Introducing Matt Cameron and Economic Updates
October 1, 2012
Our educational series has been a great way of educating you about the markets and keeping you abreast of what is going on here at Polaris. It is my great pleasure to welcome Matt Cameron to the Polaris family. Matt will be joining Polaris Wealth Advisers as a partner. Matt has over 25 years of financial industry experience, having worked for Wells Fargo Advisors, LLC, Merrill Lynch, Lehman Brothers, as well as other firms in the institutional real estate and hedge fund industries. Matt is a graduate of Harvard College, and holds an MBA from UCLA. Matt's responsibilities include serving on Polaris' Investment Committee and serving on the Business Development Team.
This week, I thought I'd pass on a bit of the economic data that we look at every day. This past week, a lot of economic data came out. Most of it was mixed. It's not the most interesting read for most of you, but hopefully it demonstrates the degree to which we are watching the markets.
- Chicago Fed National Activity Index three month average for August was -0.47, showing below average growth. If this indicator were to drop to -0.70, it would indicate that the United States had entered another recession. Before you start panicking, the Chicago Fed has been at this level many times in the past without going into a recession.
- The Chicago Business Barometer fell 3.3 points to 49.7 (below 50 indicates contraction). It indicated contraction for the first time since September 2009. Both new orders and order backlogs fell, suggesting weak future demand. Production, inventories, and employment continued to grow but at slower rates.
- The Milwaukee area activity shrank for the third straight month, albeit at a slower rate. The index rose 4.3 points to 47.2 (below 50 indicates contraction). New orders and production declined, while employment grew.
- Personal consumption expenditures rose 0.5% in August, which is the most in six months.
- Personal income rose 0.1%, below the consensus of 0.2%. Real disposable income fell 0.3% (the first decline in nine months).
- 19 of the 20 cities in the S&P/Case-Shiller index increased. The existing home price index was up 0.4%.
- New home inventory remains at 4 ½ months of supply, which is the least since October 2005. Both mean and median new home prices continue to rise on a year over year basis, reflecting stronger demand amid declining inventory.
- ICSC/Goldman Sachs Chain Store Sales Index rose 0.6% last week and is up 2.9% from this time last year.
State and local government tax revenues rose 3.3% in Q2 from a year ago. This is the 11th positive month in a row. Property taxes increased for the first time in five quarters, up 1.1% from a year ago.
We keep a close eye on these and many other indicators to understand the economic lay of the land. The indicators we follow neither have us concerned enough to aggressively get defensive with your portfolio, nor have they made us excited enough to put you into an overweight position. We remain cautious and ready to move either direction when our proprietary indicators provide more clarity.
As always, I welcome all questions and comments.
Jeffrey J. Powell
Managing Partner, Polaris Wealth Advisers, LLC
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