Yes, QE2 – that is the media nickname for the expected second round of quantitative easing from the Federal Reserve, a move which could boost long-term bond prices and lower long-term interest rates. Will the Fed buy more than $500 billion in Treasuries? Or less? The Wall Street Journal says the purchases will amount to “a few hundred billion dollars over several months.” The Fed will reveal its plans on Wednesday at the end of its November policy meeting. Meanwhile, the initial third quarter GDP reading is in: +2.0%. The good news: consumer spending in 3Q 2010 was the strongest in four years. The bad news: a 2.0% gain in GDP isn’t strong enough to reduce unemployment.1,2
HOME SALES PICK UP
Existing home sales improved 10.0% in September – the biggest one-month leap since the National Association of Realtors began keeping track of monthly sales volume. The median price was still 2.4% below year-ago levels. New home sales rose 6.6% in September, with the median price up 3.3% from 12 months ago. In related news, the August S&P/Case-Shiller home price index showed a year-over-year gain of 1.7% across 20 metro markets.3,4,5
CONSUMER SENTIMENT WAVERS
The Conference Board’s survey of consumer confidence reached 50.2 this month, a 1.6% improvement. However, the final October Reuters/University of Michigan survey hit an 11-month low of 67.7, perhaps on election season pessimism.6,7
DURABLE GOODS ORDERS RISE 3.3%
September’s overall gain was mostly attributable to a 105% jump in aircraft orders. Core durable goods orders declined by 0.6% on the month.8
MARKETS MOVE CAUTIOUSLY
Wall Street largely held its breath last week, waiting for November’s data and policy moves. The performance across the last five trading days of October: Dow, -0.13% to 11,118.49; S&P 500, +0.02% to 1,183.26; NASDAQ, +1.13% to 2,507.41.9
COMING NEXT WEEK: Monday, we have September consumer spending and construction spending data and the October ISM manufacturing report. Wednesday is also big – the Fed announcement comes at 2:15pm EST, and before that we get the ISM service sector report for October, plus data on October auto sales and September factory orders. Thursday, we receive the latest initial claims figures. Friday, we have the October unemployment report and September pending home sales.
(Click on the picture below to enlarge the table in a new window.)
WEEKLY QUOTE
“One loyal friend is worth ten thousand relatives.”
– Euripides
WEEKLY TIP
If you like to itemize, consider organizing your receipts by expense type. It will save your accountant time and help them on their quest to save you money.
Best Regards,
Kevin Kroskey
Citations.
1 –online.wsj.com/article/SB10001424052702303891804575576533845166848.html [10/25/10]
2 – abcnews.go.com/Business/wireStory?id=12000624 [10/29/10]
3 – businessweek.com/news/2010-10-25/u-s-existing-home-sales-rise-more-than-forecast.html [10/25/10]
4 - blogs.wsj.com/developments/2010/10/27/new-home-sales-stuck-at-rock-bottom/?mod=google_news_blog [10/27/10]
5 - bloomberg.com/news/2010-10-26/home-prices-in-20-u-s-cities-rose-less-than-forecast-case-shiller-says.html [10/26/10]
6 - theatlantic.com/business/archive/2010/10/consumer-confidence-remains-weak-going-into-midterms/65173/ [10/26/10]
7 - dailyfinance.com/story/consumer-sentiment-dips-on-economic-concerns-ahead-of-elections/19694879/ [10/29/10]
8 - marketwatch.com/story/durable-goods-orders-jump-33-in-september-2010-10-27 [10/27/10]
9 – cnbc.com/id/39916022 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/29/10]
11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/29/10]
12 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. 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. www.montoyaregistry.com www.petermontoya.com
