Aug

13

Growth Report – Monday, August 13, 2018

INFLATION AT 2.9%, CORE INFLATION AT 2.4%
Friday, the Department of Labor reported these annualized gains through July of this year for the Consumer Price Index. Both the headline and core CPIs rose 0.2% last month, matching the consensus forecast of economists polled by Reuters. The yearly core inflation increase is the largest on record since September 2008. (The core inflation reading leaves out food and energy costs.) The Producer Price Index was flat in July, with the yearly advance declining slightly to 3.4%; the core PPI rose 0.3%, resulting in a 2.8% annualized gain.1,2

HOW IS EARNINGS SEASON GOING?
Ninety-one percent of S&P 500 companies have reported Q2 results so far. FactSet, the respected stock market analytics firm, reports that 72% have surprised to the upside in terms of sales and 79% have topped earnings expectations. Weighing actual earnings results and future projections, FactSet estimates a 24.6% “blended” earnings growth rate for the second quarter. On Friday, the forward 12-month P/E ratio for the S&P 500 was 16.6; that compares to an average of 16.2 across the past five years.3

OIL FALLS FOR A SIXTH STRAIGHT WEEK
WTI crude last suffered such a losing streak in 2015. Friday, it settled at $67.63 on the NYMEX, even after a 1.2% advance during Friday’s trading session. Some commodities investors believe that the emerging trade war will reduce demand for energy products.4

NASDAQ ADVANCES, S&P and DOW RETREAT
The possibility of the U.S. doubling tariffs on Turkish aluminum and steel sent stocks skidding worldwide, Friday, as diplomatic disagreements between the countries took on an economic aspect. Of the three major Wall Street indices, only the Nasdaq Composite posted a weekly gain, rising 0.35% to 7,839.11. The S&P 500 fell 0.25% in five days, settling at 2,833.28 Friday. The Dow Jones Industrial Average ended the week 0.59% lower at 25,313.14.5,6

T I P O F T H E W E E K
This year, the Internal Revenue Service eased the “use it or lose it” rule on Flexible Spending Accounts (FSAs). In the past, funds you directed into an FSA had to be spent by the end of a year or else they would be forfeited. The I.R.S. now permits you to carry over as much as $500 in FSA funds into the next year, but your employer must elect to allow this option.

THIS WEEK
Sysco announces Q2 results Monday. | Advance Auto Parts, Agilent Technologies, and Home Depot present earnings on Tuesday. | On Wednesday, July retail sales numbers are out, along with earnings from Briggs & Stratton and Cisco. | Nordstrom, Nvidia, and Walmart share quarterly results on Thursday, as Wall Street also considers new data on initial jobless claims and July homebuilding activity. | The University of Michigan’s initial August consumer sentiment index appears on Friday, plus the Conference Board’s latest leading indicators index and earnings from Deere & Co.

Q U O T E O F T H E W E E K
“Do not accustom yourself to use big words for little matters.”
SAMUEL JOHNSON

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

2.40

15.88

12.82

11.48

NASDAQ

13.55

26.09

22.84

22.13

S&P 500

5.97

16.20

13.50

11.71

REAL YIELD

8/10 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.78

0.40

0.33

1.80

Sources: wsj.com, bigcharts.com, treasury.gov – 8/10/186,7,8,9
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.

T H E W E E K L Y R I D D L E
A cargo truck hauling a load of lumber can carry 2 tons. It approaches a bridge with a sign, which notes that the bridge can support up to 2 tons of weight. The driver sees the sign and reckons that the bridge should hold up under the weight of the truck. Is the driver right?

LAST WEEK’S RIDDLE:
Gary drops an egg onto a sidewalk. The egg doesn’t break after falling 3 feet. Why?
ANSWER:
The egg is dropped from a height of more than 3’, so after 3’ of falling, it has not yet broken.

 

CITATIONS:
1 – cnbc.com/2018/08/10/us-cpi-july-2018.html [8/10/18]
2 – reuters.com/article/us-usa-economy-inventories/u-s-producer-prices-unchanged-in-july-idUSKBN1KU1JH [8/9/18]
3 – factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_081018.pdf [8/10/18]
4 – bloomberg.com/news/articles/2018-08-10/oil-set-for-sixth-weekly-loss-as-u-s-china-trade-war-escalates [8/10/18]
5 – thestreet.com/markets/stocks-slide-amid-currency-crisis-in-turkey-14679908 [8/10/18]
6 – markets.wsj.com/us [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F10%2F17&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F10%2F17&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F10%2F17&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F9%2F13&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F9%2F13&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F9%2F13&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F11%2F08&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F11%2F08&x=0&y=0 [8/10/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F11%2F08&x=0&y=0 [8/10/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/10/18] 
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/10/18]

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, Mark is known as a Wealth Advisor, The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment and retirement planning for individuals and 401k consulting for small businesses. Cities served but not limited to are: Park City, Salt Lake City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, and American Fork City in Utah.

Share This With Others:
Facebooktwitterlinkedin

Category: Blog, Economic Updates

About the Author ()

Mark K. Lund is the firm's founder, CEO and author of The Effective Investor, a #1 Best Seller. He has written articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and Newsmax.com, just to name a few.  Mark publishes two newsletters called, “The Mark Lund Growth Report” and “Mark Lund on Money.”  Mark provides CPE (continuing professional education) courses for CPAs.  You may also have seen him on KUTV Channel 2, or as a guest speaker at a local association or business. Mark provides investment and retirement planning services for individuals and 401(k) consulting for small businesses. In his book, The Effective Investor, Mark exposes the false narrative magazines, media, big Wall Street firms, and most advisors want you to believe. The good news is that Mark will show you that you don’t need their speculative ways of investing in order to be successful. Get a free copy when you schedule your initial consultation.

Leave a Reply