Market Commentary - Week of 8/12/13
“When the only tool you have is a hammer, you tend to see every problem as a nail.”
- Abraham Maslow
If much of your net worth is tied to the value of your home and you are seeing home equity as a tool to help fund your retirement, recognize that the ups and downs of your local real estate market may alter that possibility.
A cat falls into a hole 14.5 feet deep. The cat can jump 3 feet high, but she slides back 1 foot with each jump. How many jumps does it take her to get out of the hole?
Last week’s riddle:
I am usually only as wide as a thumb, and I typically travel across the nation for less than a dollar, all while lying flat. What am I?
Last week’s answer:
A postage stamp.
Week of August 12, 2013
IMPRESSIVE SERVICE SECTOR GROWTH
Last month saw solid expansion in U.S. service industries, according to the July non-manufacturing PMI from the Institute for Supply Management. ISM’s latest service sector PMI came in at 56.0 compared with 52.2 in June. July’s new orders index rose 6.9% to 57.7, and July’s business activity index climbed 8.7% to 60.4.1
OBAMA: FANNIE MAE & FREDDIE MAC SHOULD GO
Last week in Phoenix, the President said that “private capital should take a bigger role in the mortgage markets” and advocated the passage of bipartisan legislation circulating in the Senate that would “end Fannie and Freddie as we know them” and create a Federal Mortgage Insurance Corporation to regulate the home financing system. Even though winding down Fannie and Freddie has widespread support, mortgage interest rates would likely rise without their credit guarantees.2,3
HOW DOES EARNINGS SEASON LOOK SO FAR?
The short answer: it looks better than many analysts had expected. Just after Friday’s close, Bloomberg reported that 447 firms in the S&P 500 had reported quarterly results; 72% of them had beaten the profit projections of analysts and 56% had exceeded sales forecasts.4
OIL & GOLD FINISH THE WEEK WITH A FLOURISH
NYMEX crude settled up at $106.03 per barrel Friday after rising 2.54% in a trading day. On the COMEX, gold ended the week at $1,314.60 an ounce, up $3.90 Friday.5
STOCKS BEAT A RETREAT
The big three all traded lower last week. The Dow went -1.49% to settle at 15,425.51 Friday, the NASDAQ went -0.80% to end the week at 3,660.11, and the S&P 500 went -1.07% to wrap up the week at 1,691.42.6
THIS WEEK: Monday brings earnings from Sysco. July retail sales numbers from the Census Bureau, a report on June business inventories and earnings from Flower Foods and Cree arrive Tuesday. Wednesday, the July Producer Price Index appears, plus earnings from Cisco, NetApp, Deere, Macy's and NetEase. July’s Consumer Price Index comes out Thursday, along with the August NAHB Housing Market Index, numbers on July industrial output, and quarterly results from Nordstrom, Applied Materials, Kohl's and Wal-Mart. Friday, the initial August consumer sentiment index from the University of Michigan appears, along with numbers on July housing starts and building permits.
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This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. 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. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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.
1 - ism.ws/ISMReport/NonMfgROB.cfm [8/5/13]
2 - nytimes.com/2013/08/07/us/politics/obama-fannie-mae-freddie-mac.html [8/7/13]
3 - csmonitor.com/Business/new-economy/2013/0808/If-Obama-eliminates-Fannie-Mae-Freddie-Mac-will-mortgage-rates-go-up [8/8/13]
4 - bloomberg.com/news/2013-08-09/u-s-stock-index-futures-decline-monster-beverage-drops.html [8/9/13]
5 - reuters.com/finance/commodities [8/9/13]
6 - tinyurl.com/luqsm63 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F9%2F12&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F9%2F12&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F9%2F12&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F8%2F08&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F8%2F08&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F8%2F08&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F8%2F03&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F8%2F03&x=0&y=0 [8/9/13]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F8%2F03&x=0&y=0 [8/9/13]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/9/13]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/9/13]