“Certainty? In this world nothing is certain but death and taxes.”
Benjamin Franklin
Mr. Franklin understood the inevitable need of governments to fund operations, perhaps as well as any of the founding fathers. If his life both inside and outside government is any example, he also fully understood the need for frugality in regard to the minor things of life, so as to have resources for things of greater importance.
In his Autobiography, he devotes a great deal to the concept of careful resource management. With the campaign season upon us, it will be interesting to watch the good, old fashioned American debate. From a market and investment perspective, the fact that the discussion is centered around responsible fiscal management (whatever the respective sides’ definition may be) is a very good thing.**
The Markets
Domestic equities saw their second week of lackluster performance as earnings reports battled economic data for investor attention. The tech-heavy Nasdaq continued to be the year-to-date laggard, while the 10-year Treasury yield reversed course, ending the week lower for the first time in a month.
Last Week's Headlines
- Retail sales rose in March for the ninth straight month, but the 0.4% increase was less than the previous month's 1.1%. The Commerce Department said car sales were slower, while people spent more on gas and home furnishings.
- Consumer prices rose 0.5% in March, according to the Bureau of Labor Statistics (BLS). Not surprisingly, food (up 0.8%) and gasoline (up 5.6%) accounted for most of the increase; apart from those two factors, so-called core inflation was up 0.1%. March's increase means that consumer inflation is up 2.7% over the last year.
- Meanwhile, the BLS said inflation at the wholesale level rose 0.7%, though as with consumer inflation, the 2.6% increase in energy costs largely drove that figure. The increase, the ninth in as many months, put the year-over-year wholesale inflation rate at 5.8%.
- Game on: Dueling versions of how to tackle the country's budget deficit took shape as President Obama released a plan designed to counter the program proposed earlier by Republican Rep. Paul Ryan and passed by the House of Representatives last week. Both purport to trim roughly $4 trillion over the next 10-12 years.
- The Federal Reserve's "beige book" report continued to show economic growth in all 12 regions of the country. Meanwhile, China's National Bureau of Statistics reported a 9.7% annualized increase in Q1 gross domestic product, with an annual consumer inflation rate of 5.4% in March.
Eye on the Week Ahead
First-quarter earnings will really come into focus as several major tech and S&P 500 companies report. U.S. markets will be closed Friday for the holiday weekend.
Key dates and data releases: housing starts (4/19); existing home sales (4/20).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The 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. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Forefield Inc. Copyright 2011
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