five days ago. Many investors are now asking themselves whether this is the pivot point in the bond market that many have been waiting for, where interest rates now begin to rise.

Additionally, higher interest rates usually lift currency prices, so it’s not surprising to see the Deutsche Bank Long U.S. Dollar Futures Index up 0.98 percent on Monday, and now very close to its 12-month high.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

BLUE CHIPS HIT ALL-TIME HIGHS

Donald Trump’s unexpected presidential election win did not rattle Wall Street. Instead, bulls saw the prospect of greater federal outlays and less business regulation in the near future. The Dow Jones Industrial Average closed at a new record Friday: 18,847.66. The Dow 30 had its finest week since 2011, gaining 5.36%. As for the S&P 500, it advanced 3.80% in five days to 2,164.45. Settling at 5,237.11 Friday, the Nasdaq Composite rose 3.78% on the week.1,2

FED’S FISCHER: TIME FOR GRADUAL TIGHTENING

Stating that the central bank “appears reasonably close to achieving both inflation and employment components of its mandate,” Federal Reserve vice chairman Stanley Fischer noted Friday that “the case for (raising interest rates) gradually is quite strong, keeping in mind that the future is uncertain and that monetary policy is not a preset course.” Some analysts believe sizable infrastructure spending under a Trump administration could spur inflation. On Friday, Fed fund futures contracts implied an 81% chance of a hike at the central bank’s December meeting.3

CONSUMER SENTIMENT ROSE BEFORE ELECTION

Displaying a reading of 91.6, the University of Michigan’s preliminary November household sentiment index climbed 4.4 points off its final October mark. Analysts polled by Bloomberg forecast an initial November reading of 87.9 for the gauge.4

CRUDE, GOLD PRICES DECLINE

As Wall Street rallied, key commodities had a tough week. Oil and gold were among them. The yellow metal settled at $1,227.40 an ounce on the COMEX Friday, leaving it down 3.75% at the end of this second week of the month. Oil ended the week at $43.12 a barrel on the NYMEX; it has sunk 7.78% so far in November.5

THIS WEEK

Advance Auto Parts and Smart & Final present Q3 results Monday. October retail sales numbers arrive Tuesday, plus earnings from Agilent Technologies, Aramark, Beazer Homes, Dick’s Sporting Goods, Diebold, and Home Depot. Wednesday, investors consider earnings from Cisco, L Brands, Lowe’s, NetApp, and Target, plus the October Producer Price Index. Thursday, Federal Reserve chair Janet Yellen testifies on the economic outlook in Congress, the October Consumer Price Index is released, October groundbreaking and building permit numbers are announced, and America’s Car-Mart, Applied Materials, Best Buy, Bon-Ton, Gap, Intuit, J.M. Smucker, Ross Stores, Spectrum Brands, Staples, Stein Mart, Walmart, and Williams-Sonoma offer earnings. Abercrombie & Fitch and Foot Locker announce Q3 results Friday.

November 7, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

Investors and analysts spend a lot of time watching the Fed, more accurately referred to as the Federal Reserve, to get their opinion on the economy and see how this might impact short term interest rates, also referred to as monetary policy. However, it was the Feds, as in FBI, that jolted U.S. stock market futures higher Sunday evening, after the announcement from FBI Director Comey. U.S. stocks gapped higher at the opening bell on Monday while making additional gains throughout the day. By the end of the trading day all the major market averages had recovered over two percent with the Standard and Poor’s 500 up 2.22 percent.

To say that investors are getting jittery before the presidential election is an understatement, Monday’s gains have erased all the losses over the past week and then some.

Still some may be trying to determine the outcome off the election based on Monday’s stock markets’ gains, but we only have to look back to June of this year, prior to the U.K.’s “Brexit” vote, to find a time when that strategy failed. In the case of the “Brexit”, market trends, polls, and even odds makers were all indicating that the “Remain” vote would win. However, that clearly is not how things turned out.

In cases like we find ourselves in today, it typically pays to react to the real news instead of trying to anticipate it. Once we know the results of the election, calmer heads usually prevail even if it’s not our preferred candidate.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

NEW DATA SHOWS BRIGHTER JOBS PICTURE

Unemployment fell to 4.9% in October as firms added 161,000 net new workers, but that was just one positive from the Department of Labor’s latest summary of the U.S. employment situation. Year-over-year wage growth reached 2.8%, the best number seen since June 2009, as average hourly pay rose ten cents last month. The U-6 rate (underemployment + unemployment) fell 0.2% to 9.5%. In addition, hiring totals across August and September were revised higher by 44,000.

CONSUMER SPENDING ROSE IN SEPTEMBER

The ninth month of 2016 saw gains of 0.5% in personal spending and 0.3% in personal incomes, the Commerce Department reported last week. Adjusted for inflation, consumer spending advanced 0.3% for September, as opposed to retreating 0.2% in August.2

MORE EXPANSION AMONG SERVICE & FACTORY FIRMS

The Institute for Supply Management’s twin barometers of the U.S. manufacturing and non-manufacturing sectors were both comfortably above the 50-mark showing growth in October. ISM’s factory purchasing managers index came in at 51.9, up 0.4 points; its service sector PMI declined 2.3 points to 54.8.3

STOCKS PULL BACK

The Federal Reserve left interest rates alone last week, just as many analysts predicted – but investors were more concerned with the upcoming presidential election and earnings, and those anxieties certainly impeded the bulls. Across five days, the Dow Jones Industrial Average fell 1.50% to 17,888.28; the S&P 500, 1.94% to 2,085.18; and the Nasdaq Composite, 2.77% to 5,046.37.1,4

THIS WEEK

Earnings from AMC Entertainment, Dean Foods, Hertz Global, Marriott International, MGM Resorts, Priceline, Rosetta Stone, and Scripps Networks arrive Monday. Tuesday is Election Day, with CVS Health, D.R. Horton, and TripAdvisor joining the fall earnings parade. Wednesday, Wall Street looks at earnings from AmeriGas, Clear Channel Outdoor, Coty, Energizer, Green Dot, Magellan Health, NetEase, Norwegian Cruise Line, Popeye’s, Viacom, and Wendy’s. A new initial claims report comes out Thursday, plus earnings from Kohl’s, Macy’s, Michael Kors, Nordstrom, Nvidia, Ralph Lauren, Sigma Labs, and Walt Disney Co. This Friday is Veterans Day: the stock market is open, the bond market is closed, November’s initial University of Michigan consumer sentiment index appears, and J.C. Penney and Weibo release Q3 results.

November 1, 2016 – Weekly American Wealth Review

By Weekly Newsletter

Weekly Letter

October usually gets a bad rap as a negative month for the stock market, and it also tends to be a low point for the stock market, the kind of low from which stocks usually rally. However, as October came to a close on Monday, that low point is still not apparent just yet. Part of the reason for this is due to three significant events coming up this week and next, these are the November FOMC meeting announcement this Wednesday, the October employment report this Friday, and the Presidential election next Tuesday. Any one of theses events would cause investors to push the pause button and wait for the results before making any new commitments, let alone all three.

U.S. crude oil fell 3.90 percent to $46.76 per barrel on Monday, after OPEC failed to nail down a plan that would cut global oil supplies over during a series of meetings over the weekend. So far, OPEC has been successful at holding oil prices aloft with verbal promises of a coordinated effort to cap global production. However, OPEC’s inability to deliver may set in motion a larger pull back in the coming months.

During October, the U.S. Dollar rose back to where it began the year and bond yields rose, as signs of inflation may be an indicating that the economy is picking up. The expectation that inflation will rise can be seen in the recent gains in the 10-year treasury yield that closed on Monday at 1.83 percent, well off its July low of 1.36 percent earlier this year.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

ECONOMY EXPANDS 2.9% IN THIRD QUARTER

After just 1.4% growth in Q2, this was welcome news. Surging exports and greater inventory investment and federal spending made Q3 the best quarter for the economy in two years, according to the Department of Commerce. The federal government’s core PCE price index was up 1.7% for the quarter versus 1.8% in Q2.1

CONSUMER CONFIDENCE INDICES DESCEND

Last week, the Conference Board’s gauge of household confidence came in at 98.6 for October, down from 103.5 in September. The University of Michigan’s final October consumer sentiment index slipped to 87.2 from its prior mark of 87.9.2

PENDING HOME SALES REBOUND

The National Association of Realtors noted a 1.5% gain in housing contract activity in September, following a 2.5% downturn in August. The August S&P/Case-Shiller home price index revealed a 5.3% annual rise in U.S. home values.2

BLUE CHIPS FARE BEST DURING A MIXED WEEK

Across five trading days, the Dow Jones Industrial Average rose 0.09% to settle at 18,161.19 Friday. Weekly losses struck the S&P 500 (0.69% to 2,126.41) and Nasdaq Composite (1.28% to 5,190.10).3

THIS WEEK

September consumer spending figures are out on Monday, along with earnings from Aegion, Anadarko Petroleum, Loews, Nautilus, and Tesoro. Tuesday, ISM releases its October factory PMI and Archer Daniels Midland, Coach, Cummins, Electronic Arts, Gilead Sciences, Kellogg, Molson Coors, Mosaic, Noble Energy, Occidental Petroleum, Papa John’s, Pfizer, Square, U.S. Steel, Western Union, and Wingstop announce earnings. Wednesday, the Federal Reserve makes its latest policy statement, ISM’s service sector PMI appears, ADP issues its September payrolls report, and earnings news arrives from Allergan, Allstate, AIG, Anthem, Avis Budget, Clorox, Estee Lauder, Facebook, GoDaddy, iHeartMedia, Marathon Oil, MetLife, Office Depot, Prudential, Red Robin, Sunoco, Take-Two Interactive, Time Warner, Transocean, Whole Foods, Yelp, and Zynga. The October Challenger job-cut report and the latest initial claims figures come out Thursday, and Alamo Group, AMC Networks, Avon, Chesapeake Energy, Cigna, Fluor, GoPro, Hyatt Hotels, Icahn Enterprises, Kemper, Kraft Heinz, Lions Gate, Monster Beverage, Noble Corp., Starbucks, and TiVo all join the earnings parade. Friday, the Department of Labor provides its October jobs report, and Duke Energy, Humana, Jamba, and Revlon present earnings.

Economic Update

By Weekly Newsletter

Investors seem to be pleased with the results so far this earnings season, as we saw on Tuesday, as stocks rose following better than expected earnings news from several well-known blue chip companies. The major market averages gapped higher at the opening bell, then held onto their gains throughout the day with the Standard and Poor’s 500 higher by 0.62 percent and the Nasdaq Composite gaining 0.85 percent on Tuesday.

However, investors now have several macro events to consider beyond just quarterly earnings. In addition to the presidential election just three weeks away, investors are considering the next interest rate move from the Federal Reserve, and looking for greater clarity on the Brexit. In the short term, favorable earnings reports that would have previously driven stock prices higher may have less of an effect until the uncertainty of the election is over, or the Federal Reserve meeting in December or both.

Back in 2013, just knowing the Federal Reserve was planning to cut financial stimulus sent the bond market into a tailspin, with bond prices falling and interest rates rising. Though some are anticipating such an event prior to the next rate increase, the bond market seems less nervous this time around. This could be due in part to recent comments by Fed vice-chairman Stanley Fischer; who at the beginning of the week said that variables such as “weak growth prospects, an aging population, poor investments and a slowing growth trend overseas,” were impeding raising interest rates.

Commodity prices got a lift on Tuesday, as the U.S. Dollar stabilized on the idea that interests would not go much higher in the short term.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

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.

10-17-16

10-11-2016 Weekly American Wealth Review

By Weekly Newsletter

The major market averages were given a boost on Monday led by energy stocks, after Russian President Vladimir Putin said he would support international efforts to put a cap on oil supplies and hoped OPEC producers would come to an agreement on appropriate production curbs at their next meeting in November. U.S. crude oil lurched higher following the news, to close up 2.71 percent at $51.15 per barrel, the highest close since June of this year. The Standard and Poor’s 500 rose 0.46 percent and the Nasdaq Composite gained 0.69 percent, as the Dow Jones U.S. Energy index led the broad stock market gaining 1.64 percent on the day.

Investors received uneventful news on the U.S. economy last Friday, after the non-farms payroll report showed that fewer jobs were created during the month of September than expected, with only 156,000 jobs created. The employment report is a key indicator of the strength in the U.S. economy, and is heavily relied upon by the Federal Reserve to determine our countries monetary policy.

The deceleration in the rise of interest rates over the past two days suggests investors believe the probability the Federal Reserve will raise interest rates in November has diminished. In the meantime, the likelihood of a rate increase in December is now 69.2 percent according to the Fed fun futures. As we get closer to the December FOMC meeting, there is a greater chance that bonds and dividend paying stocks will start to underperform.Today is the start of quarterly earnings season with the first major corporations releasing their third quarter results before this morning’s opening bell. Though there are fewer economic reports due out this week, investors are looking forward to the FOMC minutes due out this Wednesday, to get a sense of the Feds discussion on interest rates during last month’s meeting.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

HIRING PICKED UP IN THE THIRD QUARTER

Employers added 156,000 net new jobs to their payrolls in September, the Department of Labor stated Friday. The August gain was revised up to 167,000, so monthly job growth averaged 192,000 in Q3, improved from 146,000 in Q2. The unemployment rate ticked up to 5.0% in September; the U-6 underemployment rate remained at 9.7%. Yearly wage growth reached 2.6%, with the average hourly wage rising six cents to $25.79.1,2

ISM INDICES SHOW A SEPTEMBER REBOUND

America’s manufacturing sector grew again last month; the Institute for Supply Management’s factory PMI improved to 51.5 in September, recovering from its recessionary August mark of 49.4. The Institute’s non-manufacturing PMI surged north 5.7 points last month, rising to 57.1.2

OIL & GOLD PRICES HEAD IN OPPOSITE DIRECTIONS

On Friday, gold closed down at $1,251.90 on the COMEX, falling about 5% for the week. Light sweet crude advanced just over 3% last week, closing at $49.81 on the NYMEX Friday, even after a 1.3% loss during the trading week’s last session.3

STOCKS END THE WEEK SLIGHTLY LOWER

The numbers contained within Friday’s jobs report did not exactly spark a rally, so the S&P 500 settled at 2,153.74, losing 0.67% for the week. The Nasdaq Composite and Dow Jones Industrial Average both descended 0.37% across five trading days to respective Friday closes of 18,240.49 and 5,292.40.4

THIS WEEK

Monday is Columbus Day. Wall Street will be open for business, but federal government offices and banks will be closed. Tuesday, a new earnings season starts with results from Alcoa, Barracuda Networks, and Fastenal. Wednesday, the Federal Reserve releases minutes from its September monetary policy meeting, and CSX Corp. announces Q3 earnings. Thursday’s earnings parade includes results from Delta Air Lines, Winnebago, and Wynn Resorts; a new initial jobless claims report also arrives. Fed chair Janet Yellen speaks on Friday in Boston about the economic recovery; Wall Street will consider her comments, along with the preliminary October University of Michigan consumer sentiment index, September retail sales numbers, the September PPI, and earnings from Citigroup, JPMorgan Chase, PNC, and Wells Fargo.

10-4-2016 Weekly American Wealth Review

By Weekly Newsletter

Stocks began the new month on Monday with little enthusiasm, as the major market averages gave back a portion of last Friday’s gains. Maybe it was British Prime Minister Theresa May’s comments on Sunday that took wind out of the markets’ sales, when she said the U.K. would start separating itself from the European Union by the end of March. Many have wondered what shape the Brexit would take, but so far the intent seems to be for what some are calling a “hard Brexit” or in other words a clean break. Though the major market averages attempted to recover some of their losses in the last hour of trading, by the closing bell, the Standard and Poor’s 500 was off 0.33 percent and the Nasdaq Composite had slipped 0.21 percent.

On Monday, investors learned that the manufacturing sector of the U.S. economy expanded for the month of September with the ISM Manufacturing Index gaining over 2 points to 51.4. This was a welcome relief after the August manufacturing index contracted, due to an unexpected decline in new orders, and sending the index below 50 to 49.4. It takes a reading of 50 or above to indicate expansion. Some of the highlights of the September report were new orders gaining 6 points to 55.1, production up 1.4 points to 52.8, and export orders which held firm at 52.0.

In other economic news, motor vehicle sales also improved during September gaining 4.7 percent to a 17.8 million annualized rate. This higher than expected growth in auto sales is solid evidence that the U.S. economy was strong during the month of September, as sales of North American made models grew by 6.0 percent to 14.2 million. Strong auto sales are typically a reflection of a health jobs market, something we expect to hear more about this Friday when the September employment report is released.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

NO ADVANCE IN CONSUMER SPENDING

Personal spending was flat in August even as personal incomes rose 0.2%. These numbers from the Department of Commerce fell short of expectations: economists polled by MarketWatch had forecast a 0.2% gain in both categories. In other news linked to consumer spending, the federal government revised second-quarter GDP up to 1.4% in its third estimate; it had previously put Q2 growth at 1.1%.1

HOUSEHOLD CONFIDENCE IMPROVES

September brought a big jump in the Conference Board’s closely watched consumer confidence index, which rose 3.0 points to 104.1. The University of Michigan’s consumer sentiment index ended September at 91.2, up from 89.8 at the end of August; the main factor in that gain was an improved outlook among higher-income households.1,2

NEW HOME SALES DIP 7.6%

This housing indicator tends to be very volatile, and this August retreat follows a 13.8% July advance. The median new home price was down 5.3% in August from a year earlier, the Census Bureau noted. Looking at other real estate data, the July edition of the 20-city S&P/Case-Shiller home price index showed a 5.0% annual increase in existing home values, ticking down from 5.1% in June; the National Association of Realtors said that pending home sales fell 2.4% in August.1,3

MINOR GAINS IN A WEEK OF MAJOR UPS & DOWNS

The last week of September saw the three major U.S. equity indices advance. The Dow Jones Industrial Average rose 0.26%; the S&P 500 gained 0.17%; and the Nasdaq Composite added 0.12%. The September 30 settlements: Dow, 18,308.15; S&P, 2,168.27; Nasdaq, 5,312.00.4

THIS WEEK

Monday offers ISM’s September manufacturing PMI and quarterly results from The Container Store. Tuesday, Wall Street considers earnings from Darden Restaurants and Micron Technology. On Wednesday, ISM releases its September service sector PMI; ADP issues its September payrolls report; data on August factory orders appears; and Constellation Brands, Monsanto, and Yum! Brands announce earnings. In addition to a new initial jobless claims report, Thursday brings the latest Challenger job-cut data and Q3 results from Ruby Tuesday. Friday, the focus turns to the Department of Labor’s September jobs report.

Market Review


Pat Meidell, Laif Meidell and Heidi Foster are Registered Representatives with and offer securities through M.S. Howells & Co., member FINRA/SIPC. Investment advice is offered through American Wealth Management, a registered investment advisor and a separate entity from M.S. Howells & Co. A portion of 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. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. 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 [9/30/16] 2 – sca.isr.umich.edu [9/30/16] 3 – latimes.com/business/la-fi-new-home-sales-20160926-snap-story.html [9/26/16] 4 – markets.wsj.com/us [9/30/16] 5 – bigcharts.marketwatch.com/historical/default.asp [9/30/16] 6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/30/16] 7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/30/16]

9-26-2016 Weekly American Wealth Review

By Weekly Newsletter

Stocks were down on Monday as financial shares across the globe suffered the largest decline of a single sector. This weakness in the financial stocks comes in part as a result of the Fed’s decision last week to keep interest rates unchanged until at least November, and concern over the impact of a settlement between a major European bank and the U.S. Justice Department. For others, the uncertainty of the presidential election may be beginning to weigh on investors’ minds, due to the first presidential debate that was held on Monday.U.S. stock futures began losing ground on Sunday as markets in Europe and Asia declined, leading the major market averages to a lower price at the opening bell. Not even higher oil prices on Monday could invigorate the stocks market as U.S. crude oil gained 3.3 percent to $45.93 per barrel. Though most of the day’s losses occurred in the first thirty minutes of trading, prices spent most of the day at the bottom of the range closing near their lowest prices of the day, with the Standard and Poor’s 500 down 0.86 percent and the Nasdaq Composite off 0.91 percent.This week is expected to be relatively light on economic news, but throughout the week eleven members of the Federal Reserve are scheduled to speak to include Federal Reserve President Janet Yellen. This barrage of messages from the Federal Reserve should keep investors on their toes.

Sincerely,
Laif E. Meidell, CMT

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

Weekly Economic Update

FED WAITS TO RAISE INTEREST RATES

Federal Reserve officials decided against a rate hike last week, but two details in the central bank’s latest policy statement suggested an upward move was near. One, the Federal Open Market Committee voted 7-3 against raising the federal funds rate – an unusually close margin. Two, the Fed’s new dot-plot forecast showed consensus for a rate increase before the end of 2016. “Our decision [to wait] does not reflect a lack of confidence in the economy,” Fed chair Janet Yellen told the media after the announcement. “We’re generally pleased with how the U.S. economy is doing.”1

FEWER HOUSING STARTS, LESS HOMEBUYING

August saw existing home sales dip 0.9%; as the National Association of Realtors delivered that news, it also revised its July sales calculation to a decline of 3.4%. A Census Bureau report showed housing starts falling 5.8% last month, and building permits decreasing 0.4% following an 0.8% retreat in July.2OIL GAINS FOR WEEK, EVEN WITH 4% FRIDAY FALL
WTI crude settled Friday at $44.48 on the NYMEX, even after the price slipped 4% in one trading day. The worst daily drop for the commodity since July 13 did not stop crude from posting a 2% weekly gain.3

TURBULENCE, BUT ALSO AN ADVANCE

Stocks pushed through volatility and gained ground last week. Across five trading days, the Dow Jones Industrial Average rose 0.76%; the Nasdaq Composite, 1.17%; and the S&P 500, 1.19%. The three indices closed, as follows, Friday: Dow, 18,261.45; Nasdaq, 5,305.75; S&P, 2,164.69. Incidentally, the Dow Jones Utility Average ended the week at +20.15% YTD.4

THIS WEEK

Monday brings August new home sales data, earnings from Carnival and Thor Industries, and the first presidential debate. The Conference Board’s September consumer confidence index and the July Case-Shiller home price index arrive Tuesday, plus quarterly results from Cintas and Nike. On Wednesday, Fed chair Janet Yellen testifies on bank supervision and regulation before the House Financial Services Committee, the latest durable goods orders report appears, and Paychex and Pier 1 present quarterly results. Thursday, Janet Yellen speaks at a Kansas City Fed conference, NAR issues its August pending home sales report, the final number on Q2 GDP comes out of Washington, and new initial claims figures appear, along with earnings from ConAgra Foods, Costco, and PepsiCo. August personal spending data and the final September consumer sentiment index from the University of Michigan take the spotlight Friday.