Gaxiola Financial Group Presents:
WEEKLY ECONOMIC UPDATE April 2, 2012
WEEKLY QUOTE “He who lives by the crystal ball soon learns to eat ground glass.” - Edgar Fiedler
WEEKLY TIP At a 4% rate of inflation, expenses will double every 18 years. That’s a pretty good argument for growth investing in retirement.
WEEKLY RIDDLE Take one letter out of a 7-letter word and it becomes longer. What is this word?
HIGH GAS PRICES DON’T DENT PERSONAL SPENDING Consumer spending increased by 0.8% in February, even with fuel prices soaring. That topped the 0.6% gain projected by economists polled by Reuters. February’s inflation-adjusted gain was 0.5%, the largest in six months. January’s headline personal spending gain was doubled to 0.4% in a Commerce Department revision.1
HOW IS THE CONSUMER FEELING? The final March University of Michigan consumer sentiment survey hints that morale may be rising on Main Street. It came in at 76.2, well above the 74.3 consensus of economists polled by Briefing.com. On the other hand, the March consumer confidence poll from the Conference Board fell to 70.2 from February’s 71.6 mark, which was in line with the expectations of those economists.2
MORTGAGE RATES DIP BACK UNDER 4% Freddie Mac’s March 29 survey found the average interest rate for a 30-year fixedrate home loan at 3.99% with an average 0.7 point. Rates on 15-year FRMs averaged 3.23% with an average 0.8 point last week. A sour note: the S&P/Case-Shiller Home Price Index fell 3.8% in January to a low unseen since the end of 2002. 2,3
DURABLE GOODS ORDERS UP 2.2% FOR FEBRUARY This reverses some of the 3.6% retreat from January. However, economists polled by Briefing.com had expected a 2.8% gain for the month.2
A TREMENDOUS QUARTER WRAPS UP Last week’s riddle: You need to take a gallon of oil out of a barrel of oil. How can you do it using only a 3gallon container and a 5-gallon container? Last week’s answer: Fill the 3-gallon container with oil and pour it into the 5-gallon container. Then fill the 3-gallon container again and use it to fill the 5-gallon container the rest of the way. One gallon will be left in the 3-gallon container.
The best first quarter for stocks in 14 years ended with another solid week: DJIA, +1.00% to 13,212.04; S&P 500, +0.81% to 1,408.47; NASDAQ, +0.77% to 3,091.57. Look at these Q1 performances: NASDAQ, +18.67% (its best quarter in 21 years); Dow, +8.14%; S&P 500, +12.00%. Gold futures climbed $9.50 for the week, settling Friday at $1,671.90 an ounce. Gold gained 6.71% for the quarter. NYMEX crude fell $3.85 last week, but still ended March at $103.02 with a 4.24% quarterly gain.4,5 THIS WEEK: The March ISM manufacturing index and February construction spending data arrive Monday. Tuesday presents Commerce Department reports on February factory orders and March vehicle sales along with the March 13 FOMC minutes. On Wednesday, the March edition of ISM’s service sector index is out, plus Q1 earnings from Monsanto and Bed Bath & Beyond. Thursday brings earnings from CarMax and the latest initial claims numbers. On Good Friday, U.S. financial markets will be closed and banks will be open; the March unemployment figures will also be released. % CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+8.14
+6.97
+1.39
+2.70
NASDAQ
+18.67
+11.34
+5.53
+6.75
S&P 500
+12.00
+6.04
-0.17
+2.28