THE WEEKLY ECONOMIC UPDATE - July 19, 2010

QUOTE OF THE WEEK:
“To be humble to superiors is duty, to equals courtesy, to inferiors nobleness.”– Ben Franklin

Consumer prices decrease a bit; consumer sentiment drops notably

In June, the Consumer Price Index fell for the third month in a row, heading south 0.1%. Analysts thought the June reading would be flat. The Labor Department noted that core CPI did rise 0.2% last month, largely due to rent costs increasing. The last time CPI went negative for three straight months was October-December 2008. Separately, the preliminary July Reuters/University of Michigan consumer sentiment index came in at 66.5 compared to 76.0 in June – analysts expected a number in the mid-seventies.¹

Dodd-Frank bill off to Obama’s desk

The Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act Thursday by a 60-39 vote, with President Obama’s signature expected next week. The legislation is intended to protect consumers in the financial arena and prevent a repeat of TARP. Detractors think it gives too much power to regulators and might even open the door for further bailouts. House Minority Leader John A. Boehner (R-OH) called it "killing an ant with a nuclear weapon."²

Shops sell less in June

Retail sales were down 0.5% last month, according to the Commerce Department, marking the second straight month of retreat. Additionally, business inventories gained 0.1% for June (the fifth monthly gain in a row for that category).³

Producer prices fall 0.5% last month

The trend here may look deflationary: as with the CPI, this was the third straight monthly decline. However, the Bureau of Labor Statistics noted that core PPI increased by 0.1% for June.⁴

Friday selloff means a down week

Stocks were doing well last week until the market saw the latest consumer confidence and big-bank revenue reports. As a consequence, a seven-day Dow win streak ended. The S&P 500 lost 1.21% last week, concluding Friday’s market day at 1,064.88. The NASDAQ only lost 0.79% to 2,179.05 and the DJIA slipped 0.98% last week to settle Friday at 10,097.90.⁵

% Change	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG		R I D D L E O F T H E W E E K
DJIA	-3.17	+15.91	-1.02	-0.65		Observe the following sequence of numbers: 11, then 1,331, then 161,051, then 19,487,171. Given this sequence, what would the next number be?
NASDAQ	-3.97	+15.60	+0.21	-4.90
S&P 500	-4.50	+13.20	-2.66	-2.95
Real Yield	7/16	1 YR AGO	5 YRS AGO	10 YRS AGO
10YrTIPS	1.25%	1.82%	1.95%	4.03%
(Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov, 7/16/10)5,6,7,8 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.						Contact my office or see next week’s Update for the answer!

Last week’s riddle: Name the number that is 5 greater than the number which is one-fifth of one-fifth of one-half of 1050.

Last week’s riddle answer: 26. (As in 1050 ÷ 5 = 525 ÷ 5 = 105 ÷ 5 = 21 + 5 = 26.)

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Citations.

1 - reuters.com/article/idUSTRE65M2WK20100716 [7/16/10]

2 - latimes.com/business/la-fi-financial-reform-20100716,0,2303004.story [7/16/10]

3 - online.wsj.com/article/SB10001424052748703792704575366743747967242.html [7/15/10]

4 - theatlantic.com/business/archive/2010/07/producer-prices-fell-by-05-in-june/59799/ [7/15/10]

5 - cnbc.com/id/38282532 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F16%2F09&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]

6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]

7 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/16/10]

7 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/16/10]

8 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Regards,

C.W. Copeland
"Your Personal CFO"
C.W. Copeland & Associates
Lifestyle Management Advisors
3401 Norman Berry Drive
Suite 253
East Point, GA 30344
404.567.3275 (direct)
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