Jehl & Kreilach Financial Management Presents:
WEEKLY ECONOMIC UPDATE September 17, 2012
WEEKLY QUOTE “Every exit is an entry somewhere else.” - Tom Stoppard
WEEKLY TIP Think about making a household budget using an online spreadsheet. You can easily find or create one on the Web for free; some even have built-in calculators.
WEEKLY RIDDLE What lives above a star but never burns, has 11 neighbors, and can replace the letters P, Q, R or S in some cases? Last week’s riddle: What 9-letter word remains an English word each time you remove a letter from it, until it becomes a 1letter word? (Hint: You can remove letters from any part of the word.) Last week’s answer: Startling (Starting, Staring, String, Sting, Sing, Sin, In, I).
FEDERAL RESERVE OPTS FOR OPEN-ENDED EASING On September 13, America’s central bank announced its third round of quantitative easing since 2008. QE3 has no set timeframe: the Fed will buy $40 billion of agency mortgage-backed securities each month until it elects to halt its effort. Pair that with the ongoing Operation Twist and the Fed will purchase about $85 billion worth of longer-term securities monthly in the last third of 2012. In addition, the latest FOMC policy statement reaffirmed the pledge to keep interest rates at “exceptionally low levels” through mid-2015. Will the Fed also decide to buy Treasuries? Will mortgage rates drop to new all-time lows? Will this promote more spending and lending? While the answers to these questions won’t be known for a while, the Dow went +206.51 Thursday in the wake of the news.1,2
PPI JUMPS DRAMATICALLY; CPI ALSO RISES The Labor Department said that its Producer Price Index climbed 1.7% in August, mostly on soaring energy costs. Wholesale prices hadn’t advanced so much in a month since June 2009. Core PPI rose just 0.2%. August also saw a 0.6% increase in the Consumer Price Index – the CPI’s largest monthly rise since March. Retail gas prices represented 80% of that gain. Core CPI rose only 0.1%, as in July. 3,4
RETAIL SALES & CONSUMER SENTIMENT IMPROVE August turned out to be the best month for retail sales since February. Last month’s 0.9% gain complements the 0.6% advance recorded by the federal government in July. The University of Michigan’s preliminary September consumer sentiment survey rose to 79.2, much improved from the final August mark of 74.3. 4,5
BOND BUYING INSPIRES STOCK BUYING The S&P 500 gained 1.94% last week to settle Friday at 1,465.77 – its best close since December 31, 2007. The lift from QE3 also took the Dow (+2.15% to 13,593.37) and NASDAQ (+1.52% to 3,183.95) higher last week. NYMEX crude settled at $99.00 per barrel Friday; COMEX gold ended the week at $1,772.70 an ounce. 5,6,7 THIS WEEK: No major U.S. economic releases are slated for Monday. Tuesday, September’s NAHB housing market index comes out plus earnings from FedEx, Cracker Barrel and Darden. Wednesday, earnings from Bed Bath & Beyond, AutoZone, General Mills and Adobe Systems complement reports on August existing home sales, building permits and housing starts. The Conference Board’s August index of leading indicators appears Thursday, plus weekly jobless claims and earnings from CarMax, Rite Aid and Oracle. The iPhone5 ships Friday, which is also a quadruple witching day. % CHANGE
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Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 9/14/12 6,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
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Registered Representative and Principal, Securities offered through Cambridge Investment Research Inc., broker/dealer, Member HYPERLINK "http://www.finra.org" \t "_blank" FINRA/ HYPERLINK "http://www.sipc.org" \t "_blank" SIPC to residents of: IN, AK, FL, IA, IL, MI, MN, MO, TN, CT, CA, NY, NJ, SC, VA and OH. Advisory Services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor to residents of: IN, AK, FL, IA, IL, MI, MN, MO, TN, CT, CA, NY, NJ, SC, VA and OH. Jehl & Kreilach Financial Management and Cambridge are not affiliated.
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Citations. 1 - www.cnbc.com/id/49018964 [9/13/12] 2 - www.cnbc.com/id/15839285 [9/13/12] 3 - www.nasdaq.com/article/us-ppi-jumps-17-jobless-claims-up-20120913-01084 [9/14/12] 4 - www.cnbc.com/id/49032270 [9/14/12] 5 - money.msn.com/market-news/post.aspx?post=f94f59a8-0745-4ac6-b69c-ce8b66e9516f [9/14/12] 6 - www.cnbc.com/id/49032125 [9/14/12] 7 - montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F14%2F11&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F14%2F11&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F14%2F11&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F14%2F07&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F14%2F07&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F14%2F07&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F13%2F02&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F13%2F02&x=0&y=0 [9/14/12] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F13%2F02&x=0&y=0 [9/14/12] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/14/12] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/14/12] 10 - treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]