Kevin M. Nast Presents: WEEKLY ECONOMIC UPDATE

– Tom Stoppard

WEEKLY TIP

Think about making a household budget using an online spreadsheet. You can easily find or create one on the Web for free; some even have built-in calculators.

WEEKLY RIDDLE

What lives above a star but never burns, has 11 neighbors, and can replace the letters P, Q, R or S in some cases?

Last week’s riddle:

What 9-letter word remains an English word each time you remove a letter from it, until it becomes a 1-letter word? (Hint: You can remove letters from any part of the word.)

Last week’s answer:

Startling (Starting, Staring, String, Sting, Sing, Sin, In, I).

September 17, 2012

FEDERAL RESERVE OPTS FOR OPEN-ENDED EASING

On September 13, America’s central bank announced its third round of quantitative easing since 2008. QE3 has no set timeframe: the Fed will buy $40 billion of agency mortgage-backed securities each month until it elects to halt its effort. Pair that with the ongoing Operation Twist and the Fed will purchase about $85 billion worth of longer-term securities monthly in the last third of 2012. In addition, the latest FOMC policy statement reaffirmed the pledge to keep interest rates at “exceptionally low levels” through mid-2015. Will the Fed also decide to buy Treasuries? Will mortgage rates drop to new all-time lows? Will this promote more spending and lending? While the answers to these questions won’t be known for a while, the Dow went +206.51 Thursday in the wake of the news.^1,2

PPI JUMPS DRAMATICALLY; CPI ALSO RISES

The Labor Department said that its Producer Price Index climbed 1.7% in August, mostly on soaring energy costs. Wholesale prices hadn’t advanced so much in a month since June 2009. Core PPI rose just 0.2%. August also saw a 0.6% increase in the Consumer Price Index – the CPI’s largest monthly rise since March. Retail gas prices represented 80% of that gain. Core CPI rose only 0.1%, as in July.^3,4

RETAIL SALES  & CONSUMER SENTIMENT IMPROVE

August turned out to be the best month for retail sales since February. Last month’s 0.9% gain complements the 0.6% advance recorded by the federal government in July. The University of Michigan’s preliminary September consumer sentiment survey rose to 79.2, much improved from the final August mark of 74.3.^4,5

BOND BUYING INSPIRES STOCK BUYING

The S&P 500 gained 1.94% last week to settle Friday at 1,465.77 – its best close since December 31, 2007. The lift from QE3 also took the Dow (+2.15% to 13,593.37) and NASDAQ (+1.52% to 3,183.95) higher last week. NYMEX crude settled at $99.00 per barrel Friday; COMEX gold ended the week at $1,772.70 an ounce.^5,6,7

THIS WEEK: No major U.S. economic releases are slated for Monday. Tuesday, September’s NAHB housing market index comes out plus earnings from FedEx, Cracker Barrel and Darden. Wednesday, earnings from Bed Bath & Beyond, AutoZone, General Mills and Adobe Systems complement reports on August existing home sales, building permits and housing starts. The Conference Board’s August index of leading indicators appears Thursday, plus weekly jobless claims and earnings from CarMax, Rite Aid and Oracle. The iPhone5 ships Friday, which is also a quadruple witching day.

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 9/14/12^6,8,9,10

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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. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. 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. 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. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. 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.

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Citations.

1 – www.cnbc.com [9/13/12]

2 – www.cnbc.com [9/13/12]

3 – www.nasdaq.com [9/14/12]

4 – www.cnbc.com [9/14/12]

5 – money.msn.com [9/14/12]

6 – www.cnbc.com [9/14/12]

7 – montoyaregistry.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

8 – bigcharts.marketwatch.com [9/14/12]

9 – treasury.gov [9/14/12]

9 – treasury.gov [9/14/12]

10 – treasurydirect.gov [7/10/02]