Economic Update for June 18, 2012

Best-case scenarios for Greece seemed to fade as the weekend neared. Concerns mounted that Sunday’s special elections would either bring another parliamentary deadlock or a victory for parties opposing scheduled austerity cuts. Some economists maintained that a Greek exit from the euro would not be abrupt and not produce a shock like the 2008 Lehman Brothers collapse. Anxiety was tempered by anticipation: expectations of a central bank response grew. In fact, last week the Bank of England announced plans for 6-month loans and liquidity injections to shield the U.K. financial system from any fallout. Yields on Spanish 10-year notes hit 7% last week, a sign of skepticism about that nation’s bank bailout.1,2

Consumer prices declineD in MAY
The federal government’s Consumer Price Index fell 0.3% for May, thanks largely to a 4.3% drop in energy prices. Core CPI rose 0.2% for the third straight month with 12-month consumer inflation at 1.7% (a long way from the 3.9% annualized inflation measured in September). May’s Producer Price Index dropped 1.0%.3

The Census Bureau said retail sales fell 0.2% in May; they slipped for a second straight month, which hasn’t happened since 2010. June’s preliminary University of Michigan consumer sentiment survey dropped to 74.1 from May’s final mark of 79.3. On a positive note, retail gas prices are down 2.65% so far in June; on Friday, AAA had regular unleaded averaging just $3.52 a gallon. Another positive: Q1 2012 saw a 7.3% rise in U.S. home equity, the best quarter in in more than 60 years.4,5,6,7

New hope of central bank intervention (and expiring options and futures) pushed stocks higher last week, with the major indices performing as follows: S&P 500, +1.30% to 1,342.84; DJIA, +1.70% to 12,767.17; NASDAQ, +0.50% to 2,872.80. Gold was up 2.31% for the week to $1,628.10, oil down 0.08% on the week to $84.03.6,8

THIS WEEK: Besides global market reaction to Greece’s special elections (and a possible central bank response), Monday will also mark the start of a G20 summit. Tuesday, a two-day FOMC meeting begins and data on May housing starts arrives in addition to Q1 earnings from Adobe Systems, FedEx and Discover. Wednesday, the Fed will make a policy statement; earnings from Bed, Bath & Beyond also come out. Thursday, we get data on May’s existing home sales, the Conference Board’s latest LEI report, and Q1 earnings from Rite Aid, Oracle and ConAgra. Friday, Q1 results arrive from Darden Restaurants.

DJIA +4.50 +7.31 -1.28 +3.48
NASDAQ +10.27 +9.17 +1.87 +9.09
S&P 500 +6.78 +6.12 -2.48 +3.33
10 YR TIPS -0.54% 0.74% 2.73% 3.48%

Sources:,,, – 6/15/126,9,10,11 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

“Big thoughts are fun to romanticize, but it is many small insights coming together that bring big ideas into the world.”
– Scott Berkun

Sometimes filing separately can reduce a married couple’s federal tax burden. If one spouse has large itemized deductions or if both spouses are in markedly different tax brackets, it could be a good move.

I can’t walk, but at times I run and I am very difficult to hide. I am always with you. What am I? 

Last week’s riddle:
Two couples played paintball. Each person had blue, green, yellow, or red paint, and wore a uniform in one of those same colors. Barbara used blue paint. The person wearing green used yellow paint. Steven did not wear the red uniform. Vicki used green paint and wore blue. Ian used the same color paint as his t-shirt. Can you match each person to the color of paint and uniform they used?  

Last week’s answer: Ian: wore red, red paint; Barbara:  yellow, blue; Steven:   green, yellow; Vicki: blue,  green

1 – [6/15/12]
2 – [6/15/12]
3 – [6/15/12]
4 – [6/5/12]
5 – [6/6/12]
6 – [6/15/12]
7 – [6/14/12]
8 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
9 – [6/15/12]
10 – [6/15/12]
10 – [6/15/12]
11 – [1/9/02]

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. an independent fee only registered investment advisor firm. Salt Lake City, Provo, Utah. Mark Lund is the author of The Effective