Weekly Economic Update for October 3, 2011

“Jealousy is the tribute mediocrity pays to genius.”
– Fulton J. Sheen

So noted the Bureau of Labor Statistics last week. The Consumer Price Index rose 0.3% during the month of September, with core CPI rising 0.1%, the smallest such increase in six months. (Annualized core consumer inflation was at 2.0%.) The Producer Price Index climbed 0.8% for September after a flat August.1

Existing home sales decreased by 3.0% last month, according to the National Association of Realtors. At this rate, about 4.91 million previously occupied homes will be sold in 2011, matching the total for 2010. In a normal year, about 6 million residential resales occur in the real estate sector.2

Here’s a good sign for residential real estate: a sign of demand. Most of the 15.0% monthly increase in September came from apartment construction; the Commerce Department reported a 53% monthly jump in that category. Single-family construction improved by 1.7%. Overall, there were 658,000 housing starts last month, the best number in any month since April 2010.3

Wall Street rallied Friday on the eve of the crucial summit meeting to address the Eurozone debt crisis, helped by news that a new aid package for Greece had been approved by EU finance ministers. The DJIA gained ground for the fourth week in a row; the S&P 500 also advanced. The weekly numbers: S&P 500, +1.12% to 1,238.25; DJIA, +1.41% to 11,808.79; NASDAQ, -1.14% to 2,637.46.4,5

THIS WEEK: Earnings season is in full swing. Monday, earnings reports from Netflix, Amgen, Caterpillar and Texas Instruments hit the Street. On Tuesday, BP, Deutsche Bank, Amazon.com, Broadcom, DuPont, UBS and 3M issue 3Q results … and the August Case/Shiller Home Price Index comes out along with the Conference Board’s October gauge of consumer confidence. On Wednesday, quarterly results arrive from Boeing, VISA, GlaxoSmithKline, Sprint, ConocoPhillips and Ford and we have data on September new home sales and durable goods orders. Thursday brings the initial estimate of 3Q GDP and the data on September pending home sales, plus earnings from ExxonMobil, Occidental Petroleum, Baidu, P&G, Aetna, Bristol-Myers Squibb, Time Warner Cable, Hershey and Motorola Solutions. Friday, earnings from Merck and Chevron come out along with the report on September consumer spending and October’s final University of Michigan consume r sentiment index.

DJIA +2.00 +5.94 -0.32 +2.59
NASDAQ -0.58 +7.23 +2.52 +5.44
S&P 500 -1.54 +4.91 -1.90 +1.36
10 YR TIPS 0.23% 0.50% 2.53% 3.50%

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 10/21/114,5,6,7,8 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

Many small business owners don’t have succession plans. If you haven’t created one, now is as good a time as any to start; this will not only enable continuity, but also address possible gift, income and estate tax issues.

I am in the center of gravity, and part of every victory. I am clearly seen in the midst of a river. I could name three who are in love with me and have three associates in vice. What am I?

Last week’s riddle:
Trains travel from one town to another town all day, always on the same track, always going nonstop and at the same speed. The noon train took 80 minutes to complete the trip, but the 4 PM train took an hour and 20 minutes. Why?

Last week’s answer:
80 minutes is the same as an hour and 20 minutes.

1 – nytimes.com/2011/10/20/business/economy/us-consumer-inflation-subdued-housing-starts-up.html [10/19/11]
2 – ajc.com/business/sales-of-previously-occupied-1206303.html [10/20/11]
3 – thestreet.com/story/11283665/1/raise-the-roof-housing-starts-up-15-in-september.html [10/20/11]
4 – montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [10/21/11]
5 – cnbc.com/id/44988273 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F21%2F10&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F21F2%2F10&x=10&y=18 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F21%2F10&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F20%2F06&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F20%2F06&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F20%2F06&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F22%2F01&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F22%2F01&x=0&y=0 [10/21/11]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F22%2F01&x=0&y=0 [10/21/11]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/21/11]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/21/11]
8 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]

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