Weekly Update

August 12, 2013

The Markets:
Stocks, as measured by the Dow Jones Industrials and the S&P 500 Index, haven’t had a down week since the middle of June (MarketWatch data), so it shouldn’t be all that surprising that shares finally ran out of gas last week. Volume was light (Investor’s Business Daily), and the traditionally slow days of August seemed to provide a good reason for some to book short-term profits.

As expected, Fed officials continued their PR blitz, with most signaling the central bank is prepared to begin dialing back on quantitative easing (QE), the popular term used to describe the $85 billion in monthly bond buys by the Fed (Market News Intl, Wall Street Journal, CNBC interviews). Not surprisingly, none would commit to a specific date.

A couple of key economic gauges compiled by the Institute for Supply Management (ISM) – the ISM Manufacturing Index and the ISM Non-Manufacturing (services) Index – suggested the economy may be firming as we enter the second half of the year, but we’ve seen this happen before with no follow through.

As reflected by the chart below, the recession significantly worsened in the second half of 2008, bottomed in the middle of 2009, and then embarked on a slow and rocky road to recovery.  No doubt about it, the economy has been stuck in what might be called a “2nd gear economic recovery” and yet stock indices have continued to rise this year. We have had moments when it seemed we might shift into 3rd gear, but each time – the start of 2011, 2012, and 2013 – the momentum faded.  More robust business and consumer spending (outside of autos) would go a long way in helping the economy enter a more sustained, balanced, and healthier phase.  We are not yet convinced at this point that this economy is set to really move into “3rd gear” moving forward.  We will keep you posted.


Each month the ISM polls a nationwide group of purchasing managers based on their industry’s contribution to gross domestic product (GDP). The survey examines a number of key measures, including new orders, production, pricing, employment, new export orders, order backlogs, and customer inventories. Taken together many of these subcomponents could be viewed as leading indicators.

We wish you a great week ahead and hope you all have a good finish to the summer of 2013 as it winds down to a close.  As always, if you have any questions or if we can be of further service in any way, please don’t hesitate to call at any time.

God Bless,
Your TEAM at F.I.G. Financial Advisory Services, Inc.

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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly.  Past performance does not guarantee future results.
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