{"id":709,"date":"2012-01-23T11:37:28","date_gmt":"2012-01-23T17:37:28","guid":{"rendered":"http:\/\/www.sunlakesofarizona.com\/blog\/?p=709"},"modified":"2012-01-23T11:37:28","modified_gmt":"2012-01-23T17:37:28","slug":"economic-notes-for-january-23rd","status":"publish","type":"post","link":"https:\/\/dev.sunlakesofarizona.com\/blog\/2012\/01\/economic-notes-for-january-23rd\/","title":{"rendered":"Economic Notes for January 23rd"},"content":{"rendered":"

Headline inflation, measured by the Consumer Price Index (CPI)<\/strong>, was unchanged in December, while the \u2018core\u2019 number that excludes food and energy was slightly higher (+0.1%).\u00a0 During the month, rent inflation was bit higher, but clothing and auto prices fell.<\/p>\n

 <\/p>\n

The year-over-year CPI number for 2011 was +3.0% (+2.2% for core CPI).\u00a0 We\u2019ve seen the rate of inflation abate in recent months, as food prices have moderated and the rise of certain energy components (WTI crude) has been offset by steep declines in others (natural gas).\u00a0 While a little bit of inflation is a helpful and positive byproduct of economic activity, low levels overall act as a much better input than high inflation\u2014obviously\u2014as looked at by business and consumer budgets.\u00a0 Lower inflation inputs should also help boost corporate earnings as they translate through the process.<\/p>\n

 <\/p>\n

Initial unemployment claims<\/strong> fell to 352,000 for the January 14th<\/sup> ending week, which was lower than expected, 50,000 lower than the week prior, and reflected a bit of \u2018usual seasonal volatility\u2019 (according to the DOL).\u00a0 Continuing claims are also much lower.\u00a0 Year-end figures are always a bit sporadic due to seasonal adjustments, changes to payrolls and holiday employment, but the trend continues to be lower as the job situation in general has been improving.<\/p>\n

 <\/p>\n

The headline Producer Price Index (PPI)<\/strong> fell -0.1% for December, in contrast to expectations for a slight increase, while the \u2018core\u2019 PPI number gained +0.3% for the month.\u00a0 The difference was mostly caused by a nearly 1% drop in usually-more-volatile gasoline and food products (which aren\u2019t included in the \u2018core\u2019 core figure).\u00a0 A good part of the core increase came from light truck prices, which rose 1% on the month, although passenger vehicles, prescription drugs and tobacco helped.\u00a0 Year-over-year, the core PPI is up 3.0%, which is the highest it\u2019s been since June 2009\u2014producer inflation is another byproduct of improved economic activity.<\/p>\n

\u00a0<\/strong><\/p>\n

U.S. factory output<\/strong> soared in December, up +0.9%, according to the Federal Reserve, which is the largest increase in a year.\u00a0 While output levels remain a few percentage points below the pre-recession peak, they are up +14% from the recession\u2019s low in June of 2009.\u00a0 In the second half of 2011, these figures were generally aided by more car purchases by consumers, and more capex machinery and technology spending by businesses, as well as inventory restocking activity.<\/p>\n

 <\/p>\n

Industrial production<\/strong> for December gained +0.4%, which was nearly on target of what was expected, and was revised higher for several earlier months.\u00a0 Capacity utilization<\/strong> remained consistent with expectations at 78.1%.\u00a0 Manufacturing output increased by +0.9%, which was led by motor vehicle assemblies, machinery and computers\/electronics\u2014in keeping with other metrics.<\/p>\n

 <\/p>\n

The monthly Homebuilders\u2019 survey<\/strong> rose from 21 to 25 over the past month to the highest level it\u2019s been since early 2007.\u00a0 This survey is comprised of three parts:\u00a0 present home sales, expected home sales and prospective buyer traffic\u2014which can change on a dime\u2014but the\u00a0 higher level of positivity is interesting.\u00a0 Housing starts<\/strong> fell to 675k in December, which was larger than anticipated, but the bulk of the damage came from multi-family starts (and was a bit of a reversion from the huge month for that component in November).\u00a0 Existing home sales<\/strong> were up +5.0% for December, which was largely in line with expectations.\u00a0 The number of homes offered for sale fell, while the \u2018months supply\u2019 of homes inventory fell from 7.2 to 6.2.\u00a0 The median price also rose a bit from mid-2011, so there were some positive elements sporadically the housing story.<\/p>\n

 <\/p>\n

 <\/p>\n

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

 <\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n
Period ending 1\/20\/2012<\/strong><\/td>\n\n

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

\n

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

DJIA<\/td>\n\n

2.46<\/p>\n<\/td>\n

\n

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

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

2.06<\/p>\n<\/td>\n

\n

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

Russell 2000<\/td>\n\n

2.68<\/p>\n<\/td>\n

\n

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

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

4.04<\/p>\n<\/td>\n

\n

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

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

4.42<\/p>\n<\/td>\n

\n

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

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

-0.50<\/p>\n<\/td>\n

\n

-0.09<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\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\/30\/2011<\/td>\n\n

0.02<\/p>\n<\/td>\n

\n

0.25<\/p>\n<\/td>\n

\n

0.83<\/p>\n<\/td>\n

\n

1.89<\/p>\n<\/td>\n

\n

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

1\/13\/2012<\/td>\n\n

0.03<\/p>\n<\/td>\n

\n

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

\n

0.80<\/p>\n<\/td>\n

\n

1.89<\/p>\n<\/td>\n

\n

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

1\/20\/2012<\/td>\n\n

0.05<\/p>\n<\/td>\n

\n

0.26<\/p>\n<\/td>\n

\n

0.91<\/p>\n<\/td>\n

\n

2.05<\/p>\n<\/td>\n

\n

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

 <\/p>\n

 <\/p>\n

Rumors of an agreement being reached on the Greek restructuring plan buoyed risk assets overall later in the week.\u00a0 U.S. stocks were strong on the week, as they have been year-to-date.\u00a0 From a sector standpoint, technology and consumer discretionary performed best, while defensive utilities and consumer staples underperformed.\u00a0 So far, while less than 10% of S&P firms have reported earnings, roughly half have beaten them\u2014but more to come from some key companies this week.\u00a0 Ironically, the weakest areas of 2011 have been the strongest so far this year, such as emerging markets, which are up nearly 9% so far in January.\u00a0 Insofar as the Extended model holdings are concerned, these areas have contributed to attractive portfolio returns during the first few weeks.<\/p>\n

 <\/p>\n

Bond prices were down with improved optimism on economic prospects and yields inching higher\u2014back up over 2% on bellwether 10-Year Treasury.\u00a0 Treasuries are having their worst yearly start since 2003, in fact, despite their popularity last year.\u00a0 Corporate credit, including high yield, though, have outperformed.\u00a0 Foreign debt also performed positively.<\/p>\n

 <\/p>\n

In commodity markets, silver traded much higher on the week, as did lead and nickel in the industrial metals area.\u00a0 Natural gas, as has been the trend over the past several months, lost another 10% on a warmer than average winter and concerns of oversupply.\u00a0 Gas, a volatile contract anyway, is down 2\/3 from its price a year ago.<\/p>\n

 <\/p>\n

Enjoy the week.<\/p>\n

 <\/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, Yahoo!, Standard & Poors, MSCI, Barclays Capital, JPMorgan Asset Management, Northern Trust, Oppenheimer Funds, PIMCO.\u00a0 Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return\/excluding dividends.\u00a0 Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.<\/p>\n

 <\/p>\n

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.\u00a0 All information and opinions expressed are subject to change without notice.\u00a0 Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.\u00a0 Schroeder Financial Services, Inc. is a registered investment advisor.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Headline inflation, measured by the Consumer Price Index (CPI), was unchanged in December, while the \u2018core\u2019 number that excludes food and energy was slightly higher (+0.1%).\u00a0 During the month, rent inflation was bit higher, but clothing and auto prices fell.   The year-over-year CPI number for 2011 was +3.0% (+2.2% for core CPI).\u00a0 We\u2019ve seenRead 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-709","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/709","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=709"}],"version-history":[{"count":1,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/709\/revisions"}],"predecessor-version":[{"id":710,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/709\/revisions\/710"}],"wp:attachment":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/media?parent=709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/categories?post=709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/tags?post=709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}