7 -2 1- 2 01 4
Today and Tomorrow
LEXINGTON WEALTH MANAGEMENT-ECONOMIC UPDATE
“Never forget the six-foot tall man who drowned crossing the river that was five feet deep on
average. The important thing to remember about investing is that it is not sufficient to set up a
portfolio that will survive on average. The key is to survive at the low ends.” – Howard Marks
ECONOMIC & MARKET UPDATE: JULY 21, 2014
Econom ic Data -­‐ Previous Week
Series
Actual
Forecast
Advance Retail Sales
0.2%
0.6%
Empire Manufacturing
25.60
17.00
Import Price Index
0.1%
0.4%
Producer Price Index
0.4%
0.2%
Industrial Production
0.2%
0.3%
NAHB Housing Idx
53
50
Housing Starts
893K
1,020K
Philadelphia Fed Survey
23.9
16.0
U. of Mich Confidence
81.3
83.0
Leading Econ Indicators
0.3%
0.5%
Econom ic Data -­‐ Upcom ing Week
Date
Series
Actual
Forecast
7/22
Consumer Price Index
-0.3%
7/22
Home Price Index
-0.3%
7/22
Existing Home Sales
-4.97M
7/24
New Home Sales
-480K
7/25
Durable Goods Orders
-0.5%
Source: Bloomberg
Date
7/15
7/15
7/15
7/16
7/16
7/16
7/17
7/17
7/18
7/18
Prior
0.5%
19.28
0.3%
-0.2%
0.5%
49
985K
17.8
82.5
0.5%
Weak auto sales weigh on headline; core sales surprise to upside
Upside on robust gains in new orders, shipments, & employment
Food inflation falls 1.7%, offsetting 1.4% jump in fuel costs
Producer costs boosted by 2.1% rise in energy prices; core +0.2%
Larger than expected headwind from auto production drives miss
Broad based improvement drives homebuilder sentiment upside
Starts fall 9.3% on broad-based weakness in single & multi-family
Large gains in leading components drive significant upside vs. est.
Increased inflationary expectations tempers consumer optimism
Weak housing indicators detract, but 7 of 10 components positive
Prior
0.4%
0.0%
4.89M
504K
-0.9%
Gas prices likely to boost headline, but lower airfare to temper core
Home prices expected to tick higher amid rebounding demand
Increased May pending sales bodes well for June's existing sales
New sales expected to retrace some of May's out-sized 18.6% gain
Seasonal increase in aircraft to boost headline; solid core expected
GEOPOLITICAL HEADLINES KICK UP VOLATILITY
Despite a volatile week for equities, the S&P
500 and Dow ended the week up 0.5% and
0.9%, respectively. Small stocks continued
their decline from the previous week with the
Russell 2000 falling 0.7%.
Retail sales kicked off a week occupied with
geopolitical headlines. Sales for June came in
below expectations as auto sales surprised to
the downside. Retail sales increased 0.2%
from the prior month, coming in well below
the 0.6% forecast. Excluding the 0.3% decline
in auto sales, sales gained 0.4%. Retail sales
for May were revised up to 0.5% from 0.3%.
Similar to retail sales, industrial production
figures came in soft for June. Following an
increase of 0.5% in May, industrial production
slowed to a rise of 0.2% as auto production
slipped.
Excluding
motor
vehicles,
manufacturing rose 0.2% with durable goods
increasing
0.4%.
Nondurable
good
production fell 0.3% with declines in the
output of petroleum & coal products and
7 -2 1- 2 01 4
Today and Tomorrow
LEXINGTON WEALTH MANAGEMENT-ECONOMIC UPDATE
apparel. The index for food, beverage, and
tobacco products also fell 0.6%.
Housing market data came in mixed. The
NAHB Housing index, which is a broad
based survey on housing market conditions,
jumped to 53 from 49. This came in above
consensus forecasts for 50. Strength was seen
in sales expectations and current sales.
Housing starts, however, disappointed as
starts fell 9.3% in June. This came after a
7.3% decline in May. Multifamily starts fell
9.9% while single-family starts dropped 9.0%
with the South experiencing a record decline.
May. The outsized jump was the result of
rising energy prices. Excluding food, energy,
and trade services, the PPI rose 0.2%.
The Philadelphia Fed Survey, which gauges
manufacturing
conditions
within
the
Philadelphia Federal Reserve district, crushed
consensus forecasts for 16.0 as the index
surged to 23.9. The index rose to its highest
reading since March 2011 as new orders,
shipments, and unfilled orders soared. Despite
covering only the mid-Atlantic region, the
survey is often used as a broader indicator for
US manufacturing activity.
HO USING STA RTS
1100
Starts, (000s)
900
700
500
300
100
FORTIGENT®
Source: Bloomberg
Price indexes came in somewhat mixed as
import prices fell short of expectations while
producer prices accelerated from last month’s
decline. Import prices rose just 0.1% as
food/feeds/beverage prices fell 1.7%. Export
prices also declined as agricultural prices fell
1.8% on the month. Producer prices bounced
0.4%, rebounding from a 0.2% decline in
The Conference Board’s Leading Economic
Indicators index wrapped up the week. The
index continued its rise, albeit at a slowerthan-expected pace. The index increased 0.3%
in June, but came in below consensus
forecasts of a 0.5% jump. The report was
mostly positive with seven of 10 components
posting gains. Housing sector struggles were
the largest drag on the index’s acceleration.
THE WEEK AHEAD
Economic data slows this week. The
Consumer Price Index comes out Tuesday.
Additional guidance on the direction of the
housing market arrives via the Home Price
Index and existing and new home sales. The
week wraps up with durable goods orders.
Earnings season continues with reports from
Halliburton, Apple, Coca Cola, Comcast,
7 -2 1- 2 01 4
Today and Tomorrow
LEXINGTON WEALTH MANAGEMENT-ECONOMIC UPDATE
McDonalds, AT&T, Boeing, Visa and
Caterpillar amongst others. Central bank
policy announcements are due from Hungary,
New Zealand, and Russia.
7 -2 1- 2 01 4
Today and Tomorrow
LEXINGTON WEALTH MANAGEMENT-ECONOMIC UPDATE
Why we exist We serve as your advocate, preserving and growing your wealth, so you can achieve your life-­‐ and financial goals. This is why we exist! What we do Our success together comes from an open dialogue that allows us to hear and understand your unique living story. With your interests at heart, we then guide you through the financial emotional decisions that arise throughout life. From an investment perspective, we educate and keep you well-­‐informed while we provide innovative ideas. We take only the risk that you are comfortable with and is necessary to meet your objectives. We balance the most current academic and real world information to build sound tax efficient portfolios. This is what we do! What we believe We serve you with open mindedness, objectivity, and passion. We hope to be thought of as an extension of your families: we listen, we ask questions, and we focus on delivering solutions to your personal and portfolio needs. We also believe that fostering a culture of independence is the only way to do business. We do not put you into pre-­‐packaged models. We do not accept commissions or soft dollars. We do not sell proprietary products. We instead believe in the free-­‐market of ideas, in open competition and in critical examination. This is what we believe! Where we are going Wherever you want to go. Together. Who we are Lexington Wealth Management is a boutique, fee-­‐only, conflict free, wealth management firm that provides concierge services. The firm is based in Lexington and serves both high net worth and family office clients. Using a novel approach that’s about more than money, Lexington Wealth develops a comprehensive understanding of clients’ lives and provides an equally comprehensive reporting package that captures every detail of your portfolio. We employ forward-­‐thinking strategies to show you the most effective pathways to preserving your wealth, achieving peace of mind and retaining control over your financial life. This report is prepared through a collaborative effort with LWM investment team and strategic partner
Fortigent. The information provided is general in nature and is not intended to be, and should not be
construed as, investment, legal or tax advice. Lexington Wealth Management make no warranties with
regard to the information or results obtained by its use and disclaims any liability arising out of your use
of, or reliance on, the information. The information is subject to change and, although based upon
information that Lexington Wealth Management consider reliable, is not guaranteed as to accuracy or
completeness.
Not FDIC Insured No Bank Guarantee May Lose Value