January 17, 2011 Weekly Market Commentary

The U.S. inflation rate hit an 18-month peak in December: the federal government’s Consumer Price Index advanced 0.5%. Pump prices were a big factor in that gain: gasoline grew 8.5% more expensive last month. However, core CPI (minus food and energy prices) only rose 0.1% for the month, and consumers experienced just 1.5% inflation across 2010. The Producer Price Index went 1.1% higher in December, and energy costs were responsible for most of the gain. Core PPI (again, minus food and energy prices) was just +0.2% for December. Wholesale prices rose 4.0% in 2010.1,2,3

The Commerce Department announced a 0.6% gain in retail sales for December. While this was smaller than the 0.8% advance forecast by economists polled by MarketWatch, the increase wrapped up a positive year for the indicator. Retail sales have now improved for sixth months in a row, and 2010 was the best year for the category since 1999.4

Gold is certainly off to a rocky start in 2011: as of Friday’s COMEX close, it was down 4.27% YTD to $1360.40 per ounce following news that China had tightened bank reserves. Oil, on the other hand, gained 3.99% last week to settle Friday at $91.54 a barrel on the NYMEX with prices up +0.18% YTD.5

The initial Reuters/University of Michigan consumer sentiment survey for January showed a little slip in consumer sentiment. It came in at 72.7, down from 74.4 at the end of 2010. Economists polled by Bloomberg News had reached a consensus forecast of 75.5.6

A strong Friday contributed to nice weekly advances for the three major U.S. indices. The weekly numbers: DJIA, +0.96% to 11,787.38; NASDAQ, +1.93% to 2755.30; S&P 500, +1.71% to 1293.24. At Friday’s close, the S&P was at its highest level since August 28, 2008.7

THIS WEEK: Stock markets are closed Monday for the national holiday honoring Dr. Martin Luther King, Jr. Looking at the notable economic releases next week, we get data on December housing starts and building permits on Wednesday, and a look at December existing home sales, the latest index of leading indicators from the Conference Board and the latest initial and continuing claims reports on Thursday.

“Knowledge is more than equivalent to force.”
– Samuel Johnson

Do you have credit cards? Did you know you can call your credit card company and request a lower interest rate? In fact, a good rule of thumb is to do this once every six months. They don't grant every request, but you won't know if you don't ask.

Best Regards,

Kevin Kroskey

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1- bls.gov/news.release/cpi.nr0.htm [1/14/11]
2 - theatlantic.com/business/archive/2011/01/consumer-price-inflation-jumps-05-in-december/69567/ [1/14/11]
3 - npr.org/blogs/thetwo-way/2011/01/13/132886429/jobless-claims-jump-up-energy-pushed-wholesale-prices-higher [1/13/11]
4 - marketwatch.com/story/us-retail-sales-climb-06-in-december-2011-01-14 [1/14/11]
5 - blogs.wsj.com/marketbeat/2011/01/14/data-points-energy-metals-440/ [1/14/11]
6 - bloomberg.com/news/2011-01-14/u-s-consumer-confidence-unexpectedly-declines-on-jobless-rate-fuel-costs.html [1/14/11]
7 - cnbc.com/id/41080629 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F12%2F01&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F12%2F01&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F7%12F01&x=0&y=0 [1/14/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/14/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/14/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. 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 assistance is needed, the reader is advised to engage the services of a competent professional.

Future Posts at www.TrueWealthDesign.com

Any future blog posts will be done at www.TrueWealthDesign.com . Thank you, Kevin Kroskey, CFP, MBA