Skip to content

Weekly Economic Update

June 19, 2012

IF GREECE EXITS THE EURO, WHAT COMES   NEXT?  

Best-case   scenarios for Greece seemed to fade as the weekend neared. Concerns mounted   that Sunday’s special elections would either bring another parliamentary deadlock   or a victory for parties opposing scheduled austerity cuts. Some economists maintained   that a Greek exit from the euro would not be abrupt and not produce a shock like   the 2008 Lehman Brothers collapse. Anxiety was tempered by anticipation:   expectations of a central bank response grew. In fact, last week the Bank of   England announced plans for 6-month loans and liquidity injections to shield   the U.K. financial system from any fallout. Yields on Spanish 10-year notes hit   7% last week, a sign of skepticism about that nation’s bank bailout.1,2

Consumer   prices declineD in MAY

The   federal government’s Consumer Price Index fell 0.3% for May, thanks largely   to a 4.3% drop in energy prices. Core CPI rose 0.2% for the third straight   month with 12-month consumer inflation at 1.7% (a long way from the 3.9%   annualized inflation measured in September). May’s Producer Price Index   dropped 1.0%.3

SALES & SENTIMENT   SLIP, HOME EQUITY INCREASES   The Census   Bureau said retail sales fell 0.2% in May; they slipped for a second straight   month, which hasn’t happened since 2010. June’s preliminary University of   Michigan consumer sentiment survey dropped to 74.1 from May’s final mark of   79.3. On a positive note, retail gas prices are down 2.65% so far in June; on   Friday, AAA had regular unleaded averaging just $3.52 a gallon. Another   positive: Q1 2012 saw a 7.3% rise in U.S. home equity, the best quarter in in   more than 60 years.4,5,6,7

HOPES RISE … AND SO DO STOCKS

New   hope of central bank intervention (and expiring options and futures) pushed   stocks higher last week, with the major indices performing as follows: S&P   500, +1.30% to 1,342.84; DJIA, +1.70% to 12,767.17; NASDAQ, +0.50% to 2,872.80.   Gold was up 2.31% for the week to $1,628.10, oil down 0.08% on the week to $84.03.6,8

THIS WEEK: Besides   global market reaction to Greece’s special elections (and a possible central   bank response), Monday will also mark the start of a G20 summit. Tuesday, a   two-day FOMC meeting begins and data on May housing starts arrives in   addition to Q1 earnings from Adobe Systems, FedEx and Discover. Wednesday, the   Fed will make a policy statement; earnings from Bed, Bath & Beyond also come   out. Thursday, we get data on May’s existing home sales, the Conference   Board’s latest LEI report, and Q1 earnings from Rite Aid, Oracle and ConAgra.   Friday, Q1 results arrive from Darden Restaurants.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.50

+7.31

-1.28

+3.48

NASDAQ

+10.27

+9.17

+1.87

+9.09

S&P     500

+6.78

+6.12

-2.48

+3.33

REAL YIELD

6/15 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10     YR TIPS

-0.54%

0.74%

2.73%

3.48%

Sources: money.msn.com, bigcharts.com, treasury.gov,   treasurydirect.gov – 6/15/126,9,10,11

Indices are unmanaged, do not   incur fees or expenses, and cannot be invested into directly.

These returns do not include   dividends.

 

Citations.

 

1 – www.nytimes.com/2012/06/15/business/global/europe-braces-for-greek-vote-and-maybe-more.html   [6/15/12]

 

2 – www.ft.com/cms/s/0/2bb1de8c-b6cd-11e1-8c96-00144feabdc0.html#axzz1xtvQqrp4   [6/15/12]

 

3 – www.usatoday.com/money/economy/story/2012-06-13/econ-reports-0614-cpi-jobless-claims/55592570/1   [6/15/12]

 

4 – www.washingtonpost.com/business/economy/retail-sales-drop-again-in-may-report-says/2012/06/13/gJQANa80aV_story.html   [6/5/12]

 

5 – www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/06/15/bloomberg_articlesM5NW0W07SXKX01-M5NWG.DTL   [6/6/12]

 

6 – money.msn.com/market-news/post.aspx?post=85df9010-4f02-4208-bbdf-5f7a52a60a67   [6/15/12]

 

7 – www.bloomberg.com/news/2012-06-14/americans-see-biggest-home-equity-jump-in-60-years-mortgages.html   [6/14/12]

 

8 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F15%2F11&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F15%2F11&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F15%2F11&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F15%2F07&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F15%2F07&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F15%2F07&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F14%2F02&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F14%2F02&x=0&y=0   [6/15/12]

 

9 –   bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F14%2F02&x=0&y=0   [6/15/12]

 

10 –   treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield   [6/15/12]

 

10 –   treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll   [6/15/12]

 

11 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm10902.pdf   [1/9/02]


This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at www.theretirementgroup.com.

 

Comments are closed.

%d bloggers like this: