Floyd E. Miller Presents: Weekly Economic Update

Floyd E. Miller Presents: Weekly Economic Update

By Floyd Miller

 

 

 

November 29, 2010CONSUMERS SPEND, BUT FED REVISES ITS FORECAST The latest Commerce Department data shows consumer spending at +0.4% for October and +2.8% for 3Q 2010. Personal incomes rose by 0.5% last month, and the federal government revised its 3Q economic growth estimate north to +2.5%. Still, the FOMC minutes from November 3 weren’t encouraging: the Federal Reserve thinks unemployment could stay above 9% in 2011, and it feels inflation could remain below 2% until 2013. The Fed’s GDP forecast for 2010 was revised down to the range of 2.4-2.5%, which is hardly what is needed to reduce joblessness.1,2{{more}}DEMAND LAGS IN HOUSING MARKETWill that demand increase by next spring? Hopefully. Existing home sales were down 2.2% in October according to the National Association of Realtors. The Census Bureau said new home sales slipped by 8.1% last month, with the average price of a new home falling by a shocking 14.0%. Only 23,000 new homes were bought in the U.S. in October, and new home sales were down 28.5% in year-over-year terms.3,4CONSUMER SENTIMENT HITS A 5-MONTH PEAK The final Reuters/University of Michigan consumer sentiment index for November rose to 71.6, the best reading since 76.0 in June and above the consensus 69.5 forecast of economists polled by Reuters. The sub-indexes measuring consumer expectations and current economic conditions were also at highs unseen since June.5UNEXPECTED DROP IN DURABLE GOODS ORDERSThe Commerce Department reported a 3.3% decline in the category, on the heels of an upwardly revised 5.0% gain for September. The month-over-month drop in hard goods orders was the largest since January 2009.1NASDAQ ADVANCES DURING ABBREVIATED WEEK The NASDAQ gained 0.65% across three-and-a-half trading days to settle at 2,534.56 at Friday’s closing bell. The Dow was down 1.00% for the week, closing Friday at 11,091.87; the S&P 500 lost 0.86% last week, settling at 1,189.40 Friday.6COMING NEXT WEEK: Tuesday, we have the September Case-Shiller index of home prices and the Conference Board’s latest consumer confidence poll. Wednesday, we get the November ISM manufacturing report and the Fed’s December Beige Book, along with data on November auto sales and October construction spending. Thursday, we receive data on October pending home sales plus the latest reports on jobless claims. Friday, we get November’s unemployment report, the November ISM service sector report, and data on October factory orders.% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVGDJIA +6.37 +6.81 +0.29 +0.52NASDAQ +11.70 +18.52 +2.40 -1.20S&P 500 +6.66 +8.97 -1.24 -1.18REAL YIELD 11/26 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO10 YR TIPS 0.75% 1.15% 2.05% 4.03%Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov – 11/26/106,7,8,9Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.These returns do not include dividends.«RepresentativeDisclosure»This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. 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 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. operates two securities exchanges: the New York Stock Exchange and NYSE Arca . NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. 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.Citations.1 – bloomberg.com/news/2010-11-24/u-s-michigan-consumer-sentiment-increases-to-five-month-high.html [11/24/10]2 – nytimes.com/2010/11/24/business/economy/24fed.html [11/23/10]3 – curiouscapitalist.blogs.time.com/2010/11/24/housing-drop-more-bad-news-for-the-economy/ [11/24/10]4 – census.gov/const/newressales.pdf [11/24/10]5 – abcnews.go.com/Business/wireStory?id=12233911 [11/24/10]6 – cnbc.com/id/40382919 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F27%2F09&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F27%2F09&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F27%2F09&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F25%2F05&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F25%2F05&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F25%2F05&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F27%2F00&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F27%2F00&x=0&y=0 [11/26/10]7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F27%2F00&x=0&y=0 [11/26/10]8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [11/26/10]8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [11/26/10]9 -treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]