GREECE DEAL, FED MINUTES REASSURE INVESTORS
On Friday, Greece reached an agreement with eurozone finance ministers to extend its economic bailout through June. The four extra months of financial aid depend on reforms that the country will present to its creditors this week (they must be approved by April). Stateside, minutes from the Federal Reserve’s January policy meeting noted that most Fed officials favored “keeping the federal funds rate at its effective lower bound for a longer time,” which also pleased the markets.1,2
PRODUCER PRICES FALL BY MOST IN 5 YEARS
Labor Department data showed an 0.8% dip in the Producer Price Index in January, the largest monthly decline since November 2009. Cheaper fuel costs were the major factor. The core PPI (minus food and energy prices) was flat year-over-year.2
LESS GROUNDBREAKING IN JANUARY
The pace of housing starts slowed 2.0% last month – not surprising given the rough weather in much of the nation. January also saw building permits decline 0.7%. While the Commerce Department reported fewer single-family projects starting up, multi-family construction actually accelerated in the year’s opening month.2
STOCKS MOVE NORTH
Solid gains occurred during a short trading week: DJIA, 0.94% to 18,140.44; NASDAQ, 2.02% to 4,955.97; S&P 500, 0.63% to 2,110.30. WTI crude fell 5.20% for the week, settling Friday at $49.91 a barrel; gold slipped 2.36% for the week to a Friday COMEX settlement of 1,199.10.3
THIS WEEK: The National Association of Realtors reports January existing home sales on Monday. Tuesday, Fed chair Janet Yellen begins two days of testimony to the Senate Banking Committee, and February’s Conference Board consumer confidence index, the December S&P/Case-Shiller home price index, a new reading on euro area inflation and earnings from Home Depot, Hertz Global, Comcast, Macy’s, First Solar, Domino’s, Hewlett-Packard and Office Depot arrive. Wednesday, investors assess the Census Bureau’s report on January new home buying, an HSBC factory PMI for China and earnings from Lowe’s, Campbell Soup, RBC, SodaStream, TJX, Target, Chesapeake Energy, Dollar Tree and Transocean. News items for Thursday include January’s CPI and durable goods orders, new initial claims figures and quarterly results from Sempra Energy, AMC Networks, Anheuser-Busch, Autodesk, Gap, Herbalife, J.C. Penney, Kohl’s, L Brands and Monster. On Friday, the second estimate of Q4 GDP arrives, plus the University of Michigan’s final February consumer sentiment index and NAR’s January pending home sales report.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +1.78 +12.44 +14.88 +6.82
NASDAQ +4.64 +16.13 +24.17 +14.07
S&P 500 +2.50 +14.70 +18.05 +7.56
REAL YIELD 2/20 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.38% 0.63% 1.52% 1.67%
Sources: online.wsj.com, bigcharts.com, treasury.gov – 2/20/154,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
WEEKLY QUOTE
“Don’t rule out working with your hands. It does not preclude using your head.”
– Andy Rooney
WEEKLY TIP
If you are newly married, think about creating a joint savings or checking account to which you can both contribute each month. The money in the account can be used to pay for jointly incurred financial/household expenses.
WEEKLY RIDDLE
Katherine and Sterling each have the same amount of pears. How many pears does Katherine need to give Sterling so that Sterling has 10 more pears than she does?
Last week’s riddle:
I am astonishingly light, but even the strongest person in the world can only hold me for a few minutes. What am I?
Last week’s answer:
Air.
Citations.
1 – tinyurl.com/kfx2gv2 [2/20/15]
2 – bloomberg.com/news/articles/2015-02-18/factory-production-in-u-s-climbed-less-than-forecast-in-january [2/18/15]
3 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [2/20/15]
4 – markets.wsj.com/us [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/20/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/20/15]
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 financial Advisor services for professional athletes and 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.
