December 18, 2018
WEEKLY ECONOMIC UPDATE
AS FUEL GROWS CHEAPER, INFLATION BECOMES TAMER
Last week, the latest Consumer Price Index arrived, showing no move for headline inflation in November and a 0.2% core inflation increase. That precisely matched the consensus forecast of economists polled by Reuters. What held the headline CPI in check last month? You can credit a sudden drop in gas prices, which fell 4.2%. Annualized inflation declined to 2.2%. Overall producer prices only rose 0.1% last month, compared to an October ascent of 0.6%.1,2
A MIDDLING ADVANCE FOR RETAIL SALES
During October, American households boosted their retail spending by 1.1% (originally reported by the Department of Commerce as a gain of 0.8%), but November presented a different story. Sales rose last month, but only by 0.2%. The gain remained at 0.2% with auto buying removed.2
OIL HEADS 2.6% LOWER
That was the weekly loss for light sweet crude, influenced by two factors: increasing dollar strength and concerning economic data from China, which made traders wonder if the P.R.C.'s demand for crude could lessen. Oil settled at $51.20 Friday on the NYMEX.3
STOCKS HEAD LOWER
Bothered by anxieties about global growth, bulls lost some of their appetite for risk last week. Across five trading days, the S&P 500 ceded 1.26%; the Dow Jones Industrial Average, 1.18%; the Nasdaq Composite, 0.84%. That left them at the following settlements on Friday: S&P, 2,599.95; DJIA, 24,100.51; COMP, 6,910.66. The small-cap Russell 2000 index had it worse, falling 2.57% to 1,410.81 over five days. While all this happened, volatility actually declined, at least according to the CBOE VIX; the leading gauge of Wall Street instability retreated 6.89% for the week to 21.63.4
THIS WEEK
Oracle and Red Hat share quarterly results on Monday. | On Tuesday, the Census Bureau offers a snapshot of November residential construction activity, and Darden Restaurants, FedEx, Jabil, Micron Technology, Navistar, Steelcase, and Worthington Industries present earnings. | Wednesday, the Federal Reserve releases its latest policy statement, followed by a press conference with Fed chair Jerome Powell; in addition, investors will consider October existing home sales numbers and earnings from General Mills, Paychex, Rite Aid, and Winnebago. | On Thursday, earnings roll in from Accenture, BlackBerry, Conagra Brands, Nike, and Walgreens Boots Alliance, and the Department of Labor issues a new initial claims report. | Friday, Wall Street reviews November consumer spending and capital goods orders data, the federal government's third estimate of Q3 growth, and earnings from CarMax.
% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
-2.50
-1.67
10.59
18.14
NASDAQ
0.11
0.79
14.54
35.82
S&P 500
-2.76
-1.96
9.29
19.93
REAL YIELD
12/14 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
1.07
0.48
0.72
2.43
Sources: wsj.com, bigcharts.com, treasury.gov - 12/14/184,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
Phil Guerrero, CFP®
President
Wealth Advisor

Terry Maziarka
Operations Manager

847.550.6100
WEEKLY QUOTE

"Laughter is an instant vacation." - MILTON BERLE

WEEKLY TIP
A simple tip to keep credit card spending under control: only use a card for purchases you know you can pay off within one month.
WEEKLY RIDDLE
Dave says that the small city he lives in has a municipal building with more than a hundred stories. What building is this?
LAST WEEK'S RIDDLE:  Take a word with four letters. Take away one, and what remains will be better ... better than zero, anyway. What word is this?

ANSWER: Gone.