{"id":701,"date":"2011-12-20T06:29:54","date_gmt":"2011-12-20T12:29:54","guid":{"rendered":"http:\/\/www.sunlakesofarizona.com\/blog\/?p=701"},"modified":"2011-12-20T06:29:54","modified_gmt":"2011-12-20T12:29:54","slug":"economic-notes-for-the-week-of-december-19th","status":"publish","type":"post","link":"https:\/\/dev.sunlakesofarizona.com\/blog\/2011\/12\/economic-notes-for-the-week-of-december-19th\/","title":{"rendered":"Economic Notes for the Week of December 19th"},"content":{"rendered":"

Retail Sales<\/strong> numbers were positive at +0.2% month-over-month, but slightly below results for the past two months and a bit below consensus.\u00a0 The strongest portions of the report were electronics sales and \u2018non-store\u2019 retailers, which includes online purchases.\u00a0 Additionally, sales numbers for prior months were revised upward.<\/p>\n

Overall, retail numbers have been a potentially positive contributor to the fourth quarter\u2019s GDP number\u2014which could be surprisingly strong according to current estimates.\u00a0 The Holiday shopping season specifically has looked to be a strong one.\u00a0 Perhaps not one of the best ever by any means, but decent, according to preliminary data as well as our own anecdotal (albeit limited) mall experiences of the season.<\/p>\n

Industrial production<\/strong> declined -0.2% for November (month-over-month), when consensus called for a slight gain.\u00a0 Last month\u2019s figures were mostly a result of a -0.4% drop in manufacturing production (specifically motor vehicle output, which cooled off after several months of gains).\u00a0 As an input to 4th Quarter GDP, this serves as a slight negative.<\/p>\n

According to the Job Openings and Labor Turnover Survey (\u2018JOLTS\u2019)<\/strong> for October, openings and hiring activity declined slightly, although the trend from the overall past few months has been positive.\u00a0 Initial Jobless Claims<\/strong> came in at 366k versus the expected 390k; importantly, claims have fallen strongly over the last several weeks to their lowest level since May 2008.\u00a0 We remain cautiously optimistic\u2014as employment has improved as of late, it is important for this trend to continue over the coming months in order for meaningful impact to unemployment to occur.<\/p>\n

Import prices<\/strong> rose +0.7% for November, mostly due to oil.\u00a0 This was slightly lower than forecast.\u00a0 Non-oil prices, such as metal imports, declined.\u00a0 The Producer Price Index (PPI)<\/strong> increased by +0.3% month-over-month (resulting in +6.1% year-over-year), which was slightly more than expected, while the core number was only up +0.1%\u2014the headline number was affected by higher food prices. \u00a0Overall, core PPI has slowed down during the last several months.\u00a0 The headline Consumer Price Index (CPI)<\/strong> was relatively flat for November (keeping a +3.4% gain year-over-year), as gasoline prices dropped over the month.\u00a0 Core CPI was up +0.2% (and +2.2% year-over-year), but was mostly affected by more cyclical components like clothing.\u00a0 In general, as commodity prices and expectations for global growth have moderated, concerns about forward-looking inflation have calmed, and it appears inflation figures may look a bit more contained over the next several months at this current pace.<\/p>\n

The FOMC \u2018non\u2019-decision, keeping existing rates and current quantitative easing measures intact, while also acknowledging strengthening economic and employment metrics.\u00a0 Both the FOMC and critics of the FOMC have toyed with the idea of using different economic measures to determine when enough stimulus is enough.\u00a0 One more unique idea proposed by some economists, but less likely to be implemented by the Fed, is \u2018nominal GDP level targeting,\u2019 where a stated dollar level of GDP is targeted (in line with its long-term trend).\u00a0 Unfortunately, with the Fed\u2019s dual mandate of stable prices and maximum employment, one problem with this approach is that one of the two Fed mandates (\u2018stable prices\u2019) could be violated as monetary stimulus is ramped up to achieve this trend goal.\u00a0 However, the \u2018maximum employment\u2019 mandate could well benefit from this higher growth.\u00a0 Another example of politics and economics in conflict\u2014and perhaps working against each other in the search for common sense solutions.<\/p>\n

 <\/p>\n

Market Notes <\/em><\/strong><\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n
Period ending 12\/16\/2011<\/strong><\/td>\n\n

1 Week (%)<\/strong><\/p>\n<\/td>\n

\n

YTD (%)<\/strong><\/p>\n<\/td>\n<\/tr>\n

DJIA<\/td>\n\n

-2.54<\/p>\n<\/td>\n

\n

5.24<\/p>\n<\/td>\n<\/tr>\n

S&P 500<\/td>\n\n

-2.79<\/p>\n<\/td>\n

\n

-1.05<\/p>\n<\/td>\n<\/tr>\n

Russell 2000<\/td>\n\n

-3.08<\/p>\n<\/td>\n

\n

-6.71<\/p>\n<\/td>\n<\/tr>\n

MSCI-EAFE<\/td>\n\n

-4.01<\/p>\n<\/td>\n

\n

-14.79<\/p>\n<\/td>\n<\/tr>\n

MSCI-EM<\/td>\n\n

-3.22<\/p>\n<\/td>\n

\n

-21.48<\/p>\n<\/td>\n<\/tr>\n

BarCap U.S. Aggregate<\/td>\n\n

0.63<\/p>\n<\/td>\n

\n

7.72<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n
U.S. Treasury Yields<\/strong><\/td>\n\n

3 Mo.<\/strong><\/p>\n<\/td>\n

\n

2 Yr.<\/strong><\/p>\n<\/td>\n

\n

5 Yr.<\/strong><\/p>\n<\/td>\n

\n

10 Yr.<\/strong><\/p>\n<\/td>\n

\n

30 Yr.<\/strong><\/p>\n<\/td>\n<\/tr>\n

12\/31\/2010<\/td>\n\n

0.12<\/p>\n<\/td>\n

\n

0.61<\/p>\n<\/td>\n

\n

2.01<\/p>\n<\/td>\n

\n

3.30<\/p>\n<\/td>\n

\n

4.34<\/p>\n<\/td>\n<\/tr>\n

12\/9\/2011<\/td>\n\n

0.01<\/p>\n<\/td>\n

\n

0.22<\/p>\n<\/td>\n

\n

0.89<\/p>\n<\/td>\n

\n

2.07<\/p>\n<\/td>\n

\n

3.10<\/p>\n<\/td>\n<\/tr>\n

12\/16\/2011<\/td>\n\n

0.00<\/p>\n<\/td>\n

\n

0.24<\/p>\n<\/td>\n

\n

0.81<\/p>\n<\/td>\n

\n

1.86<\/p>\n<\/td>\n

\n

2.86<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Markets were generally weaker during the week as a continued matter of European concerns despite the decent U.S. economic data noted above.\u00a0 Somewhat strangely, markets fell on Tuesday in response to the Fed\u2019s reaction of \u2018no action.\u2019\u00a0 Seems people want improvement in the economy, but, at the same time, are disappointed that the economy is perhaps strong enough to not need additional easing… curious.<\/p>\n

Defensive sectors in the market, such as telecom, utilities and health care outperformed the market, while energy, materials and technology underperformed by the largest amounts.\u00a0 Large-cap generally outperformed mid- and small-cap stocks.<\/p>\n

The U.S. Dollar being up roughly two percent on the week provided an additional headwind to foreign investments as well as commodities.\u00a0 Commodity markets were led by several agricultural and industrial metals contracts, while precious metals like gold and silver were down.\u00a0 With a much stronger U.S. Dollar in recent weeks, due to more confidence about U.S. prospects relative to the situation in Europe, gold bug concerns about inflation (which often go hand-in-hand with a weakening dollar) and U.S. economic prospects have dissipated a bit.<\/p>\n

Naturally, with the movement away from risk assets, investment-grade bonds benefitted, while certain corporates and non-governments were flat to slightly lower.<\/p>\n

As a side note, December has proven to be the best performing month over time from a seasonal standpoint… as of Friday\u2019s close, we\u2019re down -2% on the month so far, so a Santa Claus rally is still within reach.<\/p>\n

Enjoy the week\u2014and we want to wish Happy Holidays to you and your families.<\/p>\n

Karl Schroeder, RFC, CSA, CEP<\/p>\n

Investment Advisor Representative<\/p>\n

Schroeder Financial Services, Inc.<\/p>\n

480-895-0611<\/p>\n

 <\/p>\n

Sources:\u00a0 FocusPoint Solutions, Goldman Sachs, Morgan Stanley, Morningstar, Payden & Rygel, Deutsche Bank, Wells Capital Management, Bloomberg, Reuters, Standard & Poors, MSCI, Barclays Capital, JPMorgan Asset Management, Northern Trust, Oppenheimer Funds, PIMCO.\u00a0 Index performance is shown as total return, which includes dividends.\u00a0 Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.<\/p>\n","protected":false},"excerpt":{"rendered":"

Retail Sales numbers were positive at +0.2% month-over-month, but slightly below results for the past two months and a bit below consensus.\u00a0 The strongest portions of the report were electronics sales and \u2018non-store\u2019 retailers, which includes online purchases.\u00a0 Additionally, sales numbers for prior months were revised upward. Overall, retail numbers have been a potentially positiveRead more<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-701","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/701","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/comments?post=701"}],"version-history":[{"count":1,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/701\/revisions"}],"predecessor-version":[{"id":702,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/701\/revisions\/702"}],"wp:attachment":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/media?parent=701"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/categories?post=701"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/tags?post=701"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}