Weekly Economic Update August 20, 2012

August 21, 2012  |   News

August 20, 2012

In July, the federal Consumer Price Index showed no overall advance. That was the case in June as well, and that might just bolster the case for easing at the Federal Reserve. Consumer prices rose only 1.4% annually, the smallest increase since the November 2010 index. Core CPI (minus food and energy costs) rose 0.1% last month. As for wholesale prices, they rose 0.3% in July – the largest jump in five months, even as wholesale gas prices slipped 3.1%.1,2

American retail purchases soared 0.8% in July after a (downwardly revised) 0.7% retreat in June. It was a real sea change – the first positive month for the category since March. The monthly increase in retail gasoline sales was just 0.5%, which had little effect on the overall gain.3

U.S. builders broke ground on 1.1% fewer projects in July. The good news: permits for new construction hit a pace of 812,000, a high unseen since August 2008.4

Economists polled by MarketWatch expected a dip in August’s initial University of Michigan consumer sentiment index. Instead, it rose 1.3% to 73.6 – the best reading since May. The index’s gauge of current economic conditions improved to 87.6 in August from 82.7 in July.5

Feeling slightly bullish? You aren’t alone. The Dow and S&P 500 have now advanced for six straight weeks, and the CBOE VIX (the “fear index”) closed at 13.47 Friday, its lowest mark in five years. The numbers for the week: DJIA, +0.51% to 13,275.20; S&P 500, +0.87% to 1,418.16; NASDAQ, +1.84% to 3,076.59. Gold lost 0.21% on the COMEX for the week while oil soared 3.38% on the NYMEX. Gold settled Friday at $1,619.40, oil at $96.01.6,7,8

On Monday, Lowe’s reports Q2 earnings. Tuesday, Best Buy, Dell and Meditronic follow suit. Wednesday brings the National Association of Realtors report on July’s existing home sales, the July 31 FOMC minutes and earnings from Hewlett-Packard. In addition to weekly jobless claims, Thursday offers July data on new home buying, a new FHFA home price index and Q2 results from Hormel. Friday, the report on July’s durable goods orders arrives along with the latest USDA outlook on food prices.

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 8/17/126,9,10,11
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

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1 – www.reuters.com/article/2012/08/15/usa-economy-idINL2E8JF2C720120815 [8/15/12]
2 – www.chicagotribune.com/business/sns-rt-us-economy-ppibre87d0gq-20120814,0,3794223.story [8/14/12]
3 – articles.marketwatch.com/2012-08-14/economy/33191357_1_sales-at-gasoline-stations-furniture-store-sales-retail-sales [8/17/12]
4 – www.sfgate.com/business/bloomberg/article/Housing-Starts-in-U-S-Decline-as-Permits-Reach-3793297.php [8/16/12]
5 – www.marketwatch.com/story/consumer-sentiment-rises-in-august-2012-08-17-10103922 [8/17/12]
6 – www.cnbc.com/id/48701551 [8/17/12]
7 – money.msn.com/market-news/post.aspx?post=2dab9cc0-86e7-48a1-b678-b50cb7e539d7 [8/17/12]
8 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/17/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/17/12]
11 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]

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