Economic Update August 20, 2012
Scott Schaubhut Presents:
WEEKLY ECONOMIC UPDATE
“Loyalty to a petrified opinion never yet broke a chain or freed a human soul.”
- Mark Twain
We all have impulses that can make us spend more and save less. Recognizing them can help us to improve our financial behaviors.
What is the longest word in the English language to have only one vowel repeated? (Hint: It has 16 total letters and the vowel is repeated 4 times).
Last week’s riddle:
A common English word refers to a person or thing not being in a place. But just by inserting a space within it, you can get two words meaning that a person or thing is present. What is this word?
Last week’s answer:
Nowhere. It can become now here by inserting a space.
August 20, 2012
CPI FLAT FOR A SECOND CONSECUTIVE MONTH
In July, the federal Consumer Price Index showed no overall advance. That was the case in June as well, and that might just bolster the case for easing at the Federal Reserve. Consumer prices rose only 1.4% annually, the smallest increase since the November 2010 index. Core CPI (minus food and energy costs) rose 0.1% last month. As for wholesale prices, they rose 0.3% in July – the largest jump in five months, even as wholesale gas prices slipped 3.1%.1,2
RETAIL SALES IMPRESS
American retail purchases soared 0.8% in July after a (downwardly revised) 0.7% retreat in June. It was a real sea change – the first positive month for the category since March. The monthly increase in retail gasoline sales was just 0.5%, which had little effect on the overall gain.3
Housing starts DIP; permits hit 4-YEAR peak
U.S. builders broke ground on 1.1% fewer projects in July. The good news: permits for new construction hit a pace of 812,000, a high unseen since August 2008.4
CONSUMERS ARE FEELING A BIT BETTER
Economists polled by MarketWatch expected a dip in August’s initial University of Michigan consumer sentiment index. Instead, it rose 1.3% to 73.6 – the best reading since May. The index’s gauge of current economic conditions improved to 87.6 in August from 82.7 in July.5
THE SUMMER RALLY ROLLS ON
Feeling slightly bullish? You aren’t alone. The Dow Jones Industrial Average and S&P 500 have now advanced for six straight weeks, and the CBOE VIX (the “fear index”) closed at 13.47 Friday, its lowest mark in five years. The numbers for the week: DJIA, +0.51% to 13,275.20; S&P 500, +0.87% to 1,418.16; NASDAQ, +1.84% to 3,076.59. Gold lost 0.21% on the COMEX for the week while oil soared 3.38% on the NYMEX. Gold settled Friday at $1,619.40, oil at $96.01.6,7,8
THIS WEEK: On Monday, Lowe’s reports Q2 earnings. Tuesday, Best Buy, Dell and Meditronic follow suit. Wednesday brings the National Association of Realtors report on July’s existing home sales, the July 31 FOMC minutes and earnings from Hewlett-Packard. In addition to weekly jobless claims, Thursday offers July data on new home buying, a new FHFA home price index and Q2 results from Hormel. Friday, the report on July’s durable goods orders arrives along with the latest USDA outlook on food prices.
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1 - www.reuters.com/article/2012/08/15/usa-economy-idINL2E8JF2C720120815 [8/15/12]
2 - www.chicagotribune.com/business/sns-rt-us-economy-ppibre87d0gq-20120814,0,3794223.story [8/14/12]
3 - articles.marketwatch.com/2012-08-14/economy/33191357_1_sales-at-gasoline-stations-furniture-store-sales-retail-sales [8/17/12]
4 - www.sfgate.com/business/bloomberg/article/Housing-Starts-in-U-S-Decline-as-Permits-Reach-3793297.php [8/16/12]
5 - www.marketwatch.com/story/consumer-sentiment-rises-in-august-2012-08-17-10103922 [8/17/12]
6 - www.cnbc.com/id/48701551 [8/17/12]
7 - money.msn.com/market-news/post.aspx?post=2dab9cc0-86e7-48a1-b678-b50cb7e539d7 [8/17/12]
8 - montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
9 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
10 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/17/12]
10 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/17/12]
11 - treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]
Scott Schaubhut, CPA | 08/21/2012