Stocks rose again this week. Janet Yellen’s testimony before congress stressed the strength in the economy and indicated the FED will be looking at possible raising rates as early as the March meeting as it is nearing its target for full employment and price stability. Commodities were slightly lower as the U.S. glut of gasoline hit an all-time high since records were first kept in 1990. There was very little change in the 10 year Treasury yield or the dollar.
In the numbers this week:
- The Commerce Department reported:
- Retail sales rose a seasonally adjusted 0.4% in January. Excluding motor vehicles and auto parts retail sales rose 0.8%. December sales were revised higher from 0.6% to 1.0%. From a year earlier January retail sales were 5.6% higher. Auto sales fell 1.4% in January from December but were 6.8% higher than a year ago. Gasoline sales were up 2.3% in January and 14.2% from a year ago.
- Housing starts fell 2.6% in January. Single family housing starts actually rose 1.9% while multi-family starts fell 10.2%
- Home construction permits (an indication of future starts) rose 4.6%.
- China’s producer prices rose 6.9% in January from a year earlier while consumer prices rose 2.5%.
- The Eurozone Gross Domestic Product grew 1.7% in all of 2016.
- The Federal Reserve reported
- U.S. Industrial Production fell in January 0.3%. Capacity use also fell 0.3% to 75.3% well below the long-term average of 79.9%. The decline was mainly due to a 5.7% decline in utilities which was mainly due to milder than normal weather reducing heating demand. Manufacturing output actually rose 0.2%. From a year ago, however, manufacturing output is only up 0.3% in January.
- Household debt grew $226BN in the final three months of 2016 to $12.7TN. That is still $99BN below the peak reached in 2008. However, the FED doesn’t adjust these figures for inflation.
- Loan delinquencies have improved dramatically since the financial crisis and continued to improve last quarter:
- The Energy Information Administration’s Weekly Petroleum Data report is attached.wpsrsummary (6)
- The Energy Information Administration reported that U.S. field production of crude oil declined 1,000 barrels per day in the prior week.
- Baker Hughes reported that oil drilling rigs rose 6 to 597. Gas drilling rigs increased 4 to 153.
- The Labor Department reported:
- Consumer prices rose 0.6% in January. Excluding volatile food and energy, consumer prices rose 0.3%. From a year ago, overall prices rose 2.5% and 2.3% excluding food and energy. While the FED uses a different measure of inflation, the Personal Consumption Deflator which has been running lower, these figures from the Labor Department show inflation running above the FED’s 2.0% target and may support the FED raising rates sooner.
- Initial claims for unemployment rose 5,000 to a seasonally adjusted 239,000. The four-week moving average of claims, designed to smooth out weekly fluctuations, rose 500 to 245,250.
- Factset reported that with 82% of S&P 500 companies reporting, 4th quarter earnings have increased 4.6%.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results.