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Economic Update 01/19/16

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Oil closed at its lowest level in more than 12 years Friday, plummeting 11.3% for the trading week on the NYMEX. Two factors contributed greatly to the rout: the Energy Information Administration’s forecast of the global crude glut lasting well into 2017 and the imminent expiration of sanctions against Iran, which could mean greater crude exports from that country. The EIA forecast West Texas Intermediate crude prices to rise to the vicinity of $40 later this year.


Rising to 93.3 from its final 2015 mark of 92.6, the University of Michigan’s initial January consumer sentiment index amounted to a pleasant surprise during a gloomy week. Another consumer indicator was less positive: the Commerce Department said that both headline and core retail sales dipped 0.1% in December.


This statistic is only part of the story regarding wholesale inflation in December. Minus the volatile food and energy categories, producer prices rose 0.1% last month according to the Labor Department.


Another dip for Chinese equities and slumping oil prices led shares lower last week.  During January 11-15, the Dow lost 2.19%, the Nasdaq 3.34%, and the S&P 500 2.17%. At the close, the Dow stood at 15,988.15, the Nasdaq at 4,488.42, the S&P at 1,880.28. Even COMEX gold futures lost 0.7% for the week, settling Friday at $1,090.70.

THIS WEEK: U.S. financial markets are closed Monday in observation of Martin Luther King, Jr. Day. Bank of America, Charles Schwab, Comerica, Delta Air Lines, eBay, IBM, Morgan Stanley, Nautilus, Netflix, and UnitedHealth Group announce earnings Tuesday, and China presents its Q4 and 2015 GDP readings. On Wednesday, investors consider the December CPI, December housing starts and building permits, and earnings from Briggs & Stratton, Brinker International, Goldman Sachs, Kinder Morgan, Northern Trust, and Raymond James. Thursday, earnings from Alaska Air Group, American Express, BoNY Mellon, BB&T, E*TRADE, Fifth Third, J.B. Hunt, Schlumberger, Starbucks, Southwest Airlines, Travelers, Union Pacific, and Verizon arrive along with the latest initial claims figures. Friday, NAR’s December existing home sales numbers and the latest Conference Board leading indicator index complement earnings from GE and SunTrust Banks.

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About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

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