FEDERAL RESERVE: UNWINDING WILL BE GRADUAL
Last Wednesday, the country’s central bank detailed how it would shrink its mammoth balance sheet. During the fourth quarter, the Fed will unload $10 billion of maturing bonds per month; in each subsequent quarter, the monthly runoff will increase by $10 billion until reaching a limit of $50 billion. Fed chair Janet Yellen said that this schedule is set in stone, barring a “sufficiently great” economic threat. The Fed made no interest rate move last week, but 12 of 16 Fed officials do project a hike before 2017 ends. 1
HOME SALES RETREAT AGAIN
In August, existing home sales fell for the fourth time in five months. Resales decreased 1.7% to a seasonally adjusted annual pace of 5.35 million, a 12-month low, according to the National Association of Realtors. Two factors hindered would-be buyers: a median house price of $253,500 and a 2.1% monthly reduction in inventory (the supply of homes for sale was 6.5% greater in August 2016). 2
BUILDING PERMITS UP 5.7% IN AUGUST
This good news was countered by last month’s 0.8% reduction in groundbreaking. The Census Bureau’s report on August construction activity showed the rate of issuance for permits 8.3% above where it was a year earlier; the pace of starts was 1.4% improved. Starts for single-family homes were up 17.1% in 12 months. 3
A MIXED WEEK FOR EQUITIES
Leading the way among the three major indices last week, the Dow Jones Industrial Average rose 0.36% in five days to 22,349.59. The S&P 500 made a smaller advance of 0.08% to 2,502.22. The Nasdaq Composite took a weekly loss of 0.33%, settling Friday at 6,426.92. 4
THIS WEEK : On Monday, Red Hat reports quarterly results. August new home sales numbers, the latest S&P/Case-Shiller home price index, the September Conference Board consumer confidence index, and earnings from Cintas, Darden Restaurants, Micron Technology, and Nike all arrive on Tuesday. Earnings announcements from Jabil Circuit, Pier 1 Imports, Thor Industries, and Worthington Industries complement reports on August durable goods orders and pending home sales, Wednesday. Thursday, the federal government’s second estimate of Q2 GDP and a new initial jobless claims report appear; also, Accenture, Blackberry, Conagra Brands, KB Home, and Rite Aid present earnings. The August personal spending report, the Federal Reserve’s August PCE price index, and the final September University of Michigan consumer sentiment index surface Friday.
|Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||9/22 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.42%||0.08%||0.71%||2.31%|
Sources: wsj.com, bigcharts.com, treasury.gov – 9/22/17 4,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
“Price is what you pay. Value is what you get.”
– Warren Buffett
Are your antiques and collectibles worth more than they used to be? Their current value should be accurately stated on your homeowner insurance policy. Otherwise, an insurer may not reimburse you for their full value if they are lost or damaged.
A 6-foot chain is suspended with its ends nailed to a wall, with the nails parallel to the floor. The chain sags and hangs down between the nails; the height of the hanging chain is therefore 3 feet from top to bottom. What is the distance in between the nails?
Last week’s riddle:
Take three letters, arrange them one way, and you have a word for “conflict.” Arrange them another way, and you have a word for “uncooked.” What are the three letters?
Last week’s answer:
A, R, and W.
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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. 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 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. 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 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 – nytimes.com/2017/09/20/business/economy/fed-bond-buying.html [9/20/17]
2 – marketwatch.com/story/existing-home-sales-fall-in-august-for-the-fourth-time-in-five-months-2017-09-20 [9/20/17]
3 – forbes.com/sites/samanthasharf/2017/09/19/u-s-housing-starts-slipped-permits-rose-in-august/ [9/19/17]
4 – markets.wsj.com/us [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F22%2F16&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F22%2F16&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F22%2F16&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F21%2F12&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F21%2F12&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F21%2F12&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F21%2F07&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F21%2F07&x=0&y=0 [9/22/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F21%2F07&x=0&y=0 [9/22/17]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/22/17]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/22/17]