Weekly Economic Update for April 18, 2011

Presented by Mark Lund, The Investor Coach.

WEEKLY QUOTE
“Things turn out best for those who make the best of the way things turn out.”
– Jack Buck

INFLATION LIVES UP TO EXPECTATIONS
Economists polled by Briefing.com felt that the federal government’s Consumer Price Index would rise 0.5% in March, and it did. They thought core CPI would advance by 0.1% for the month; they also got that right. If this keeps up, America will be staring at 6% annualized inflation. Should we instead focus on the tiny core CPI increase that strips out food and energy prices? It is pretty hard to ignore energy costs given that the Producer Price Index rose by another 0.7% in March, with the wholesale price of gasoline rising 5.7%. The PPI has climbed 5.8% over the past 12 months. Economists and investors are wondering how much mind the Federal Reserve will pay to all this at its next FOMC meeting, scheduled for April 26-27.^1,2,3

KEY CONSUMER sentiment INDEX IMPROVES
The initial April Thomson Reuters/University of Michigan consumer sentiment survey came in at 69.6, a 2.1% increase from the final 67.5 reading for March. Economists polled by Bloomberg News had forecast the index would only rebound to 68.8 from this 16-month low.⁴

NEW REPORTS ON RETAIL SALES, FACTORY OUTPUT
Retail sales increased by 0.4% in March, according to the Commerce Department. The year-over-year improvement was 7.1%. The asterisk: with retail gasoline sales factored out of the data, the overall March gain was just 0.1%. Factory output was up 0.7% in March, much better than the 0.1% rise for February. In a nice sign for real estate, production of construction goods was up 1.5% last month.^2,5

A SMALL RETREAT
The Dow couldn’t quite manage to extend its weekly winning streak to four last week. The marquee indices performed like so across five trading days: DJIA, -0.31% to 12,341.83; S&P 500, -0.64% to 1,319.68; NASDAQ, -0.25% to 2,764.65.⁶

THIS WEEK: On Monday, Citigroup, Texas Instruments and Eli Lilly issue earnings reports – and of course, April 18 is the federal tax deadline. Tuesday is a huge day for 1Q results – we’ll hear from IBM, Goldman Sachs, Intel, Johnson & Johnson and Yahoo, and March housing starts data will also arrive. Wednesday is just as momentous, with 1Q earnings announced by AT&T, Amgen, Apple, AmEx, Wells Fargo and Yum Brands … and in addition, we’ll get the March existing home sales report from the NAR. Thursday brings more attention-getting earnings from McDonald’s, Morgan Stanley, Verizon, GE, and DuPont plus weekly initial and continuing claims data and the Conference Board’s leading indicator index. Friday is Good Friday, so the financial markets will be closed (banks will stay open).

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 4/15/11^6,7,8,9  Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.  These returns do not include dividends.

WEEKLY RIDDLE
They never move, even when we walk on them, but signs and arrows may indicate that they go “up” and “down”. What are they?

Last week’s riddle:
Can you rearrange the letters in new door to make one word?

Last week’s answer:
Yes, you can spell out “ONE WORD” by rearranging the letters in “NEW DOOR”.

Citations.
1 – briefing.com/Investor/Public/Calendars/EconomicCalendar.htm / [4/15/11]      
2 – blogs.forbes.com/heatherstruck/2011/04/15/march-cpi-increase-in-line-with-expectations/ [4/15/11]
3 – seattletimes.nwsource.com/html/businesstechnology/2014773317_apuseconomy.html [4/15/11]
4 – bloomberg.com/news/2011-04-15/consumer-sentiment-in-u-s-rises-more-than-forecast-in-third-monthly-gain.html [4/15/11]
5 – marketwatch.com/story/us-retail-sales-rise-04-in-march-2011-04-13 [4/13/11]
6 – cnbc.com/id/42613371 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F15%2F10&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F15%2F10&x=10&y=18 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F15%2F10&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F06&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F06&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F06&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F16%2F01&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F16%2F01&x=0&y=0 [4/15/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F16%2F01&x=0&y=0 [4/15/11]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/15/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/15/11]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 – montoyaregistry.com/Financial-Market.aspx?financial-market=401k-withdrawal-rules&category=2 [1/10/01]

This information should not be construed as investment, tax or legal advice. 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 Peter Montoya Inc., for Stonecreek Wealth Advisors, Inc. a fee only registered investment advisor firm in Utah.  Mark Lund is the author of The Effective Investor.