Portfolio Advisory Council, LLC presents:
 

 

THE WEEKLY ECONOMIC UPDATE

 

June 22, 2020 

 
QUOTE OF THE WEEK

"We must reject the idea that every time a law's broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions ."

RONALD REAGAN


THE WEEK ON WALL STREET
Stocks moved higher last week on news of more Federal Reserve market support and diminished concerns that new COVID-19 cases might lead to another economic shutdown.
The Dow Jones Industrial Average rose 1.04%, while the Standard & Poor's 500 gained 1.86%. The Nasdaq Composite Index jumped 3.73% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 1.88%.1,2,3

Investor Sentiment
News on Monday that the Fed would be expanding its bond-buying program to include the debt of individual companies sparked a sharp jump in stocks. The momentum gained through the week as investors focused on positive economic signals, especially with retail sales. A midweek report of an effective COVID-19 treatment for critically ill patients boosted investor optimism.
Market sentiment also was helped by talk of more fiscal stimulus and a report that China would be moving ahead with agricultural purchases to comply with phase one of the trade deal, easing concerns over growing friction in the U.S.-China relationship. 
 

Mixed Economic Data
Last week's economic data illustrated the uneven nature of the nation's nascent economic recovery.
Retail sales, which were up by 17.7% in May, reflected a strong, encouraging rebound in the U.S. consumer. Consumer spending was particularly strong in clothing, furniture, sporting goods, and autos.4,5
But industrial production (up by only 1.4%) and new housing starts (ahead by just 4.3%) showed tepid rebounds, indicating that recovery has yet to reach all corners of the American economy. Jobless claims posted their best number since mid-March (1.5 million), but remained high by historical standards.6,7,8
 

Final Thoughts
Last week saw the flare-up of border tensions in two geopolitical hotspots: North Korea and the disputed border region between China and India. The hope, of course, is that escalation can be avoided through diplomacy, but any heightening in tensions may become a concern for global markets.
 

BY THE NUMBER$

HELP WANTED SIGNS - The number of job openings in the United States has fallen by just short of 2 million in the last 2 months.  There were 7.004 million job openings nationwide as of 2/29/20, a total that has dropped to 5.046 million as of 4/30/20 (source: Department of Labor).    
 
NOT INFLATION, BUT DEFLATION - The Consumer Price Index (CPI) fell 0.1% on a month-over-month basis in May 2020, the 3rd consecutive month of "negative inflation."  The last calendar year in which inflation was negative, i.e., deflation, was 1954 or 66 years ago (source: Bureau of Labor Statistics).   9

 
 
THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Existing Home Sales.

Tuesday: New Home Sales.

Thursday: Durable Goods Orders. Gross Domestic Product (GDP). Jobless Claims.

Friday: Consumer Sentiment.

Source: Econoday, June 19, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: KB Home (KBH).

Thursday: Accenture Plc (ACN), Darden Restaurants (DRI).

Source: Zacks, June 19, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
 
 
 

THE WEEKLY RIDDLE
 
What is the only planet within our solar system that rotates clockwise?
 
LAST WEEK'S RIDDLE: The names of two U.S. state capital cities rhyme but share no vowels. Can you name the two cities?
ANSWER: Austin and Boston.
 


Portfolio Advisory Council, LLC
A Registered Investment Advisory Since 1986
             
Investment advisory services offered through Portfolio Advisory Council, LLC, and an SEC Registered Investment Adviser.
 
We cannot accept trade orders through e-mail. Important letters, e-mail, or fax messages should be confirmed by calling 713.574.6015.  This email service may not be monitored every day, or after normal business hours.  

James W. Hamilton, CFS, AIF
713.574.6025
 
W. Thomas Sutton  CFP(R), ChFC, CLU
713.574.6020
 
Philip B. Moran, MBA, ChFC, CFP(R), AIF
713.574.6030
 
John C. Husbands

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a 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 a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. 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. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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.


C ITATIONS:
1 - The Wall Street Journal, June 19, 2020
2 - The Wall Street Journal, June 19, 2020
3 - The Wall Street Journal, June 19, 2020
4 - The Wall Street Journal, June 16, 2020
5 - The Wall Street Journal, June 16, 2020
6 - MarketWatch, June 16, 2020
7 - CNBC, June 17, 2020
8 - The Wall Street Journal, June 18, 2020
9 -  Re production Prohibited without Express Permission - Copyright © 2011 Michael A. Higley

CHART CITATIONS:

The Wall Street Journal, June 19, 2020
The Wall Street Journal, June 19, 2020
Treasury.gov, June 19, 2020