NO SURPRISE: HOUSEHOLD SENTIMENT WANES
The initial September edition of the University of Michigan’s consumer sentiment index came in last week at 85.7 – its lowest reading in a year, significantly below its final August mark of 91.9. Given the recent stock market retreat and ongoing headlines about China’s economic slowdown, the closely watched indicator seemed primed for a descent – but a consensus MarketWatch forecast projected a 90.3 reading.1,2
PRODUCER PRICES WERE UNCHANGED IN AUGUST
Wholesale inflation was absent last month, at least by the measure of the Labor Department’s Producer Price Index. The flat reading in the headline PPI followed a 0.2% increase in July. Producer prices were down 0.8% across the 12 months ending in August. Annualized wholesale inflation has now been negative for seven straight months, influenced by reduced energy and fuel costs.1
COULD WTI CRUDE DIP TO $20 A BARREL?
Analysts at Goldman Sachs see that possibility. On Friday, they released a note commenting that the oil market is “even more oversupplied than we had expected” and that “the potential for oil prices to fall to [levels] near $20/bbl is becoming greater as storage continues to fill.” In Goldman’s model scenario, the price of West Texas Intermediate crude dips to $38 in October and rises to $45 by September 2016. Oil settled at $44.63 on the NYMEX Friday, falling 3.1% for the week.3,4
STOCKS END THE WEEK HIGHER
Some bullish sentiment crept back into the market ahead of the Federal Reserve’s September policy meeting. Across four trading days, the S&P 500 gained 2.07% to a Friday close of 1,961.05. The Dow rose 0.36% to 16,433.09 while the Nasdaq moved up 1.88% to 4,822.34.5
THIS WEEK: Nothing major is slated for Monday. On Tuesday, reports on August retail sales and August industrial output appear. Wednesday, the August Consumer Price Index arrives along with earnings from Cracker Barrel, FedEx, and Oracle. Thursday, investors worldwide will await the Federal Reserve’s latest policy statement (a press conference follows); the day’s other news items include August housing starts and building permits, new initial claims figures and quarterly results from Adobe and Rite Aid. On Friday, the Conference Board releases its August leading economic indicators index.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -7.80 -3.61 +11.41 +5.39
NASDAQ +1.82 +5.02 +23.01 +12.17
S&P 500 -4.75 -1.82 +15.35 +5.80
REAL YIELD 9/11 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.61% 0.42% 1.02% 1.69%
Sources: wsj.com, bigcharts.com, treasury.gov – 9/11/156,7,8,9
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
“You cannot depend on your eyes when your imagination is out of focus.”
– Mark Twain
WEEKLY TIP
If you are starting a business, obtain a credit card and bank account specifically for your company. This can help you avoid comingling of business and personal assets, and it can also allow you to easily identify business-related expenses that can be deducted from business income.
WEEKLY RIDDLE
I lack lungs, yet I constantly need oxygen; I have no mouth, but sufficient water will drown me. What am I?
Last week’s riddle:
What has a foot on each side and yet another foot in its middle?
Last week’s answer:
A yardstick.
Citations.
1 – tinyurl.com/pj74sff [9/11/15]
2 – marketwatch.com/economy-politics/calendars/economic [9/11/15]
3 – businessinsider.com/goldman-sachs-huge-supply-and-weak-demand-could-send-oil-prices-plunging-to-20-per-barrel-2015-9 [9/11/15]
4 – marketwatch.com/story/oil-pulls-back-after-conflicting-supply-signals-2015-09-11/ [9/11/15]
5 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [9/11/15]
6 – markets.wsj.com/us [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F11%2F14&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F11%2F14&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F11%2F14&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F10%2F10&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F10%2F10&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F10%2F10&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F9%2F05&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F9%2F05&x=0&y=0 [9/11/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F9%2F05&x=0&y=0 [9/11/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/11/15]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/11/15]
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, Mark is known as The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner 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, and American Fork in Utah.
