Another week, another round of record highs. Despite concerns about how France's upcoming presidential election could affect the European Union's stability, U.S. stocks ended the week up yet again. The S&P 500 gained 1.51%, the Dow added 1.75%, and the NASDAQ increased 1.82% - growth that represents record highs for all three indexes. International equities in the MSCI EAFE also posted positive returns, with 0.78% growth for the week
A number of data reports also came out last week, and they tell a mostly encouraging story about the economy right now.
JANUARY INCREASES
Consumer Price Index Up by 0.6%
The Consumer Price Index (CPI), which measures the average prices of specific consumer goods and services, beat expectations and experienced its largest month-over-month jump since 2013. The index is now 2.5% higher than a year ago, a sign that inflation could be picking up.
Producer Price Index Up by 0.6%
Whereas the CPI evaluates price changes from a consumer's perspective, the Producer Price Index (PPI), measures changes from the seller's perspective. For January, the PPI also beat expectations, with energy experiencing a 4.7% increase.
Retail Sales Up by 0.4%
The monthly Retail Sales report shows growth or contraction in consumer demand for goods and can help indicate whether the economy is expanding. In addition to January's 0.4% growth, the latest report included upward revisions for November and December 2016. Overall, Retail Sales are up 5.6% over January 2016.
Small Business Optimism Index Up by 0.1 points
Each month, the National Federation of Independent Business (NFIB) releases the results of its Small Business Optimism Index, which shows results from its member surveys. This report measures the mood of small business owners - the largest employers in the U.S. - and January's results are the highest reading since December 2004. Last month's growth comes on the back of December's 7.4 point jump, the survey's largest ever increase. In other words, small business owners are interested in hiring and expanding, good news for American workers and the economy.
JANUARY DECREASES
Industrial Production Down by 0.3%
Last month, industrial firms, such as factories and mines, produced a lower volume of raw goods. If you dig deeper, however, the data is likely less concerning than what it may seem at first. For example, warmer-than-normal temperatures in the contiguous U.S. - a factor that does not have to do with the economy - contributed to utility output's 5.7% decrease, the largest drop since 2006.
Housing Starts Down by 2.6%
The number of new houses beginning construction fell in January, but future construction permits increased by 4.6% - higher than any time since November 2015. Housing Starts are also up 10.5% over January 2016. While the most recent report shows a monthly dip, the data indicates that housing has grown over the past year and will continue to grow in the future.
As you can gather from the balance between data increases and decreases, the January reports we received last week indicate an economy that is growing. We will continue to monitor the pace of growth and stay on top of political developments as we strive to determine what changes or opportunities may be on the horizon.
Quote of the Week
"You cannot escape the responsibility of tomorrow by evading it today."
--Abraham Lincoln
Golf Tip of the Week
Hit Solid Shots in Windy Weather
Wouldn't it be wonderful if every round of golf came with still, calm weather? Of course, wind can pick up at any time, and you don't want to sacrifice your score (or sanity) if it does. Fighting the wind can be tempting, but no matter how strong you are, you're probably not stronger than the breeze. So, rather than trying to muscle through, follow these two simple tips to hit solid shots when the wind is blowing.
- Go up a club or two. The key to maintaining your game in a breeze is hitting solid, low shots. By going up a club or two, you can focus on making ideal contact with the ball, rather than trying to hack at it with all of your strength.
- Swing at 75%. Because you have more club than you'd usually use, you can swing with less force. By avoiding the backspin that often accompanies a fast swing, you won't send your ball skyrocketing high in the air, where the wind can easily catch it.
Playing in the wind is always more challenging than enjoying a round on a clear day. With a slower swing and a stronger club, you will be better able to keep your ball low and straight, and have more control of where your shots land.
Financial Question of the Week
How often do you review my portfolio?
Although our clients all have customized portfolios, most portfolios hold similar investments that we have chosen as best in class from throughout the investment universe. The customizations typically come in the form of asset allocation - determining the appropriate mix of investments for your particular situation.
That being said, we constantly review the investments we have chosen. During our daily meetings with clients we continuously evaluate these investments to ensure they remain in line with our expectations throughout changes in the market and economy. An even closer look is taken outside of meetings where we perform more detailed fundamental analysis.
With investments constantly analyzed, we take the opportunity to review each client's customized portfolio on at least a monthly basis. At this time we review how your investments are performing as a whole, your asset allocation strategy, and how your portfolio is working towards achieving your goals, among other factors effecting your financial situation.
Please let us know if you or someone you know has any questions about their portfolio.
