June 17, 2013

IMF: FED SHOULD WAIT 6 MONTHS TO TAPER QE3

On Friday, the International Monetary Fund called for the Federal Reserve to keep easing at current levels at least until the end of 2013 and to carefully manage any exit from QE3 (Quantitative Easing). In its annual review of the U.S. economy, the IMF characterized the March 1 federal budget cuts as “excessively rapid and ill-designed” and called for their repeal. It lowered its 2014 GDP projection for the U.S. to 2.7%. The IMF still projects U.S. growth for 2013 at 1.9%.1,2

RETAIL SALES UP 0.6% IN MAY

This Commerce Department announcement was a nice surprise, as retail purchases advanced just 0.1% in April. A 1.8% jump in car and truck sales was instrumental, though the pace of overall retail purchases still improved 0.3% for May with vehicle sales factored out.3

A NOTABLE RISE IN THE PPI

Increases in food and energy costs took the overall Producer Price Index 0.5% higher for May, with a surge in gasoline prices central to the advance. The core PPI (minus food and energy prices) rose 0.1% last month.1,4

HOUSEHOLD SENTIMENT SLIPS

On Friday, the University of Michigan’s preliminary June index of consumer sentiment came in at 82.7. That was a surprise to the downside; economists polled by Bloomberg had forecast a reading of 84.5, the index’s final mark for May.1

HEADWINDS BUFFET WALL STREET

The Dow fell 1.17% from June 10-14, closing at 15,070.18 Friday. Similar weekly losses plagued the NASDAQ (-1.32% to 3,423.56) and the S&P 500 (-1.01% to 1,626.73). Last week also brought a 12.62% rise for the CBOE VIX, which settled at 17.05 Friday.4

THIS WEEK: June’s NAHB housing market index comes out Monday, and a G8 summit begins in Ireland. Tuesday, the May Consumer Price Index arrives along with data on May housing starts; Adobe Systems and La-Z-Boy present earnings. Wall Street will be focused on the Federal Reserve’s latest policy announcement on Wednesday; in addition, earnings news rolls in from Red Hat, FedEx and Jabil Circuit. Thursday, NAR releases its report on May existing home sales and the Conference Board’s May index of leading indicators appears, complemented by earnings from Kroger, Rite Aid and Oracle. Friday is a quadruple witching day which also offers earnings from CarMax.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+15.00

+19.11

+4.49

+6.53

NASDAQ

+13.38

+20.70

+7.90

+11.05

S&P 500

+14.06

+22.39

+3.92

+6.45

REAL YIELD

6/14 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.09%

-0.47%

1.77%

1.51%

Sources: cnbc.com, bigcharts.com, treasury.gov – 6/14/134,5,6,7

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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«RepresentativeDisclosure»

Quantitative Easing is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

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

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

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 – nasdaq.com/article/midday-update-stocks-sliding-after-imf-cuts-us-growth-forecast-consumer-sentiment-dips-cm253273 [6/14/13]

2 – bbc.co.uk/news/business-22911400 [6/14/13]

3 – stltoday.com/business/local/u-s-retail-sales-jump-percent-in-may-on-autos/article_33200d05-0de6-5d75-a666-5d422d700c76.html [6/13/13]

4 – cnbc.com/id/100816191 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F14%2F12&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F14%2F12&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F14%2F12&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F13%2F08&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F13%2F08&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F13%2F08&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F13%2F03&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F13%2F03&x=0&y=0 [6/14/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F13%2F03&x=0&y=0 [6/14/13]

6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/14/13]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/14/13]

 

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