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October 16, 2017

RETAIL SALES, SENTIMENT NUMBERS IMPRESS

Two economic indicators stood out last week. Retail purchases rose 1.6% during September as households and businesses replaced cars and trucks damaged in hurricanes. This was the best monthly advance recorded by the Department of Commerce since March 2015, and the gain was 1.0% even with auto buying removed. The University of Michigan’s initial October consumer sentiment index displayed a reading of 101.1, which was nearly a 14-year high. Economists polled by Briefing.com had forecast just a half-point improvement to 95.6.1,2

GAS PRICES DRIVE UP INFLATION

A 13.1% spike in retail gasoline costs accounted for 75% of the 0.5% September increase in the Consumer Price Index. Not since January has the CPI risen so much in a month. Still, the core CPI was up just 0.2%. In yearly terms, headline inflation now stands at 2.2%; core inflation, at 1.7%.3

SOCIAL SECURITY BENEFITS TO INCREASE 2% IN 2018

Friday, the Social Security Administration announced the largest cost-of-living adjustment to retirement benefits since 2012. Next year, Social Security payments will get a 2.0% boost, meaning the average retired Social Security recipient will receive $27.40 more per month.4

MINOR ADVANCES BY MAJOR INDICES

From October 9-13, that was the story on Wall Street. The Dow 30 rose 0.43% to 22,871.72, the Nasdaq Composite added 0.24% to 6,605.80, and the S&P 500 gained 0.15% to 2,553.17. The CBOE VIX ended the week down at 9.66.5

THIS WEEK: Netflix presents Q3 results on Monday. On Tuesday, Comerica, CSX, Goldman Sachs, W.W. Grainger, Harley-Davidson, Johnson & Johnson, and UnitedHealth offer earnings news. Earnings emerge from Abbott Labs, Alcoa, American Express, and U.S. Bancorp Wednesday, and Wall Street will also review September housing starts and building permits and a new Federal Reserve Beige Book. On Thursday, BB&T, KeyCorp, Philip Morris International, Quest Diagnostics, Travelers Companies, and Verizon join the earnings parade, and a new initial claims report surfaces. September existing home sales numbers appear Friday, plus earnings from BHGE, Daimler AG, General Electric, Schlumberger, and SunTrust Bank; also, Fed chair Janet Yellen speaks on monetary policy Friday night in Washington, D.C.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+15.73

+26.37

+14.32

+6.23

NASDAQ

+22.71

+26.71

+23.40

+13.54

S&P 500

+14.04

+19.72

+15.74

+6.35

REAL YIELD

10/13 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.43%

0.12%

-0.78%

2.36%

Sources: wsj.com, bigcharts.com, treasury.gov - 10/13/175,6,7,8 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

Sincerely,

The Advisors at Sound Financial Strategies Group

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Citations.

1 - briefing.com/investor/calendars/economic/2017/10/09-13 [10/13/17]

2 - tinyurl.com/ychmlgup [10/13/17]

3 - reuters.com/article/us-usa-economy-inflation/gasoline-boosts-u-s-consumer-prices-underlying-inflation-tame-idUSKBN1CI1NZ [10/13/17]

4 - marketwatch.com/story/social-security-checks-expected-to-increase-2-in-2018-2017-10-13/ [10/13/17]

5 - markets.wsj.com/us [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F13%2F16&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F12&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]

6-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F07&x=0&y=0 [10/13/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/13/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/13/17]


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