Clarksville, TN – Mixed, but generally favorable, earnings reports and an ebbing in Ebola fears helped propel the major stock market indices higher.
The economic data were largely irrelevant. The Consumer Price Index continued to show a low trend in inflation (+1.7% y/y for both the headline index and the core). Home sales figures were mixed. The Index of Leading Economic Indicators rose 0.8% suggesting little chance of a recession anytime soon
Next week, the earnings calendar is brisk with about a third of the companies in the S&P 500 reporting. There are two key items on the economic calendar: the Fed policy meeting and the advance estimate of 3Q14 GDP growth.
The Federal Open Market Committee is widely expected to bring its asset purchase program (QE3) to a close. Being well advertised, this should not create any problems for the financial markets.
For investors the key will be the language of the forward guidance – in particular, whether the Fed will remove the “considerable period” phrase. Such a change is coming, but it’s more likely that this will happen at the next policy meeting (mid-December).
The advance GDP estimate is always an adventure. The government will have to make assumptions about a number of missing components and the figures will be revised in late November and revised again in December. The story behind the figures is what’s important (although the financial markets tend to put a lot of weight on the headline number).
Consumer spending appears to have been on a lackluster-to-moderate pace in 3Q14. Business fixed investment is expected to have been strong. A slower pace of inventory growth should subtract, while a narrower trade deficit should add.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.601||1.613|
|Dollars per Euro||1.267||1.374|
|Japanese Yen per Dollar||107.460||97.320|
|Canadian Dollars per Dollar||1.125||1.032|
|Mexican Peso per Dollar||13.532||12.948|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||3.18||3.51|
Treasury Yield Curve – 10/24/2014
S&P Sector Performance (YTD) – 10/24/2014
|October 27th||—||Pending Home Sales Index (September)|
|October 28th||—||Durable Goods Orders (September)
Consumer Confidence (October)
|October 29th||—||FOMC Policy Decision (no press conference)|
|October 30th||—||Jobless Claims (week ending October 25th)
Real GDP (3Q14, advance estimate)
|October 31st||—||Employment Cost Index (3Q14)
Personal Income and Spending (September)
|November 3rd||—||IISM Manufacturing Index (October)
Motor Vehicle Sales (October)
|November 4th||—||Election Day|
|November 6th||—||ECB Policy Meeting|
|November 7th||—||Employment Report (October)|
|November 11th||—||Veterans Day (bond market closed)|
|November 14th||—||Retail Sales (October)|
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Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business October 16th, 2014.