JOBLESS RATE DROPS, SURPRISING ANALYSTS
Non-farm payrolls expanded by 146,000 positions in November. Economists polled by Reuters had expected only 93,000 new jobs because of the impact of Superstorm Sandy. Yet while the jobless rate dipped to 7.7% last month, it was largely because fewer people sought work; the labor force participation rate was 63.6%, scraping an all-time low. The economy has added an average of 151,000 jobs a month in 2012, about 25% less than the growth needed to dramatically reduce unemployment.1,2
SENTIMENT INDEX SLIPS
The fiscal cliff issue and ferocious weather may have been big factors in the sudden 8.2% drop in the University of Michigan’s consumer sentiment index. November’s 74.5 preliminary reading was far from the number (82.7) that economists surveyed by Reuters had forecast.2
MANUFACTURING CONTRACTS
For November, the Institute for Supply Management gauged service sector expansion and manufacturing sector contraction. ISM’s manufacturing index fell to 49.5 for the month, down from 51.7 in October. The non-manufacturing index was at 54.7, improved from October’s 54.2 mark.3
MIXED WEEK FOR STOCKS, NO PROGRESS AT THE CLIFF
With the fiscal cliff less than four weeks away, neither Democrats nor Republicans were citing any compromise on tax rates on Capitol Hill (though the idea of setting the top federal tax bracket at 37% rather than 39.6% had emerged). House Speaker John Boehner said that the White House had “wasted another week” due to the Obama administration’s stubbornness; House Democratic leader Nancy Pelosi felt that the Republican leadership was just as inflexible. The major index performance for the week: Dow, +0.99% to 13,155.13; NASDAQ, -1.07% to 2,978.04; S&P 500, +0.13% to 1,418.07. Oil ended the week at just $85.93 a barrel on the NYMEX and gold settled Friday at $1,705.50 an ounce on the COMEX.2,4,5,6,7
THIS WEEK: No major U.S. economic releases are scheduled for Monday. On Tuesday, Dollar General reports earnings. Wednesday, the Federal Reserve makes a policy announcement (with a corresponding press conference), OPEC wraps up a meeting of its oil ministers, and Costco unveils its latest earnings. The Census Bureau’s November retail sales numbers arrive on Thursday, along with November’s PPI, the latest weekly jobless claims figures and earnings from Hovnanian, Pier 1 Imports and Adobe Systems. Friday sees the release of the November CPI and data on November’s industrial production.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +7.67 +7.86 -0.69 +5.22
NASDAQ +14.31 +12.41 +2.01 +10.94
S&P 500 +12.76 +12.46 -1.15 +5.55
REAL YIELD 12/7 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.86% -0.01% 1.86% 3.10%
Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 12/7/122,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“Intelligence without ambition is a bird without wings.”
– Salvador Dalí
WEEKLY TIP
Self-employed? The annual deadline to set up a Keogh plan is December 31, and Keogh contributions for 2012 can be made up to the due date for filing your tax return.
WEEKLY RIDDLE
Victor is assigned to paint suite numbers on doors at an office building with 100 suites, which will be numbered from 1 to 100. How many times will he have to paint the number 8?
Last week’s riddle:
Liz went into a convenience store at 1:58am on a Sunday morning to get a coffee. She drove six miles away and then returned to the store to get a lotto ticket … also at 1:58am. The store’s clock was working perfectly, so how could it be 1:58am again when she returned?
Last week’s answer:
Liz made her trips to the convenience store during the morning when clocks were set back an hour at the end of Daylight Saving Time (at 2:00am).
Citations.
1 – www.reuters.com/article/2012/12/07/us-usa-economy-idUSBRE8B605F20121207 [12/7/12]
2 – www.cnbc.com/id/100289757 [12/7/12]
3 – www.ism.ws/ISMReport/NonMfgROB.cfm [12/5/12]
4 – www.cnn.com/2012/12/07/politics/fiscal-cliff/index.html [11/27/12]
5 – www.politico.com/story/2012/12/boehner-on-fiscal-cliff-no-progress-to-report-84753.html [12/7/12]
6 – www.bloomberg.com/news/2012-12-07/soybeans-corn-fall-most-in-three-weeks-commodities-at-close.html [12/7/12]
7 – montoyaregistry.com/Financial-Market.aspx?financial-market=retirement-investment-funds&category=3 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F7%2F11&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F7%2F11&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F7%2F11&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F7%2F07&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F7%2F07&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F7%2F07&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F6%2F02&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F6%2F02&x=0&y=0 [12/7/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F6%2F02&x=0&y=0 [12/7/12]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/7/12]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/7/12]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]
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. 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. 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 assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Stonecreek Wealth Advisors, Inc. an independent fee-only Registered Investment Adviser firm. Salt Lake City, Provo, Utah. Mark Lund is a Wealth Management Advisor, Investor Coach, Speaker and the author of The Effective Investor.
