Weekly Economic Update for August 1, 2011

Presented by Mark Lund, Investor Coach.

WEEKLY QUOTE
“It takes a long time to grow young.”
– Pablo Picasso

A HINT OF COMPROMISE, A SIGN OF WEAKNESS
The weekend arrived with the House narrowly passing a Republican debt-reduction bill – the “two-step” bill linked to a balanced budget amendment, proposing a $917 billion cut in federal spending. Though doomed in the Senate, the vote on the bill opened a door to negotiation that may lead to passage of a compromise measure by the August 2 deadline. (At a Friday press briefing, Democratic officials said that Congress could possibly approve a 2-day extension of the cutoff date.) Meanwhile, the Commerce Department announced that the economy grew just 1.3% in the second quarter; economists polled by Reuters had forecast GDP of +1.8%.^1,2,3,4

MIXED CONSUMER CONFIDENCE READINGS
The final July Reuters/University of Michigan consumer sentiment survey came in at 63.7, the lowest reading since March 2009. However, the Conference Board’s July survey came in 1.9 points higher than June at 59.5.^5,6

REAL ESTATE INDICATORS LOOK MIXED
The May S&P/Case-Shiller Home Price Index showed a 1.0% gain in prices across 20 metro markets; the spring homebuying bump may have contributed to its second straight monthly advance. Year-over-year, prices were down 4.5%. The National Association of Realtors said pending home sales rose 2.4% in June; the Census Bureau said new home sales decreased 1.0% in that month.^8,9

DEBT IMPASSE TAKES TOLL ON STOCKS
July 25-29 was a trying market week. The numbers: S&P 500, -3.92% to 1,292.28; DJIA, -4.24% to 12,143.24; NASDAQ, -3.58% to 2,756.38.¹⁰

THIS WEEK: Monday offers the July ISM manufacturing index and earnings from Honda, Allstate and Humana. Tuesday, the consumer spending numbers for June are available along with 2Q results out of Pfizer, CBS, Barclays, Molson Coors and Toyota. Wednesday we have ISM’s July service sector index, news about June factory orders and earnings from MasterCard, Comcast and Time Warner. Thursday brings weekly jobless claims plus results from General Motors, Adidas, Unilever, CIGNA, CVS, Kraft, DirecTV and Southwest Airlines. The July unemployment figures are issued Friday, and Berkshire Hathaway, Viacom, Allianz and Procter & Gamble all come out with 2Q results.

Sources: usatoday.com, online.wsj.com, bigcharts.com, treasury.gov – 7/29/11^{10,11,12,13,14} Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

WEEKLY RIDDLE
There are 2 nouns in the English language that become men’s names when you capitalize them – and when you capitalize them, you alter their pronunciation. Name either or both of these 2 nouns, both of which end in ‘b’.

Last week’s riddle:
Two trains are crossing America from coast to coast, traveling over 3,000 miles of track. The Gentle Zephyr is going west at 70mph; the Western Wind is headed east at 80mph. So which train will be closer to the east coast when they roll by each other in Kansas?

Last week’s answer:
Neither. When they roll by each other, they will be the same distance from the east coast.

Citations.
1 – marketwatch.com/story/house-passes-bill-to-raise-debt-ceiling-2011-07-29-1827320 [7/29/11]        
2 – cnbc.com/id/43946958
3 – huffingtonpost.com/2011/07/29/democrats-narrow-targets-_n_913725.html [7/29/11]
4 – cnbc.com/id/43941459/ [7/29/11]
5 – bloomberg.com/news/2011-07-29/michigan-consumer-sentiment-index-fell-to-63-7-in-july-from-71-5-in-june.html [7/29/11]
6 – conference-board.org/data/consumerconfidence.cfm [7/26/11]
7 – blogs.wsj.com/marketbeat/2011/07/29/data-points-energy-metals-503/ [7/29/11]
8 – seattletimes.nwsource.com/html/businesstechnology/2015732200_homeprices27.html [7/26/11]
9 – blogs.wsj.com/developments/2011/07/28/behind-the-numbers-pending-home-sales-rise/ [7/28/11]
10 – blogs.wsj.com/marketbeat/2011/07/29/data-points-u-s-markets-34/ [7/29/11]
11 – usatoday.com/money/index [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F29%2F10&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F29%2F10&x=10&y=18 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F29%2F10&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F28%2F06&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F28%2F06&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F28%2F06&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F30%2F01&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F30%2F01&x=0&y=0 [7/29/11]
12 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F2%30F01&x=0&y=0 [7/29/11]
13 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/29/11]
13 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/29/11]
14 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]
15 -montoyaregistry.com/Financial-Market.aspx?financial-market=inheriting-an-ira&category=22 [7/31/11]

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. a fee only registered investment advisor firm in Salt Lake City, Utah, providing wealth management services. Mark Lund is the author of The Effective Investor.