Weekly Economic Update - September 26, 2011

September 26, 2011 INVESTORS SEEK CASH, WATCH POLICY MOVESStocks tumbled last week as Wall Street shrugged off news of the Federal Reserve’s move to direct $400 billion into longer-term Treasuries and wondered if Europe’s debt troubles might trigger a recession. At mid-week, the Federal Reserve and International Monetary Fund managing director Christine LaGarde both noted “downside risks” to the U.S. and world economies. Thursday night, finance ministers and central bank governors from the Group of 20 pledged they would make a “strong and coordinated international response to address the renewed challenges facing the global economy” – a welcome declaration, yet the S&P 500 still slipped more than 6% on the week.1,2,3 EXISTING Home Sales UP 7.7% in AUGUST This was a pleasant surprise. The National Association of Realtors also noted an 18.6% year-over-year improvement in residential resales. Housing starts were also up 3.2% last month, according to a Census Bureau report.4,5 conference board LEADING INDICATORS RISE The global research group said its index rose 0.3% last month. However, a sizable part of that gain was due to a rise in M2 money supply – Americans boosting their bank accounts and cash positions.6 BLEAK WEEK FOR GOLD & CRUDE Commodities took a beating last week as the dollar strengthened. Gold lost 9.64% last week (and $101.70 on Friday) to end the trading week at $1,637.50 an ounce. Oil fell 9.45% last week, with futures settling at $79.85 per barrel Friday.7                                   CONFIDENCE TAKES A HOLIDAY Buyers were scarce last week on Wall Street, as these weekly performances point out: S&P 500, -6.54% to 1,136.43; NASDAQ, -5.30% to 2,483.23; DJIA, -6.41% to 10,771.48.3 THIS WEEK: Monday, the Census Bureau releases new home sales figures for August. Tuesday, the July S&P/Case-Shiller home price index comes out, plus the Conference Board's September consumer confidence index; Walgreens issues an earnings report. Wednesday brings a look at August durable goods orders. On Thursday, we have a new report on pending home sales and new initial claims figures; Germany’s parliament also votes on expanding the Eurozone bailout fund. On Friday, we get the Commerce Department’s report on August consumer spending and the University of Michigan’s final September consumer sentiment survey. % CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG DJIA -6.96 +1.02 -1.28 +2.52 NASDAQ -6.39 +6.71 +2.38 +6.56 S&P 500 -9.64 +1.03 -2.71 +1.33 REAL YIELD 9/23 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO 10 YR TIPS 0.10% 0.77% 2.27% 3.50% Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 9/23/113,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.