Weekly Free Market Update for October 18, 2010

Presented by Mark Lund, The Investor Coach.

WEEKLY QUOTE
“The hardest tumble a man can make is to fall over his own bluff.”
– Ambrose Bierce

CPI UP JUST 0.1%, PPI ADVANCES 0.4%
In September, consumer prices barely increased – in fact, the core Consumer Price Index was flat for the second month in a row. According to the Labor Department, core CPI has risen only 0.8% in the last 12 months – core inflation hasn’t been so tame since 1961. With the economy so sluggish, retailers clearly need to keep their prices low to see if they can promote any demand. Producer prices increased for the third straight month, with the core PPI rising 0.1% for September. The core PPI is up 1.6% over the past 12 months, and the overall PPI has advanced 4.0% in that period.^1,2

CONSUMER SENTIMENT SLIPS A BIT
October’s preliminary University of Michigan/Reuters consumer sentiment index is in, and it shows a mild decline. Analysts weren’t expecting the index to move south, but it went to 67.9 from the final 68.2 September reading.³

RETAIL SALES UP BY 0.6% FOR SEPTEMBER
On Friday, the Commerce Department reported the second straight monthly advance in the category, after a revised 0.7% gain for August. Sales improved across almost all retail categories – they only weakened at clothing stores.³

BUSINESS INVENTORIES GROW IN AUGUST
Business stockpiles increased by 0.6% in that month, according to the Commerce Department. This follows a 1.1% increase for July. Both of those gains will likely constitute major contributions to 3Q GDP. On the downside, business sales only improved by 0.1%, leaving the inventory-to-sales ratio at 1.27 months.⁴

WALL STREET RIDES A 2-WEEK WIN STREAK
The Dow, S&P 500 and NASDAQ all advanced last week. The DJIA gained 0.51% for the week to close at 11,062.78 on Friday. The NASDAQ ended last week at 2,468.77 after a 2.78% weekly gain; the S&P 500 wound up at 1,176.19 after a 0.95% weekly advance.⁵

COMING NEXT WEEK: On Monday, we have a report on September industrial output; on Tuesday, we get data on September housing starts and building permits; on Wednesday, the Federal Reserve’s newest Beige Book comes out; and on Thursday, we receive fresh initial claims numbers and the Conference Board’s leading indicators index for September.

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov – 10/15/10^5,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
What is placed on a table and cut, but never eaten?

Last week’s riddle:
I am a word that signifies a wide natural area – but remove my first letter, and you are left with a word signifying a narrow urban corridor. What word am I?

Last week’s answer:
Valley – remove the V and you get “alley”.

Citations.
1 – bloomberg.com/news/print/2010-10-15/consumer-prices-in-u-s-rise-0-1-in-september-core-unchanged.html [10/15/10]
2 – foxbusiness.com/markets/2010/10/14/september-producer-prices-rise/ [10/14/10]
3 – bloomberg.com/news/2010-10-15/u-s-consumer-confidence-unexpectedly-decreases-to-67-9-in-michigan-index.html [10/15/10]
4 – reuters.com/article/idUSTRE69E2RQ20101015 [10/15/10]
5 – cnbc.com/id/39690885 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F15%2F09&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F15%2F09&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F15%2F09&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F14%2F05&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F14%2F05&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F14%2F05&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F16%2F00&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F16%2F00&x=0&y=0 [10/15/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F16%2F00&x=0&y=0 [10/15/10]
7 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/15/10]
7 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/15/10]
8 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative’s Broker/Dealer. This information should not be construed as investment advice. 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. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. 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 other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.