NO TAPERING YET…BUT COULD IT HAPPEN SOON?
The DJIA hit an all-time high Wednesday after the Federal Reserve decided not to reduce its $85 billion monthly stimulus effort. Friday, the index lost 185 points on the heels of comments from St. Louis Fed President James Bullard (who said that QE3 could be tapered next month) and Kansas City Fed President Esther George (who said that the decision not to taper created confusion in the markets). So investors wonder: is an “Octaper” ahead? This week is data-heavy, and investors will be keeping an eye on federal budget talks in addition to any comments from Fed officials. The September FOMC minutes come out on October 9; the next Fed policy announcement occurs on October 30.1,2
RISING INTEREST RATES PROMPT HOMEBUYING
Existing home sales hit a six-year peak in August, rising 1.7% for the month in the estimate of the National Association of Realtors. The big reason? Buyers ran to lock in interest rates on mortgages before they increased further. The median price of an existing home in August was $212,100 – 14.7% higher than in August 2012. Housing starts rose 0.9% in August, according to the Commerce Department.3
CPI BARELY BUDGES IN AUGUST
Consumer inflation (as measured by the Consumer Price Index) ticked up 0.1% last month. The core CPI also rose 0.1%. Economists surveyed by Briefing.com had expected 0.2% August gains for both the headline and core indices.4
STOCKS ADVANCE FOR THIRD CONSECUTIVE WEEK
A bad Friday still left the Dow at 15,451.09 at the end of the week. Across a volatile five days, it rose 0.49%; the S&P 500 (+1.30% to 1,709.91) and NASDAQ (+1.41% to 3,774.73) both outperformed it last week.1
THIS WEEK: On Monday, Goldman Sachs, Nike and Visa join the DJIA (replacing Alcoa, Bank of America and Hewlett-Packard); Red Hat announces Q2 results. July’s S&P/Case-Shiller home price index and FHFA home price index appear Tuesday, along with the Conference Board’s September consumer confidence survey and earnings from Lennar, CarMax and KBHome. Wednesday, the Census Bureau issues August new home sales figures, the August durable goods orders report arrives, and Bed Bath & Beyond and AutoZone report earnings. Thursday brings the last estimate of Q2 GDP from the federal government, NAR’s report on August pending home sales, new initial jobless claims numbers and Q2 results from Accenture and Nike. Friday offers the University of Michigan’s final September consumer sentiment index, the August consumer spending numbers and earnings from Blackberry.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +17.91 +13.64 +7.13 +6.02
NASDAQ +25.01 +18.85 +13.20 +9.81
S&P 500 +19.89 +17.10 +7.25 +6.50
REAL YIELD 9/20 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.52% -0.70% 1.85% 2.17%
Sources: cnbc.com, bigcharts.com, treasury.gov – 9/20/131,5,6,7 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“Always bear in mind that your own resolution to succeed is more important than any other.”
– Abraham Lincoln
WEEKLY TIP
Understanding the tax status of your investments can help you arrange your withdrawals to make the most out of your retirement funds.
WEEKLY RIDDLE
In the morning, I lie at your feet. I almost vanish in midday sun. But I’ll be with you all day as you stand, walk, leap a run. What am I?
Last week’s riddle:
A 10k cross-country run through the woods attracts 36 entrants. The day is unseasonably hot, and the course is not laid out well. Three runners get lost, five quit and 28 finish the run. What happens to the other entrants?
Last week’s answer:
The whereabouts of all entrants are known, as 3 + 5 + 28 = 36.
Citations.
1 – tinyurl.com/lco7mw2 [9/20/13]
2 – federalreserve.gov/whatsnext.htm [9/19/13]
3 – sfgate.com/business/bloomberg/article/Sales-of-U-S-Existing-Homes-Rise-in-August-to-4827311.php [9/19/13]
4 – briefing.com/investor/calendars/economic/2013/09/16-20 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F20%2F12&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F20%2F12&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F20%2F12&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F19%2F08&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F19%2F08&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F19%2F08&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F19%2F03&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F19%2F03&x=0&y=0 [9/20/13]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F19%2F03&x=0&y=0 [9/20/13]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/20/13]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/20/13]
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. 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 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 Mark Lund an independent Investment Advisor, Investor Coach and author of The Effective Investor. Mark is located in Salt Lake City and Provo Utah.
