Weekly Economic Update
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- Warren Buffett
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March 24, 2014
FED TAPERS, CHANGES CRITERIA FOR A RATE HIKE
Last week, the Federal Reserve disclosed another $10 billion cut for QE3 in April, and a view that declining unemployment would not necessarily prompt interest rate increases. Rather than peg rate hikes on the jobless rate dipping below 6.5%, the Fed will give greater weight to inflation and other economic factors; it sees the federal funds rate at 1% by the end of 2015 and 2% by the end of 2016. Wall Street was startled Thursday by Fed chair Janet Yellen’s verbal guesstimate that the central bank might raise rates about 6 months after the presumed late-2014 end of QE3 (about 6 months earlier than many analysts presume). IHS Global Insight economist Paul Edelstein echoed the prevalent opinion, saying “this could have been a rookie gaffe on Yellen’s part.”1
DID COLD WEATHER COOL HOME SALES?
The National Association of Realtors said existing home sales fell 0.4% in February, leading to the slowest annualized sales pace since June 2012. The median sale price was $189,000, up 9.1% year-over-year. Census Bureau data showed a 7.7% rise in building permits in February, but groundbreaking decreased 0.2% last month.2,3
A MINIMAL UPTICK IN CONSUMER PRICES
February saw the Consumer Price Index rise just 0.1% for the second straight month. The core CPI (minus food and energy prices) advanced 0.1% for the third consecutive month. In the past year, the headline CPI is up only 1.1% and the core CPI only 1.6%.3
STOCKS TURN NORTH
A 1.37% weekly gain brought the S&P 500 to a close of 1,866.52 Friday. The Dow rose 1.48% on the week to settle Friday at 16,302.77, and the Nasdaq managed an 0.74% advance for the week to 4,276.79.4,5
THIS WEEK: Wall Street will watch private-sector PMIs for China, Germany and the eurozone Monday. Tuesday offers data on February new home sales, the Conference Board’s March consumer confidence index, January’s S&P/Case-Shiller home price index, January’s FHFA housing price index and earnings from Walgreen’s. On Wednesday, the Commerce Department releases a report on February hard goods orders. Thursday brings NAR’s pending home sales report for February, the final government estimate of Q4 GDP, the latest initial jobless claims numbers and earnings from Lululemon, Red Hat, RE/MAX and Accenture. Friday offers the February consumer spending report, the final March consumer sentiment index from the University of Michigan, and Q4 results from BlackBerry.
Sources: USATODAY.com, bigcharts.com, treasury.gov - 3/21/145,6,7,8
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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. 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 - sacbee.com/2014/03/19/6251229/yellen-speaks-clarity-weak-stocks.html [3/19/14]
2 - marketwatch.com/story/existing-home-sales-decline-04-in-february-2014-03-20-109104 [3/20/14]
3 - reuters.com/article/2014/03/18/usa-economy-idUSL2N0MF0HR20140318 [3/18/14]
4 - google.com/finance?q=INDEXDJX%3A.DJI&ei=qqwsU-C5DISsiALCKw [3/21/14]
5 - usatoday.com/money/markets/overview/ [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F21%2F13&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F21%2F13&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F21%2F13&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F20%2F09&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F20%2F09&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F20%2F09&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F22%2F04&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F22%2F04&x=0&y=0 [3/21/14]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F22%2F04&x=0&y=0 [3/21/14]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/21/14]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/21/14]
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