Money Talk Podcast

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Landaas & Company newsletter  March edition now available.

Advisors on This Week’s Show

Brian Kilb

Kyle Tetting

Art Rothschild

(with Max Hoelzl and Joel Dresang)

Week in Review (February 22-26, 2016)

Significant economic indicators & reports

Monday

No major announcements

Tuesday

Sales of existing houses rose to their fastest pace in six months in January and their highest year-to-year increase since mid-2013. The National Association of Realtors warned that a relatively short supply of houses for sale has been pushing up prices too quickly, which could be pricing some wannabe home buyers out of the market. The trade association questioned whether the nation would have sufficient inventory for spring sales.

The December report from the S&P/Case Shiller home price index shows house prices moderating but still far outpacing inflation. Year-to-year housing inflation was 5.7% in the 20-city composite index, about twice the overall inflation rate. A housing economist with the index said price increases should stimulate more home building, which has been lagging the moderate economic expansion. A lack of inventory has been a chief cause of rising prices.

The Conference Board released a lower consumer confidence reading in February than analysts expected. An economist for the business research group said stock market turbulence may be undermining some of consumers’ collective outlook, but their relatively rosy feelings toward current conditions suggest continued economic growth.

Wednesday

In further housing news, new home sales in January dipped from a solid annual pace in December. The Commerce Department reported the first slowdown in four months, citing a decline in activity in western states. Still, sales have been hovering near their pre-recession levels, providing continued stimulus for further economic growth dependent on local and regional conditions.

Thursday

Led by automobiles and the volatile commercial airlines category, January orders for durable goods rose more than expected, gaining for the first time in three months. Excluding transportation equipment, orders reflected broad growth in manufacturing demand. The Commerce Department said civilian capital goods orders minus aircraft, an indicator of business investments, rose by 3.9% from December, when it declined by 3.7%.

Employers continued to be reluctant to let workers go as the moving four-week average for initial unemployment claims dropped for the third week in a row and the fourth time in five weeks. The Labor Department reported that the average remained 24% below the 48-year average level, which it has been below each week since early 2013.

Friday

The economy grew a tad faster than initially estimated in the last three months of 2015, with inventories piling higher but slower consumer spending. The Gross Domestic Product. The Bureau of Economic Analysis said its second look at the GDP showed a 1% annual gain in the fourth quarter. That follows a 2% annual growth rate in the third quarter, down from 3.9% in the second quarter. Consumer spending, which drives two-thirds of economic growth, rose 2% in the latest quarter, down from an initial 2.2% and below the long-term average of more than 3%.

A narrower, more recent look at consumer spending showed higher-than-expected activity in January, rising 0.5% from December, the biggest gain in eight months. The Bureau of Economic Analysis said personal spending rose as personal income grew by 0.5% and the saving rate stayed at 5.2%. A key measure of inflation followed by the Federal Reserve Board rose to 1.7% for January 2015, closer to the Fed’s target of 2%, which hasn’t been reached for more than three years.

Consumer sentiment nearly recovered from a mid-February dip but still remains fairly optimistic, according to the University of Michigan. Considered a leading indicator of consumer [...]

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Landaas & Company newsletter  February edition now available.

Advisors on This Week’s Show

Bob Landaas

Brian Kilb

Marc Amateis

Dave Sandstrom

(with Max Hoelzl)

Week in Review (February 15-19, 2016)

Significant economic indicators & reports

Monday

Markets closed for Presidents Day

Tuesday

No major releases

Wednesday

Wholesale inflation was higher than analysts expected in January but continues to indicate a lack of robustness in the economy. The Bureau of Labor Statistics said the Producer Price Index rose for just the second time in six months. The year-to-year inflation rate at the wholesale level declined 0.2%, increasing to 0.6% if you ignore food and energy prices. The Federal Reserve considers 2% inflation a sign of healthy economic growth.

Struggling for months against a strong U.S. dollar and weak markets abroad, U.S. manufacturers posted better-than-expected industrial production results in January. The Federal Reserve said factories increased output for the first time in three months, led by consumer goods, including automobiles. Mining production, including the oil extraction industry, was unchanged, but utilities generated more energy as wintry weather rebounded from an unseasonably warm December. Capacity utilization, considered a leading indicator of inflation, reached the highest level since October but stayed below the long-term average.

The up-and-down housing recovery continued on a down note in January, with both housing starts and building permits slowing pace more than analysts expected. The Commerce Department said the annual rate of new house construction dipped 3.8% from December, the second consecutive decline. Building permits, an indication of future construction, declined 0.2%, with single-family houses dropping and multi-family units gaining.

Thursday

The moving four-week average for initial unemployment claims fell for the third time in four weeks, dropping to the lowest level since mid-December. Data from the Labor Department suggest employers continue to have little interest in losing the employees they have, which should help lead to a sense of job security and eventually higher wages. Jobless claims are 24% below the 48-year average and have been that level each week for more than three years.

The U.S. economy should continue modest growth at least through the first half of 2016, according to the Conference Board’s January index of leading economic indicators. Even though the index declined for the second month in a row, it reached its highest point in a decade in November. Also, the chief factors cited by the business research group as dragging down the index last month – the January stock sell-off and a rise in unemployment claims – both have dissipated recently.

Friday

Inflation showed signs of nudging up, perhaps reflecting the Federal Reserve’s notion of sustainable economic growth in January. The Consumer Price Index, the broadest measure of inflation, rose 2.2% from the year before but only after excluding food and fuel costs. That was the highest measure for the indicator since June 2012. Including the volatile food and energy categories – including gasoline, which has dropped in price by 29% since January 2015 – the CPI gained 1.4%, according to the Bureau of Labor Statistics.

Where the Markets Closed for the Week

Nasdaq – 4,504, up 166 points or 3.8%

Standard & Poor’s 500 – 1,918, up 53 points or 2.8%

10-year U.S. Treasury Note – 1.75%, up 0.02 point

Dow Jones industrial – 16,392, up 418 points or 2.6%

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Landaas & Company newsletter  February edition now available.

Advisors on This Week’s Show

Bob Landaas

Brian Kilb

Art Rothschild

Kyle Tetting

(with Max Hoelzl and Joel Dresang)

Week in Review (Feb. 8-12, 2016)

Significant economic indicators & reports

Monday

No major releases

Tuesday

Employers raised U.S. job openings 4.8% to the second-highest level on record in December. The Bureau of Labor Statistics reported that the number of advertised openings reached 5.6 million, exceeding the level before the recession began, though shy from the 5.7 million peak in July. The number of workers quitting – suggesting confidence they’ll get better jobs – also rose. Both trends could help push up wages, which fuel consumer spending.

The Commerce Department said wholesalers decreased inventories in December, though sales sank even faster. The tell-tale inventories-to-sales ratio remained at the highest level since the recession, suggesting a mismatch between supply and demand that could hamper production and employment growth in coming months.

Wednesday

No major releases

Thursday

The moving four-week average for initial unemployment claims fell for the second time in three weeks, reaching the second-lowest level in 2016. Jobless applications filed with the Labor Department have remained below the 48-year average every week since early 2013, suggesting persistent reluctance by employers to part with their workers.

Friday

American consumers – whose spending drives about two-thirds of the U.S. economic growth – increased retail sales in January, for the third month in a row. The Commerce Department reported that nine of 13 categories experienced higher sales. In the last 12 months, only gas stations and electronics stores had sales declines. Lower prices have been holding back gas station sales. Year-to-year, total retail sales grew by 3.4%, the highest rate in more than a year.

Similar to the wholesaler report on Tuesday, business inventories also continued to outpace sales in December, suggesting businesses are overestimating demand for their goods. Inventories rose 0.1% for the month and 1.7% since December 2014 while sales declined 0.6% since November and declined 2.7% year-to-year. To the degree businesses want to run lean, the inventories-to-sales ratio indicated the fattest conditions since the recession in 2009.

A preliminary reading of consumer sentiment from the University of Michigan suggests Americans remain fairly confident about their personal finances but mostly because their expectations for inflation are the lowest in 40 years of surveys. Overall, sentiment continued a gradual decline to the lowest point in four months. A university economist used the survey to project a moderate 2.7% rise in consumer spending in 2016.

Where the Markets Closed for the Week

Nasdaq – 4,338, down 25 points or 0.6%

Standard & Poor’s 500 – 1,865, down 15 points or 0.8%

10-year U.S. Treasury Note – 1.73%, down 0.12  point

Dow Jones industrial – 15,974, down 231 points or 1.4%

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More information and insight from Money Talk

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Landaas newsletter subscribers return to the newsletter via e-mail.