FED MAY WAIT LONGER TO TIGHTEN
March’s Federal Reserve policy statement provided less forward guidance than many investors expected. As anticipated, the word “patient” disappeared – but the Federal Open Market Committee also lowered its 2015 GDP forecast (to a range of 2.3-2.7%) and nearly halved its 2015 inflation projection (to a range of 0.6-0.8%). Seconding this weaker economic outlook, the Fed indicated it might wait until late 2015 to tinker with interest rates, altering the commonly held perception that a rate hike might be in store before Q2 ends.1
OIL PRICES RISE
Light sweet crude rose 3.9% on the NYMEX last week, settling at $45.72 Friday. It was the first winning week in five for the commodity, and a short-term decline in the dollar and lower U.S. rig counts helped. Gasoline advanced 2.0% on the NYMEX for the week, natural gas 2.2% and heating oil 1.2%.2
FEWER STARTS, BUT MORE PERMITS
The Census Bureau measured a 17.0% drop in groundbreaking for February, which took housing starts to a 13-month low. Declining builder sentiment, higher construction costs and fewer available parcels were all contributing factors. Building permits increased 3.0% last month; apartment permits jumped 18.3%.3
TERRIFIC WEEK FOR U.S. EQUITIES
A little dollar weakness, a rebound in energy prices, easing in Europe, the latest FOMC statement and pleasing corporate earnings all supported a 5-day rally. From March 16-20, the S&P 500 gained 2.66% to settle Friday at 2,108.06. The Dow and Nasdaq posted weekly gains of 2.13% and 3.17% on their way to respective closes of 18,127.65 and 5,026.42.4
THIS WEEK: Existing home sales figures for February appear Monday, courtesy of the National Association of Realtors. On Tuesday, February new home sales data arrives from the Census Bureau, and the Street also interprets February’s CPI, manufacturing PMIs for Japan and China and earnings from H.B. Fuller, Sonic and Steelcase. Wednesday brings durable goods data for February plus earnings from Pacific Sunwear, Paychex and Red Hat. In addition to the latest initial jobless claims report, Thursday also brings earnings from Accenture, Restoration Hardware, Lululemon Athletica, ConAgra Foods, GameStop, Fred’s Super Dollar and Scholastic. Friday, the University of Michigan publishes its final March household sentiment survey, the federal government’s final estimate of Q1 growth arrives, and Fed chair Janet Yellen speaks on monetary policy in San Francisco.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +1.71 +11.00 +13.75 +7.16
NASDAQ +6.13 +16.37 +22.34 +15.04
S&P 500 +2.39 +12.61 +16.35 +7.81
REAL YIELD 3/20 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.17% 0.66% 1.50% 1.80%
Sources: online.wsj.com, bigcharts.com, treasury.gov – 3/20/155,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
WEEKLY QUOTE
“Things turn out best for the people who make the best out of the way things turn out.”
– Art Linkletter
WEEKLY TIP
Federal student loans may offer 6-month grace periods before any repayment is necessary, but having an income-based repayment plan in place soon after graduation is wise. Repayments can be limited to affordable amounts through these plans.
WEEKLY RIDDLE
Its body of stone shields a fiery heart. Under sufficient pressure, its head will depart. What is it?
Last week’s riddle:
I never complain no matter where I am led; I go around in circles, yet move straight ahead. What am I?
Last week’s answer:
A wheel.
Citations.
1 – thestreet.com/story/13084714/1/meaning-of-fed-policy-statement-depends-on-definition-of-is–surprising-market-reaction.html [3/19/15]
2- marketwatch.com/story/oil-prices-stay-choppy-ahead-of-rig-count-data-2015-03-20 [3/20/15]
3 – eyeonhousing.org/2015/03/housing-production-stumbles/ [3/17/15]
4 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [3/20/15]
5 – markets.wsj.com/us [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F20%2F14&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F20%2F14&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F20%2F14&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F19%2F10&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F19%2F10&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F19%2F10&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F21%2F05&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F21%2F05&x=0&y=0 [3/20/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F21%2F05&x=0&y=0 [3/20/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/20/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/20/15]
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 Mark Lund, The 401k Advisor, Investor Coach, Financial advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and financial planner services for professional athletes and individuals. Stonecreek is located in Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, American Fork all in Utah.
