FED PLANS TO STOP EASING THIS FALL
June’s Federal Reserve policy meeting minutes outlined the central bank’s exit plan from QE3. The Fed will continue tapering its monthly asset purchases in a series of $10 billion cuts, then make a last $15 billion cut in late October. The June minutes offered no hint of change on interest rates; Fed officials are widely expected to adjust short-term rates in 2015. The Fed actually lessened its medium-term inflation forecast, and the minutes showed general agreement for reinvesting proceeds from maturing bonds until a rate hike occurs.1,2
U.S. BUDGET DEFICIT COULD BE SMALLEST IN 6 YEARS
According to the Congressional Budget Office, the federal deficit totaled $366 billion nine months into the current fiscal year – a 28% reduction from the previous year. (Chalk that up partly to federal tax receipts increasing 8% for FY 2014.) The CBO sees a $492 billion federal deficit for the full budget year ending Sept. 30.3
OIL DIPS BELOW $101 AS SUPPLY FEARS DIMINISH
Futures dropped 3.1% last week, closing at $100.83 Friday on the NYMEX. Risks to supplies in Iraq and Libya lessened, and American crude inventories expanded.4
BANK STRESS IN EUROPE HELPS SEND STOCKS SOUTH
When the parent company of Portuguese lender Banco Espirito Santo missed debt payments last week, a blip of anxiety about eurozone banks hit the market. That contributed to the following weekly performances: S&P 500, -0.90% to 1,967.57; DJIA, -0.73% to 16,943.81; NASDAQ, -1.57% to 4,415.49.4,5,6
THIS WEEK: Citigroup, M&T Bank, SuperValu, Charles Schwab, Piper Jaffray, Safeway and American Airlines announce earnings on Monday. On Tuesday, Janet Yellen begins two days of Senate testimony on Fed monetary policy; earnings from CSX, Cintas, Goldman Sachs, Comerica, JPMorgan Chase, Johnson & Johnson, Yahoo! and Intel appear along with June retail sales numbers. Quarterly results from BlackRock, Bank of America, US Bancorp, PNC Financial, East West Bancorp, Kinder Morgan, SanDisk, Yum! Brands, Northern Trust and Abbott Labs arrive Wednesday, plus a new Fed Beige Book, June’s PPI and numbers on June industrial output. Thursday offers earnings from Google, Mattel, Morgan Stanley, AutoNation, Capital One, Sherwin-Williams, Philip Morris, Snap-On, Alliance Data Systems, Seagate, Fifth Third and IBM, in addition to data on initial claims and June housing starts and building permits. Friday, the preliminary July University of Michigan consumer sentiment index arrives, along with the Conference Board’s June leading indicator index and quarterly results from GE, Bank of NY Mellon and Honeywell.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +2.21 +9.59 +21.60 +6.55
NASDAQ +5.72 +23.40 +30.29 +12.80
S&P 500 +6.45 +17.47 +24.76 +7.66
REAL YIELD 7/11 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.25% 0.56% 1.80% 2.02%
Sources: USATODAY.com, bigcharts.com, treasury.gov – 7/11/146,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
WEEKLY QUOTE
“The truth is rarely pure and never simple.”
– Oscar Wilde
WEEKLY TIP
If you make pre-tax contributions to a workplace retirement plan, check and see how they affect your personal cash flow. You may discover that you can put in more than you think.
WEEKLY RIDDLE
It can be told, played, and cracked and it can even be practical as well. What is it?
Last week’s riddle:
What do the words civic and level have in common?
Last week’s answer:
They are palindromes.
Citations.
1 – marketwatch.com/story/fed-plans-to-end-bond-purchases-in-october-2014-07-09 [7/9/14]
2 – fxstreet.com/analysis/us-fedwatch/2014/07/11/ [7/11/14]
3 – tinyurl.com/ldflmmx [7/11/14]
4 – money.msn.com/business-news/article.aspx?feed=BLOOM&date=20140711&id=17768873 [7/11/14]
5 – google.com/finance?q=INDEXSP%3A.INX&ei=XFfAU-iVJZTLiQLwpIHQDQ/ [7/11/14]
6 – usatoday.com/money/markets/overview/ [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F11%2F13&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F11%2F13&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F11%2F13&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F10%2F09&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%10F2%2F09&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F10%2F09&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F12%2F04&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F12%2F04&x=0&y=0 [7/11/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F12%2F04&x=0&y=0 [7/11/14]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/11/14]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/11/14]
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 management services for professional athletes and select individuals. Stonecreek is located in Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, American Fork all in Utah.
