Economic Update 01/27/14

MORE HOMES MOVE IN DECEMBER

Last month saw a 1.0% gain in existing home sales, a nice change for this key economic indicator after a few subpar months. Analysts surveyed by Dow Jones Newswires anticipated sales improving 0.6%. The National Association of Realtors did revise November’s sales decline to 5.9% (it had been 4.3%).

GAUGE OF NEAR-TERM PROSPECTS EDGES HIGHER

The Conference Board’s index of leading indicators – intended to assess economic prospects for the next 3-6 months – ticked up 0.1% for December. Additionally, the CB revised the November gain of the index from 0.8% to 1.0%.                

GOLD RALLY CONTINUES

Futures advanced for a fifth straight week, settling Friday at $1,264.30 an ounce on the COMEX after rising 1.0% in 5 days, helped by a wave of disappointing economic news from overseas. The precious metal hasn’t had such a long winning streak since September 2012.

STOCKS STAGE A MAJOR RETREAT

Weak manufacturing data from China and an exit from emerging market currencies triggered a 2-day global selloff at the end of last week. The Argentine peso dropped 15% in 5 days, and the Russian ruble, South African rand and Brazil real also slumped. As a result, the DJIA had its poorest week in more than 2 years (-3.52%). The Nasdaq lost 1.65% for the week while the S&P 500 fell 2.63%. At the close Friday, here was where the big three stood: S&P, 1,790.29; DJIA, 15,879.11; NASDAQ, 4,128.17.

THIS WEEK: Monday brings Q4 results from Apple and Caterpillar and the Census Bureau’s report on December new home sales. On Tuesday, investors will consider the Conference Board’s January consumer confidence index, the November Case-Shiller home price index, December durable goods orders and earnings from Amgen, Ford Motor Co., Yahoo, Comcast, AT&T, Siemens and Pfizer. The earnings parade continues Wednesday with quarterly results from Dow Chemical, Novartis, Qualcomm, Boeing and Biogen – and the Federal Reserve makes a policy announcement. Thursday, NAR reports December pending home sales, the first federal estimate of Q4 growth appears, and earnings arrive from Amazon, Google, Banco Santander, Ericsson, LVMH, Royal Dutch Shell, H&M, Exxon Mobil, Visa, UPS and 3M. Friday, the Commerce Department issues its December personal spending report, the University of Michigan’s final January consumer sentiment index appears, and earnings arrive from Chevron, MasterCard and BBVA.