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Weekly Economic Update

January 21, 2013

WILL THE DEBT LIMIT BE LIFTED SHORTLY?
Friday, House GOP leaders announced a new proposal to authorize a three-month
extension of federal government borrowing authority. House Majority Leader Eric
Cantor (R-VA) summed up the plan in four words: “No budget, no pay.” Under the
terms of the proposed legislation, members of Congress would end up working for
free if they failed to approve a federal budget by April 15. The GOP still wants major
spending cuts as a condition of any long-term debt limit increase.
1

NO MONTHLY CHANGE IN CONSUMER PRICE INDEX
December’s CPI was flat, with core CPI rising only 0.1%. A 2.3% dip in gas prices
helped, even as food prices rose 0.2%. The overall Producer Price Index posted a
0.2% decline for a third straight month. Inflation was tame in 2012: the CPI
advanced only 1.7% last year compared to 3.0% for 2011, while the PPI rose just 1.3%
for its smallest annual increase since 2008.
2,3

RETAIL SALES STRONG IN DECEMBER
The Census Bureau notes that they increased 0.5% last month, bringing the yearly
advance to 4.7%. Purchases made through non-store retailers rose 12.6% in 2012.
3,4

CONSUMER SENTIMENT DECLINES
The University of Michigan’s preliminary January consumer sentiment index came
in at 71.3 Friday, well under the 75.0 consensus forecast of economists surveyed by
Reuters. This represents a 13-month low.
5

STOCKS REACH A 5-YEAR PEAK
After a 0.95% weekly advance, the S&P 500 settled at 1,485.98 Friday. The DJIA
(+1.20% to 13,649.70) and NASDAQ (+0.29% to 3,134.71) also extended their win
streaks. On the COMEX Friday, gold settled at $1,687.00, oil at $95.56.
5,6

THIS WEEK: All U.S. markets will be closed Monday as the nation observes
Martin Luther King Jr. Day; the Presidential Inauguration will also be held in
Washington, D.C. Tuesday, data on December’s existing home sales arrives plus
earnings from Verizon, DuPont, Texas Instruments, Johnson & Johnson, Travelers,
Google, IBM and AMD. Wednesday is another big earnings day, with Apple,
McDonald’s, United Tech, Abbott Labs, Coach, WellPoint, Amgen, Netflix, SanDisk,
Symantec and Western Digital all reporting results. On Thursday, Microsoft, 3M,
Xerox, AT&T, Bristol-Myers, Nokia E-Trade and Starbucks offer earnings reports.
The Census Bureau releases December new home sales figures Friday, and earnings
will be announced at Kimberly-Clark, P&G, Halliburton and Honeywell.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +4.16 +8.51 +2.56 +5.90
NASDAQ +3.82 +13.18 +6.79 +12.78
S&P 500 +4.19 +13.60 +2.43 +6.48
REAL YIELD 1/18 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO

10 YR TIPS -0.66% -0.15% 1.42% 2.34%
Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 1/18/125,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
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Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ
Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of
Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered
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and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX
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Citations.
1 – http://www.reuters.com/article/2013/01/18/us-usa-fiscal-budget-idUSBRE90H11H20130118 [1/18/13]
2 – http://www.usatoday.com/story/money/business/2013/01/16/consumer-price-index-december/1838907/ [1/16/13]
3 – news.morningstar.com/articlenet/article.aspx?id=581091 [1/15/13]
4 – http://www.census.gov/retail/marts/www/marts_current.pdf [1/15/13]
5 – http://www.cnbc.com/id/100390628 [1/18/13]
6 – http://www.bloomberg.com/news/2013-01-18/natural-gas-rises-on-cold-weather-forecast-commodities-at-close.html [1/18/13]
7 – montoyaregistry.com/Financial-Market.aspx?financial-market=retirement-investment-funds&category=3 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F18%2F12&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F18%2F12&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F18%2F12&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F18%2F08&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F18%2F08&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F18%2F08&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F17%2F03&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F17%2F03&x=0&y=0 [1/18/13]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F17%2F03&x=0&y=0 [1/18/13]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/18/13]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/18/13]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2003/ofm010803.pdf [1/8/03]

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