A JUMP IN HOUSING STARTS
In a relatively light week of economic data, one of the notable items was a 1.7% rise in new home construction in July. Economists had expected only a 0.2% increase in that category. However, the Commerce Department said most of the gain came in multi-family housing. In contrast, single-family housing starts were down 4.2% for the month, with building permits down 3.1%.1
GM WILL GO PUBLIC
General Motors has announced it will reenter the stock market. Last Wednesday, it filed an IPO registration with the Securities and Exchange Commission. One of the largest IPOs in history may come as soon as October, including common and preferred shares. This signals the end of “Government Motors”: the Treasury Department will now have the opportunity to reduce its 61% stake in the company. GM earned $1.3 billion in 2Q 2010 – its second straight quarter in the black. 2,3
LEADING INDICATORS TURN POSITIVE AGAIN
After a 0.3% slip in June and a 0.5% drop in May, the Conference Board’s Leading Economic Index eked out a 0.1% increase for July. The LEI has been more or less flat since March, yet components within the index have signified a mild economic expansion across that time.4
PPI RISES FOR FIRST TIME SINCE MARCH
July’s 0.2% increase in the Producer Price Index was in line with analysts’ forecasts. Core PPI (wholesale inflation minus food and energy prices) rose 0.3% in July, more than the 0.1% advance expected.1
OIL FUTURES SINK; GOLD FUTURES RISE
In fact, gold prices rose $12.30 last week. That 1.01% weekly advance led to gold settling at $1,227.20 per ounce Friday on the COMEX. Over the last three weeks, gold prices have climbed 3.85%. Oil prices slipped $1.93 last week. At Friday’s close on the NYMEX, crude for September delivery was at $73.46 a barrel.5
LIGHT VOLUME, LOW ENTHUSIASM
August options were expiring last week, and initial jobless claims weren’t shrinking. Combine that with some bearish sentiment and you had a week of light trading marked by significant selloffs. The NASDAQ advanced 0.04% last week to close Friday at 2,179.76. The DJIA lost a bit of ground to settle at 10,213.62 Friday, while the S&P 500 ended the week at 1,071.69.6
| % CHANGE | Y-T-D | 1-YR CHG | 5-YR AVG | 10-YR AVG |
| DJIA | -2.06 | +9.24 | -0.65 | -0.78 |
| NASDAQ | -3.94 | +9.58 | +0.41 | -4.49 |
| S&P 500 | -3.89 | +6.38 | -2.43 | -2.85 |
| REAL YIELD | 8/20 RATE | 1 YR AGO | 5 YRS AGO | 10 YRS AGO |
| 10 YR TIPS | 1.05% | 1.60% | 1.85% | 4.03% |
Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov – 8/20/106,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of Statler Financial Services, Inc. This information should not be construed as investment 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 (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. 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 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. http://www.montoyaregistry.com http://www.petermontoya.com
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Citations.
1 – online.wsj.com/article/BT-CO-20100817-705894.html [8/17/10]
2 – boston.com/business/markets/articles/2010/08/20/gms_ipo_may_favor_brave_despite_recent_rocky_history/ [8/20/10]
3 – freep.com/article/20100818/BUSINESS0101/100818044/GM-files-to-launch-its-public-stock-offer [8/18/10]
4 – conference-board.org/press/pressdetail.cfm?pressid=3988 [8/19/10]
5 – blogs.wsj.com/marketbeat/2010/08/20/data-points-energy-metals-344/ [8/20/10]
6 – cnbc.com/id/38789911 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/20/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/20/10]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]
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