INFLATION RISES IN DECEMBER
Labor Department reports showed the Consumer Price Index up 0.3% last month (with core CPI rising 0.1%) and the Producer Price Index advancing 0.4% (core PPI went north 0.3%). If these spikes foreshadow greater inflation for 2014, they do little to alter the big picture of 2013 – a year in which consumer prices increased only 1.5% and wholesale prices rose just 1.2%. Annualized consumer inflation is beneath the Federal Reserve’s 2.0% target and hasn’t exceeded 2% for two years. The last two consecutive years in which consumer prices rose less than 2% were 1997-98.1,2
A MILD LIFT FOR RETAILERS
Economists polled by Briefing.com thought retail sales would be flat in December. They rose 0.2% instead (0.7% with auto buying factored out). The Census Bureau revised November’s 0.7% advance down to 0.4%.3
CONSUMER SENTIMENT MISSES EXPECTATIONS
The initial January consumer sentiment index from the University of Michigan took a major dip, dropping to 80.4 from the final December figure of 82.5. The consensus forecast of analysts surveyed by Briefing.com was for a much higher reading – 83.0.3
LESS GROUNDBREAKING AT YEAR’S END
This is hardly surprising given winter weather: the Census Bureau reported a 9.8% drop in housing starts for December, plus a 3.0% decline in building permits. For 2013, housing starts increased 18.3% and permits 17.5%.4
NASDAQ OUT OF THE RED YTD
Thanks to a 0.55% 5-day advance, the tech-heavy Nasdaq became the first of the big three to go positive so far for 2014. The Dow gained 0.13% last week; the S&P 500 retreated 0.20%. Friday, the indices settled as follows: DJIA, 16,458.56; NASDAQ, 4,197.58; S&P, 1,838.70.5
THIS WEEK: Monday is Martin Luther King, Jr. Day and U.S. stock and bond markets are closed; overseas, China’s government releases Q4 and 2013 GDP numbers. Tuesday brings earnings from Delta Airlines, Texas Instruments, Verizon, Halliburton, IBM, Johnson & Johnson, TD Ameritrade and The Travelers. More earnings reports arrive Wednesday from eBay, Logitech, Netflix and SanDisk, and the annual World Economic Forum begins in Switzerland. Thursday offers data on December existing home sales and initial jobless claims, Q4 results from Altera and Alaska Airlines and the Conference Board’s December leading indicators index. Friday, nothing major is scheduled.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.71 +21.05 +19.75 +5.53
NASDAQ +0.50 +33.85 +34.89 +9.61
S&P 500 -0.52 +24.16 +23.26 +6.13
REAL YIELD 1/17 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.58% -0.64% 1.81% 1.83%
Sources: USATODAY.com, bigcharts.com, treasury.gov – 1/17/146,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
WEEKLY QUOTE
“The friend who holds your hand and says the wrong thing is made of dearer stuff than the one who stays away.”
– Barbara Kingsolver
WEEKLY TIP
With a durable financial power of attorney, someone you trust can act on your behalf to manage your finances and investments if you cannot.
WEEKLY RIDDLE
Dave is at the hardware store to buy something for his house. Yesterday, he bought 1 for $1. The week before he bought 10 for $2 and his friend bought 100 for $3. Today he bought 907 for $3. If the prices haven’t changed, how is this possible?
Last week’s riddle:
David put on a white shirt with three large holes in it and went to the grocery store. No one gave him a funny look; no one objected to it. What kind of shirt was David wearing?
Last week’s answer:
A white T-shirt.
Citations.
1 – forbes.com/sites/kitconews/2014/01/16/subdued-inflation-offers-little-help-to-gold/ [1/16/14]
2 – investing.com/news/economic-indicators/u.s.-ppi-rises-0.4-in-december,-core-ppi-up-0.3-260436 [1/15/14]
3 – briefing.com/investor/calendars/economic/2014/01/13-17 [1/17/14]
4 – esa.doc.gov/economic-indicators/economic-indicators-6 [1/17/14]
5 – thestreet.com/story/12244254/1/markets-hustle-stocks-mixed-amid-lackluster-earnings.html [1/17/14]
6 – usatoday.com/money/markets/overview/ [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F17%2F12&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F17%2F12&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F17%2F13&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F16%2F09&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F16%2F09&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F16%2F09&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F16%2F04&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F16%2F04&x=0&y=0 [1/17/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F16%2F04&x=0&y=0 [1/17/14]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/17/14]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/17/14]
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, The 401k Advisor, Investor Coach and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and private investment advisory services for select individuals. Stonecreek is located in Salt Lake City and Provo Utah.
