A JUMP IN HOUSING STARTS
In a relatively light week of economic data, one of the notable items was a 1.7% rise in new home construction in July. Economists had expected only a 0.2% increase in that category. However, the Commerce Department said most of the gain came in multi-family housing. In contrast, single-family housing starts were down 4.2% for the month, with building permits down 3.1%.1

GM WILL GO PUBLIC
General Motors has announced it will reenter the stock market. Last Wednesday, it filed an IPO registration with the Securities and Exchange Commission. One of the largest IPOs in history may come as soon as October, including common and preferred shares. This signals the end of “Government Motors”: the Treasury Department will now have the opportunity to reduce its 61% stake in the company. GM earned $1.3 billion in 2Q 2010 – its second straight quarter in the black. 2,3

LEADING INDICATORS TURN POSITIVE AGAIN
After a 0.3% slip in June and a 0.5% drop in May, the Conference Board’s Leading Economic Index eked out a 0.1% increase for July. The LEI has been more or less flat since March, yet components within the index have signified a mild economic expansion across that time.4

PPI RISES FOR FIRST TIME SINCE MARCH
July’s 0.2% increase in the Producer Price Index was in line with analysts’ forecasts. Core PPI (wholesale inflation minus food and energy prices) rose 0.3% in July, more than the 0.1% advance expected.1

OIL FUTURES SINK; GOLD FUTURES RISE
In fact, gold prices rose $12.30 last week. That 1.01% weekly advance led to gold settling at $1,227.20 per ounce Friday on the COMEX. Over the last three weeks, gold prices have climbed 3.85%. Oil prices slipped $1.93 last week. At Friday’s close on the NYMEX, crude for September delivery was at $73.46 a barrel.5

LIGHT VOLUME, LOW ENTHUSIASM
August options were expiring last week, and initial jobless claims weren’t shrinking. Combine that with some bearish sentiment and you had a week of light trading marked by significant selloffs. The NASDAQ advanced 0.04% last week to close Friday at 2,179.76. The DJIA lost a bit of ground to settle at 10,213.62 Friday, while the S&P 500 ended the week at 1,071.69.6



This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information should not be construed as investment advice. 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 to be representative of the stock market in general. It is not possible to invest directly in an index. www.montoyaregistry.com www.petermontoya.com


Citations.
1 – online.wsj.com/article/BT-CO-20100817-705894.html [8/17/10]
2 – boston.com/business/markets/articles/2010/08/20/gms_ipo_may_favor_brave_despite_recent_rocky_history/ [8/20/10]
3 – freep.com/article/20100818/BUSINESS0101/100818044/GM-files-to-launch-its-public-stock-offer [8/18/10]
4 – conference-board.org/press/pressdetail.cfm?pressid=3988 [8/19/10]
5 – blogs.wsj.com/marketbeat/2010/08/20/data-points-energy-metals-344/ [8/20/10]
6 – cnbc.com/id/38789911 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F20%2F09&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F19%2F05&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F21%2F00&x=0&y=0 [8/20/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/20/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/20/10]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

GOOD NEWS: INFLATION IS BACK
The Consumer Price Index rose 0.3% for July – the largest monthly increase since August. The Labor Department’s report quelled deflation worries among economists and investors who feared the CPI would go negative for a fourth straight month. Energy prices rose 2.6% in July, while core CPI (minus food and energy prices) went up 0.1%. Across the last 12 months of data, core CPI has increased 0.9% and overall CPI has advanced 1.2% – the mildest inflation in 44 years.1,2

A SLIGHT RISE IN CONSUMER SENTIMENT
The middle of the month brings the latest University of Michigan/Reuters consumer sentiment survey. The preliminary August edition came in at 69.6, slightly better than the 69.0 consensus forecast of economists polled by Bloomberg News.3

FED WILL BUY UP MORE DEBT
As if acknowledging that the recovery is not moving fast enough to stimulate notable growth or job creation, the Federal Reserve said it would use proceeds from maturing mortgage-linked securities to buy up U.S. Treasuries. Analysts estimate the Fed could buy $10 billion to $30 billion of the bonds per month. The new effort will keep the Fed’s portfolio of Treasuries around the $2 trillion level for the near future, with the goal of keeping long-term interest rates from rising. Fed policymakers left the benchmark interest rate unchanged last week.4,5

BUSINESS INVENTORIES UP, BUSINESS SALES DOWN
The Commerce Department noted last week that business stockpiles grew by 0.3% for June, on the heels of a 0.2% increase for May. However, business sales fell by 0.6% – better than June’s 1.2% drop, but still the second monthly decline in a row after 13 straight monthly gains.6

ROUGH WEEK FOR WALL STREET
It was especially tough for the NASDAQ, which dived 5.02%. The S&P 500 slipped 3.78% last week while the DJIA lost 3.29%. Wednesday, Wall Street endured a major selloff on pessimism over the bearish FOMC statement and worries about a slowing global economy; that was the pivotal day of the week for stocks. Where did the indices settle at Friday? DJIA, 10,303.15; NASDAQ, 2,173.48; S&P 500, 1,079.27.7

RETAIL SALES IMPROVE
The Commerce Department estimated a 0.4% gain in retail sales for July – a nice turnaround after two months in the minus column. (A 1.6% rise in motor vehicle and motor vehicle parts purchases certainly helped.)1



This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information should not be construed as investment advice. 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 to be representative of the stock market in general. It is not possible to invest directly in an index. www.montoyaregistry.com www.petermontoya.com


Citations.
1 – economy.kansascity.com/?q=node/7992 [8/13/10]
2 – bls.gov/news.release/cpi.nr0.htm [8/13/10]
3 – bloomberg.com/news/2010-08-13/u-s-consumer-confidence-rises-more-than-estimated-michigan-index-shows.html [8/13/10]
4 – latimes.com/business/la-fi-fed-20100811,0,835529.story [8/11/10]
5 – federalreserve.gov/newsevents/press/monetary/20100810a.htm [8/10/10]
6 – cbsnews.com/stories/2010/08/13/ap/business/main6769597.shtml [8/13/10]
7 – cnbc.com/id/38696191 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F13%2F09&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F13%2F09&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F13%2F09&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F12%2F05&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F12%2F05&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F12%2F05&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F14%2F00&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F14%2F00&x=0&y=0 [8/13/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F14%2F00&x=0&y=0 [8/13/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/13/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/13/10]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

HOME SALES & HOME PRICES IMPROVE
The Commerce Department said new home purchases surged by 23.6% for June, bouncing back nicely from May’s historic retreat. The supply of new homes for sale diminished to 7.6 months worth, much improved from the 9.6 months worth of inventory estimated in May and much closer to the 6-month level of a healthy housing market. New home prices dropped only 0.6% from June 2009 to June 2010, the smallest year-over-year decrease since November 1987. Separately, the Standard & Poor’s/Case-Shiller home price index of 20 U.S. cities showed prices of existing homes rising 1.3% for May. Prices were also 4.6% higher than a year ago.^1,2


CONSUMER CONFIDENCE LAGS
The economic recovery is taking time – too much time for many Americans, according to the final July University of Michigan consumer sentiment survey and the July Conference Board poll. The Reuters/University of Michigan index came in at 67.8, way down from the final 76.0 of June. That is the lowest reading since November. The Conference Board’s survey also slipped to 50.4 in July from June’s 54.3 mark.³


ECONOMY GROWS 2.4% IN SECOND QUARTER
The preliminary GDP reading from the Commerce Department was received tepidly on Wall Street. Analysts surveyed by Reuters were predicting 2.5% 2Q growth, and the federal government had earlier estimated 1Q 2010 expansion at 2.7%. Still, the recovery is continuing. One interesting note: business expenditures on equipment and software increased by 29.1% last quarter – the biggest jump since 3Q 1997.^4,5


DURABLE GOODS ORDERS DOWN 1.0%
Economists polled by MarketWatch had forecast a 1.1% gain for June. Instead, the category posted its worst performance in 10 months. With transportation orders factored out, the decrease was only 0.6%.⁶


A GREAT JULY ON WALL STREET
While last week saw stocks retreat slightly, the Dow climbed 7.08% in July for its best month in a year. As of Friday’s close, about two-thirds of companies in the S&P 500 had issued earnings reports with about 75% surpassing expectations. The DJIA ended the week at 10,465.94, while the NASDAQ and S&P 500 respectively settled at 2,254.70 and 1,101.60 Friday. In commodities, oil logged its best month since March, with prices rising 4.39% to $78.95 a barrel at the July 30 NYMEX close. Gold had its poorest month since December, with futures falling 5.12% in July and ending the month at $1,181.70 per ounce on the COMEX.^5,7



This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information should not be construed as investment advice. 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 to be representative of the stock market in general. It is not possible to invest directly in an index. www.montoyaregistry.com www.petermontoya.com

Citations.
1 – reuters.com/article/idUSTRE65M2WK20100716 [7/26/10]
2 – articles.latimes.com/2010/jul/28/business/la-fi-home-prices-20100728 [7/28/10]
3 – thestreet.com/story/10822616/1/consumer-sentiment-hits-9-month-low.html [7/30/10]
4 – cnbc.com/id/38483372/ [7/30/10]
5 – cnbc.com/id/38487832 [7/30/10]
6 – marketwatch.com/story/surprise-drop-in-june-us-durable-goods-orders-2010-07-28?dist=beforebell [7/28/10]
7 – blogs.wsj.com/marketbeat/2010/07/30/data-points-energy-metals-330/ [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F30%2F09&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F30%2F09&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F30%2F09&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F29%2F05&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F29%2F05&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F29%2F05&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/30/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/30/10]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]