MORE HOMEBUYING IN JULY
Census Bureau data showed new home sales increasing 3.6% in July to a two-year peak, with an annual gain of 25%. In addition, the National Association of Realtors reported a 2.3% gain in existing home sales last month; residential resales were 10% improved from 12 months ago. The latest edition of the Federal Housing Finance Agency’s Home Price Index showed prices 1.8% higher for the second quarter (the best quarter since Q4 2005) and 3.0% higher year-over-year.1,2
DURABLE GOODS ORDERS SEND MIXED MESSAGE
Overall hard goods orders rose 4.2% in July, but they fell 0.4% for the month with transportation orders subtracted. Core capital goods orders fell 3.4% in July, the most severe monthly decline since November and the fourth retreat in five months.3
DID THE FED HINT AT QE3 … OR NOT?
The August 1 Federal Reserve policy minutes noted: “Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.” Does that imply QE3? Not according to St. Louis Fed president James Bullard, who dismissed the minutes as “stale” on Thursday and noted that stocks are “looking at all-time highs”. Friday, however, the Wall Street Journal cited a letter from Fed Chairman Ben Bernanke noting that there was “scope for further action” by the Fed to “ease financial conditions and strengthen the recovery.” Investors are hoping for a decisive FOMC move in September.4,5,6
MARKET PULLS BACK
All three major U.S. indexes retreated last week, as follows: DJIA, -0.88% to 13,159.02; S&P 500, -0.46% to 1,411.68; NASDAQ, -0.19% to 3,070.73. In the commodities markets, COMEX gold gained 3.30% on the week while NYMEX crude rose 0.15%; gold ended the week at $1,672.90, oil at $96.15. A gallon of unleaded averaged $3.73 nationwide Friday.7,8
THIS WEEK: Monday, Tiffany announces Q2 earnings. Tuesday brings June’s S&P/Case-Shiller Home Price Index and the Conference Board’s August consumer confidence survey. Wednesday offers the latest Fed Beige Book, numbers on July’s pending home sales from the NAR and the second estimate of Q2 GDP from the federal government; TiVo, Pandora and Heinz issue earnings reports. July consumer spending figures are out on Thursday in addition to the weekly jobless claims report. Friday, Ben Bernanke speaks at the Fed’s annual Jackson Hole symposium and the final August University of Michigan consumer sentiment index arrives.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +7.71 +16.24 -0.33 +4.83
NASDAQ +17.87 +24.44 +3.83 +12.24
S&P 500 +12.25 +19.88 -0.92 +5.00
REAL YIELD 8/24 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.60% 0.25% 2.40% 3.10%
Sources: money.msn.com, bigcharts.com, treasury.gov, treasurydirect.gov – 8/24/127,9,10,11 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“The opposite of a correct statement is a false statement. The opposite of a profound truth may well be another profound truth.”
– Niels Bohr
WEEKLY TIP
Have you talked to your spouse about your retirement goals? This is vital. See how your individual visions of retirement correspond or differ.
WEEKLY RIDDLE
A major league pitcher faces just 27 hitters in a baseball game. He retires all of them, allowing no runs and no hits. Still, his team loses the game 4-0. How is this possible?
Last week’s riddle:
What is the longest word in the English language to have only one vowel repeated? (Hint: It has 18 total letters and the vowel is repeated 4 times).
Last week’s answer:
Strengthlessnesses.
Citations.
1 – www.nytimes.com/2012/08/24/business/economy/claims-for-jobless-benefits-rise.html [8/24/12]
2 – www.bloomberg.com/news/2012-08-23/house-prices-rose-most-since-2005-in-second-quarter-fhfa.html [8/23/12]
3 – www.mysanantonio.com/news/article/Drop-in-key-US-durable-goods-orders-shows-weakness-3812413.php [8/24/12]
4 – www.sfgate.com/business/bloomberg/article/Many-on-FOMC-Favored-Easing-Soon-If-No-Sustained-3808030.php [8/23/12]
5 – www.bloomberg.com/news/2012-08-23/fed-s-bullard-says-fomc-minutes-stale-economy-stronger.html [8/23/12]
6 – www.ajc.com/business/a-word-from-bernanke-1505404.html [8/24/12]
7 – money.msn.com/market-news/post.aspx?post=a498bd60-281a-4ee6-8fdc-80e3ddb041b7 [8/24/12]
8 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/24/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/24/12]
11 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]
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 adviser firm. Salt Lake City, Provo, Utah. Mark Lund is the author of The Effective Investor.
