The Independent Market Observer

Monday Update: Back to Normal

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Aug 31, 2015 2:27:00 PM

and tagged In the News

Leave a comment

Monday UpdateLooking at today’s news, the lack of worrisome economic headlines is remarkable. Considering all that’s happened in the past couple of weeks—not to mention that markets are closing out their worst month in years—this seems to reinforce the idea that things here in the U.S. really are moving back to normal.

A Look at Last Week’s Data

Housing. The consumer economy continued to improve last week, as evidenced by positive housing news:

  • New home sales in July rose 5.4 percent month-on-month, slightly below expectations but up significantly from a decline of 7.7 percent the previous month.
  • July sales numbers increased to 507,000, slightly below expectations of 510,000 but up from 481,000 the previous month.
  • House prices also rose between 4.5 percent and 5 percent, according to the S&P/Case-Shiller index.

Consumer confidence. The Conference Board’s Consumer Confidence Index posted a substantial increase for August, from 90.9 to 101.5, well above expectations and more than offsetting the prior month’s fall. The rise was broad based, with improvements in the present conditions index and in the number of people reporting that jobs were hard to get.

Personal income and spending. Although not outstanding, these figures continue to show steady growth:

  • Income was up by 0.4 percent in July, a reasonably strong number in line with both the previous month and with expectations.
  • Spending increased 0.3 percent, also in line with the previous month but slightly below expectations.

Business results. From a business perspective, the news was positive as well:

  • Durable goods orders, which were expected to decline by 0.4 percent, actually increased by 2 percent in July, a drop from the previous month’s very strong number but still well above expectations.
  • Stripping out aircraft and defense, the improvements were even better, with orders up 2.2 percent versus a 0.9-percent increase the previous month and expectations of 0.3 percent.

GDP growth. The big news last week was the jump in second-quarter GDP growth, which was revised up to 3.7 percent from the previous estimate of 2.3 percent. Coming in well above expectations of 3.2 percent, this result indicates that growth remained strong despite all the turbulence during the quarter.

What to Watch This Week

Tuesday: The ISM Manufacturing Index is expected to remain stable, with the potential for a small increase. Although results may not be especially strong, the fact that the index should stay in growth territory despite many headwinds for manufacturing is a positive sign.

Thursday: The ISM Non-Manufacturing Index, which covers the much larger U.S. service sector, is expected to decline from last month’s exceptionally strong level while continuing to indicate high growth.

Friday: The major release of the week, the employment report should show continued growth at healthy levels. Based on the coverage of the Federal Reserve conference in Jackson Hole over the weekend, it appears that a rate increase this year is still on the table. Friday's employment report should have a lot of influence on whether that happens.

                      Subscribe to the Independent Market Observer            

Subscribe via Email

New call-to-action
Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®