Kevin Kroskey's Market Commentary

December Monthly Market Commentary

2012-01-09T16:45:00.002-05:00

THE MONTH IN BRIEF
The Dow advanced 1.43% and the S&P 500 rose 0.85% in December, but there was no major “Santa Claus” rally at the end of 2011. As a result, the Dow wound up +5.53% for the year while the S&P 500 posted a 2011 loss of 0.003% (exlcuding reinvested dividends). While the year was hardly spectacular for U.S. stocks, our benchmarks outshone many others. Last month we glimpsed more hints that the real estate market could be inching toward some kind of recovery. Shoppers spent freely for the holidays while legislators managed to extend the payroll tax holiday. It was a bad month for many commodities but a good month for the dollar.¹

DOMESTIC ECONOMIC HEALTH
Three developments stand out from December: the improvement in retail sales during the holiday season, the significant drop in the unemployment rate and the approval of a two-month extension of the payroll tax cut.

While we learned that consumer spending had increased just 0.1% in November, the numbers out of the malls and power centers in December were encouraging. According to the International Council of Shopping Centers index, same-store sales during the holiday season were up 4.5% over 2010. Gauging online retail sales from the start of November through Christmas Day, market research firm ComScore Inc. estimated e-commerce purchases rose by 15% year-over-year. Consumer confidence also improved. Last month’s poll from the Conference Board reached its highest level since April (64.5) and the University of Michigan’s final December survey showed its index at 69.9, the best reading since June.^2,3,4

Early in the month, the Labor Department said the jobless rate had dropped 0.4% in November to 8.6%, with unemployment down 1.5% since a high point in October, 2009. Underemployment stood at 15.6 in November. Non-farm payrolls marked their fourteenth consecutive month of expansion.⁵

The U.S. service and manufacturing sectors were growing, by the estimate of the Institute for Supply Management’s latest PMIs. ISM’s service sector index came in at 52.0 for November, down 0.9 from October; its December manufacturing index rose 1.2 points to 53.9. Durable goods orders were up 3.8% in November (+0.3% with the transportation category factored out).^2,6,7

Inflation showed signs of easing. Consumer prices, as measured by the Bureau of Labor Statistics, were flat in November. Annualized consumer inflation was at 3.4%, declining for the second straight month. Wholesale inflation rose 0.3% in November with the year-over-year gain in the Producer Price Index reaching 5.7%.^8,9

After another notable partisan fight, Congress passed an extension of the payroll tax holiday through the end of February, meaning Social Security taxes would stand at 4.2% for at least another two months. Long-term unemployment benefits were also extended through February 29 as a result of the legislation, and Medicare payments to physicians were allowed to remain at current levels through that date.¹⁰

GLOBAL ECONOMIC HEALTH
Last month, 25 of 27 economists responding to a BBC survey predicted a mild recession across Europe. German Chancellor Angela Merkel stated that 2012 “will no doubt be more difficult than 2011” for her country, while new Italian president Giorgio Napolitano called for sacrifices by taxpayers to ward off the threat of “financial collapse”. In another BBC poll, a majority of economists polled stated that the chances of a future Eurozone breakup were 30-40%.^11,12,13

As doomy as these pronouncements sound, there were positive signals in world manufacturing at the end of 2011. While the December Markit Economics PMI showed sector contraction in Germany, France and Italy, the overall index rose half a point to 46.9. Manufacturing indexes in the United Kingdom, China, Australia, Singapore and Switzerland all improved last month. In another unexpected good sign, German unemployment dropped to 6.8%.¹⁴

WORLD MARKETS
Some of the world’s benchmark indices managed advances last month; some did not. The gains to note (these figures are from Morningstar and in U.S. dollar terms): Hang Seng, +2.67%; FTSE 100, +1.21%; Nikkei 225, +0.25%; CAC 40, +0.16%. The losses were deeper: All Ordinaries, -1.06%; TSX Composite, -2.04%; DAX, -3.13%; Sensex, -4.15%; Shanghai Composite, -5.74%. The MSCI World and MSCI Emerging Markets indices had another down month: the World fell 0.17% and the Emerging Markets slipped 1.29%. Among the above indices, the FTSE 100 (-5.55%) and MSCI World (-7.61%) held up best in 2011. At the back of the pack, we find the Shanghai Composite (-21.68%) and the Sensex (-24.64%).^15,16

COMMODITIES MARKETS
Was gold overvalued? That perception may have strongly influenced its December performance; it dropped 10.48% for the month. Oil fared better but still retreated, losing 1.52% in December. Still, they both had annual gains: gold went +10.23% for 2011 (settling at $1,566.80 on December 30) and oil went +8.15% for the year (ending 2011 at $98.83 a barrel). Silver and copper respectively lost 14.90% and 3.90% in December. They had poor years: copper lost 22.73% for 2011, silver lost 9.77%. Natural gas went -15.80% on the month and lost 32.15% for 2011. Key crop futures did well in December: wheat went +6.31%, corn +6.32% and cotton +0.85%. Still, wheat (-17.82%) and cotton (-36.69%) took dives on the year. The U.S. Dollar Index was up for the second straight month (+2.59%) to finish +1.56% for 2011.¹⁷

REAL ESTATE
For once, the news across this sector was mostly good. (When was the last time that happened?) The Census Bureau said that new home sales were up 1.6% in November to the best sales pace since April. The National Association of Realtors noted a 4.4% rise in existing home sales in November, matching a pace unseen since January. Pending home sales reached a 19-month peak in November as well. Housing starts also increased by 9.3% in November. The October edition of the S&P/Case-Shiller Home Price Index, released in late December, slipped 1.2% from its September level.^18,19,20

Freddie Mac’s December 29 Primary Mortgage Market Survey showed average interest rates on 30-year FRMs at 3.95%, average rates on 15-year FRMs at 3.24% and average rates on 5/1-year ARMs at 2.88%; these were all slightly below rates in the December 1 PMMS. Rates on 1-year ARMs averaged 2.78% in both surveys.²¹

LOOKING BACK…LOOKING FORWARD
The Dow wound up in the black for 2011 largely due to a record-setting fourth quarter, seeing the biggest quarterly point ascent in DJIA history. The Dow gained 11.95% in the quarter, and that was actually topped by the Russell 2000, which went +15.02% for 4Q 2011 yet finished at -5.45% for the year.¹

% CHANGE	2011	1-MO CHG	1-YR CHG	10-YR AVG
DJIA	+5.53	+1.43	+5.53	+2.19
NASDAQ	-1.80	-0.58	-1.80	+3.36
S&P 500	-0.003	+0.85	-0.003	+0.95
REAL YIELD	12/30 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	-0.07%	1.08%	2.41%	3.50%

Sources: cnbc.com, bigcharts.com, treasury.gov - 12/30/11^1,22,23,24

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

January opened with a triple-digit climb for the Dow, a good sign if you believe in the old “January effect” theory. S&P Cap IQ chief strategist Sam Stovall recapped the premise for CNBC: “An up first week in the market usually signals an up January and as goes January, so goes the year. Since 1945, whenever the market has been up in January it has been up for the entire year 88% of the time.” Of course, past performance is no basis for future results: the S&P 500 advanced 2.26% for January 2011 and finished flat for the year. If our economy continues to improve, perhaps it will provide sufficient distraction from the debt crisis in the EU and the potential for recession in European and Asian economies to promote gains for U.S. stocks.^25,26

UPCOMING ECONOMIC RELEASES: For the balance of January, the economic news items look like this: November factory orders and December auto sales (1/4), the December ISM service sector index (1/5), the December unemployment report (1/6), a new Fed Beige Book (1/11), the December retail sales numbers from the Census Bureau (1/12), January’s initial University of Michigan consumer sentiment survey (1/13), December’s PPI and industrial output (1/18), the December CPI plus December housing starts and building permits (1/19), December existing home sales (1/20), December’s pending home sales report from the NAR and a Fed interest rate decision (1/25), December new home sales and durable goods orders plus the Conference Board’s December Leading Economic Indicators index (1/26), the final University of Michigan January consumer sentiment survey and the BEA’s first take on 4Q GDP (1/27), the Commerce Department’s report on December consumer spending (1/30), and finally the November Case-Shiller home price index and the Conference Board’s January consumer confidence poll (1/31).

To Your Prosperity,

Kevin Kroskey

Citations.

This commentary written by Peter Montoya Inc.

1 - www.cnbc.com/id/45824871 [12/30/11]
2 - www.reuters.com/article/2011/12/23/us-usa-economy-idUSTRE7BM0AB20111223 [12/23/11]
3 - latimesblogs.latimes.com/money_co/2011/12/holiday-shopping-lift-christmas.html [12/28/11]
4 - www.csnews.com/top-story-confidence_surges_on_better_employment_outlook-60179.html [12/28/11]
5 - online.wsj.com/article/SB10001424052970204464404577112680918832116.html [1/3/12]
6 - www.ism.ws/ISMReport/NonMfgROB.cfm [12/5/11]
7 - www.ism.ws/ISMReport/MfgROB.cfm [12/1/11]
8 - www.reuters.com/article/2011/12/16/us-economy-idUSTRE7BE12S20111216 [12/16/11]
9 - www.businessweek.com/ap/financialnews/D9RL8CRG0.htm [12/15/11]
10 - money.cnn.com/2011/12/23/news/economy/payroll_tax_cut_deal/ [12/23/11]
11 - news.bbc.co.uk/today/hi/today/newsid_9669000/9669315.stm [12/30/11]
12 - www.bbc.co.uk/news/world-europe-16377010 [1/1/12]
13 - www.bbc.co.uk/news/business-16382874 [1/2/12]
14 - www.bloomberg.com/news/2012-01-03/global-manufacturing-displays-resilience-to-europe-s-debt-crisis-economy.html [1/3/11]
15 - news.morningstar.com/index/indexreturn.html [12/30/11]
16 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [12/30/11]
17 - money.msn.com/market-news/post.aspx?post=7a929e98-4d99-44cb-98c9-a0ef1c3151c4 [12/30/11]
18 - www.businessweek.com/news/2011-12-23/sales-of-u-s-new-homes-in-november-rise-to-315-000-rate.html [12/23/11]
19 - www.reuters.com/article/2011/12/27/us-economy-idUSTRE7BE12S20111227 [12/27/11]
20 - www.realtor.org/press_room/news_releases/2011/12/phs_nov [12/29/11]
21 - www.freddiemac.com/pmms/ [1/3/12]
22 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F31%2F01&x=0&y=0 [12/30/11]
22 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F31%2F01&x=0&y=0 [12/30/11]
22 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F31%2F01&x=0&y=0 [12/30/11]
23 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/30/11]
23 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/30/11]
24 - www.treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]
25 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [11/2/11]
26 - cnbc.com/id/45848630/ [1/2/12]
27 - blogs.wsj.com/marketbeat/2011/01/31/data-points-us-markets-342/ [1/31/11]=

November Monthly Market Commentary

2011-12-05T14:15:00.001-05:00

THE MONTH IN BRIEF
An astonishing rally during the last three days of November did much to improve what had been an anxious month for investors. The Dow ended up gaining 0.76% in November after jumping 4.24% on November 30 alone, responding largely to coordinated action by the world’s central banks to improve liquidity in the European Union. We got hints that the real estate market might be finding a legitimate bottom, some fine numbers from Black Friday and Cyber Monday, and pleasant surprises from some other key economic indicators. Our stock market struggled to pull off gains in the face of debt worries, both in Europe and at home.¹

DOMESTIC ECONOMIC HEALTH
November 2011 might be remembered most for a political and economic lowlight. On November 21, the Congressional “super committee” of 12 assigned to come up with a plan to reduce the federal deficit simply quit. This paved the way for involuntary cuts of $1.2 trillion in 2013. That prompted a stock market plunge and a Fitch Ratings decision, with the agency changing its U.S. outlook to “negative”.^2,3

In better news, consumers spent $52.4 billion during the four-day Thanksgiving Day weekend. The National Retail Federation said average shopper shelled out $398.62 in those four days, a new record. Cyber Monday sales rose 22% over 2010 levels to $1.25 billion. The Commerce Department noted that personal spending rose only 0.1% in October; however, personal wages did increase by 0.4%. The federal government’s Consumer Price Index also budged north by 0.1% in October with annualized inflation coming in at 3.5%.^4,5,6

There was a rebound in consumer confidence. November’s Conference Board poll saw a 15-point spike to 56.0. The month’s final University of Michigan index of consumer sentiment came in at 64.1, much better than the final 55.7 for October; it was the third straight monthly gain for the index.^4,7

Now, over to industry. The Institute for Supply Management’s November manufacturing PMI bucked a global trend and advanced 1.9% to 52.7, marking the sector’s 28th straight month of expansion. ISM’s most recent service sector PMI (October) came in at 52.9, down from 53.0 the preceding month. Producer prices fell 0.3% in October and total durable goods orders slipped 0.7% in September (they went +0.7% when transportation orders were factored out).^8,9,10,11

The jobless rate stunningly dropped to 8.6% in November; it had been 9.0% in October and 9.1% in September. Some of this reduction in unemployment was attributable to people dropping out of the job hunt, but the private sector did add 140,000 positions last month. The underemployment rate fell 0.6% to 15.6%.¹²

GLOBAL ECONOMIC HEALTH
Political change did not stop key Italian bond yields from approaching 7% during November. On November 23, 35% of the 10-year notes offered at Germany’s federal bond auction went unsold. After these alarming developments, the Federal Reserve and other key central banks united on November 30 to foster cheaper dollar loans for European lenders, a move that global markets cheered in relief.^1,13,14,15

Economically, the world is sometimes a small village. Was the trouble in Europe now indirectly affecting China? Its PMI fell to 48 in October from 51, the largest monthly slip since March 2009; below 50 is the contraction zone. Output also contracted in Taiwan and South Korea in October. Key PMIs for the Eurozone and Great Britain also fell below 50 in that month of data.^14,16

WORLD MARKETS
Most world benchmarks seem headed for double-digit 2011 losses; fortunately, our benchmarks have done better. How did things go globally in November? Poorly, for the most part. In USD terms, here are the monthly numbers according to Morningstar on November 30: FTSE 100, -0.70%; DAX, -0.85%; CAC 40, -2.72%; All Ordinaries, -4.03%; Shanghai Composite, -5.46%; Nikkei 225, -6.16%; TSX Composite, -6.29%; Hang Seng, -9.63%; Sensex, -10.09%. The oft-watched MSCI World (-2.69%) and MSCI Emerging Markets (-6.75%) indices both slipped for the month.^17,18

COMMODITIES MARKETS
Gold futures advanced 1.45% last month while copper lost 1.56% and silver lost 4.51%. Through the end of November, gold was +23.14% YTD on the COMEX. The U.S. Dollar Index gained 2.86% in November; at 78.49, it was still -1.01% YTD. Oil ended November at $100.36 a barrel after going +7.69% for the month. Natural gas went -9.76% in November. Retail gas prices (regular unleaded) fell 4.30% last month to $3.30 a gallon at month’s end. Coffee gained 2.82% for November, but other key crop futures descended: cotton lost 11.13%, corn lost 6.03% and wheat lost 2.27%.¹⁵

REAL ESTATE
Unexpectedly, the National Association of Realtors found that existing home sales increased 1.4% in October. Inventory shrank 2.2% to an 8.0-month backlog; the median sale price was $162,500, down 4.7% from a year before. The NAR also measured pending home sales surging by 10.4% in October. The S&P/Case-Shiller Home Price Index showed an overall 0.6% decline in September; after a 3Q overall gain of 0.1%, the index showed home prices at roughly 1Q 2003 levels. New home sales increased by 1.3% in October with the annualized gain at 8.9%.^15,19,20,21

Interest rates on conventional mortgages didn’t move much. Freddie Mac noted the following change (or lack thereof) in its November 3 and December 1 Primary Mortgage Market Surveys: the average rate on the 30-year FRM stayed flat at 4.00%, and the average rate on the 15-year FRM ticked down 0.01% to 3.30%. Rates on 5/1-year ARMs moved down from 2.96% to 2.90%; rates on 1-year ARMs fell to 2.78% from 2.88%.²²

LOOKING BACK…LOOKING FORWARD
The month ended well. November 28-30 represented the S&P 500’s best three days since November 23-25, 2008. At the close on November 30, the Dow was back above 12,000, the S&P back above 1,200 and the NASDAQ back above 2,600.¹⁵

December is historically a fine month for stocks, of course. With the continuing EU debt troubles, will a “Santa Claus” rally will occur as we get toward New Year’s Day? It does seem as though there is more optimism at the moment, or at least greater distraction on Wall Street from the crisis in Europe and the apparent slowdown in China. Perhaps stateside indicators will encourage the bulls to run and make 2011 a bit better statistically for investors. As CNBC notes, the Dow has gone positive in 71% of Decembers in its long history, posting an average gain of 1.40%. December has also been the best month of the year for the S&P 500 since 1950.^29,30

UPCOMING ECONOMIC RELEASES: Here are the news items arriving between now and the end of the year: the November ISM service sector index and the report on October factory orders (12/5), the initial University of Michigan December consumer sentiment survey (12/9), the report on November retail sales and a Federal Reserve policy announcement (12/13), the November PPI and November industrial output (12/15), the November CPI (12/16), data on November housing starts and building permits (12/20), November existing home sales (12/21), the BEA’s final estimate of 3Q GDP, the final University of Michigan December consumer sentiment survey and the Conference Board’s November Leading Economic Indicators index (12/22), November consumer spending, new home sales and durable goods orders (12/23), the October Case-Shiller home price index and the Conference Board’s December consumer confidence poll (12/27), and the November pending home sales report (12/29). The December unemployment report will be out on January 6.

MONTHLY QUOTE
“If you command wisely, you’ll be obeyed cheerfully.”

– Thomas Fuller

To Your Prosperity,

Kevin Kroskey

Citations

1 - www.reuters.com/article/2011/11/30/markets-stocks-close-idUSWEN125420111130 [11/30/11]
2 - abcnews.go.com/Business/gdp-grew-25-percent-boosted-consumer-spending-double/story?id=14821833 [10/27/11]
3 - abcnews.go.com/blogs/business/2011/11/fitch-cuts-u-s-outlook-from-stable-to-negative/ [11/28/11]
4 - www.kansascity.com/2011/11/29/3291899/americans-in-november-more-confident.html [11/29/11]
5 - www.reuters.com/article/2011/11/23/us-usa-economy-consumer-idUSTRE7AM17320111123 [11/23/11]
6 - www.businessweek.com/ap/financialnews/D9R1SFE00.htm [11/16/11]
7 - latimesblogs.latimes.com/money_co/2011/11/report-consumer-confidence-is-up-.html [11/23/11]
8 - www.ism.ws/ISMReport/MfgROB.cfm [12/1/11]
9 - www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943 [11/3/11]
10 - www.bls.gov/news.release/ppi.nr0.htm [11/15/11]
11 - community.nasdaq.com/News/2011-11/us-durablegoods-order-fell-07-in-october.aspx?storyid=104419 [11/23/11]
12 - www.reuters.com/article/2011/12/02/us-usa-economy-idUSTRE7AL14I20111202 [12/2/11]
13 - www.reuters.com/article/2011/11/29/italy-bonds-auction-idUSL5E7MS3S820111129 [11/29/11]
14 - www.fxstreet.com/fundamental/analysis-reports/the-energy-report/2011/11/24/ [11/24/11]
15 - money.msn.com/market-news/post.aspx?post=fd688bc8-f250-4f5f-b360-b0324cd7581c [11/30/11]
16 - www.ft.com/cms/s/0/88f51a98-1c3e-11e1-af09-00144feabdc0.html#axzz1fKupP0aW [12/1/11]
17 - news.morningstar.com/index/indexreturn.html [11/30/11]
18 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [11/30/11]
19 - realtors.org/press_room/news_releases/2011/11/ehs_oct [11/21/11]
20 - www.census.gov/const/newressales.pdf [11/28/11]
21 - www.marketwatch.com/story/us-home-prices-drop-06-in-september-2011-11-29 [11/29/11]
22 - www.freddiemac.com/pmms/ [12/2/11]
23 - money.cnn.com/data/markets/dow/ [11/30/11]
24 - money.cnn.com/data/markets/sandp/ [11/30/11]
25 - money.cnn.com/data/markets/nasdaq/ [11/30/11]
26 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F30%2F01&x=0&y=0 [12/2/11]
27 - www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/2/11]
28 - www.treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]
29 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [11/2/11]
30 - www.cnbc.com/id/45481657 [11/30/11]
This news release was prepared by Peter Montoya.

October Monthly Market Commentary

2011-11-06T03:02:00.005-05:00

THE MONTH IN BRIEF
In October 2011, stocks had their best month in nearly 20 years. The S&P 500 climbed 10.77% as optimism returned; investors were relieved that Eurozone nations were progressing toward a solution to avert a Greek default. However, the month ended with a political curveball that threatened to sabotage the whole effort. At home, consumer confidence and mortgage rates were at generational lows while consumer spending, auto sales and new home sales held up. Occupy Wall Street gained the world’s attention, as the hazily defined movement may have inspired its first tangible financial change.¹

DOMESTIC ECONOMIC HEALTH
In the month of October, the most reassuring stateside economic indicator was a quarterly one. The initial estimate of 3Q GDP was a 2.5% rise: precisely what economists were forecasting and exactly what was needed to at least temporarily silence arguments that we were on the cusp of a double-dip recession.²

Consumers had become pessimists, but they were still spending enough money to move the economy along. They weren’t happy: the month’s final University of Michigan consumer sentiment survey came in at 60.9, better than the preceding month’s 59.4 but still very low. The Conference Board’s October poll fell to an abysmal 39.8. Yet personal spending had improved by 0.6% in September, even as incomes only rose 0.1% in that month.^3,4

At both the mall and the factory, there were still signs of vitality. The latest purchasing manager indexes from the Institute for Supply Management showed mild sector expansion: 50.8 in October for the manufacturing index, 53.0 in September for the service sector index. Retail sales zoomed north 1.1% in September, according to the Commerce Department. U.S. auto sales posted a 7.5% monthly gain in October. Overall durable goods orders retreated 0.8% in September, yet there was a 1.7% gain in hard good orders ex-transportation.^5,6,7,8,9

Moderate inflation was also alive and well; the federal government’s Consumer Price Index showed annualized inflation reaching 3.9% in September; annualized core CPI was unchanged from the August reading of 2.0%. The CPI posted a 0.3% monthly gain for September while the Producer Price Index went up 0.8% after a flat August.¹⁰

The jobless rate didn’t move for the third straight month; in September, it remained at 9.1%. On Capitol Hill, President Obama’s American Jobs Act stalled in the Senate and there were indications that the “super committee” of 12 legislators assigned to craft a deficit reduction plan wasn’t making much progress. President Obama used an executive order to speed up implementation of rules intended to ease the debt burden from college loans, and another to broaden the qualifying criteria for HARP, the federal government’s underutilized mortgage relief program. The Occupy Wall Street protest spread to other cities; while some of the protesters seemed naïve and poorly informed about the relationship of Main Street to Wall Street, they may have hit one of their targets. Late last month, Bank of America announced it was dropping its proposed $5 monthly fee on debit card use; other lenders considering debit card usage fees publicly reconsidered them.^11,12

GLOBAL ECONOMIC HEALTH
Things were looking so much better in Europe, until one politician made a truly scary announcement on Halloween. Greek prime minister George Paparandou stunned the European Union with his intent to make the latest austerity cuts for Greece contingent on a public vote. On November 2, German Chancellor Angela Merkel and French President Nicolas Sarkozy gave Paparandou an ultimatum: no more money from the EU or the IMF unless Greek voters approve the cuts. One day later, Paparandou scuttled the referendum and faces a potentially grim political future. In late October, key bankers and insurers within the Eurozone agreed to a 50% writedown on their Greek debt holdings; additionally, European finance ministers unveiled a plan to boost bank capital ratios to 9% or better by June and increase the size of the Eurozone bailout fund fourfold.^13,14,15,35

So what was going on in Asian economies? Some inflation readings were lower than analysts expected: 4.4% for Indonesia; 4.2% for Thailand; 3.9% for South Korea. India’s PMI improved 1.6% in October to 52.0 and its exports surged 36% in the month. On the downside, Taiwan’s latest GDP reading was lower than anticipated, and so was China’s official PMI, which approached a three-year low last month.¹⁶

WORLD MARKETS
Looking at Morningstar’s figures for global indexes (calculated in USD terms), we see some impressive one-month rebounds from September. England’s FTSE 100 went +8.11% and the French CAC 40 +8.75%, but that paled in comparison to the German DAX at +11.62% and Hong Kong’s Hang Seng at +12.50%. Other nice performances: India’s Sensex, +7.60%; Australia’s All Ordinaries, +7.13%; the TSX Composite of Canada, +5.40%; the Shanghai Composite of China, +4.62%; Japan’s Nikkei 225, +3.31%. The MSCI World Index rose 10.26% last month while the MSCI Emerging Market Index gained 13.08%.^17,18

COMMODITIES MARKETS
Metals rebounded in October, as follows: gold, +6.3%; silver, +14.2%; copper, +15.0%; platinum, +5.5%; palladium, +6.0%. Gold ended up +21.3% YTD when October concluded. Oil rose $13.99 on the month, settling at $93.19 a barrel on Halloween. The real yield of the 10-year note (already down to 0.17% on September 30) diminished to 0.08% by October 31. The U.S. Dollar Index retreated 3.03% last month.^{19,20,21,22,23}

REAL ESTATE
There was some good news: the Census Bureau reported housing starts up by a whopping 15.0% for September, and it said new home sales improved by 5.7% in that month. The August edition of the S&P/Case-Shiller Home Price Index posted an overall advance for the third month in a row (0.2%), with prices rising in 10 of 20 metro areas and the year-over-year price decline shrinking to just 3.8%.^24,25,26

On the downside, the National Association of Realtors said existing home sales fell 3.0% for September, leaving sales on pace for a 2012 total of 4.91 million; this was be precisely the same amount of residential resales as 2010, that year being the worst on record for the category since 1997. NAR also said that pending home sales slipped 4.6% in September (economists polled by Bloomberg had forecast a 0.4% gain).^27,28

Mortgage rates went up in October. Freddie Mac’s October 27 Primary Mortgage Market Survey showed the average rate on the 30-year FRM at 4.10%, up from the bedrock-low 4.01% on September 29. Other average interest rates moved as follows during that interval: 5/1-year ARMs, from 3.02% to 3.08%; 1-year ARMs, from 2.83% to 2.90%; 15-year FRMs, from 3.28% to 3.38%.²⁹

LOOKING BACK…LOOKING FORWARD
This sterling market month started and ended with sour notes: the Dow’s worst trading days of October were October 1 and Halloween. Those notes aside, October was positively amazing for the blue chips. In percentage terms, the DJIA had its finest month since October 2002 (and that was with a 2.26% fall on Halloween). All 30 components advanced; the last month in which that happened was September 2010. Also worth noting: the NASDAQ had its best month since September 2010. Here was the tale of the tape at the end of October.¹

This is the time of year many investors look forward to; November often marks the start of the traditional fall-winter “sweet spot” for the market. According to the Stock Trader’s Almanac, the S&P 500 has advanced in 57% of Novembers since 1928, with an average gain of 0.78%. Not only that, November has been the second-best month of the year for the S&P 500 since 1950. However, the yet-unresolved situation in Europe is hanging over the market like a cloud; Europe is the market mover now and for the near future. The current Greek government may or may not survive a seemingly inevitable confidence vote; Greek PM George Papandreou’s recent backtrack on a bailout referendum only adds to the uncertainty. So November proceeds with a caution flag for investors; in the best-case scenario, EU pressure on the Papandreou government and a calming of internal Greek political strife lowers that flag.^{34, 35}

UPCOMING ECONOMIC RELEASES
The rest of November offers the following news items: the October ISM service sector index (11/3), the October unemployment report (11/4), September’s wholesale inventories (11/9), the initial University of Michigan November consumer sentiment survey (11/11), the October PPI, October retail sales and September business inventories (11/15), October’s CPI and industrial output (11/16), October housing starts and building permits (11/17), the Conference Board’s October Leading Economic Indicators index (11/18), October existing home sales (11/21), the latest FOMC minutes and the BEA’s second estimate of 3Q growth (11/22), the October consumer spending and durable goods orders reports and the final University of Michigan October consumer sentiment survey (11/23), October new home sales (11/28), the September Case-Shiller home price index and the Conference Board’s November consumer confidence snapshot (11/29), and finally the October pending home sales report and a new Beige Book from the Federal Reserve (11/30).

MONTHLY QUOTE
“The family you come from isn’t as important as the family you’re going to have.”

– Ring Lardner

To Your Prosperity,

Kevin Kroskey

Citations.

1 - blogs.wsj.com/marketbeat/2011/10/31/data-points-u-s-markets-60/ [10/31/11]

2 - abcnews.go.com/Business/gdp-grew-25-percent-boosted-consumer-spending-double/story?id=14821833 [10/27/11]

3 – www.foxbusiness.com/markets/2011/10/28/consumer-spending-rises-weak-incomes-worry/ [10/28/11]

4 - www.npr.org/blogs/thetwo-way/2011/10/25/141683694/consumer-confidence-back-down-to-recession-level [10/25/11]

5 - www.ism.ws/ISMReport/MfgROB.cfm [11/1/11]

6 – www.ism.ws/ISMReport/NonMfgROB.cfm [10/5/11]

7 - www.latimes.com/business/la-fi-economy-retail-20111014,0,1716584.story?track=rss [10/14/11]

8 - online.wsj.com/article/SB10001424052970204528204577011691060440660.html [11/1/11]

9 - www.forbes.com/2011/10/26/durable-goods-order-rise-extransportation-mortgage-apps-rise-marketnewsvideo.html [10/26/11]

10 - www.nytimes.com/2011/10/20/business/economy/us-consumer-inflation-subdued-housing-starts-up.html [10/19/11]

11 – www.marketwatch.com/story/september-data-show-improvement-in-jobs-market-2011-10-07 [10/7/11]

12 - bottomline.msnbc.msn.com/_news/2011/11/01/8583136-after-debit-card-battle-beware-of-more-bank-fees [11/1/11]

13 - www.reuters.com/article/2011/10/31/us-greece-referendum-analysts-idUSTRE79U7GO20111031 [10/31/11]

14 - www.marketwatch.com/story/greek-bondholders-to-take-50-haircut-2011-10-26 [10/27/11]

15 - www.guardian.co.uk/world/2011/nov/02/greece-ultimatum-austerity-forego-eu?intcmp=239 [11/2/11]

17 - news.morningstar.com/index/indexreturn.html [11/1/11]

18 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [10/31/11]

19 - www.bullionpricestoday.com/bullion-prices-rally-in-october-2011/ [10/31/11]

20 - www.marketwatch.com/gold-futures-drop-as-us-dollar-surges-2011-10-31 [10/31/11]

21 - online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [11/2/11]

22 - blogs.wsj.com/marketbeat/2011/10/31/data-points-energy-metals-528/ [10/31/11]

23 – www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldYear&year=2011 [11/1/11]

24 – www.thestreet.com/story/11283665/1/raise-the-roof-housing-starts-up-15-in-september.html [10/20/11]

25 - marketwatch.com/story/new-us-home-sales-rise-as-prices-tumble-2011-10-26 [10/26/11]

26 - articles.latimes.com/2011/oct/25/business/la-fi-home-prices-20111026 [10/25/11]

27 - ajc.com/business/sales-of-previously-occupied-1206303.html [10/20/11]

28 - bloomberg.com/news/2011-10-27/pending-sales-of-u-s-existing-homes-unexpectedly-falls-4-6-on-demand-ebb.html [10/27/11]

29 - freddiemac.com/pmms/ [11/2/11]

30 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F1%2F10&x=0&y=0 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F1F2%2F10&x=10&y=18 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F1%2F10&x=0&y=0 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F31%2F01&x=0&y=0 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F31%2F01&x=0&y=0 [11/2/11]

31 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F31%2F01&x=0&y=0 [11/2/11]

32 - www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/2/11]

33 - www.treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]

34 - www.cnbc.com/id/45082000 [11/2/11]

35 - www.nytimes.com/2011/11/04/world/europe/greek-leaders-split-on-euro-referendum.html [11/3/11]

August Monthly Market Commentary

2011-09-08T20:22:00.002-04:00

THE MONTH IN BRIEF
In August, Wall Street waited for a debt deal, reeled from Standard & Poor’s downgrade of the U.S. credit rating, contended with mounting anxieties over mediocre domestic indicators and troubles in Europe, felt an earthquake and braced itself against an oncoming hurricane. No wonder the S&P 500 slipped 5.68% during the month – a month that most investors would rather forget.¹

DOMESTIC ECONOMIC HEALTH
Congress finally passed a bill lifting the nation’s debt ceiling, meeting the August 2 deadline set by the Treasury Department. However, Standard and Poor’s dropped the hammer on August 5, cutting America’s credit rating from AAA to AA+. Moody’s and Fitch Ratings did not follow suit.²

Consumer confidence really plummeted: the University of Michigan’s final August poll presented a 55.7 mark, way down from 63.7 to end July. The Conference Board’s consumer confidence index dived nearly 15 points last month, coming in at 44.5. Unemployment stayed at 9.1% in August, and for the first time since September 2010, the economy added no new jobs.^3,4,5

There was some good news: consumers were still spending, and not just on the basics. The Commerce Department said that consumer spending soared 0.8% in July, and 0.5% in inflation-adjusted terms (the best such advance in 20 months). Overall retail sales were up 0.5%, with August increases in clothing store sales (0.5%), electronics and appliance sales (1.4%), online retail purchases (0.9%), auto and auto parts sales (0.4%) and furniture sales (0.5%). In another encouraging sign, durable goods orders soared by 4.0% in June; economists polled by Bloomberg News had forecast a 2.0% gain.^6,7,8

The Consumer Price Index rose 0.5% in July with core CPI up 0.2%. The Federal Reserve’s PCE gauge rose 0.4%; the Labor Department’s Producer Price Index rose 0.2%, with core PPI rising 0.4%.^9,10

As for the Institute for Supply Management’s key manufacturing and service sector indices … the August manufacturing index looked shaky, descending to 50.6 (indicating just a small expansion) … and in early August, the July service sector PMI came in at 52.7. Yet the Commerce Department said that factory orders rose 2.4% in July thanks to both a boost in aircraft orders and the biggest one-month demand for autos in eight years.^11,12,13

GLOBAL ECONOMIC HEALTH
At mid-month, German chancellor Angela Merkel and French president Nicolas Sarkozy appeared together to reaffirm the European Union’s support for the euro and to announce three new responses to the EU debt crisis: a new EU economic forum/leadership panel that would meet every six months, a tax on financial transactions, and (shades of the Tea Party) a proposal for all EU countries to adopt constitutional balanced budget amendments. To Wall Street, this was little better than rhetoric. There was no decision to bolster the €440 billion euro stability fund or to create a “Eurobond”, a move that many analysts feel could help to stabilize bond yields across the EU’s 17 nations and aid its most indebted countries.^14,15

In the Asia-Pacific region, factories seemed to be slowing down their pace of production. The much-watched official PMI of China did show some growth, rising 0.2% to return to the 50.9 level it had been at in June. Purchasing manufacturers indexes in Taiwan and South Korea flashed contraction. Consumer price indexes in Thailand and South Korea also climbed more than analysts had forecast, with inflation in South Korea surpassing the government’s target for the eighth month in a row. Industrial output fell far short of forecasts in Japan – economists had expected a 1.5% improvement in August, but there was only a 0.6% gain. On the bright side, analysts surveyed by Reuters felt that Japan’s economy would expand by 1.2% in 3Q 2011, outpacing all other major industrialized economies.^16,17

WORLD MARKETS
While Wall Street had a trying month, other benchmarks had it worse, as these Morningstar numbers for August indicate: Canada’s TSX Composite, -2.40%; Australia’s All Ordinaries, -2.90%; China’s Shanghai Composite, -4.97%; England’s FTSE 100, -7.23%; India’s Sensex, -8.36%; Japan’s Nikkei 225, -8.93%; Hong Kong’s Hang Seng, -9.16%. The truly severe losses came in Europe: France’s CAC 40 plunged 11.29% on the month and Germany’s DAX dove 19.19%. Some of the YTD numbers were also pretty remarkable on August 31: the Sensex and DAX were respectively - 18.69% and -20.08% YTD.¹⁸

The Dow was just about the only major stock index that was not in the red at the end of August. The MSCI World Index and MSCI Emerging Markets Index also took big hits during the month, respectively sinking 7.26% and 9.19%.¹⁹

COMMODITIES MARKETS
The flight to gold was dramatic in August. Gold futures gained $200.20 (12.3%) last month. The precious metal wrapped up August at $1,828.50 an ounce and +28.67% YTD. How did other metals do? Silver went +4.1% for August, platinum +4.0%, palladium -4.5% and copper -6.3%. Oil slid 7.2% in August, with futures settling at $88.81 per barrel on the NYMEX on August 31. The 19-commodity Reuters-Jefferies CRB Index posted a 0.33% loss on the month and the U.S. Dollar Index realized a 0.30% gain. The real yield of the 10-year note was just 0.18% on August 31 (and it was briefly negative earlier in the month).^{20,21,22,23,24}

REAL ESTATE
New home sales (-0.7%) and existing home sales (-3.5%) declined in July, along with housing starts (-1.5%) and building permits (-3.2%). Pending home sales diminished by 1.3% in July, according to the National Association of Realtors. One relative bright spot: June’s S&P/Case-Shiller Home Price Index revealed a 3.6% quarterly gain in home sale prices, although the YOY price retreat deepened to 5.9%.^6,25,26

Comparing Freddie Mac’s July 28 and September 1 Primary Mortgage Market Surveys, we see that mortgages became even cheaper last month. The average rate on the 30-year FRM fell 0.33% in this period to 4.22%, and rates on 15-year FRMs fell 0.27% to 3.39%. The average rate on the 5/1-year ARM shrank 0.29% to go to 2.96% and the average rate on the 1-year ARM went 0.06% lower to 2.89%.²⁷

LOOKING BACK…LOOKING FORWARD
August 2011 was the poorest August since 2001 for America’s three major stock indices. All three had their worst month since May.¹

After a wild and vexing August, we are now in September - traditionally a lousy month for stocks. Of course, Wall Street has not exactly behaved according to tradition these past few years. On the hopeful side, the latest consumer spending data indicates that America’s economic engine has not stalled – and the August unemployment figures were affected by the fact that 45,000 Verizon workers went on strike (i.e., were technically jobless) during the week in which the Labor Department compiled its data. Factor in the recent demand for durable goods, the nice numbers on discretionary spending and the descent in oil prices and the economy may be in better shape than the bears presume. Perhaps we will also see a better September for stocks than analysts expect.⁵

UPCOMING ECONOMIC RELEASES: Looking at the balance of September, here is what is on tap: the August ISM service sector PMI (9/5), the Federal Reserve’s newest Beige Book (9/7), a look at July wholesale inventories (9/9), the August PPI, August retail sales figures, and July business inventories (9/14), the August CPI and August industrial output (9/15), the initial University of Michigan September consumer sentiment survey (9/16), a much-anticipated Federal Reserve meeting (9/19-9/20), August housing starts and building permits (9/20), August existing home sales (9/21), the Conference Board’s August LEI index (9/22), August new home sales (9/26), the July Case-Shiller home price index and the Conference Board’s September consumer confidence poll (9/27), August durable goods orders (9/28), August pending home sales plus the final estimate of 2Q GDP (9/29), and August consumer spending and the final University of Michigan September consumer sentiment survey (9/30).

MONTHLY QUOTE
“If you want to go somewhere, it is best to find someone who has already been there.”
– Robert Kiyosaki

To Your Prosperity,

Kevin Kroskey

Citations.

1 - cnbc.com/id/44340676 [8/31/11]
2 - ncsha.org/blog/sp-downgrades-rating-us-long-term-debt-housing-feels-domino-effect#comment-form [8/11/11]
3 - businessweek.com/news/2011-08-26/u-s-michigan-consumer-sentiment-index-slumped-in-august.html [8/25/11]
4 - freep.com/article/20110831/BUSINESS07/108310413/Consumer-confidence-plummets-shoppers-keep-spending [8/31/11]
5 - latimes.com/business/la-fiw-jobs-20110903,0,2844276.story [9/2/11]
6 - online.wsj.com/article/SB10001424053111904332804576538164016048034.html [8/30/11]
7 - zacks.com/stock/news/58936/Reports+of+the+Consumer%27s+Death+Are+Greatly+Exaggerated [8/12/11]
8 - bloomberg.com/news/2011-08-24/orders-for-durable-goods-in-u-s-increase-4-twice-as-much-as-estimated.html [8/24/11]
9 - forbes.com/sites/afontevecchia/2011/08/18/cpi-jumps-stoking-fears-of-stagflation/ [8/18/11]
10 - blogs.wsj.com/economics/2011/08/17/vital-signs-producer-price-index/ [8/17/11]
11 - ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942 [9/1/11]
12 - ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943 [8/3/11]
13 - businessweek.com/ap/financialnews/D9PF4EQ01.htm [8/31/11]
14 - money.cnn.com/2011/08/19/news/international/european_union_debt_crisis/index.htm [8/19/11]
15 - reuters.com/article/2011/08/16/eurozone-francogerman-idUSLDE77F12B20110816 [8/16/11]
16 - reuters.com/article/2011/09/01/global-economy-idUSL4E7K10CA20110901 [9/1/11]
17 - reuters.com/article/2011/08/31/japan-economy-output-idUSL4E7JV00V20110831 [8/31/11]
18 - news.morningstar.com/index/indexreturn.html [8/31/11]
19 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [8/31/11]
20 - blogs.wsj.com/marketbeat/2011/08/31/data-points-energy-metals-517/ [8/31/11]
21 - marketwatch.com/story/gold-steady-after-retaking-1800-2011-08-31 [8/31/11]
22 - bloomberg.com/apps/quote?ticker=CRY:IND [8/31/11]
23 - online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [9/2/11]
24 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldYear&year=2011 [9/2/11]
25 - blogs.wsj.com/developments/2011/08/23/behind-the-numbers-perilous-time-in-home-building/ [8/23/11]
26 - dailyfinance.com/2011/09/01/5-reasons-why-your-home-will-be-worth-less-in-3-years/ [9/1/11]
27 - freddiemac.com/pmms/ [9/2/11]
28 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F31%2F01&x=0&y=0 [8/31/11]
29 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/31/11]
30 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]
31 - montoyaregistry.com/Financial-Market.aspx?financial-market=is-your-ira-slipping-away&category=1 [5/2/11]

The above commentary was produced by PeterMontoya.com.

Living With Volatility

2011-08-11T07:21:00.002-04:00

Market volatility is here to stay--at least a while. Academic research labels times such as these in the markets as having 'volatility clustering.' This means that quick and severe bursts of volatility are exhibited. It's important to remember that there is both downside volatility as well as upside volatility.

The academic research clearly shows that periods of downside volatility are followed by periods of upside volatility. This can also be described by a phenomenon called 'reversion to the mean.' Essentially, this means that while markets are very noisy and can be quite volatile in the short run, prices do get back to some level of normalcy. This begets a very elusive question of timing: 'When will markets return to normal?'

Relatively speaking, stocks still look cheap next to bonds and cash. As the dust settles from these big market drops, markets will weigh their collective direction. On the one hand, you have rampant anxiety; on the other hand, you have attractive valuations. Patience will prove to be a virtue as the saga plays out and we eventually return to market fundamentals.

Unfortunately you cannot predict these volatile movements with any reliability. While this immutable fact is unsatisfying to many, ignoring it most often causes the unsatisfied (and unsophisticated) investor to make emotional decisions and miss the upside of the volatility and the reversion to the mean. Leaving investment decisions to emotions and pure chance is simply not a sound philosophy.

For more information, below is a good article from Jim Parker of Dimensional Fund Advisors that puts the current market volatility in perspective. It's a good, quick read.

Hang in there.

Kevin Kroskey, CFP, MBA

----

"Living With Volatility"
Jim Parker, VP, Dimensional Fund Advisors

The current renewed volatility in financial markets is reviving unwelcome feelings among many investors—feelings of anxiety, fear, and a sense of powerlessness. These are completely natural responses. Acting on those emotions, though, can end up doing us more harm than good.

At base, the increase in market volatility is an expression of uncertainty. The sovereign debt strains in the US and Europe, together with renewed worries over financial institutions and fears of another recession, are leading market participants to apply a higher discount to risky assets.

So, developed world equities, oil and industrial commodities, emerging markets, and commodity-related currencies like the Australian dollar are weakening as risk aversion drives investors to the perceived safe havens of government bonds, gold, and Swiss francs.

It is all reminiscent of the events of 2008, when the collapse of Lehman Brothers and the sub-prime mortgage crisis triggered a global market correction. This time, however, the focus of concern has turned from private-sector to public-sector balance sheets.

As to what happens next, no one knows for sure. That is the nature of risk. But there are a few points individual investors can keep in mind to make living with this volatility more bearable.

Remember that markets are unpredictable and do not always react the way the experts predict they will. The recent downgrade by Standard & Poor's of the US government's credit rating, following protracted and painful negotiations on extending its debt ceiling, actually led to a strengthening in Treasury bonds.
Quitting the equity market at a time like this is like running away from a sale. While prices have been discounted to reflect higher risk, that's another way of saying expected returns are higher. And while the media headlines proclaim that "investors are dumping stocks," remember someone is buying them. Those people are often the long-term investors.
Market recoveries can come just as quickly and just as violently as the prior correction. For instance, in March 2009—when market sentiment was last this bad—the S&P 500 turned and put in seven consecutive months of gains totaling almost 80 percent. This is not to predict that a similarly vertically shaped recovery is in the cards this time, but it is a reminder of the dangers for long-term investors of turning paper losses into real ones and paying for the risk without waiting around for the recovery.
Never forget the power of diversification. While equity markets have had a rocky time in 2011, fixed income markets have flourished—making the overall losses to balanced fund investors a little more bearable. Diversification spreads risk and can lessen the bumps in the road.
Markets and economies are different things. The world economy is forever changing, and new forces are replacing old ones. As the IMF noted recently, while advanced economies seek to repair public and financial balance sheets, emerging market economies are thriving.¹ A globally diversified portfolio takes account of these shifts.
Nothing lasts forever. Just as smart investors temper their enthusiasm in booms, they keep a reserve of optimism during busts. And just as loading up on risk when prices are high can leave you exposed to a correction, dumping risk altogether when prices are low means you can miss the turn when it comes. As always in life, moderation is a good policy.

The market volatility is worrisome, no doubt. The feelings being generated are completely understandable. But through discipline, diversification, and understanding how markets work, the ride can be made bearable. At some point, value will re-emerge, risk appetites will re-awaken, and for those who acknowledged their emotions without acting on them, relief will replace anxiety.

Recent Market Declines: Another Great Recession Ahead?

2011-08-04T19:19:00.006-04:00

The markets have been volatile. Very volatile. I'm watching the nightly news with Brian Williams and the headline "Markets In Turmoil" led the broadcast. NBC is even so kind to have a special program tonight at 8pm with the same title. Great.

I wrote the paragraph below to conclude my last Saturday morning post about the debt ceiling uncertainty going into the weekend. While I was right in interpreting the events that were transpiring, I certainly didn't think the market would sell off as much as it did. I doubt any honest person would say that they did either.

"What is most likely to move markets is how the likely compromise to the debt ceiling is perceived by the market. Markets will assimilate this new information to establish a new equilibrium price, based on the compromise's effects on the US and global economy near and longer term. For instance, severe spending restraints could represent a short-term reduction in demand that can slow economic growth. This could negatively impact equities and be a boon for bonds."

Don't confuse the debt ceiling with what's transpiring here. They're distinctly different. In my opinion, the market has over-reacted to the coming decrease of economic stimulus by the government, some ho-hum economic indicators, and resurfacing concern about European banks and sovereign debt.

The market is down slightly more than 10% from the recent peak. It may go down some more, who knows. But it's not another great recession like 2008 and 2009. In looking at the 10-year treasury note, it's less than 2.5%--similar to October 2008 levels. Think the bond market is concerned about the loss of a AAA rating? No way. Rates would be much higher. Economic slow down is the concern or perhaps more apt: the panic.

Markets will likely exhibit continued volatility and the economy and job outlook will likely be marginal at best. These problems will take a long time to work through. Meanwhile, real people living and working in the real economy need real, after-tax returns to make their financial plans work and live their lifestyles. And rates being earned on savings simply will not cut it for the vast majority.

So what to do now? Even though I'm espousing opinions above and consider the likely hood of economic scenarios and their impact on markets when making portfolio management decisions for clients, you simply cannot time this stuff. Look at the chart of monthly returns for the S&P 500 and Russell 2000 indices below. (Click on the image to enlarge it.)

Last May and June we had larger declines than what we've had recently. In fact May, June, and August of last year saw the Russell 2000 sell off by more than 7% each month. Then look at the positive returns that followed. Trying to time these ups and downs is like playing Russian Roulette.

What I said last week is repeated below.

Care will need to be taken in investing new cash or when transferring funds between accounts. Averaging into the market in this case is a sound approach. Rebalancing your account to move equity gains over the last year into bonds is also a sound move.

In general, now is not the time to sell unless you portfolio is poorly constructed, under-diversified, high cost, or you are taking too much risk to begin with. Now could be a good time to harvest tax losses if you have some, but be careful not to be out of the market in doing so.

Be prudent and rational. Work your plan and hang in there.

Gotta run for the 8pm special. Thanks NBC.

Kevin Kroskey, CFP, MBA

"If you don't read the newspaper, you're uninformed. If you read the newspaper, you're mis-informed." — Mark Twain

The U.S. Debt Ceiling and Possible U.S. Rating Downgrade: What Should Investors Do Now?

2011-07-30T05:36:00.013-04:00

As the wrangling continues on Capitol Hill, increasingly the thought is that the Treasury can manage well through roughly August 10 without a debt-ceiling increase, and even after that time, they can go on for a considerable period without technically defaulting on the debt.

Financial markets are now beginning to price in the likelihood of a U.S. government debt downgrade from AAA to AA+ in the near future, although relatively few think the government will technically default. The credit rating downgrade, however, is believed to be probable. The chances of a ‘grand bargain’ sufficiently large to satisfy Standard and Poor’s appears to be practically negligible.Not only would the federal government’s rating be impacted, but Moody’s has warned that five states are in danger of losing their triple-A ratings as well: Maryland and Virginia (both home to a large number of federal employees) and New Mexico, Tennessee and South Carolina face downgrades because of their heavy reliance on federal revenue.

Moody's added that other institutions would be affected by a U.S. credit rating downgrade, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks and the Federal Farm Credit Banks. As many as 7,000 states and municipalities could feel the impact, as well as foreign bonds that are guaranteed by the U.S. government, such as those of Israel and Egypt.

The Impact of a US Credit Downgrade

While the US may at least temporarily lose it's AAA status, this may be more of a headline the media runs with rather than a great concern to investors. Other countries that in the past have lost their AAA and dropped to AA, such as Canada, Australia and Japan seem to have been only marginally impacted. More importantly, Canada and Australia were able to regain their AAA rating after several years of fiscal discipline.

A key question in many investors’ minds is what impact will a downgrade have on interest rates. Taking Japan as an example, the answer is that a downgrade may have no impact on rates. Indeed, Japan was downgraded by S&P from AAA to AA+ on February 22, 2001 and the 10-yr rate moved 24bps lower the following week.

Similarly when both S&P and Fitch lowered Japan’s credit rating to a AA in November of 2001 the 10-year rate traded relatively flat to lower in the weeks following the downgrades (Chart 2). Ten years have passed since Japan lost its AAA rating and while its 10-year yield still remains close to 1% its currency has not been negatively impacted, but rather it is near the strongest levels of the decade.

Therefore while a credit downgrade would create a long period of uncertainty before all the implications became clear, there is precedent to suggest that rates may be not spike higher as some market participants are expecting and the world’s reserve currency may remain unaffected.

So What Should Investors Do Now?

Uncertainty is never good for markets, business, and thus for the economy. Businesses have reduced spending to maintain high levels of cash. Hiring and capital spending plans are at risk of postponement or cancellation. Consumers and investors are behaving more cautiously as well.

It's important to note that the volatility in the market is for significantly different reasons than that seen in 2008-2009. At that time, global, systemic risk was pervasive and highly uncertain. This time the risk is predominantly because of our political system, often called geopolitical risk. This type of risk is more commonly associated with emerging economies, but sadly it's now forefront in our own back yard.

Yet, while we will likely see continuing high levels of volatility until the issue is resolved for at least some period of time (aka until the next political go-round), this risk is known by market participants and is not global nor systemic to the market.

What is most likely to move markets is how the likely compromise to the debt ceiling is perceived by the market. Markets will assimilate this new information to establish a new equilibrium price, based on the comprise's effects on the US and global economy near and longer term. For instance, severe spending restraints could represent a short-term reduction in demand that can slow economic growth. This could negatively impact equities and be a boon for bonds.

Care will need to be taken in investing new cash or when transferring funds between accounts. Averaging into the market in this case is a sound approach. Rebalancing your account to move equity gains over the last year into bonds is also a good move. However, for any remaining portion of your assets currently invested in the equity markets, leave it there. Trying to time the volatility and predicting what our politicians will ultimately agree to is a loser's game.

In the words of George Costanza...Serenity Now.

Kevin Kroskey, CFP, MBA

July Monthly Market Commentary

2011-07-08T11:51:00.001-04:00

June was looking pretty bleak … but then economic indicators turned surprisingly positive and Greece passed austerity measures that could help it avoid default. The month concluded with a powerful Wall Street rally. Still, the S&P 500 lost 1.83% for June. Most of the month’s data substantiated that we were seeing a soft patch. While politicians butted heads over the debt ceiling, the real estate market flashed weakness and the commodities sector suffered a collective hit. Even so, Wall Street’s mood has improved as we head into the next earnings season.¹

DOMESTIC ECONOMIC HEALTH Consumers weren’t spending very much, and they weren’t feeling too confident either. Personal spending was flat in May (after ten straight months of gains) and actually decreased 0.1% in inflation-adjusted terms. Both of the major consumer confidence polls went south for June: the Conference Board’s survey dipped 3.2 points to 58.5, and the University of Michigan’s final June consumer sentiment survey retreated to 71.5 from May’s 74.3 mark.^2,3,4

Consumer inflation moderated and unemployment increased. The May edition of the Consumer Price Index rose 0.2%; core CPI was up 0.3%. Food prices were up 0.4% and energy prices were up 0.6%, but even so this was the smallest monthly increase in inflation in seven months. Year over year through May, consumer inflation was 3.6% (and core inflation was 1.5%). The Producer Price Index advanced 0.2% in May; the preceding two months had seen increases of 0.7% and 0.8%. Annualized wholesale inflation was 7.3% - the highest wholesale inflation rate since the summer of 2008. The nation’s jobless rate ticked up to 9.1% in May.^5,6,7

On the bright side, the Institute for Supply Management’s twin PMI indices signaled that the pace of expansion had accelerated in both the service and manufacturing sectors. ISM’s May service sector index increased 1.8% to 54.6, with a 4.1% boost in new orders. The recently released June manufacturing index was a pleasant surprise: defying expectations of analysts, it rose from 53.5 to 55.3. The Conference Board’s index of leading indicators bounced back from an -0.4& showing in May to go +0.8% in June as eight of ten indicators improved. Durable goods orders had increased by 1.9% during May, and May’s 0.2% dip in retail sales was shallower than analysts had expected.^2,8,9,10,11

In Washington, there was much argument over the federal debt ceiling but little agreement. While hiking the debt cap is all but inevitable, Congress elected to take the NFL/NBA approach and sustain the dispute. Meanwhile, Standard & Poor’s warned that it would cut the U.S. debt rating from AAA to D if the debt cap wasn’t raised by August 2; Moody’s threatened a cut to somewhere in its Aa category.¹²

GLOBAL ECONOMIC HEALTH The International Energy Agency surprised the futures markets in late June when it announced a plan to release 60 million barrels worth of crude from global reserves. In the big picture, the move has a chance to tame inflation pressures (especially in Europe) and aid the dollar.¹³

Speaking of Europe, reassuring news emerged from the EU as the Greek government embarked on actions to service its debts and stay in the euro. Yet Greece is not out of the woods by any means – the possibility of default still looms, and Standard & Poor’s said it would regard a proposed rollover of privately held Greek debt led by French banks as a “selective default”.¹⁴

New manufacturing index data indicated that Asia’s economies were muddling through a soft patch as well. In June, India’s benchmark PMI had its biggest one-month fall since November 2008, reaching a nine-month low of 55.3. Taiwan’s PMI went below 50 for the first time in nine months (meaning sector contraction), and South Korea’s PMI slipped to its lowest level in seven months. China’s official PMI fell to 50.9 for June – a 28-month low.¹⁵

WORLD MARKETS Some benchmarks went positive in June, others negative. According to Morningstar calculations in U.S. dollar terms, major Asian benchmarks did okay - Sensex, +2.34%; Nikkei 225, +1.26%; Shanghai Composite, +0.68% (yet Australia’s All Ordinaries went -2.70%). In Europe, the big indices mostly retreated: DAX, +1.11%; CAC 40, -0.62%; FTSE 100, -0.74%; STOXX 600, -2.92%. To our north, Canada’s TSX Composite went -4.41%. The key MSCI indices also lost ground in June (World, -1.73%; Emerging Markets, -1.86%).^16,17,18

COMMODITIES MARKETS It was another rough month for the majority of commodities investors. Oil slipped 7.1% in June, a drop aided by the IEA’s surprise call for nations to tap into petroleum reserves. Gold had its second down month in a row (its May-June performance was -3.5%) but remained +5.71% on the year despite a -2.19% month that left prices settling at $1,502.30 on June 30. When the Department of Agriculture said that America had greater inventories and acreage of corn (and other key crops) than estimated, ag futures took a big hit. Wheat lost 21.0%, corn 17.0%, soybeans 6.0% and rice 1.4% in June. Even the dollar lost some ground: the U.S. Dollar Index went -0.21% last month, wrapping up June at 74.54.^19,20,21

REAL ESTATE What can you say about a real estate market which features reduced sales activity during the prime homebuying season? There isn’t much positive to report when assessing the May data: existing home sales were down 3.8% while new home sales were down 2.1%. In annual terms, new home sales had improved by 13.5% with the average price better by $1,400;existing home sales were down 15.3% year-over-year with the median price retreating 4.6%.^22,23

Speaking of home prices, the April edition of the Case-Shiller/S&P home price index actually showed a 0.7% overall price gain across 20 metro markets – but there was a 4.0% annualized dip in prices to take any celebration out of that small monthly advance. The good news is that pending home sales really rebounded in May: the National Association of Realtors said home sale contracts were up 8.2% from April’s seven-month low and up 17.0% from the June 2010 trough.^24,25

Freddie Mac’s June 30 Primary Mortgage Market Survey showed descents in average interest rates on the four common mortgage types compared with its June 2 survey: 30-year FRMs, -0.04% to 4.51%; 15-year FRMs, -0.05% to 3.69%; 5/1-year ARMs, -0.19% to 3.22%; 1-year ARMs, -0.16% to 2.97%.²⁶

LOOKING BACK…LOOKING FORWARD Early in June, bears were groaning. By the end of the month, the bulls were back in charge. In fact, June 27-July 1 represented the best week for the Dow and S&P 500 since mid-July 2010. Still, it was a negative month for stocks.²⁷

So with this newfound momentum or at least interest in equities, we find ourselves in July – traditionally a pretty good month on Wall Street, powered by anticipation of 2Q earnings. Since 2000, July has been a little less positive than in previous stock market cycles: the Stock Trader’s Almanac notes that the Dow and S&P have respectively averaged July gains of 1.24% and 0.16% in the last 11 years, with the NASDAQ averaging a 0.45% loss for the month. That is the recent history. The current reality is that we still have concerns about a flagging world economy, severe debt problems plaguing multiple EU countries and no agreement yet on the federal debt ceiling. Let’s hope that earnings season casts its spell on the collective mind of Wall Street, with 2Q results impressive enough to make stock market performance in July 2011 correspond to Julys of decades before.³²

UPCOMING ECONOMIC RELEASES: Looking at the balance of July, here is what’s ahead: the June ISM service sector index (7/6), the June jobs report and May wholesale inventories (7/8), June PPI and retail sales and May business inventories (7/14), June CPI and industrial output and the initial University of Michigan July consumer sentiment survey (7/15), June building permits and housing starts (7/19), June existing home sales (7/20), the Conference Board’s LEI index for June (7/21), June new home sales, May’s Case-Shiller home price index and the Conference Board’s July consumer confidence poll (7/26), June durable goods orders and a new Federal Reserve Beige Book (7/27), June pending home sales (7/28), and the first take on 2Q 2011 GDP and a final June consumer sentiment poll from the University of Michigan (7/29). The Commerce Department report on June consumer spending will be released on August 2.

MONTHLY QUOTE

“The large print giveth, but the small print taketh away.”
– Tom Waits

MONTHLY TIP
How big is your rainy day fund? Ideally, you should build an emergency fund that should equal 6-12 months of current living expenses. It is a worthwhile goal to pursue.

Best Regards,
Kevin Kroskey

Citations.
1 - blogs.wsj.com/marketbeat/2011/06/30/data-points-u-s-markets-27/ [6/30/11]
2 - cnbc.com/id/43546166/ [6/27/11]
3 - blogs.wsj.com/marketbeat/2011/07/01/ism-much-better-than-expected/ [7/1/11]
4 - marketwatch.com/story/consumer-sentiment-declines-in-june-2011-07-01 [7/1/11]
5 - bls.gov/news.release/cpi.nr0.htm [6/15/11]
6 - bls.gov/news.release/ppi.nr0.htm [6/14/11]
7 - latimes.com/business/la-fi-jobs-report-20110604,0,3594048.story [6/3/11]
8 - ism.ws/ISMReport/NonMfgROB.cfm [6/3/11]
9 - bloomberg.com/news/2011-06-17/u-s-leading-economic-indicators-index-rises.html [6/17/11]
10 - marketwatch.com/story/us-durable-goods-orders-rise-19-for-may-2011-06-24 [6/24/11]
11 - marketwatch.com/story/retail-sales-fall-for-first-time-in-11-months-2011-06-14-919560 [6/17/11]
12 - bloomberg.com/news/2011-06-29/moody-s-would-likely-cut-u-s-debt-rating-to-aa-range-in-event-of-default.html [6/30/11]
13 - online.wsj.com/article/BT-CO-20110627-712832.html [6/27/11]
14 - investors.com/NewsAndAnalysis/Article/577212/201107050905/Stock-Futures-Nose-Lower-Baidu-Adds-2.htm [7/5/11]
15- reuters.com/article/2011/07/01/economy-global-pmi-idUSL3E7I10O820110701 [7/1/11]
16 - news.morningstar.com/index/indexReturn.html [6/30/11]
17 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [6/30/11]
18 - blogs.wsj.com/marketbeat/2011/06/30/data-points-europe-135/ [6/30/11]
19 - blogs.wsj.com/marketbeat/2011/06/30/data-points-energy-metals-494/ [6/30/11]
20 – online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [7/5/11]
21 - businessweek.com/news/2011-07-01/corn-extends-worst-monthly-loss-since-2008-on-acreage-increase.html [7/1/11]
22 - money.cnn.com/2011/06/23/real_estate/new_home_sales/?section=money_latest [6/23/11]
23 - nytimes.com/2011/06/22/business/economy/22econ.html [6/22/11]
24 - blogs.forbes.com/morganbrennan/2011/06/29/what-can-homeowners-learn-from-case-shillers-home-price-index/ [6/29/11]
25 - usatoday.com/money/economy/housing/2011-06-29-pending-home-sales_n.htm [6/29/11]
26 - freddiemac.com/pmms/ [7/5/11]
27 - cnbc.com/id/43608555 [7/1/11]
28 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F30%2F10&x=0&y=0 [7/5/11]
28 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F30%2F10&x=10&y=18 [7/5/11]
28 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F30%2F10&x=0&y=0 [7/5/11]
29 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldYear&year=2011 [7/5/11]
30 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/5/11]
31 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
32 - cnbc.com/id/43197003 [5/31/11]
33 - montoyaregistry.com/Financial-Market.aspx?financial-market=financial-planning-where-do-you-begin&category=5 [7/6/11]

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The S&P/ASX All Ordinaries Index represents the 500 largest companies in the Australian equities market. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

June Monthly Market Commentary

2011-06-20T10:05:00.002-04:00

The month of May saw a barrage of disappointing economic reports one after the other. As the end of the second quarter approaches, long-term interest rates have fallen while international fears have risen. Earlier this month, Greece’s credit rating was downgraded once again because of ongoing concerns regarding austerity measures and debt rescheduling possibilities. Japanese auto production has also plunged 60% since the earthquake and tsunami—731,000 units were produced in April 2010, while only 292,000 units were produced in April 2011.

GDP: The first-quarter GDP remained unrevised at 1.8%, despite expectations of an upward revision because of strong retail sales growth in February. While several retail categories were revised upward, the combination of gasoline sales, auto sales, and utility usage being revised downwards roughly offsets the retail revisions. On a brighter note, falling gasoline and utility sales means consumers are driving less as a result of higher prices rather than cutting back on other categories. In the months ahead, this could mean lesser oil imports, which in turn could potentially aid GDP growth. National gasoline prices dropped to $3.78 a gallon recently, down from a high of $3.98 but still dangerously higher than last year’s $2.78 a gallon.

Employment: Employment data was disappointing for the month of May. Businesses performed worse than expected as consumers pulled back due to rising gas prices and commodity price increases. Employment grew by a mere 54,000 compared with 241,000 during April, representing an annualized employment growth of 0.5%. Retail and leisure payroll categories accounted for the majority of this significant decline; retail added 78,000 jobs in April but only a dismal 3,000 in May, while leisure went from 30,000 jobs in April to negative 6,000 in May.

Unemployment: The unemployment rate crawled up slightly to 9.1% from 9.0%. Initial jobless claims fell 6,000 during the last week in May to 422,000. The four-week average of 425,000 compared well to the month-ago level of 432,250.

Housing: Housing prices continued to erode as the national purchasing managers' reports for manufacturers showed a major decline. The pending home sales report was a disappointment. Contract signings in April fell by 12% compared with March and fell 27% from last year’s tax-credit-fueled period. One of the causes for this decline was severe weather conditions: The United States experienced the heaviest April precipitation level in 20 years. Tight lending remained another prevailing factor, dragging the numbers lower.

Manufacturing: The ISM Manufacturing Index dropped sharply, indicating that the manufacturing sector is still growing, but at a significantly slower pace compared with April. Morningstar’s economists do not think that this was something unexpected. The Chicago regional report (announced the day before the ISM numbers were released) also gave strong indication of slowing growth.

Retail sales: The International Council of Shopping Centers report revealed that monthly retail sales increased 5.3% as luxury goods stores continued to display stellar results. The “Tale of Two Recoveries” continued, as high-end retailers such as Saks and Tiffany raised price points and outperformed the market respectively while on the other end of the spectrum, companies like Gap and Wal-mart continued to struggle. Morningstar economists expect real wages, measured by the Personal Consumption Expenditure Price Index, to move into negative territory for May; the number has been steadily declining since February.

©2011 Morningstar, Inc., 22 W. Washington Street, Chicago, IL 60602.

Fed Chairman Bernanke Speaks on U.S. Economy

2011-06-07T17:12:00.002-04:00

Chairman Bernanke’s speech on June 7, 2011 held no surprises, with the somewhat down-beat tone reflecting the recent spate of dreary economic reports. While acknowledging that the economy and labor markets have lost some momentum, the Chairman continues to expect a moderate paced recovery to unfold through the second half of the year. He noted that consumers continue to face headwinds such as high gasoline prices and falling house prices, but takes some comfort in the recent moderation in the former. The recent upturn in inflation is expected to be temporary amid high unemployment and steadier commodity prices. He repeated the Federal Open Market Committee's commitment to end QE2 later this month, but to continue reinvesting maturing assets, and also affirmed that low rates are likely justified for an “extended period”.

With the economy still operating well below its potential, “accommodative monetary policies are still needed”, and a full-fledged recovery likely won’t take root until “we see a sustained period of stronger job creation.” He warned the Administration and Congress to establish a credible long-term deficit reduction plan, one that doesn’t jeopardize the fragile economic recovery in the near term.

Bottom Line: The Chairman said it best in that in the face of the worst financial crisis and housing bust since the Depression, “monetary policy cannot be a panacea”. It can only treat the symptoms and alleviate the pain.

May 9, 2011 Weekly Market Commentary

2011-05-09T12:33:00.000-04:00

HIRING IMPROVES IN APRIL

The Labor Department’s latest jobs report contained some good news: the private sector added 268,000 new jobs last month, and overall non-farm payrolls increased by 244,000 in April. The private sector hasn’t seen this much month-over-month job creation since February 2006, and the net gain of 244,000 jobs was the best since June 2010. The unemployment rate went up to 9.0% in April, but Wall Street rallied Friday after the report was released.1

PMI INDEX STRONG; SERVICE SECTOR INDEX SLIPS
Last week, the Institute for Supply Management released its April reports on the manufacturing and service sectors. While the manufacturing index came in at 60.4 – down slightly from March’s 61.2 – anything above 60 indicates a booming sector. The non-manufacturing index dropped to 52.8 from March’s 57.3 reading. Anything above 50 means growth, but the index hasn’t been this low in eight months.2

GOLD, SILVER & OIL PULL BACK
Are commodities overbought? That anxiety weighed on the futures markets last week, and it was amplified by a strengthening dollar. Silver took the biggest hit, retreating 27.4% across five days to $35.28 an ounce at the Friday COMEX close. Gold lost 4.2% to end the week at $1,491.20 per ounce; copper sank 4.9% for the week, leaving it 14% under its February 14 record close on Friday. Oil slid 14.7% last week, all the way down to $97.18 per barrel at the Friday close; crude had its poorest week since mid-December of 2008.3,4

A VOLATILE WEEK SEES STOCKS RETREAT
Stocks rollercoastered a bit last week as closely watched indicators alternately came in positive and negative. By Friday’s close, the scorecard for May 3-6 looked like this: DJIA, -1.34% to 12,638.74; S&P 500, -1.72% to 1,340.20; NASDAQ, -1.60% to 2,827.56. (The “flash crash” occurred on May 6, 2010 – that’s why the 1-YR CHG column below shows such radical improvement this week.)5

THIS WEEK: No major economic releases are scheduled for Monday. On Tuesday, we have a report on March wholesale inventories and 1Q earnings from Disney. On Wednesday, three Federal Reserve Bank presidents speak and 1Q earnings from Toyota, Symantec and Cisco arrive. Thursday, the April PPI is released and the newest reports on initial jobless claims arrive; we get the Census Bureau’s report on April retail sales along with 1Q earnings from three titans of the mall – Nordstrom, Macy’s and Kohl’s. Friday, we get April’s CPI and the University of Michigan’s initial consumer sentiment survey for May.

WEEKLY QUOTE
“That which seems the height of absurdity in one generation often becomes the height of wisdom in the next.”
– John Stuart Mill

WEEKLY TIP
If you have adult children living at home, do they pay rent? It can provide you with a source of extra income.

Best Regards,

Kevin Kroskey

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.
1 - cnbc.com/id/42928731/ [5/6/11]
2 - zacks.com/stock/news/52612/ISM+Service+Index+Disappoints [5/4/11]
3 - blogs.wsj.com/marketbeat/2011/05/06/silver-finishes-its-brutal-week-with-a-whimper/ [5/6/11]
4 - blogs.wsj.com/marketbeat/2011/05/06/data-points-energy-metals-489/ [5/6/11]
5 - cnbc.com/id/42935357 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F6%2F10&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F6%2F10&x=10&y=18 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F6%2F10&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F5%2F06&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F5%2F06&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F5%2F06&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F7%2F01&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F7%2F01&x=0&y=0 [5/6/11]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F7%2F01&x=0&y=0 [5/6/11]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [5/6/11]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [5/6/11]
8 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
9 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [5/8/11]

April 25, 2011 Weekly Market Commentary

2011-04-26T11:45:00.002-04:00

S&P PUTS THE U.S. CREDIT RATING OUTLOOK TO NEGATIVE?

Standard & Poor’s rattled Wall Street early last week when it revised its outlook on U.S. long-term debt from “stable” to “negative”. I'm not sure if S&P was trying to make a statement of "we're on top of things" after they surely weren't in regards to the exotic mortgage instruments of years past. Regardless of the reason, their action was utterly foolish and absurd. Across the next three trading days, earnings sent the market higher. The four-day week turned into a winning one, as the numbers show: DJIA, +1.33% to 12,505.99; S&P 500, +1.34% to 1,337.38; NASDAQ, +2.01% to 2,820.16.5,6

HOME SALES, HOME STARTS IMPROVE IN MARCH
The National Association of Realtors announced that existing home sales were up 3.7% last month, about 1% higher than the rebound expected on Wall Street. (NAR noted that about 35% of these were cash sales.) In another positive development for the real estate market, the Commerce Department measured a 7.2% gain in housing starts and an 11.2% rise in construction permits for March.1

GOLD AT NEW HIGH, DOLLAR TOUCHES 3-YEAR LOW
Gold cracked the $1,500 ceiling last week. Prices reached $1,508.75 on Thursday before settling at $1,503.80 on the COMEX. Silver hit yet another 31-year high at $46.68 per ounce, with prices ending the week at $46.06. Meanwhile, the U.S. Dollar Index descended to 73.735 during the market day on Thursday, a low unseen since August 2008.2,3

LEI INDEX UP FOR NINTH STRAIGHT MONTH
The Conference Board’s index of leading economic indicators rose another 0.4% for March, complementing a revised 1.0% gain in February. Economists polled by Bloomberg News had forecast a 0.3% advance.4

THIS WEEK: The height of earnings season is upon us. On tap for Monday, we have 1Q results from Netflix and March new home sales data. Tuesday offers earnings reports from Coca-Cola, UPS, 3M, Delta Air Lines, Valero, Ford, Western Union, U.S. Steel, Broadcom and Amazon, along with the February Case-Shiller home price index and the Conference Board’s April consumer confidence index. Wednesday brings 1Q results from eBay, ConocoPhillips, Credit Suisse, General Dynamics, Starbucks, BP, Boeing and Allstate, plus a Fed rate decision and a report on March durable goods orders. Thursday gives us earnings from PepsiCo, P&G, Motorola, Exxon Mobil, Microsoft, Sprint Nextel, Bristol Myers, Viacom and Occidental Petroleum, plus February pending home sales and weekly jobless claims data. What does Friday bring? The March consumer spending report and the University of Michigan’s final March consumer sentiment poll, plus 1Q results from Merck, Caterpillar, Chevron, Weyerhaeuser and DR Horton.

WEEKLY QUOTE
“Don't let what you cannot do interfere with what you can do.”
– John Wooden

WEEKLY TIP
If you’re getting married, inform your partner about all of your debt before the wedding day. Discussing it the day of the wedding or on the honeymoon can kill the mood. Learning about credit and debt issues after the knot is tied can lead to much frustration.

Best Regards,

Kevin Kroskey, CFP, MBA

Citations.
1 - blogs.wsj.com/marketbeat/2011/04/20/existing-home-sales-rise-market-cheers/ [4/20/11]
2 - reuters.com/article/2011/04/21/us-markets-global-idUSTRE71H0EB20110421 [4/21/11]
3 - cnbc.com [4/22/11]
4 - bloomberg.com/news/print/2011-04-21/index-of-leading-economic-indicators-in-the-u-s-rises-0-4-.html [4/21/11]
5 - marketwatch.com/story/sp-cuts-us-rating-outlook-to-negative-2011-04-18 [4/18/11]
6 - cnbc.com/id/42708009 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F22%2F10&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F22%2F10&x=10&y=18 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F22%2F10&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F21%2F06&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F21%2F06&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F21%2F06&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F23%2F01&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F23%2F01&x=0&y=0 [4/22/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F23%2F01&x=0&y=0 [4/22/11]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/22/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/22/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 -montoyaregistry.com/Financial-Market.aspx?financial-market=who-needs-wealth-management-services&category=4 [4/24/11]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

April 11, 2011 Weekly Market Commentary

2011-04-14T06:23:00.000-04:00

WALL STREET WATCHES BUDGET FIGHT
While journalists and political analysts worldwide pondered the effects of a federal government shutdown last week, Wall Street conducted business as usual. Any prolonged shutdown would test the stock market: while the Federal Reserve would not be forced into a hiatus, the majority of Treasury Department employees would be furloughed, and the Securities and Exchange Commission, Federal Trade Commission and Department of Justice could halt review of M&As, IPOs and new stock and bond issues. Still, much of the Street’s attention will be focused on the new earnings season this week. (For the record, stocks actually advanced about 5% during the three-week federal budget impasse of 1995-1996.)1,2,3

ISM SERVICE SECTOR INDEX DESCENDS TO 57.3
The Institute for Supply Management’s February non-manufacturing index came in at 59.7; the March edition is 2.4% lower, and ISM’s survey estimated a 7.2% decline in business activity/production for the month and a 4.0% increase in the backlog of orders. However, the ISM non-manufacturing index has shown sector expansion for 16 months.4

REMARKABLE GAINS FOR CRUDE & GOLD
Oil prices rose 4.49% last week, and they have soared 11.60% in the last three weeks. NYMEX crude ended the week at $112.79 a barrel. (The American Automobile Association said the price of a gallon of regular unleaded gas averaged $3.73 nationally as of Friday.) Gold advanced $45.30 last week to settle at $1,473.40 on the COMEX.5,6

A FLAT LANDSCAPE FOR STOCKS
The Dow, NASDAQ and S&P 500 didn’t move much between Monday and Friday. Here is how things went for the week: DJIA, +0.03% to 12,380.05; S&P 500, -0.32% to 1,328.17; NASDAQ, -0.33% to 2,780.41.7

THIS WEEK: Monday, a fresh earnings season begins with 1Q results from Alcoa. Tuesday (assuming no federal shutdown), we have data on March import and export prices. On the schedule for Wednesday, we have the Commerce Department report on March retail sales and a new Beige Book from the Federal Reserve – and before the bell, earnings from JPMorgan. Scheduled for Thursday, we have the weekly initial and continuing claims data, the March PPI and 1Q results from Google and Hasbro. The March CPI, the initial University of Michigan March consumer sentiment survey and a report on March industrial output are all slated for Friday, and that day starts with 1Q results from Bank of America and Mattel.

WEEKLY QUOTE
“Don't forget to love yourself.” – Soren Kierkegaard

Best Regards,

Kevin Kroskey

Citations.
1 - cnbc.com/id/42478476/ [4/7/11]
2 - blogs.wsj.com/marketbeat/ [4/8/11]
3 - money.cnn.com/2011/04/08/markets/thebuzz/index.htm [4/8/11]
4 - ism.ws/ISMReport/nonmfgROB.cfm [4/5/11]
5 - blogs.wsj.com/marketbeat/2011/04/08/data-points-energy-metals-483/ [4/8/11]
6 - charlotteobserver.com/2011/04/08/2208080/gas-prices-are-on-rise-again.html [4/8/11]
7 - cnbc.com/id/42498783 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F8%2F10&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F8%2F10&x=10&y=18 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F8%2F10&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/8/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/8/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 - montoyaregistry.com/Financial-Market.aspx?financial-market=401k-an-overview&category=2 [4/9/11]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

March 28, 2011 Weekly Market Commentary

2011-03-28T16:20:00.000-04:00

4Q GDP REVISED UPWARD
The Commerce Department’s final estimate of 4Q 2010 GDP is +3.1%, an improvement from the previous estimate of +2.8%. The revision reflects increased consumer spending, exports and business investment during the quarter – and with this alteration, the Bureau of Economic Analysis now puts U.S. GDP at +2.9% for 2010. Compare that to the -2.6% economic output of 2009.1

WHEN DOES THE REAL ESTATE RECOVERY BEGIN?
By the looks of February’s home sales figures, recovery may not begin for a while. New home sales slipped 16.9% last month according to the Census Bureau, and were 28.0% under year-ago levels. The National Association of Realtors said existing home sales fell by 9.6% last month; the median sales price for a single-family home was $157,000 (-5.2% from a year ago) with distressed homes making up 39% of the market (up 4% from a year ago). While monthly home sales figures are often later readjusted and have a sizable margin of error, the numbers are still troubling; for example, existing home sales were up for each of the preceding three months.2,3

GLOBAL UNCERTAINTY WEIGHS ON CONSUMERS
High gas prices and the unresolved nuclear power plant crisis in Japan likely impacted the University of Michigan’s final March consumer sentiment survey. The final March number was 67.5, the poorest reading the index has registered since November 2009.4

HARD GOODS ORDERS SLIP IN FEBRUARY
Durable goods orders confounded the forecasts of economists, diminishing last month by 0.9%. Minus transportation orders, the decline was 0.6%.5

STOCKS PROVE RESILIENT
While the three major Wall Street indexes are still negative for March, they all posted gains last week: DJIA, +3.05% to 12,220.59; S&P 500, +2.70% to 1,313.80; NASDAQ, +3.76% to 2,743.06. The Russell 2000 was up 3.67% last week and the “fear index”, the CBOE VIX, fell 26.72%.6

THIS WEEK: February consumer spending and January pending home sales reports arrive Monday. The Conference Board’s March consumer confidence index and the January Case-Shiller home price index come out Tuesday, plus earnings from Lennar. Thursday, we have initial and continuing claims and a report on February factory orders. Both the March unemployment report and the March ISM manufacturing report will be released on Friday.

WEEKLY QUOTE
“I have friends in overalls whose friendship I would not swap for the favor of the kings of the world.”
– Thomas Edison

WEEKLY TIP
Do you save a regular amount per month? Those who do find they have money for an emergency fund or other objectives. As you look at your monthly budget, determine the amount you can save each month and pay yourself first. Increasing your employer retirement plan contributions, takes the money out of your hands before you get it.

Best Regards,

Kevin Kroskey

Citations.
1 - latimesblogs.latimes.com/money_co/2011/03/economic-growth-gdp-fourth-quarter-commerce-department-.html [3/25/11]
2 - census.gov/const/newressales.pdf [3/23/11]
3 - realtor.org/press_room/news_releases/2011/03/feb_decline [3/21/11]
4 - economy.kansascity.com/?q=node/10253 [3/25/11]
5 - community.nasdaq.com/News/2011-03/us-durable-good-orders-decline-in-feb.aspx [3/24/11]
6 - cnbc.com/id/42273638
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F25%2F10&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F25%2F10&x=10&y=18 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F25%2F10&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F24%2F06&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F24%2F06&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F24%2F06&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F26%2F01&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F26%2F01&x=0&y=0 [3/25/11]
7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F26%2F01&x=0&y=0 [3/25/11]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/25/11]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/25/11]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
10 - http://montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [3/27/11]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

March 14, 2011 Weekly Market Commentary

2011-03-14T11:44:00.000-04:00

BEST RETAIL SALES NUMBERS IN 4 MONTHS
The Census Bureau says that retail sales climbed 1.0% in February. That matched the median forecast of economists polled by Bloomberg News. Department store sales improved by 1.0% last month and restaurant sales improved by 1.2% (the best monthly gain in that category in a year). Auto sales saw a 2.3% gain in February. Overall U.S. retail sales were up 8.9% from a year before.1,2

LOWEST CONSUMER SENTIMENT IN 5 MONTHS
Sometimes economic releases seem completely contradictory. While retail sales have improved, consumer sentiment has dipped – at least according to the University of Michigan’s initial March survey, which came in at 68.2, way below the final February mark of 77.5. Soaring gas prices would seem to be a factor. The index had been making progress back toward its 2002-2007 average reading of 89.3

ROUGH GOING FOR OIL & GOLD FUTURES
Last week’s run from risk sent the prices of these commodities downward. Oil futures settled at $101.16 a barrel Friday – that was a 3.12% week-over-week drop. The decrease reflected concern over reduction of refinery capacity and demand in Japan, one of the world’s leading oil importers. As for gold, it had its poorest week since mid-January, with prices slipping $6.70 on the COMEX over five days – a 0.47% weekly loss. Gold settled at $1,421.50 Friday as its five-week winning streak was snapped.4

DOW HOLDS ON TO 12,000
In light of last week’s momentous seismic and political events, the ups and downs of Wall Street seem relatively trivial. Somehow, the Dow, S&P 500 and NASDAQ managed to remain above the psychologically significant 12,000, 1,300 and 2,700 benchmarks Friday. For the week, they performed as follows: DJIA, -1.03% to 12,044.40; NASDAQ, -2.48% to 2,715.61; S&P 500, -1.28% to 1,304.27. The CBOE VIX gained 6.56% last week.5

THIS WEEK: No major economic releases are scheduled for Monday. Tuesday, there is an FOMC meeting at the Federal Reserve. Wednesday, we learn what happened with producer prices in February, and get data about February building permits and housing starts. Thursday brings the February edition of the Consumer Price Index and the Conference Board’s February leading indicator index, plus new initial and continuing claims data and a report on February industrial output. Also in the mix Thursday: before-the-bell earnings from FedEx and after-the-bell earnings from Nike. No major economic releases are scheduled for Friday.

WEEKLY QUOTE
“Life is the art of drawing without an eraser.”
– John Gardner

WEEKLY TIP
Try setting a specific dollar amount as a goal for your emergency savings, rather than just contributing to it here and there as it's convenient. A solid goal may help you stick with steady, ongoing contributions.

Best Regards,

Kevin Kroskey

Citations.
1 – dailyfinance.com/story/the-fed-economy-grew-at-a-modest-pace-in-september/19681630/ [10/20/10]
2 – msnbc.msn.com/id/39777205/ns/business-eye_on_the_economy/ [10/21/10]
3 – marketwatch.com/story/housing-starts-rise-03-to-610000-in-september-2010-10-19 [10/19/10]
4 - thestreet.com/story/10891354/1/industrial-production-drops-in-september.html [10/18/10]
5 - blogs.wsj.com/marketbeat/2010/10/22/data-points-energy-metals-386/ [10/22/10]
6 – cnbc.com/id/39801554 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/22/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/22/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

February 28, 2011 Weekly Market Commentary

2011-02-28T15:57:00.000-05:00

STRIKING IMPROVEMENT IN CONSUMER SENTIMENT
Consumer sentiment is really rebounding – at least by the measure of the country’s two most respected polls. The final February Thomson Reuters/University of Michigan consumer sentiment survey came in at 77.5, leaping north from January’s 74.2 mark to the highest reading in 37 months. The Conference Board’s consumer confidence index climbed all the way to 70.4 this month (it was at 64.8 in January) and its gauge of future expectations hit its most optimistic level since December 2006.1,2

REAL ESTATE MARKET WEATHERS CHILLY JANUARY
According to the Census Bureau, new home sales slipped 12.6% last month. Yet the National Association of Realtors reported that residential resales improved by 2.7% in January, the fifth increase in the past six months. Existing homes have apparently become a bit less expensive: the December Case-Shiller home price index came out last week and showed prices slipping 1.0% from November across 20 metro areas.2,3

DURABLE GOODS ORDERS UP 2.7%
Aircraft orders drove the overall increase in the category for January. Economists polled by Dow Jones Newswires had forecast a 2.0% gain. Yet when you factor out transportation orders, durable goods orders actually fell 3.6% in January.4

CRUDE SETTLES NEAR $98, GAS PRICES SPIKE NORTH
By Friday afternoon, oil prices had retreated from Thursday’s $103 intraday peak. On the NYMEX, crude for April delivery settled at $97.88 a barrel Friday, capping a 9.11% weekly advance. Retail gasoline prices rose 5.9 cents overnight; the average price for a gallon of regular unleaded was $3.29 on Friday.5,6

UNREST HAMPERS STOCKS
February 21-25 amounted to the worst trading week for the S&P 500 and Dow since November. Statistically, this is what happened last week: DJIA, -2.10% to 12,130.45; NASDAQ, -1.87% to 2,781.05; S&P 500, -1.72% to 1,319.88.7

THIS WEEK: Reports on January consumer spending and December pending home sales arrive Monday. Tuesday, we get the latest ISM manufacturing index and Federal Reserve chairman Ben Bernanke speaks to Congress on monetary policy. Wednesday, we have a new Beige Book from the Fed and 4Q results from Staples and Costco. Thursday, we have the February ISM service-sector index, new initial and continuing claims figures and 4Q earnings from Kroger and Heinz. Friday, we get the February unemployment figures and the January report on factory orders.

WEEKLY QUOTE
"It is not the position, but the disposition.”
– Susan Sontag

WEEKLY TIP
Establish a timeline for your financial goals. List what you want to achieve and when, and review your progress and the deadlines you have set semi-annually or annually.

Best Regards,

Kevin Kroskey

Citations.
1 - marketwatch.com/story/consumer-sentiment-rises-in-february-2011-02-25 [2/25/11]
2 - blogs.barrons.com/stockstowatchtoday/2011/02/22/consumer-confidence-up-home-prices-down/ [2/22/11]
3 - marketwatch.com/story/new-home-sales-fall-126-in-january-2011-02-24 [2/24/11]
4 - blogs.barrons.com/stockstowatchtoday/2011/02/24/jobless-claims-fall-durable-goods-orders-gain/ [2/24/11]
5 - blogs.wsj.com/marketbeat/2011/02/25/data-points-energy-metals-464/ [2/25/11]
6 - money.cnn.com/2011/02/25/news/economy/gasoline_prices/index.htm [2/25/11]
7 - cnbc.com/id/41785394 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F25%2F10&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F25%2F10&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F25%2F10&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F24%2F06&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F24%2F06&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F24%2F06&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F26%2F01&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F26%2F01&x=0&y=0 [2/25/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F26%2F01&x=0&y=0 [2/25/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/25/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/25/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 -montoyaregistry.com/Financial-Market.aspx?financial-market=why-choose-an-independent-financial-advisor&category=5 [2/27/11]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

February 14, 2011 Weekly Market Commentary

2011-02-16T08:50:00.000-05:00

AN END IN SIGHT FOR FANNIE & FREDDIE
Friday, the Obama administration presented a plan to wind down Fannie Mae and Freddie Mac by 2018, with Treasury Secretary Timothy Geithner citing “very broad consensus” that the government should play “a much smaller role” in the housing market. So what will replace them? The plan puts three options before Congress. In one option, the government would leave the mortgage market save for the VHA, FHA and other existing agencies. Two other options would set up “re-insurance” programs. A limited version would guarantee private mortgages only in economic or real estate downturns; another would provide a backstop for mortgage investments already guaranteed by private insurers. All three options would pave the way for higher mortgage costs. The Treasury and HUD have also suggested phasing in a short-term requirement for borrowers as Fannie and Freddie are unwound: homebuyers would have to put 10% down for any mortgage backed by the GSEs.1,2

CONSUMERS FEEL MORE UPBEAT
The latest Reuters/University of Michigan consumer sentiment survey is in, and the initial February reading is 75.1, an improvement from the final January mark of 74.2. This is the best reading since June 2009. The survey’s current conditions index rose 5.0% to 86.8 – the highest it has been in 37 months.3

GOLD ADVANCES, OIL PULLS BACK
Gold prices climbed 0.86% last week to settle at $1,359.90 an ounce Friday – it was the best week for the precious metal YTD. Oil and natural gas prices fell to their lowest levels since November on Friday after Egyptian president Hosni Mubarak announced his resignation; natural gas futures fell 9.28% on the week, and oil slipped 3.88% for the week to settle at $85.58 per barrel on the NYMEX.4

DJIA CLOSES AT HIGHEST MARK SINCE 6/16/08
The Dow logged an eight-day winning streak from January 31 to February 9, and it has advanced in 10 of the past 11 weeks. The weekly performance? DJIA, +1.50% to 12,273.26; NASDAQ, +1.45% to 2,809.44; S&P 500, +1.39% to 1,329.15.5

THIS WEEK: Very little is scheduled for either Monday or Friday. Tuesday brings January retail sales numbers and a report on December business inventories, plus 4Q earnings from Dell, Barclays and Tesla. Wednesday offers the January Producer Price Index, the most recent FOMC minutes, reports on January housing starts and industrial output and 4Q results from Comcast and CBS. Thursday, we get the January Consumer Price Index, the Conference Board’s latest LEI, new initial claims numbers and earnings from Nordstrom.

WEEKLY QUOTE
“The spirit, the will to win, and the will to excel are the things that endure. These qualities are so much more important than the events that occur.”
– Vince Lombardi

WEEKLY TIP
Students who want to enter college this fall should complete the FAFSA early in 2011 to increase eligibility for student aid. After completing it, they should apply for scholarships as soon as possible.

Best Regards,

Kevin Kroskey

Citations.

1 - blogs.abcnews.com/george/2011/02/the-end-of-fannie-mae-and-freddie-mac.html [2/11/11]
2 - cnbc.com/id/41529671 [2/11/11]
3 - marketwatch.com/story/us-consumer-sentiment-rises-in-february-2011-02-11 [2/11/11]
4 - blogs.wsj.com/marketbeat/2011/02/11/data-points-energy-metals-459/ [2/11/11]
5 - cnbc.com/id/41537483 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F11%2F10&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F11%2F10&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F11%2F10&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F10%2F06&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F10%2F06&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F10%2F06&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F12%2F01&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F12%2F01&x=0&y=0 [2/11/11]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F12%2F01&x=0&y=0 [2/11/11]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/11/11]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/11/11]
8 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
9 - http://montoyaregistry.com/Financial-Market.aspx?financial-market=wills-and-living-trusts&category=30 [2/13/11]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

January 31, 2011 Weekly Market Commentary

2011-02-01T15:53:00.000-05:00

4Q GDP: +3.2%
The preliminary estimate from the Bureau of Economic Analysis certainly beats the +2.6% mark from 3Q 2010. A deeper look into the BEA report reveals both personal consumption and nonresidential fixed investment improving by a healthy 4.4% last quarter; inventory accumulation slowed as well.1

HUGE JUMP IN NEW HOME SALES
The pace of new home sales improved by 17.5% last month, according to the Census Bureau. In year-over-year terms, sales were down 7.6% while sale prices were 9.1% better. For the record, fewer new homes were built in 2010 than in any year since the government started keeping records in 1963. In other housing news, the National Association of Realtors reported that pending home sales were up for the fifth time in the last six months in December (+2.0%), and Freddie Mac reported that the average interest rate on a 30-year conventional mortgage has risen to 4.80%.2,3

DISSIMILAR FINDINGS FROM CONFIDENCE POLLS
While the Conference Board’s January poll showed U.S. consumer confidence at an 8-month peak (60.6), the final January Reuters/University of Michigan survey showed a slight decline to 74.2 from 74.5 in December.4,5

DURABLE GOODS ORDERS DOWN 2.5%
There was a silver lining in the Commerce Department’s December report: with aircraft orders factored out, durable goods orders were up 0.5% last month.6

FEARS, EARNINGS REPORTS STAGGER STOCKS
Unrest in Egypt (and subpar 4Q results from Ford, Amazon and Microsoft) led to a lot of selling Friday and took the DJIA, S&P 500 and NASDAQ lower for the week. The Dow’s eight-week winning streak was snapped; it did top 12,000 in intraday trading Friday. Weekly performances were as follows: DJIA, -0.41% to 11,823.70; S&P 500, -0.55% to 1,276.34; NASDAQ, -0.10% to 2,686.89. The CBOE VIX gained 8.50% last week.7

THIS WEEK: Monday brings a new consumer spending report and earnings from ExxonMobil and Chrysler. Tuesday, we have the January ISM manufacturing report and earnings from BP, Pfizer, UPS and Broadcom. Wednesday we get 4Q results from Yum Brands, Visa and Mattel. Thursday brings new initial and continuing claims data, a new ISM service sector report, December factory orders data, and 4Q results from Merck, Sony and Unilever and Ben Bernanke speaking to the National Press Club. Friday, we have the January jobs report and Aetna’s 4Q earnings.

WEEKLY QUOTE
“You can’t judge right from looking at what’s wrong.”
– Bo Diddley

WEEKLY TIP
A tax refund is nice, but it also means that you’ve given the IRS an interest-free loan. You may want to adjust your W-4 form so less is withheld from your paycheck. Maybe that extra money could be put to better use throughout the year - in your IRA or 401(k) for example.

Best Regards,
Kevin Kroskey

Citations.
1 - blogs.forbes.com/afontevecchia/2011/01/28/inflation-wary-consumers-help-economy-grow-3-2-in-q4/ [1/28/11]
2 - latimes.com/business/realestate/la-fi-home-sales-20110127,0,3555076.story [1/27/11]
3 - usatoday.com/money/economy/housing/2011-01-27-pending-home-sales_N.htm [1/27/11]
4 - latimesblogs.latimes.com/money_co/2011/01/consumer-confidence-index-rises-job-market-outlook.html [1/25/11]
5 - marketwatch.com/story/us-consumers-sentiment-dips-in-january-2011-01-28 [1/28/11]
6 - abcnews.go.com/Business/wireStory?id=12779327 [1/27/11]
7 - cnbc.com/id/41317519 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F28%2F10&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F28%2F10&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F28%2F10&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F27%2F06&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F27%2F06&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F27%2F06&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F7%29F01&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F7%29F01&x=0&y=0 [1/28/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F7%29F01&x=0&y=0 [1/28/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/28/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/28/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [1/29/11]

January 17, 2011 Weekly Market Commentary

2011-01-17T10:09:00.000-05:00

CONSUMER & PRODUCER PRICES RISE
The U.S. inflation rate hit an 18-month peak in December: the federal government’s Consumer Price Index advanced 0.5%. Pump prices were a big factor in that gain: gasoline grew 8.5% more expensive last month. However, core CPI (minus food and energy prices) only rose 0.1% for the month, and consumers experienced just 1.5% inflation across 2010. The Producer Price Index went 1.1% higher in December, and energy costs were responsible for most of the gain. Core PPI (again, minus food and energy prices) was just +0.2% for December. Wholesale prices rose 4.0% in 2010.1,2,3

ENCOURAGING RETAIL SALES FIGURES RELEASED
The Commerce Department announced a 0.6% gain in retail sales for December. While this was smaller than the 0.8% advance forecast by economists polled by MarketWatch, the increase wrapped up a positive year for the indicator. Retail sales have now improved for sixth months in a row, and 2010 was the best year for the category since 1999.4

GOLD SLIDES, BUT OIL RECOVERS
Gold is certainly off to a rocky start in 2011: as of Friday’s COMEX close, it was down 4.27% YTD to $1360.40 per ounce following news that China had tightened bank reserves. Oil, on the other hand, gained 3.99% last week to settle Friday at $91.54 a barrel on the NYMEX with prices up +0.18% YTD.5

NEWEST UNIV. OF MICHIGAN POLL UNDERWHELMS
The initial Reuters/University of Michigan consumer sentiment survey for January showed a little slip in consumer sentiment. It came in at 72.7, down from 74.4 at the end of 2010. Economists polled by Bloomberg News had reached a consensus forecast of 75.5.6

TWO WINNING WEEKS IN A ROW TO START 2011
A strong Friday contributed to nice weekly advances for the three major U.S. indices. The weekly numbers: DJIA, +0.96% to 11,787.38; NASDAQ, +1.93% to 2755.30; S&P 500, +1.71% to 1293.24. At Friday’s close, the S&P was at its highest level since August 28, 2008.7

THIS WEEK: Stock markets are closed Monday for the national holiday honoring Dr. Martin Luther King, Jr. Looking at the notable economic releases next week, we get data on December housing starts and building permits on Wednesday, and a look at December existing home sales, the latest index of leading indicators from the Conference Board and the latest initial and continuing claims reports on Thursday.

WEEKLY QUOTE
“Knowledge is more than equivalent to force.”
– Samuel Johnson

WEEKLY TIP
Do you have credit cards? Did you know you can call your credit card company and request a lower interest rate? In fact, a good rule of thumb is to do this once every six months. They don't grant every request, but you won't know if you don't ask.

Best Regards,

Kevin Kroskey

Citations.
1- bls.gov/news.release/cpi.nr0.htm [1/14/11]
2 - theatlantic.com/business/archive/2011/01/consumer-price-inflation-jumps-05-in-december/69567/ [1/14/11]
3 - npr.org/blogs/thetwo-way/2011/01/13/132886429/jobless-claims-jump-up-energy-pushed-wholesale-prices-higher [1/13/11]
4 - marketwatch.com/story/us-retail-sales-climb-06-in-december-2011-01-14 [1/14/11]
5 - blogs.wsj.com/marketbeat/2011/01/14/data-points-energy-metals-440/ [1/14/11]
6 - bloomberg.com/news/2011-01-14/u-s-consumer-confidence-unexpectedly-declines-on-jobless-rate-fuel-costs.html [1/14/11]
7 - cnbc.com/id/41080629 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F14%2F10&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F13%2F06&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F12%2F01&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F12%2F01&x=0&y=0 [1/14/11]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F7%12F01&x=0&y=0 [1/14/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/14/11]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/14/11]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

January 3, 2011 Weekly Market Commentary

2011-01-03T10:33:00.000-05:00

MAJOR INDICES POST DOUBLE-DIGIT GAINS IN 2010
For the second year in a row, bulls ruled Wall Street. When the closing bell sounded on December 31, the S&P 500 was at 1,257.64, having gained 12.78% for 2010. The Dow finished 2010 at 11,577.51, representing an 11.02% year-over-year advance. The NASDAQ wrapped up 2010 at 2,652.87, posting a 16.91% yearly gain. The Russell 2000 also had a terrific year, finishing +25.31% after going +7.79% for December.1

FEWER INITIAL CLAIMS … AND LESS CONFIDENCE?
While the University of Michigan’s final December consumer sentiment survey showed consumer confidence at a 6-month peak, the Conference Board’s December poll declined to a 52.5 reading. Perhaps as RBS Securities Inc. economist Omair Sharif noted at Bloomberg.com, “we should watch what consumers do and not what they say.” Here’s a development that might improve consumer sentiment: weekly jobless claims dropped to a 2-year low in the week that ended Christmas Day. The 388,000 initial claims filed that week were the smallest number since July 2008.2,3

IMPROVED PENDING HOME SALES
The National Association of Realtors reported a 3.5% increase in the category for November. NAR’s pending home sales index still came in 5.0% below its November 2009 mark, but this was the second straight monthly improvement.4

CASE-SHILLER: HOME PRICES DOWN 0.8%
The latest Standard & Poor's/Case-Shiller home price index shows an 0.8% decline in housing prices across 20 cities from October 2009 to October 2010. A 1.0% overall decline in prices last October contributed to the year-over-year retreat.5

OIL, GOLD & COPPER OUTPACE STOCKS
Gold prices rose 29.76% on the COMEX in 2010. That is the best year for gold since 2007; the precious metal climbed $41.10 last week to finish December at $1,421.10 per ounce. Oil futures went +14.27% in the fourth quarter to finish the year up 15.15% at $91.38 a barrel. Copper gained 33.42% in 2010, concluding the year at $4.44 per pound.6

COMING THIS WEEK: Monday brings the Institute for Supply Management’s December manufacturing report and data on November construction spending. Tuesday, we get data on November factory orders, the most recent FOMC minutes and new estimates of auto and truck sales. Wednesday brings the ISM December service sector report. Thursday, we have new initial and continuing claims numbers. Friday, we get the December unemployment report from the Labor Department.

WEEKLY QUOTE
“And as we let our own light shine, we unconsciously give other people permission to do the same.”
– Nelson Mandela

WEEKLY TIP
Here’s a question for 2011: how are your current lifestyle costs affecting your financial progress? Consider emulating the “millionaire next door” - spend less today and you may end up with more money to save and invest toward lifetime financial objectives.

Best Regards,

Kevin Kroskey

Citations.
1 - cnbc.com/id/40865401 [12/31/10]
2 - bloomberg.com/news/2010-12-28/consumer-confidence-in-u-s-unexpectedly-falls-on-outlook-for-job-market.html [12/28/10]
3 - marketwatch.com/story/weekly-jobless-claims-drop-below-400000-2010-12-30?dist=afterbell [12/30/10]
4 - realtor.org/press_room/news_releases/2010/12/pending_gradual [12/30/10]
5 - reuters.com/article/idUSN2824569820101228 [12/28/10]
6 - blogs.wsj.com/marketbeat/2010/12/31/data-points-energy-metals-430/ [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F31%2F09&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F31%2F09&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F31%2F09&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F30%2F05&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F30%2F05&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F30%2F05&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F22%2F00&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F22%2F00&x=0&y=0 [12/31/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F22%2F00&x=0&y=0 [12/31/10]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/31/10]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/31/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

December 20, 2010 Weekly Market Commentary

2010-12-21T14:15:00.000-05:00

OBAMA SIGNS TAX DEAL INTO LAW
President Obama signed the 2010 Tax Relief Act into law on December 17 after overwhelming passage in the House and Senate. The Bush-era tax cuts are thereby extended. Through 2012, the federal income tax tops out at 35% and taxes on dividends and capital gains top out at 15%. The 0% rate for long term gains realized in the 15% tax bracket is still in place and presents a tremendous tax planning opportunity, particularly for retirees that haven't yet started receiving Social Security and/or pension income.

Next year, the estate tax returns at 35% with a $5 million dollar exemption, effectively permitting couples to pass estates as large as $10 million to heirs; tax-free charitable IRA donations also come back in 2011. Employee payroll taxes will drop from 6.2% to 4.2% next year.1,2,3,4,5

A POSITIVE SIGNAL FOR THE FUTURE
The Conference Board’s leading economic indicators index (designed to be a gauge of economic momentum or lack thereof) jumped by 1.1% in November – the biggest gain in eight months. This follows a revised 0.4% advance in the index for October.6

PRODUCER PRICES OUTPACE CONSUMER PRICES
Consumer prices inched up 0.1% in November according to the Labor Department’s Consumer Price Index. The core CPI rose 0.1%. The Producer Price Index, on the other hand, rose by 0.8% last month. Consensus polls of economists at Briefing.com had projected a 0.2% rise in the CPI and a 0.5% gain in wholesale prices.7

HOUSING STARTS TURN NORTH
They improved for the first time in three months. The Commerce Department said November’s housing starts were up 3.9% from October levels. The 555,000 annual pace topped the 559,000 consensus projected in a Bloomberg News survey.8

STOCKS ADVANCE
It was a pretty quiet week on Wall Street, and major index performance across the five trading days was as follows: Dow, +0.72% to 11,491.91; S&P 500, +0.28% to 1,243.91; NASDAQ, +0.21% to 2,642.97. As of Friday, the DJIA had traded within a range of 100 points for six straight market days – that hadn’t occurred since January 2006. All three indices ended the week at +10% or better for 2010.9

COMING NEXT WEEK: No notable releases on Monday or Tuesday. Wednesday, we have the latest existing home sales figures and the final estimate of 3Q GDP. Thursday, we get data on consumer spending and durable goods orders for November, new home sales figures for November, the final University of Michigan consumer sentiment survey for December, and the latest initial and continuing claims numbers. That’s it for the week.

WEEKLY QUOTE
“It is not the years in your life but the life in your years that counts.”
– Adlai Stevenson

WEEKLY TIP
With the new year coming, one of your resolutions can be reviewing and/or rebalancing your portfolio, to see that your investments are in sync with your objectives.

Happy Holidays,

Kevin Kroskey

Citations.

1 edition.cnn.com/2010/POLITICS/12/17/tax.deal/ [12/17/10]
2 – online.wsj.com/article/SB10001424052748703296604576005430598327972.html [12/7/10]
3 –tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf [12/16/10]
4 – businessweek.com/ap/financialnews/D9K5IEN81.htm [12/17/10]
5 – npr.org/2010/12/10/131969824/some-worry-payroll-tax-cut-threatens-social-security [12/17/10]
6 - bloomberg.com/news/2010-12-17/u-s-leading-indicators-index-gains-most-in-eight-months-in-recovery-sign.html [12/17/10]
7 - thestreet.com/story/10947594/1/inflation-remains-subdued-in-november.html [12/15/10]
8 - bloomberg.com/news/2010-12-16/u-s-futures-fluctuate-starbucks-bank-of-america-climb-freeport-slides.html [12/16/10]
9 - cnbc.com/id/40722779 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F17%2F09&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F17%2F09&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F17%2F09&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F16%2F05&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F16%2F05&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F16%2F05&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F18%2F00&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F18%2F00&x=0&y=0 [12/17/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F18%2F00&x=0&y=0 [12/17/10]
11 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/17/10]
11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [12/17/10]
12 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]
13 - montoyaregistry.com/Financial-Market.aspx?financial-market=8-retirement-tips&category=3 [12/18/10]

December 6, 2010 Weekly Market Commentary

2010-12-08T09:29:00.000-05:00

DECEMBER GETS OFF TO A BULLISH START

Recently, it's almost comical watching the market see-saw back and forth as emotionally-based investors swing with tides of varying economonic news. In the first three days of December, the S&P 500 gained 3.74% as Black Friday sales numbers and reassurance from the European Central Bank aided Wall Street. Gold closed at a record $1406.20 an ounce Friday. Then things swung the other way. Yet for the week, the big three U.S. indices performed as follows: DJIA, +2.62% to 11,382.09; S&P 500, +2.97% to 1,224.71; NASDAQ, +2.24% to 2,591.46 (its highest close in 35 months). (6,7)

JOBLESS RATE INCREASES BY 0.2%
Unemployment hit 9.8% last month. The latest Bureau of Labor Statistics report said the economy only created 39,000 new jobs in November; economists expected three times that. After all, ADP reported 93,000 new positions in the private sector last Wednesday, and the revised government estimate for October showed the economy adding 172,000 jobs in that month. Labor Department figures indicate that the unemployed and underemployed now make up around 17% of the population. (1,2)

SECOND POLL GAUGES CONFIDENCE AT 5-MONTH HIGH
The Conference Board’s consumer confidence index rose to 54.1 for November, reaching a peak unseen since June (which is exactly what happened last week with the University of Michigan’s consumer poll). Sub-indices measuring employment expectations and income expectations also improved. (3)

SOME GOOD NEWS FROM THE REAL ESTATE SECTOR
Pending home sales increased by 10.4% in October, according to the National Association of Realtors. This would seem to suggest better numbers for existing home sales in November. NAR’s pending home sales index is now back at the level it was before the appearance of the federal home buyer tax credit. (4)

ISM INDEXES BOTH AT 55 OR BETTER
The closely-watched manufacturing and non-manufacturing sector surveys from the Institute for Supply Management show moderate growth. The manufacturing index declined to 56.6 from October’s 56.9 mark; the service sector index improved from 54.3 in October to 55.0 in November. The manufacturing index showed a 7.7% slump in production for November; the service sector index showed 4.0% gains in export orders and inventories. (5)

COMING NEXT WEEK: It is a light week in terms of major economic releases. Wednesday, we get initial and continuing jobless claims data and learn about October wholesale inventories. Thursday, we have the University of Michigan’s first consumer sentiment survey for December.

WEEKLY QUOTE

“Nothing will ever be attempted, if all possible objections must be first overcome.”

– Samuel Johnson

WEEKLY TIP

Have you taken a Required Minimum Distribution from your IRA yet? If you are age 70½ or older, it’s time. If you are taking your very first RMD, you can put it off until April 1 of next year - but if you do that, you’ll have to take two RMDs in 2011. The RMD deadline for most IRA owners aged 70½ or older is December 31.

Best Regards,

Kevin Kroskey

Citations.
1 - forbes.com/2010/12/03/markets-briefing-open-jobs-equities-unemployment.html [12/3/10]
2 - ocregister.com/articles/rate-278642-november-time.html [12/3/10]
3 - bloomberg.com/news/2010-11-30/stocks-in-u-s-pare-retreat-after-consumer-confidence-report-tops-estimate.html [11/30/10]
4 - online.wsj.com/article/SB10001424052748703377504575650470810345484.html [12/3/10]
5 - ism.ws/ISMReport/nonmfgROB.cfm [12/3/10]
6 - cnbc.com/id/40496761 [12/3/10]
7 - money.cnn.com/2010/12/03/markets/markets_newyork/index.htm [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F3%2F09&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F3%2F09&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F3%2F09&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F2%2F05&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F2%2F05&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F2%2F05&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F4%2F00&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F4%2F00&x=0&y=0 [12/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F4%2F00&x=0&y=0 [12/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [12/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [12/3/10]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

November 22, 2010 Weekly Market Commentary

2010-11-23T13:02:00.000-05:00

NO RISE IN CORE CPI OR CORE PPI IN OCTOBER
Last month, the Consumer Price Index rose 0.2% with core CPI flat for the third month in a row. Core CPI has advanced at a crawl in the past 12 months: just 0.6% compared to a Federal Reserve annualized target of 2.0%. Producer prices rose 0.4% last month, duplicating their August and September increase. Yet core producer prices fell 0.6%.1,2

HOUSING STARTS SLIP, MORTGAGE RATES JUMP
The Commerce Department announced an 11.7% slump in new residential construction starts for the month of October, and a 1.9% slip from year-ago levels. A drop in apartment and condo construction accounted for most of the October decline. Last week, Freddie Mac said that the average rate on a 30-year conventional home loan had jumped to 4.39% from 4.17% a week prior. The average rate for a 15-year FRM had increased to 3.76%, up from 3.57% in Freddie’s previous survey.3,4

RETAIL SALES 7.3% BETTER THAN A YEAR AGO
Car buying drove a 1.2% gain in U.S. retail sales in October. In fact, the Census Bureau reported a 14.7% year-over-year increase in sales volume at car dealerships. The year-over-year gain in overall retail sales was 7.3%, and 13.5% for non-store retailers.5

CONFERENCE BOARD INDEX UP 0.5%
The Conference Board’s index of leading economic indicators notched its second straight half-percent increase in October. This was also its fourth straight advance.6

GM IPO TURNS THE WEEK AROUND
Thursday’s eagerly awaited initial public offering from General Motors sent the Dow on a triple-digit rally and turned a down week into a flat one. Here is how the three marquee indices performed last week: DJIA, +0.10% to 11,203.55; S&P 500, +0.04% to 1,199.73; NASDAQ, 0.00% to 2,518.12 (it actually fell .09 on the week).7,8

COMING NEXT WEEK: No economic releases are scheduled for Monday. Tuesday, we have October existing home sales and the release of the minutes from the Fed’s November 3 policy meeting, plus the second estimate of 3Q GDP. Wednesday, we have even more data: the October consumer spending report, October new home sales, October durable goods orders and the final November consumer sentiment survey from the University of Michigan.

WEEKLY QUOTE
“You are the only real obstacle in your path to a fulfilling life.”
– Les Brown

WEEKLY TIP
Ramp up your college savings with rewards programs. There are credit cards and online shopping programs that can allow you to direct a steady stream of rebates toward your education fund.

Best Regards,

Kevin Kroskey

Citations.
1 - marketwatch.com/story/us-consumer-prices-up-02-in-october-2010-11-17 [11/17/10]
2 - blogs.barrons.com/stockstowatchtoday/2010/11/16/producer-prices-lower-than-expected-but-crude-prices-jump/ [11/16/10]
3 - articles.latimes.com/print/2010/nov/18/business/la-fi-housing-mortgage-20101118 [11/18/10]
4 - freddiemac.com/pmms/release.html [11/18/10]
5 - census.gov/retail/marts/www/marts_current.pdf [11/15/10]
6 -boston.com/news/nation/washington/articles/2010/11/19/new_figures_indicate_economy_is _picking_up [11/19/10]
7 - cnbc.com/id/40279101 [11/19/10]
8 - cnbc.com/id/40155548 [11/12/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F19%2F09&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F19%2F09&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F19%2F09&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F18%2F05&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F18%2F05&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F18%2F05&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F20%2F00&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F20%2F00&x=0&y=0 [11/19/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F20%2F00&x=0&y=0 [11/19/10]
10 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [11/19/10]
10 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [11/19/10]
11 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal 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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

November 8, 2010 Weekly Market Commentary

2010-11-09T13:14:00.000-05:00

FIRST NET JOB GAIN SINCE MAY
Economists polled by Dow Jones Newswires thought non-farm payrolls would increase by about 60,000 for October. In a pleasant surprise, the economy added 151,000 jobs instead. While the jobless rate remained at 9.6% for October, Labor Department data showed the economy adding jobs for the first time in five months – a development implying moderate growth instead of a “double dip” recession.1

TWO MORE SIGNALS OF EXPANSION
The Institute for Supply Management released its October assessments of the manufacturing and service sectors last week, and both ISM indices showed improvement. The manufacturing index climbed to 56.9 from 54.4 and the service sector index improved to 54.3 from September’s 53.2 reading.2

CONSUMERS SPEND A BIT MORE
September’s personal spending gain wasn’t that impressive – just 0.2%. Economists surveyed by Bloomberg had forecast a 0.4% increase in for the month. The Commerce Department data also showed a 0.1% decrease in personal income, the first such reduction since July 2009.3

PENDING HOME SALES SUDDENLY SLIP
They fell by 1.8% in September, according to the National Association of Realtors. They haven’t declined in three months. September 2010 pending sales were 24.9% underneath year-ago levels.4

STOCKS HIT 2010 HIGHS
The Dow, S&P 500 and NASDAQ quickly reached YTD peaks after the Federal Reserve announced its plans to buy $600 billion worth of Treasuries over the next eight months. Here is how the big three performed last week: Dow, +2.93% to 11,444.08; S&P 500, +3.60% to 1,225.85; NASDAQ, +2.85% to 2,578.98. Some key commodities took off as well – oil prices gained $5.42 on the week, gold gained $40.20 across five days to close at $1,397.30 on the COMEX Friday, and copper advanced 5.68% for the week.5,6,7

COMING NEXT WEEK: The schedule of economic releases is very light. Tuesday, we have data on September wholesale inventories. Wednesday, we have initial jobless claims for 11/6 and continuing claims as of 10/30. Friday, we get the initial October survey of consumer sentiment from the University of Michigan.

(Click on the picture below to enlarge the table in a new window.)

WEEKLY QUOTE
“The book you don’t read won’t help.”
– Jim Rohn

Best Regards,

Kevin Kroskey

Citations.
1 – online.wsj.com/article/SB10001424052748704353504575596060581399440.html [11/5/10]
2 - ism.ws/ISMReport/NonMfgROB.cfm [11/3/10]
3 - blogs.barrons.com/stockstowatchtoday/2010/11/01/markets-open-higher-despite-spending-woes [11/1/10]
4 - dailyfinance.com/story/real-estate/september-pending-home-sales-drop-uneven-economic-recovery/19704428/ [11/5/10]
5 - csmonitor.com/Business/2010/1103/Federal-Reserve-to-buy-600-billion-in-bonds-as-hedge-against-deflation [11/3/10]
6 - cnbc.com/id/40032470 [11/5/10]
7 - blogs.wsj.com/marketbeat/2010/11/05/data-points-energy-metals-396/ [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F5%2F09&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F5%2F09&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F5%2F09&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F4%2F05&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F4%2F05&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F4%2F05&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=11%2F6%2F00&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=11%2F6%2F00&x=0&y=0 [11/5/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=11%2F6%2F00&x=0&y=0 [11/5/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [11/5/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [11/5/10]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

November 1, 2010 Weekly Market Commentary

2010-11-02T14:41:00.000-04:00

WALL STREET AWAITS QE2, CONSIDERS 3Q GDP
Yes, QE2 – that is the media nickname for the expected second round of quantitative easing from the Federal Reserve, a move which could boost long-term bond prices and lower long-term interest rates. Will the Fed buy more than $500 billion in Treasuries? Or less? The Wall Street Journal says the purchases will amount to “a few hundred billion dollars over several months.” The Fed will reveal its plans on Wednesday at the end of its November policy meeting. Meanwhile, the initial third quarter GDP reading is in: +2.0%. The good news: consumer spending in 3Q 2010 was the strongest in four years. The bad news: a 2.0% gain in GDP isn’t strong enough to reduce unemployment.1,2

HOME SALES PICK UP
Existing home sales improved 10.0% in September – the biggest one-month leap since the National Association of Realtors began keeping track of monthly sales volume. The median price was still 2.4% below year-ago levels. New home sales rose 6.6% in September, with the median price up 3.3% from 12 months ago. In related news, the August S&P/Case-Shiller home price index showed a year-over-year gain of 1.7% across 20 metro markets.3,4,5

CONSUMER SENTIMENT WAVERS
The Conference Board’s survey of consumer confidence reached 50.2 this month, a 1.6% improvement. However, the final October Reuters/University of Michigan survey hit an 11-month low of 67.7, perhaps on election season pessimism.6,7

DURABLE GOODS ORDERS RISE 3.3%
September’s overall gain was mostly attributable to a 105% jump in aircraft orders. Core durable goods orders declined by 0.6% on the month.8

MARKETS MOVE CAUTIOUSLY
Wall Street largely held its breath last week, waiting for November’s data and policy moves. The performance across the last five trading days of October: Dow, -0.13% to 11,118.49; S&P 500, +0.02% to 1,183.26; NASDAQ, +1.13% to 2,507.41.9

COMING NEXT WEEK: Monday, we have September consumer spending and construction spending data and the October ISM manufacturing report. Wednesday is also big – the Fed announcement comes at 2:15pm EST, and before that we get the ISM service sector report for October, plus data on October auto sales and September factory orders. Thursday, we receive the latest initial claims figures. Friday, we have the October unemployment report and September pending home sales.

(Click on the picture below to enlarge the table in a new window.)

WEEKLY QUOTE
“One loyal friend is worth ten thousand relatives.”
– Euripides

WEEKLY TIP
If you like to itemize, consider organizing your receipts by expense type. It will save your accountant time and help them on their quest to save you money.

Best Regards,

Kevin Kroskey

Citations.
1 –online.wsj.com/article/SB10001424052702303891804575576533845166848.html [10/25/10]
2 – abcnews.go.com/Business/wireStory?id=12000624 [10/29/10]
3 – businessweek.com/news/2010-10-25/u-s-existing-home-sales-rise-more-than-forecast.html [10/25/10]
4 - blogs.wsj.com/developments/2010/10/27/new-home-sales-stuck-at-rock-bottom/?mod=google_news_blog [10/27/10]
5 - bloomberg.com/news/2010-10-26/home-prices-in-20-u-s-cities-rose-less-than-forecast-case-shiller-says.html [10/26/10]
6 - theatlantic.com/business/archive/2010/10/consumer-confidence-remains-weak-going-into-midterms/65173/ [10/26/10]
7 - dailyfinance.com/story/consumer-sentiment-dips-on-economic-concerns-ahead-of-elections/19694879/ [10/29/10]
8 - marketwatch.com/story/durable-goods-orders-jump-33-in-september-2010-10-27 [10/27/10]
9 – cnbc.com/id/39916022 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F29%2F09&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F28%2F05&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F30%2F00&x=0&y=0 [10/29/10]
11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/29/10]
11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/29/10]
12 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www.montoyaregistry.com www.petermontoya.com

October 25, 2010 Weekly Market Commentary

2010-10-26T06:22:00.000-04:00

FED & CONFERENCE BOARD SEE MODEST GROWTH
The Federal Reserve’s latest Beige Book came out last week, and 8 of the 12 regional Fed banks reported economic expansion in the anecdotal survey covering September and early October. The survey found that while hiring demand “remained limited”, gains in manufacturing and retail spending were occurring in most regions. The Conference Board’s September Leading Indicators Index offered a slightly less encouraging picture – the gauge advanced for a third consecutive month, rising 0.3%, but just 5 of the 10 components of the index posted gains.1,2

HOUSING STARTS RISE SLIGHTLY
A nice surprise: Commerce Department data showed a 0.3% advance in housing starts for September. Analysts were not expecting a third straight monthly increase. Is it a sign of stability in the real estate market? Economists hope so, though the pace of housing starts is still very weak in historical terms.3

INDUSTRIAL OUTPUT DISAPPOINTS
It had been a year since the Federal Reserve announced a monthly decline in industrial production. There was an unanticipated 0.2% drop in the category for September. Utilities production rose by 1.9%.4

GOLD PULLS BACK, OIL HOLDS STEADY
October 18-22 was the worst week in three months for the precious metal, which had been heading north toward the $1,400 mark at mid-month. Gold futures fell 3.41% last week, resulting in a $1,324.40 close Friday on the COMEX. Crude oil futures dipped 0.29% last week to settle at $81.69 per barrel on the NYMEX Friday.5

GAINS ON WALL STREET
Marquee U.S. indices pulled off small advances last week. The Dow rose 0.63% to a Friday close of 11,132.56. The NASDAQ and S&P 500 respectively gained 0.43% and 0.59% on the week; at Friday’s closing bell, that left them at 2,479.39 and 1,183.08.6

COMING NEXT WEEK: September existing home sales (Monday), the August Case-Shiller Home Price Index and the Conference Board’s October poll of consumer confidence (Tuesday), September new home sales and durable goods orders (Wednesday), the latest initial and continuing claims (Thursday), and the final October reading on consumer sentiment from the University of Michigan and the first estimate of 3Q GDP (Friday). Plus of course, 3Q earnings reports all week.

Best Regards,

Kevin Kroskey

Citations.
1 – dailyfinance.com/story/the-fed-economy-grew-at-a-modest-pace-in-september/19681630/ [10/20/10]
2 – msnbc.msn.com/id/39777205/ns/business-eye_on_the_economy/ [10/21/10]
3 – marketwatch.com/story/housing-starts-rise-03-to-610000-in-september-2010-10-19 [10/19/10]
4 - thestreet.com/story/10891354/1/industrial-production-drops-in-september.html [10/18/10]
5 - blogs.wsj.com/marketbeat/2010/10/22/data-points-energy-metals-386/ [10/22/10]
6 – cnbc.com/id/39801554 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F22%2F09&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F21%2F05&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F23%2F00&x=0&y=0 [10/22/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/22/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/22/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

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. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www.montoyaregistry.com http://www.petermontoya.com/

October 18, 2010 Weekly Market Commentary

2010-10-19T12:51:00.000-04:00

The Markets

When is a dollar not worth a dollar?

A McDonald’s Big Mac costs an average of $3.71 in the United States, according to an October 14 article from The Economist. Just across the border in Canada, that same burger costs $4.18 based on the October 13 exchange rate. In the Euro area, you’d have to shell out $4.79 to quench your Mac attack. But, if you’re really hungry, you should forget going to Switzerland because a Big Mac there will set you back a whopping $6.78 at the going exchange rate.

So, a dollar is not worth a dollar when its value declines relative to another country’s currency such as the ones above. The dollar is also weak against the Japanese yen, where it fell to a 15-year low last week, and the Australian dollar, where it fell to a nearly 30-year low, according to MarketWatch.

What’s going on here?

Essentially, the combination of economic weakness in the U.S., extremely low interest rates, and our country’s easy money policy, have conspired to reduce the value of our currency relative to some other countries. And, as our government knows, a weak currency can be a net positive -- as long as it doesn’t get too weak.

According to an October 1 weekly update from Linda Duessel at Federated Investors, “Currency depreciation is the most politically palatable way to deal with both deficits and slow growth. Unfortunately, history suggests depreciating the dollar is the worst possible way to deal with public debt. It spawns inflation, stifles growth and eats away at earnings.”

The relatively weak value of the dollar may not crimp your day-to-day lifestyle right now. However, as an advisor, it’s an important macro indicator that could impact the value of your portfolio -- and your pocketbook -- if it gets too far outside of historical norms. It bears watching.

(Click on the picture below to enlarge the table in a new window.)

WHILE THE PURCHASING POWER OF THE DOLLAR can be analyzed using a Big Mac, it can also be analyzed using something less edible -- gold. Gold has been considered a medium of exchange for several thousand years, according to the National Mining Association. And, for some people, it is the soundest “currency” in existence today because it is scarce, it can’t be printed (mined) freely, and it has a long history of being valuable and tradable even though it generally has zero commercial use other than for jewelry.

Measuring the value of the dollar in terms of gold is quite simple. All you do is plot the dollar cost of one ounce of gold over time. Back in the early 1930s when our country was on the gold standard, gold was set at a fixed price of $20.67 per ounce, according to The Economist. In the early 1970s, the last vestiges of the gold standard were removed and the price of gold was allowed to reach a “market” price. As of last week, that market price was over $1,300 per ounce.

The rise of gold from $20 an ounce to over $1,300 an ounce was effectively a massive devaluation of the dollar, according to The Economist. Had you bought an ounce of gold in 1930 for $20 and held it to today, you could sell it for more than $1,300, which is a return moderately above inflation over the timer period. However, dad you just sat on your $20, it would still be worth $20, but it would buy you less than 1/50th of an ounce of gold.

The funny thing about gold is that it’s not an “investment” in the traditional sense because it does not pay a dividend and it does not generate cash flow. It just sits there and looks really pretty. I would say it's more of a speculation than an investment given its characteristics. And for those gold bugs, gold is still markedly below it's inflation-adjusted high reached in the 1980s and did virtually nothing for 20 long years. It's just the 'speculation du jour' because it has recently done well.

Weekly Focus – Think About It

“More gold has been mined from the thoughts of men than has been taken from the earth.”
--Napoleon Hill

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

October 11, 2010 Weekly Market Commentary

2010-10-12T15:09:00.000-04:00

The Markets

Investors seem to be putting a lot of faith in the Federal Reserve right now.

Since the financial crisis began in 2008, the Federal Reserve and other branches of government have engaged in creative and somewhat unorthodox ways to try and shock the economy back to good health. While reasonable people disagree on the effectiveness of the government’s intervention, it’s fair to say that, so far, we avoided a repeat of the Great Depression. Whether that avoidance was due to, or in spite of, the government’s intervention will be debated by academics for years.

One thing that we can say with confidence is that government intervention has distorted the financial markets to some degree. For example, over the past couple years, the Federal Reserve bought about $1.75 trillion of agency debt, agency mortgage-backed securities, and longer-term Treasury securities. These purchases helped reduce government bond yields. In turn, these low interest rates have put pressure on the value of the U.S. dollar, helped boost oil and commodity prices, and helped send gold to record highs.

Last Friday, another distortion became clear when the Department of Labor released the payrolls report, which showed a loss of 95,000 jobs in September. That was worse than the expected loss of 5,000 jobs, according to Bloomberg. This “bad” news didn’t phase the stock market as it rose for the day. The logic behind this “bad news is good news” idea is that with the job market still quite soft, this makes it even more likely that the Fed will step in with another round of quantitative easing. So, investors put their faith in the Fed thinking that it will swoop in to the rescue and flood the system with cheap money, which, in theory, could help the economy.

Federal Reserve and U.S. government intervention in the financial markets is not new. However, the degree to which it is occurring is rather stunning. While it may keep the economy and the financial markets propped up, the question becomes, for how long? If the juice from the government runs out, will the economy run out, too? Or, will the juice last long enough for the patient to get well and lead us into a vibrant economic expansion?

(Click on the picture below to enlarge the table in a new window.)

HOW LONG IS THE LONG-TERM? Financial advisors commonly tell their clients to “invest for the long-term,” but how long is that? Well, how about 100 years?

Mexico, of all places, issued a government bond on October 6 that yields 6.1% and matures in 100 years, according to Financial Times. That’s longer than the average life expectancy for a baby born today. Despite the extremely long maturity, there is a legitimate reason for this type of bond.

The greatest demand for these bonds came from U.S. insurance companies, which makes sense. Insurance companies have a very long time-horizon because they insure people’s lives. And, while 100 years is longer than the average term of a life insurance policy, it gives insurance companies a little more predictability on the source of income that they can use to fund death claims.

Jeffrey Rosenberg, global credit strategist for Bank of America Merrill Lynch, pointed out in a CNBC article that issuing a 100-year bond is also a side-effect of the Federal Reserve’s easy money policy. Rosenberg said, “Lack of yield in risk-free alternatives forces investors out the risk spectrum -- either down in quality or out in maturity -- in search for yield.” In this case, investors were doing both, i.e., dropping down in quality and extending their maturity.

While a 100-year bond might work for an insurance company, the general public seems to prefer shorter-term bonds that have more liquidity. After all, in this day and age, you never know when you might need access to your investments on short notice.

Weekly Focus – Think About It

“There is a time for departure even when there's no certain place to go.” --Tennessee Williams

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

October 4, 2010 Weekly Market Commentary

2010-10-05T12:18:00.000-04:00

The Markets

STOCK MARKET RISES SHARPLY

Thanks to a super strong September (the best in 71 years, according to CNBC), stocks rallied sharply for the quarter. It didn’t start off that well as Fed Chairman Ben Bernanke described the economic outlook as “unusually uncertain” in July. The stock market basically treaded water in July and August as it digested the second quarter’s big drop and the uncertain economic environment. By the time September rolled around, investors decided that the weak economy might actually be good news for the stock market. How? In the (il)logical way that the market sometimes works, investors began to believe that the economy was weak enough that the Fed would step in at some point with another round of quantitative easing. If that happened, interest rates might drop, the economy might get a lift, and stock prices might follow. That’s the theory, anyway, and investors followed it by bidding up stock prices.

ECONOMY STILL STUCK IN LOW GEAR

Normally, deep recessions are followed by strong growth. But, not this time. More than a year after the recession officially ended, we’re still stuck with a 9.6% unemployment rate and an economy that grew at a 1.7% annualized rate in the second quarter, down from 3.7% in the first quarter, according to The Wall Street Journal and Bloomberg.

On September 24, a concerned Ben Bernanke said, “A concerted policy effort has so far not produced an economic recovery of sufficient vigor to significantly reduce the high level of unemployment.” That was followed on September 30 by comments from New York Fed president William Dudley who said, “Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.” Together, these comments suggest to some market participants that the Fed is gearing up to dole out more goodies to reignite growth.

INTEREST RATES KEEP DROPPING

Investors still have a large appetite for bonds and the government and corporations stepped in to supply it “as new-debt issuance broke records and interest rates fell toward generational lows” in the third quarter, according to The Wall Street Journal. Like a coin, there are two sides to low interest rates.

On the plus side, low rates are a boon to corporations and banks as it lowers their borrowing costs and encourages them to reinvest in their businesses. It also helps the government because it lowers their borrowing costs.

On the negative side, savers get pinched. According to Dan Dekta, chief investment officer at Smith Breeden Associates, “The Fed has effectively been taxing money-market funds [by cutting short-term interest rates] to recapitalize the financial system and to make things easier on borrowers.” So, if you’re a saver, you get near zip on your savings while borrowers reap the savings.

THE DOLLAR DILEMMA

“The dollar seems to be the ugliest girl at the dance,” according to Lane Newman, director of foreign exchange at ING Groep NV in New York as quoted in Bloomberg. With the U.S. economy still relatively weak, investors are losing enthusiasm for the dollar because they fear the Fed will drive down interest rates even further. Low interest rates make the dollar less attractive relative to other countries that may offer higher rates. This concern helped drive the dollar to a third quarter loss that was its worst quarterly loss in eight years, according to MarketWatch.

A weak dollar does benefit U.S. exporters because it makes our products less expensive to foreign consumers. A strong export economy could help lower our unemployment rate and that’s one reason why our government is not too concerned about a weak dollar. Here’s the catch, though. Other countries may want a cheap currency, too, so they can revive their own exports. Since the value of a currency is only measured in relation to another currency (or a precious metal like gold), if too many countries try to devalue their currency, then it becomes a “race to the bottom.” In that scenario, it’s likely nobody will win.

And, speaking of gold, it hit record highs in the third quarter. John Roque of WJB Capital was quoted in Barron’s as saying, “all the price of gold tells you is what paper money isn't worth.” And, as gold keeps going higher, that suggests people are getting less and less comfortable with the value of paper money.

SUMMARY

The big rally in the third quarter was preceded by a big drop in the second quarter. Net, net, after nine months, the S&P 500 index is up 2.3% for the year. Despite a lot of huffing and puffing, we’re still just about where we started the year.

Weekly Focus – Think About It

“Live as if you were to die tomorrow. Learn as if you were to live forever.” --Mahatma Gandhi

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

September 27, 2010 Weekly Market Commentary

2010-09-28T13:00:00.000-04:00

The Markets

Is inflation good or bad for our economy? After last week, we now know the Federal Reserve’s answer to that question, and it may have a major effect on the financial markets going forward.

While the recession officially ended in June 2009, sluggish growth since then has concerned the Federal Reserve and that helped prod them to make their inflation intentions known in a statement released last week.

In the statement, the Fed said three times that current inflation trends are too low and that it is “prepared to provide additional accommodation if needed to…return inflation, over time, to levels consistent with its mandate.” According to Bloomberg, the Fed statement opened the door to more quantitative easing, which would pump more dollars into the economy and possibly lead to more inflation down the road.

By the end of the week, the financial markets were essentially saying, “bring it on.”

Prominent hedge fund manager David Tepper went on CNBC last Friday morning and commenting on the Fed news said, “Government intervention in the financial markets virtually guarantees that most investment choices will go up.”

Of course, nobody can guarantee anything in the financial markets, but putting Tepper’s hyperbole aside, the Fed’s statement is noteworthy. Like Alice going down the rabbit hole in the beloved children’s story, the effect of more Fed action could take us on an adventure into the economic and political unknown.

(Click on the picture below to enlarge the table in a new window.)

MAU PIAILUG, MASTER NAVIGATOR, DIED ON JULY 12, but his skill as a navigator can teach us a few lessons about what’s possible in business and life.

In 1976, Mau sailed a double-hulled canoe 2,500 miles from Hawaii to Tahiti without a compass, sextant, or charts. His objective was to see if ancient seafarers could have traveled this way from the south and west to populate Hawaii. In a moving tribute, The Economist said, “At that time, Mau was the only man who knew the ancient Polynesian art of sailing by the stars, the feel of the wind, and the look of the sea.”

The Economist further wrote:

By day he was guided by the rising and setting sun, but also by the ocean herself, the mother of life. He could read how far he was from shore, and its direction by the feel of the swell against the hull. He could detect shallower water by color, and see the light of invisible lagoons reflected in the undersides of clouds. Sweeter-tasting fish meant rivers in the offing; groups of birds, homing in the evening, showed him where land lay.

Clearly, this was a man who understood his craft and the deep principles underlying it. While modern tools could be used to accomplish much of what Mau did by feel and perception, sometimes modern tools are no match for deep understanding.

Likewise, investors sometimes get caught up in thinking that complexity and sophistication are the ticket to stock market riches. But, as Leonardo da Vinci said, “Simplicity is the ultimate sophistication.” You can still be successful without a Bloomberg terminal, without a high-frequency algorithmic trading system, and without using esoteric derivative securities.

Mau passed down his knowledge to a small number of students so his art is not lost to the world. The art of investing is not lost to the world either, and that is an area where we strive to be a continuous learner.

Weekly Focus – Think About It

“If one does not know to which port one is sailing, no wind is favorable.” --Seneca

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

September 21, 2010 Weekly Market Commentary

2010-09-21T13:57:00.022-04:00

The Markets

Individual investors are having a hard time deciding if they want to be bullish or bearish on the stock market.

The American Association of Individual Investors is a non-profit association of 150,000 investors. Each week, the association compiles a sentiment survey of its members which measures the percentage of individual investors who are bullish, bearish, or neutral on the stock market for the next six months. Lately, their sentiment numbers have been all over the place.

For the week ending September 15, 2010, the bullish sentiment increased to 50.9%, which was the second highest reading in two years, according to Bespoke Investment Group. That was also well above the long-term average bullish reading of 39.0%. However, just three weeks earlier, the bullish sentiment was only 20.7%, which was its second lowest reading in the past two years.

So, what changed in the past three weeks? The simple answer is a very nice stock market rally. Between August 26 and September 16 -- the three weeks between the two surveys -- the S&P 500 index rose 7.4%, according to data from Yahoo! That rally helped turn many of the bears in the survey to bulls.

While this weekly sentiment survey is widely reported in the media, it is basically of little value unless it is at an extreme level of bullishness or bearishness. According to MarketGauge.com, bullish readings above 70.0%, “have been timely predictors of corrections in an up trend,” while bullish readings below 30.0% in a weak market, “indicate a level of fear and capitulation by individual investors which is common at market lows.” Even this 'timely predictor' descriptor needs to often be taken with a grain of salt.

Extreme sentiment readings may actually be a contrarian indicator of where the market is heading. The takeaway is, when individual investors get extremely bullish or bearish, it may be best to do just the opposite!

SUCCESSFUL INVESTING IS NOT LIKE DRAWING A STRAIGHT LINE from point A to point B. Rather, it’s more like being able to connect the zig-zag dots along the way.

Steve Jobs, the co-founder of Apple Computer, spoke to the graduating students at Stanford University in 2005 and told a story about how on a whim, he dropped in on a calligraphy class while he was attending Reed College back in the early 1970s. At the time, he found the class utterly fascinating, but totally useless. It wasn’t until 10 years later, when he was designing the Macintosh computer, that he was able to connect the dots. He decided to take what he learned about calligraphy and incorporate it into the computer. The result was the Macintosh, which became the first computer with beautiful typography. It became a huge hit in the desktop publishing market and helped launch Apple into a multi-billion dollar company.

Like Jobs connecting calligraphy to the computer, there are many “dots” on the investment landscape that, when connected, help draw a picture of the health of the financial markets. Here are a few “dots” to keep an eye on:

• Gold setting a new all-time record high last week, according to Financial Times
• U.S. interest rates near historical lows, according to The Wall Street Journal
• Inflation nearly non-existent in the U.S., according to MarketWatch
• The U.S. dollar near a 15-year low against the Japanese Yen, according to Bloomberg
• Trillion-dollar U.S. budget deficits, according to Bloomberg
• The U.S. unemployment rate near a 27-year high, according to MarketWatch
• The rise of the Tea Party movement, according to Barron’s
• The Federal Reserve engaging in quantitative easing, according to CNBC

Weekly Focus – Think About It

“When nothing is sure, everything is possible.” --Margaret Drabble

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

September 14, 2010 Weekly Market Commentary

2010-09-14T17:01:00.005-04:00

The Markets

If you had an extra $1,000, would you use it to reduce debt or would you spend it on something discretionary?

How Americans answer that question may significantly impact economic growth over the next few years, according to an August 20 report from Federated Investors. If Americans decide to focus on debt reduction that could keep a lid on economic growth in the near term, but would likely be good for the economy over the long term. Conversely, if Americans start spending freely, it may boost short-term growth, but it might delay our day of reckoning and make it worse down the road.

(Click on the picture below to enlarge the table in a new window.)

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

“ANYBODY WHO THINKS MONEY WILL MAKE YOU HAPPY, HASN’T GOT MONEY,” according to billionaire David Geffen. Now we have a new scientific study that helps quantify the connection between money and happiness.

Researchers Daniel Kahneman and Angus Deaton of Princeton University analyzed data from the Gallup-Healthways Well-Being Index and tried to determine how income affects an individual’s emotional well-being and overall life satisfaction. They measured emotional well-being as an individual’s day-to-day level of happiness (e.g., how much enjoyment, laughter, smiling, anger, stress, or worry they experience each day,) while overall life satisfaction was measured as an individual’s satisfaction with their life in general.

Here’s what they found.

As a person’s annual income rises up to about $75,000, their emotional well-being, or day-to-day happiness, rises, too. But, beyond $75,000 in annual income, there was no additional boost to day-to-day happiness, according to the researchers’ article published in the Proceedings of the National Academy of Sciences and reported by Inc. magazine.

What’s the key to $75,000? According to LiveScience.com, “The researchers suggest that making anything more than $75,000 no longer improves a person’s ability to spend time with friends, avoid pain and disease, and enjoy leisure time--all factors involved in emotional well-being.”

Ah, but more money does increase overall life satisfaction. According to the Inc. article, “With every doubling of income, people tended to say they were more and more satisfied with their lives on a 10-point scale--a pattern that continued for household incomes well above $120,000.”

Do these findings match your life experience? Let us know what you think.

Weekly Focus – Think About It

“An object in possession seldom retains the same charm that it had in pursuit.”

--Pliny the Younger

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

September 7, 2010 Weekly Market Commentary

2010-09-08T09:20:00.024-04:00

The Markets

Where does 2 + 2 = billions of dollars? In the stock market, of course!

Back in the “good ol’ days,” investment professionals would spend their waking hours poring over financial statements, developing financial models, and analyzing reports to try and find undervalued stocks. The thought was you could find stocks that were selling below their “intrinsic value,” and, if you held them long enough, you would likely earn a nice return. Warren Buffett exemplifies this style of investing.

Today, with an interconnected world filled with impatient “fast traders” and economic uncertainty, there seems to be a fixation on the latest data released by Washington or some other business group that has its pulse on a sector of the economy. Last week, we had two great examples of how the publication of certain data helped move the markets.

On Wednesday, the Institute for Supply Management said its closely watched index of factory activity rose to 56.3% in August from 55.5% in July, according to The Wall Street Journal. This number was better than expected and suggested the manufacturing sector of the economy was holding up well. A similar report on China’s manufacturing sector also showed an unexpected rise. Stocks reacted by jumping 2.5% that day as measured by the Dow Jones Industrial Average.

And on Friday, the government released the August nonfarm payroll report and it was better than expected, according to CNBC. Stocks jumped on the news and the Dow rose 1.2% as fears of continuing gloom in the job market eased a bit.

So, the release of two reports in two days, (the 2 + 2), helped the stock market as measured by the Dow soar 3.7% and add billions of dollars in market value, according to data from Wilshire Associates.

In this type of data-driven market, trigger-happy traders can help cause big swings -- both up and down -- that tempt some investors into thinking that either the end of the world is near or happy days are here again. Ultimately, two pieces of data in two days may help add (or subtract) billions in market value, but they are insufficient to discern a new trend. Intrinsic value still matters over time, and daily data, while helpful, is only part of the puzzle of investing.

HOW THE RICH SPEND THEIR MONEY may have a big impact on the pace of our economic recovery. Consider this, the top 5% of Americans by income account for 37% of all consumer outlays, according to an August 5 Wall Street Journal article that was based on data from Moody’s Analytics. At the other end of the spectrum, the bottom 80% by income account for 39.5% of all consumer outlays. So much for the 80/20 rule!

The share of spending by the top 5% has grown over the years, too. Back in the third quarter of 1990, the top 5% accounted for 25% of consumer outlays versus the 37% today, according to the Journal article.

In a 2005 research report, analysts at Citigroup coined the phrase “Plutonomy” to describe countries that exhibit significant income and wealth inequality. Plutonomies also are disproportionately dependent on the spending habits of the wealthy. According to that 2005 report, Citigroup classified the U.S., U.K., Canada, and Australia as Plutonomies.

So, if you want to know where the economy is heading—follow the money!

Weekly Focus – Think About It

“If you start small, dream big, plant a seed of intention, and care for it, it’s not unrealistic to expect something marvelous to come up.”
--Marc Ian Barasch

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

August 30,2010 Weekly Market Commentary

2010-08-30T16:57:00.002-04:00

The Markets

Has corporate America lost its gumption?

Three of the things that have made the United States so great are the determination, fearlessness, and entrepreneurial spirit of our people. Unfortunately, that seems to be a bit lacking right now with the leaders of some of our country’s largest companies.

For more than two years now, corporate America has been on a belt-tightening, cost-cutting push that has helped contribute to our high unemployment rate. While that has been bad for employees, it has sparked a significant revival in corporate profits. For example, according to a New York Times article based on data from the Bureau of Economic Analysis, second quarter corporate profits were within 4% of their pre-recession peak. And, by another measure, Barron’s magazine pointed out that corporate profits as a percentage of gross domestic product are near 40-year highs.

So, if corporate America is doing so well, why aren’t they hiring and why is the stock market stuck in neutral?

In a word -- uncertainty.

Even top Federal Reserve officials are having a hard time agreeing on what to do next to help the economy. On August 10, 17 of them met and, according to an August 24 Wall Street Journal article, at least seven of them spoke against or expressed reservations about the ultimate decision Chairman Bernanke made to keep the Fed’s balance sheet from shrinking. Toss in government regulation, an upcoming mid-term election, tax policy uncertainty, a deflation/inflation debate, and stubbornly high unemployment, and there’s plenty to muddy up the waters.

Corporate America is reacting to this uncertainty by conserving cash and keeping a lid on hiring. However, this will eventually change, and, on a positive note, we may be starting to see that happen as corporate acquisitions are on the rise. The current bidding war between two blue-chip technology companies for an obscure data-storage company may be one example of gumption returning to the boardroom… and that’s good!

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

WHO HAS A WORSE DEBT BURDEN, countries in developed markets or countries in emerging markets? Well, by at least one measure, developed countries are in worse shape.

According to the August 2010 newsletter from Research Affiliates, LLC, “Developed markets account for 62% of the world’s GDP and owe 90% of the world’s sovereign bond debt. The emerging markets collectively produce 38% of the world’s GDP and owe just 10% of world sovereign bond debt.” In other words, relative to the size of its economies, developed market countries (like the U.S.) have a much higher debt burden.

This debt level is problematic because it hampers a country’s ability to grow. On the flip side, emerging market countries that are not swimming in debt are some of the fastest growing in the world. China is a good example. Its breakneck growth has led to a 60-mile long traffic jam on a main highway leading into Beijing that is still unfolding, according to The New York Times. The culprit? A parade of coal trucks trying to supply the rapidly growing energy needs of Beijing.

Over time, as the developed world tries to pare its debt through austerity programs, sluggish growth may result. World leaders are banking on emerging countries like China to help pickup the economic slack. The extent to which these emerging countries can do that may have a big impact on how long the U.S. stays stuck in neutral.

Weekly Focus – Think About It

“Don't waste life in doubts and fears; spend yourself on the work before you, well assured that the right performance of this hour's duties will be the best preparation for the hours and ages that will follow it.”
--Ralph Waldo Emerson

Best regards,
Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.

August 24, 2010 Weekly Market Commentary

2010-08-24T12:31:00.004-04:00

The Markets

“We don’t think the world has ended.”

With so much doom and gloom being published these days, it’s refreshing to hear a respected leader of a global, blue-chip company make a positive statement. Doug Oberhelman, the chief executive officer of Caterpillar, met with analysts last week and painted a rather bright picture of the world economy, including the quote above.

Oberhelman went on to say that Caterpillar does not expect a double-dip recession because the world’s central bankers are staying on top of the situation and the global economy is improving -- especially in the developing world. As the world’s largest maker of construction and mining equipment, Caterpillar is considered a good indicator of worldwide economic health, according to Associated Press.

One question that many analysts and economists are struggling with is, “Can the world recover without the United States?” As the world’s largest economy, there’s an old saying that when our economy sneezes, the world catches a cold. Well, we’ve certainly done more than sneeze in the past three years. Optimists say that yes, the U.S. is still important in the world economy, but other countries, most notably China, India, and Brazil, can still prosper even if the U.S. is down for a few counts. They call this “decoupling.”

Underscoring this idea of decoupling is the fact that China just passed Japan as the world’s second largest economy, according to The New York Times. Forecasters are predicting that China will surpass the U.S. as the largest economy by as early as 2030.

Caterpillar, for one, thinks the world will continue recovering even if the U.S. is a bit weak. And the stunning growth of China makes that idea plausible.

August 16, 2010 Weekly Market Commentary

2010-08-17T07:54:00.001-04:00

The Markets

One week, the glass is half full, the next week, it is half empty.

Investor’s lack of conviction was on full display last week as a scandal at Hewlett Packard, a change of heart from the Fed, a revenue miss from tech bellwether Cisco Systems, and an unexpected rise in weekly jobless claims led to a decline in global stock markets, according to Bloomberg.

In particular, the Federal Open Market Committee last week slightly changed its economic outlook by saying, “The pace of economic recovery is likely to be more modest in the near term than had been anticipated.” To help the economy maintain momentum, the Fed announced that it will goose the economy a bit by reinvesting the principal payments it receives on its agency securities in longer-term Treasury securities and that it will roll over its maturing holdings of Treasury securities in new Treasury securities. Effectively, this means the Fed will not shrink its balance sheet for the time being.

Whether this move is good or bad for the economy is subject to debate. One camp says it will help keep interest rates low, which could be good for the economy. Another camp says it will help keep interest rates low, which could be bad for the economy at this stage of the economic recovery. That was not a misprint -- smart people are taking opposite views on whether low rates are good or bad for the economy. Kansas City Fed President Thomas Hoenig leads the dissenters. In a speech in Lincoln, NE last week, Hoenig said, “We need to get off of the emergency rate of zero, move rates up slowly and deliberately” and “We will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long.”

This tug-o-war between smart people makes for interesting reading (at least for us, anyway!)… but generates no clear trend in the market.

IF YOU HAD TO DESCRIBE THE STATE OF THE ECONOMY as an animal, which animal would you pick? This may sound like a silly question, but it is an actual question from a national survey released last month and sponsored by the Certified Financial Planner Board of Standards.

Some of the less common survey responses included cow, kangaroo, lamb, dinosaur, possum, rat, giraffe, hyena, and, not surprisingly, bull. Looking at this list makes us wonder… what attribute does a giraffe or a possum have that can be compared to the economy? Let us know what you think.

The most common responses were bear, snake, turtle, sloth, lion, pig, dog, and skunk.

Okay, have you picked your animal?

For discussion purposes, let’s say that you picked a bear as your animal. Of course, a “bear” is also commonly used to describe a weak stock market. Now, here’s the point. Often, investors get an idea in their mind -- e.g. this is a “bear” market -- and have a hard time changing their perception even in the face of new evidence that would suggest their perception is inaccurate. Psychologists call this “anchoring” and it has led many investors astray, according to Investopedia.

The key to overcoming anchoring is to keep an open mind, be willing to change, and utilize rigorous thinking.

So, no matter what animal you picked, whether it be bull, bear, turtle, sloth, or skunk, be alert to new information that may suggest that it’s time to pick a new animal. We need to be mindful of the “anchoring” bias while doing our best to base our decisions on rigorous thinking and not on an outdated opinion.

Weekly Focus – Think About It

“To get all there is out of living, we must employ our time wisely, never being in too much of a hurry to stop and sip life, but never losing our sense of the enormous value of a minute.”

--Robert Updegraff

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* This newsletter was prepared by PEAK.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.

August 9, 2010 Weekly Market Commentary

2010-08-09T11:50:00.001-04:00

The Markets

Despite a disappointing jobs report, stocks still managed to post a solid gain last week. In fact, all three major U.S. indexes --the Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite --ended last week in positive territory for the year, according to CNBC.

Strong corporate earnings are helping to keep a floor under the market. Roughly 75% of the companies that have reported second quarter earnings beat Wall Street estimates, according to CNBC. Of course, one factor that helped corporate America post strong earnings was keeping a tight rein on employment costs. Unfortunately, what’s good for corporate America may not always be good for “employment” America.

Bond yields continued to decline last week as the 2-year Treasury hit a record low of 0.50%. The 10-year Treasury yielded 2.82%, which is a 15-month low. Foreign country bonds are sporting low yields, too. The 10-year German Bund hit a record low yield of 2.51% last week, while the benchmark Japanese 10-year government bond yielded just 1.05% last week, according to Barron’s.

Low yields suggest either slower economic growth ahead or little to no inflation, or both, according to Barron’s. Low rates are generally good for businesses because it makes their cost of capital lower and makes it easier for them to reinvest for future growth. So far, the low rates appear to have helped stabilize the economy, but robust growth and reinvestment has yet to materialize, according to The New York Times.

Overall, the mixed economic data is helping keep the market stuck in a broad range.

“WE ARE IN A NEW NORMAL WORLD in which the distribution of outcomes is flatter and the tails are fatter,” according to a July 2010 Global Perspective report from Richard Clarida of PIMCO. What in the world does that mean?

Clarida’s words might sound like mumbo jumbo, but he actually makes a solid case that planning for “extreme” outcomes rather than “average” outcomes might be the appropriate investment strategy in the current climate.

History tells us that the average annualized total return on the S&P 500 between 1926 and 2009 was 9.9% and the standard deviation was 19.2, according to TD Ameritrade. Standard deviation is a measure of volatility and at 19.2 (one standard deviation), it means that about 68% of the time, we would expect the S&P 500 annual return to be somewhere between a loss of 9.3% and a gain of 29.1%. At two standard deviations, it means that about 95% of the time, we would expect the S&P 500 to return somewhere between a loss of 28.5% and a gain of 48.3%. At three standard deviations, it means that about 99.7% of the time, we would expect the S&P 500 to return somewhere between a loss of 47.7% and gain of 67.5%.

Clarida is suggesting that, in the future, more of the returns in the financial markets will fall in the 2nd or 3rd standard deviation range (the “fat tail”) instead of the 1 standard deviation range (the “hump”). If true, this means we could expect more volatility -- both positive and negative -- in the future.

The future could be more volatile due to such things as the unpredictable nature of government regulation and bailouts, sovereign debt levels, high-frequency trading, geopolitical flare-ups, social unrest, high unemployment, and medical or scientific breakthroughs.

Recent events such as the May 6 “Flash Crash,” the 2008 financial crisis, the 2007-2009 bear market, and the 2008 spike and then collapse in oil prices, support Clarida’s idea that we live in volatile times.

So, if we are temporarily living in a “fat tail” world, then it makes sense to plan accordingly. And, that’s what we’re trying to do on your behalf.

Weekly Focus – Think About It

“Take calculated risks. That is quite different from being rash.”

-- General George S. Patton

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* This newsletter was prepared by PEAK.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.

August 2, 2010 Weekly Market Commentary

2010-08-02T15:57:00.001-04:00

The Markets

Consumers are becoming more frugal and that may turn out to be a good thing.

One cause of The Great Recession was the cumulative effect of consumers spending more money than they could afford. Eventually, they got tapped out, business slowed down, and massive layoffs ensued. Of course, simple math says you cannot indefinitely spend what you do not have and, by 2008, the math caught up with many Americans.

Last week, the Commerce Department said the personal savings rate (saving as a percentage of disposable personal income) rose to 6.2% in the second quarter. That’s up from 5.5% in the first quarter. In the heyday of conspicuous consumption back in 2007, the savings rate was a paltry 2.1%, according to CNNMoney.com.

Higher savings is a double-edged sword. On the positive side, it means consumers are acting more responsibly and, by beefing up savings, they are setting the stage for future sustainable economic growth. The downside to this thriftiness is slower economic growth in the short term.

It’s a fine balance between saving enough to get our personal balance sheet back in order, but not too much that the economy takes years to regain its footing. Remember, consumer spending still accounts for about 70% of economic activity, according to The Wall Street Journal. The trick is we still have to shop -- but just not till we drop!

DOUBLE DIP IS NOT JUST FOR ICE CREAM CONES. Over the past few months, concern has grown that the U.S. economy could experience a double-dip recession. Drooping bond yields, which may suggest slower economic growth, coupled with some soft economic data and weak consumer sentiment, have raised a red flag. However, from an international perspective, the International Monetary Fund has raised its 2010 world economic growth projection five times since April 2009 and it now stands at a forecasted rate of 4.6% -- which is rather healthy and certainly not double-dip territory.

Although the likelihood of a double-dip recession still seems small, a July 27 Financial Times article outlined four risks that could possibly derail the recovery:

1. A decline in business and consumer confidence.
2. An end to temporary boost to post-recession economies, e.g., economic growth emanating from inventory re-stocking.
3. A new crisis or “black swan” event that throws the world for a loop.
4. Overly austere government budgets that tighten too much too soon and snuff out the recovery before it gets a chance to become self-sustaining.

These risks are reasonable and bear watching. However, let’s face it. No matter how well the world is humming, we (advisors) can always find something to worry about. But, that’s our job. It’s not that we’re pessimists. It just comes with the territory. We worry about things -- large and small -- in an effort to be proactive and to try and help you stay ahead of the curve.

Weekly Focus – Think About It

Here’s a list of the happiest countries in the world, according to a recently released Gallup Poll based on data collected between 2005 and 2009. Survey participants were asked to rate their overall satisfaction with their lives and how they had felt the previous day (to gauge their happiness in daily activities).

Rating   Country

1          Denmark
2          Finland
3         Norway
4         Sweden
5         Netherlands
14        United States
17       United Kingdom
44        France
81        Japan
125     China

Does this list surprise you?

Best regards,

Kevin Kroskey

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* This newsletter was prepared by PEAK.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.