HOME SALES RISE, HOUSING STARTS FALL
January brought a 0.4% improvement in existing home sales, even as the inventory of properties for sale hit a 93-month low. The National Association of Realtors reported a 25% year-over-year decline in existing home inventory, which hasn’t been seen since December 1999. The median sales price was $173,600 last month, up 12.9% from a year ago. Turning to new construction, housing starts dropped 8.5% in January after a 15.7% gain in December, but new home permits increased 1.8%.1,2
NO CHANGE IN CPI, BUT PRODUCER PRICES ADVANCE
The Consumer Price Index was flat for a second straight month in January, with annualized inflation at just 1.6%. Core CPI (minus food and energy prices) advanced 0.3%, however – the biggest monthly gain since May 2011. The Producer Price Index rose 0.2% in January, with overall yearly wholesale inflation at 1.4%.3,4
SEQUESTRATION SEEMS IMMINENT
On March 1, $85 billion in federal budget cuts are set to occur – and with Congress on recess last week, not much more than talk emerged about delaying them further. Friday, President Obama said he did not believe that the cuts were “inevitable” and commented that “this is not a smart way for us to reduce the deficit”. At the end of last week, no bipartisan effort to reschedule them was underway.5
STOCKS STAGE FIRST WEEKLY RETREAT OF 2013
Pronounced volatility returned to Wall Street last week due to earnings surprises and the January Federal Reserve policy meeting minutes, which raised concerns over the longevity of QE3. How did the key indices do last week? The numbers: Dow, +0.13% to 14,000.57; S&P 500, -0.28% to 1,515.60; NASDAQ, -0.95% to 3,161.82.6
THIS WEEK: Earnings reports from Lowe’s and Hertz arrive Monday. Tuesday, January new home sales figures, a new Conference Board consumer confidence poll and the latest Case-Shiller Home Price Index appear, and Fed chairman Ben Bernanke begins two days of testimony in Congress; Macy’s, Home Depot, Saks, AutoZone, Priceline and TiVo announce earnings. Reports on January pending home sales and durable goods orders are out Wednesday plus earnings from Target, Monster, Limited Brands, Dollar Tree, TJX, Groupon and JCPenney. Thursday offers quarterly results from Best Buy, Gap, Sears, Kohl’s and Barnes & Noble and the second estimate of Q4 GDP. Friday is March 1: sequester cuts may occur, the final February consumer sentiment index from the University of Michigan arrives, February’s ISM manufacturing index and reports on January consumer spending and vehicle sales appear, and Ben Bernanke speaks at the San Francisco Fed.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +6.84 +8.21 +2.62 +7.46
NASDAQ +4.71 +7.80 +7.45 +13.44
S&P 500 +6.27 +11.63 +2.40 +7.87
REAL YIELD 2/22 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.57% -0.27% 1.44% 1.93%
Sources: cnbc.com, bigcharts.com, treasury.gov – 2/22/136,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“You miss 100% of the shots you never take.”
– Wayne Gretzky
WEEKLY TIP
Inflation is tame right now, but keep in mind that even moderate inflation can have significant impact. For example, today’s $20,000 car would cost roughly $29,600 in 2023 after ten years of just 4% annual inflation.
WEEKLY RIDDLE
What can explode slowly, with no smoke or flame?
Last week’s riddle:
If a single-engine airplane taxied not onto a runway, but onto an enormous conveyer belt whose speed precisely equaled that of the plane in the opposite direction, could the plane still manage to take off?
Last week’s answer:
Yes, eventually. A plane’s wheels roll freely, and the thrust generated by the prop or jet engine will still be greater than drag and the lift created by air flowing over the wing will still be greater than the aircraft’s weight.
Citations.
1 – www.marketwatch.com/story/home-sales-inch-up-in-january-as-inventory-shrinks-2013-02-21 [2/21/13]
2 – blogs.wsj.com/developments/2013/02/20/housing-starts-fall-but-economists-stay-positive/ [2/22/13]
3 – www.foxbusiness.com/economy/2013/02/21/consumer-prices-flat-in-january/ [2/22/13]
4 – articles.marketwatch.com/2013-02-20/economy/37188507_1_wholesale-prices-vegetable-prices-higher-food-prices [2/22/13]
5 – abcnews.go.com/blogs/politics/2013/02/hope-springs-eternal-for-obama-on-budget-cuts/ [2/22/13]
6 – www.cnbc.com/id/100484753 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F22%2F12&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F22%2F12&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F22%2F12&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F22%2F08&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F22%2F08&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F22%2F08&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F21%2F03&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F21%2F03&x=0&y=0 [2/22/13]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F21%2F03&x=0&y=0 [2/22/13]
8 – www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/22/13]
9 – www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/22/13]
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 the author of The Effective Investor.
