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Growth Report for September 2010

Mark Lund, The Investor Coach — Tue, 07 Sep 2010 17:18:38 +0000

MONTHLY QUOTE
“Nothing in this world can take the place of persistence.”
– Calvin Coolidge

THE MONTH IN BRIEF
For the stock market investor, last month was pretty lackluster – the DJIA suffered its first negative August since 2005, sliding 4.31% and struggling to keep above the 10,000 level.¹ Volume was remarkably light and skepticism permeated Wall Street. It was widely agreed that the economy was crawling along: the impact of the 2009 federal stimulus was fading, and the government probably wasn’t going to ride to the rescue again. Businesses and consumers would just have to wait and hope. Yet as August gave way to September, some hope arrived: indicators showed an economy that appeared healthier than proclaimed.

DOMESTIC ECONOMIC HEALTH
Our first shot of hope comes in the form of consumer spending and consumer confidence. Consumer spending rose 0.4% in July after a flat June. That was the biggest increase since March, and welcome after three months without a net gain. Personal incomes were up 0.2%, and the personal savings rate declined to 5.9% from the previous 6.2%.² The University of Michigan/Reuters consumer sentiment index improved to 68.9 in August from 67.8 in July, and the Conference Board’s August poll made the same move, rising from July’s 51.0 to 53.5. (Its expectations index rose from 67.5 to 72.5.)^3,4

Our second shot of hope comes from the retail and manufacturing sectors. Analysts polled by Briefing.com expected the Institute for Supply Management’s August manufacturing index to fall to 52.9 from the July mark of 55.5. Surprise – it came in at 56.3. Additionally, the Commerce Department said retail sales increased for the first time in three months in July, reporting a 0.4% gain.^5,6,7

In another positive sign, inflation reappeared. In July, the Consumer Price Index rose 0.3% after declining the three previous months; the Bureau of Labor Statistics measured year-over-year inflation at 1.2%. The Producer Price Index advanced 0.2% in July for a 4.2% year-over-year gain.^8,9

Other indicators were less reassuring. Unemployment ticked up to 9.6% in August, and analysts were not surprised by that .1% increase. On a positive note, the private sector gained 67,000 jobs. Durable goods orders rose 0.3% in July, not the 2.7% economists surveyed by MarketWatch were forecasting. (It was the first gain in the category in three months.) The ISM service sector index also declined for August, still showing growth but descending from July’s 54.3 mark to 51.5.^10,11,12

At the Fed’s annual Wyoming retreat, chairman Ben Bernanke said that the central bank would intervene in the economy if necessary, admitting that “although private final demand, output, and employment have indeed been growing for more than a year, the pace of that growth recently appears somewhat less vigorous than we expected.” He noted that Fed policymakers did not think the recovery was fading.¹³

GLOBAL ECONOMIC HEALTH
In late August, we learned that the European Union’s collective economy expanded in the second quarter at a rate unseen since 2006. The Eurozone PMI was 55.1 in August, still showing growth but down from 56.7 in July. Still, the index has been above 50 for the last 11 months of data. The pace of manufacturing growth in Germany, England, Italy and Spain slowed in August. Economists polled by Bloomberg felt the European Central Bank would keep interest rates at around 1% for an extended period.^14,15

Both the government PMI and the most respected private-sector PMI in China advanced in August – the private sector index went from 49.4 in July to 51.9, a three-month peak. India’s manufacturing sector grew again in August, and Russia’s manufacturing sector expanded by the most since April 2008.¹⁵

WORLD MARKETS
Some benchmarks did pull off gains, and many foreign indices outperformed the DJIA and S&P 500. The advances were found in the emerging markets: Indonesia’s JSX Composite, +0.4%; India’s Sensex, +0.6%; Chile’s IPSA, +2.8%; the Philippines All Shares Index, +3.4%; and Thailand’s SETI, a remarkable +6.7% last month. The big loser among notable indices was the Nikkei 225, which had its worst month since May (-7.5%). Other monthly descents: England’s FTSE 100, -0.6%; South Korea’s KOSPI, -1.1%; Hong Kong’s Hang Seng, -2.4%; Germany’s DAX, -3.6%; France’s CAC 40, -4.3%; and Brazil’s Bovespa, -4.8%.

Now how did the key MSCI indices fare last month? Not very well. In U.S. dollar terms, the MSCI World Index lost 3.92% while the MSCI Emerging Markets Index retreated 2.15%.^16,17,18

COMMODITIES MARKETS
After a bad July, gold futures enjoyed a strong August. Gold advanced 5.64% for its best month since April. (After eight months of 2010, gold looked pretty good compared to the S&P 500: +12.90% YTD.) August was rough for oil and downright awful for natural gas. Oil fell 8.90% after rising in June and July; the August slide left it at -9.30 YTD. Natural gas futures sank 22.49% in August, a major reversal after prices rose for four straight months; at the end of August natural gas was down 31.59% for the year. The U.S. Dollar Index went +1.89% for the month, moving from 81.54 at the end of July to 83.08.^19,20

REAL ESTATE
Well, the National Association of Realtors did have a tiny bit of good news for us: in July, the median sale price of an existing home was $182,600, 0.7% higher than it had been in July 2009. That was about all the good news that the real estate sector gave us in August. Analysts knew home sales would drop without encouragement from the federal government. But they were stunned to learn just how much, especially considering that July is commonly the peak month for home buying. Existing home sales fell 27.2% on the month and were 25.5% under year-ago levels. New home purchases slipped 12.4% in July to the slowest pace since the start of recordkeeping in 1963.^21,22

Mortgage interest rates continued their descent. Freddie Mac’s August 26 Primary Mortgage Market Survey showed rates on the 30-year FRM averaging under 4.5% (4.36% nationally) and rates on 15-year FRMs averaging below 4% (3.86% nationally). In the September 2 survey, those numbers got even smaller: 4.32% and 3.83%.²³

LOOKING BACK … LOOKING FORWARD
It was an unusual August – the worst for the Dow, S&P and NASDAQ since 2001. The numbers were definitely against the norm for the Dow – historically, August is the third best month for the DJIA, with gains occurring 65% of the time.²⁴

% CHANGE	Y-T-D	1-MO CHG	1-YR CHG	10-YR AVG
DJIA	-3.96	-4.31	+5.46	-1.07
NASDAQ	-6.84	-6.24	+5.22	-4.97
S&P 500	-5.90	-4.74	+2.81	-3.09
REAL YIELD	8/31 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.95%	1.76%	1.65%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 8/31/10^{1,25,26,27,28}
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

So how optimistic should we be for September? Well, we have some very good signs in the jobless report. August non-farm payrolls only shrank by 54,000, compared to expectations of a loss of 120,000 positions. The private sector gain of 67,000 jobs also surpassed the gain of 41,000 analysts had forecast. Newly revised June and July numbers from the Labor Department indicate that the economy lost 123,000 less jobs than previously assumed.¹² Factor in the recent gains in personal spending and personal income and the continued signs of growth in U.S. and world manufacturing and suddenly things seem a bit brighter. However, unemployment remains the biggest drag on the housing market and a significant drop in joblessness isn’t seen for a long time to come.

Here are the key economic releases for the balance of September. We have the Fed’s September beige book (9/8), July wholesale inventories (9/10), August retail sales and July business inventories (9/14), August factory output (9/15), August PPI (9/16), August CPI and the preliminary September University of Michigan consumer sentiment survey (9/17), a Fed interest rate decision and August housing starts and building permits (9/21), August existing home sales and the Conference Board’s August leading indicators (9/23), August new home sales and durable goods orders (9/24), the Conference Board’s September look at consumer sentiment and the July Case-Shiller home price index (9/28). The August consumer spending data comes to us on October 1, in addition to the September ISM manufacturing index.

MONTHLY RIDDLE

Tom’s mother has four children. Each was born exactly one year and one month apart from the previous child. The first she named April, the second she named May, the third she named June. What did she name her fourth child?

Last month’s riddle:
What do the words Potato, Voodoo, Grammar, Revive and Banana have in common?

Last month’s answer:
All five words read the same backwards when their first letter is moved to the last position. (Ex: Banana … move “b” to the end position to spell “ananab”. Ananab = Banana spelled backwards.)

Citations.
1 - blogs.wsj.com/marketbeat/2010/08/31/data-points-us-markets-287/ [8/31/10]
2 - cnbc.com/id/38915439/ [8/30/10]
3 - bloomberg.com/news/2010-08-27/u-s-consumer-sentiment-rises-to-68-9-from-an-eight-month-low-index-shows.html [8/27/10]
4 - conference-board.org/data/consumerconfidence.cfm [8/31/10]
5 - cnbc.com/id/38951763 [9/1/10]
6 - briefing.com/Investor/Public/Calendars/EconomicCalendar.htm [9/3/10]
7 - online.wsj.com/article/BT-CO-20100813-705991.html [8/13/10]
8 - bls.gov/news.release/pdf/cpi.pdf [8/13/10]
9 - bls.gov/news.release/pdf/ppi.pdf [8/17/10]
10 - latimes.com/business/la-fi-unemployment-rate-20100904,0,5340720.story [9/3/10]
11 - marketwatch.com/story/us-durable-goods-orders-inch-up-03-2010-08-25?dist=beforebell [8/25/10]
12 - cnbc.com/id/38988946/ [9/3/10]
13 - online.barrons.com/article/SB50001424052970204014404575455490503235852.html [8/27/10]
14 - bloomberg.com/news/2010-09-01/trichet-may-say-ecb-to-keep-emergency-lending-measures-in-place-into-2011.html [9/1/10]
15 - in.biz.yahoo.com/100901/137/baw6w5.html [9/1/10]
16 - cnbc.com/id/38926843 [8/31/10]
17 - emerginvest.com/WorldStockMarkets/Countries.html [8/31/10]
18 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [8/31/10]
19 - blogs.wsj.com/marketbeat/2010/08/31/data-points-energy-metals-351/ [8/31/10]
20 - online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [8/31/10]
21 - realtor.org/press_room/news_releases/2010/08/ehs_fall [8/24/10]
22 - reuters.com/article/idUSTRE67N3B320100825 [8/25/10]
23 - freddiemac.com/pmms [9/3/10]
24 - cnbc.com/id/38923794 [8/31/10]
25 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F31%2F09&x=0&y=0 [8/31/10]
25 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F31%2F09&x=0&y=0 [8/31/10]
25 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F31%2F09&x=0&y=0 [8/31/10]
26 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F31%2F00&x=0&y=0 [8/31/10]
26 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F31%2F00&x=0&y=0 [8/31/10]
26 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F31%2F00&x=0&y=0 [8/31/10]
27 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/31/10]
27 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/31/10]
28 - 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. The JSX Composite is an index of all stocks that trade on the Indonesia Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The IPSA Index is a Total Return Index and is composed of the 40 stocks with the highest average annual trading volume in the Santiago Stock Exchange. The Philippine Stock Exchange All Share Index is a market capitalization weight index composed of all the stocks listed at the Philippine Stock Exchange. The Bangkok SET Index is a capitalization-weighted index of stocks traded on the Stock Exchange of Thailand. The Nikkei 225 is the benchmark stock market index for the Tokyo Stock Exchange (TSE). The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges. The Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. 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 Bovespa, the benchmark stock index of Brazil, is the second largest in the Americas, and the leading exchange in Latin America. 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. 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.mon

Weekly Free Market Update for September 7, 2010

Mark Lund, The Investor Coach — Tue, 07 Sep 2010 16:52:24 +0000

WEEKLY QUOTE
“Pleasure may come from illusion, but happiness can come only of reality.”
– Sebastien-Roch Nicolas De Chamfort

JOBLESS RATE RISES, AND SO DO STOCKS
Friday, the Labor Department reported 9.6% unemployment in August. While that was no improvement from July’s 9.5% mark, there was some good news within the report – news that helped the Dow to a triple-digit Friday gain. First of all, the private sector hired 67,000 new workers – more than the 41,000 analysts expected. Economists polled by Briefing.com feared the report would show a net loss of 107,000 jobs; instead, that net reduction was just 54,000. Job losses for June and July were also revised downward by the Labor Department.^1,2

CONSUMER SPENDING UP 0.4%
Personal spending had been flat in June, so investors welcomed the change of pace in July. Personal income rose 0.2% in July, with private sector salaries and wages up 0.5%. The personal savings rate declined to 5.9% from June’s 6.2% mark, implying that more after-tax income had been spent.³

ISM INDICES SIGNAL EXPANSION
The Institute for Supply Management’s manufacturing sector index went to 56.3 in August from 55.5 in July. ISM’s August service sector index came in at 51.5, below the 53.5 forecast by economists polled by Reuters. Anything above 50 means growth, yet this is down from the 54.3 mark of July. The index’s employment barometer fell to 48.2 and its new orders gauge fell to 52.4 from 56.7 in July.⁴

CONFERENCE BOARD GAUGES MORE OPTIMISM
The Conference Board Consumer Confidence Index rose to 53.5 in August, a notable increase from the 51.0 of July. Peering deeper into the survey, the CB’s index of present conditions slipped to 24.9 in August from 26.4 in July, but its index of future expectations improved from 67.5 all the way to 72.5.⁵

HOME PRICES RISE FOR THIRD STRAIGHT MONTH
The June edition of the Case-Shiller Home Price Index revealed a 1.0% gain – the third monthly advance for the index, which studies prices of existing homes in 20 metropolitan areas. Only one of those 20 areas saw prices decrease: Las Vegas.⁶

DOW GOES BACK IN THE BLACK
September got off to a nice start on Wall Street – the three major U.S. indices all gained ground. The DJIA advanced 2.93% last week to settle at 10,447.93 Friday. The NASDAQ soared 3.72% to 2,233.75, and the S&P 500 topped the 1,100 level with a 3.75% weekly gain (it closed at 1,104.50 Friday).⁷

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+0.19	+11.81	+0.00001	-0.70
NASDAQ	-1.56	+12.63	+0.87	-4.72
S&P 500	-0.95	+10.09	-1.86	-2.74
REAL YIELD	9/3 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.09%	1.69%	1.59%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 9/3/10^7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?

Last week’s riddle:
A woman walking along a canal sees a boat full of people, yet there isn’t a single person on board. How could this be?

Last week’s answer:
Everyone aboard the boat is married.

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Citations.
1 - cnbc.com/id/38988946 [9/3/10]
2 - briefing.com/Investor/Public/Calendars/EconomicCalendar.htm [9/3/10]
3 - online.wsj.com/article/SB10001424052748703369704575461293945190712.html [8/31/10]
4 - marketwatch.com/story/services-growth-slows-in-august-ism-says-2010-09-03-102400 [9/3/10]
5 - conference-board.org/press/pressdetail.cfm?pressid=3997 [8/31/10]
6 - marketwatch.com/story/us-home-prices-rose-10-in-june-2010-08-31?dist=countdown/ [8/31/10]
7 - cnbc.com/id/38996210 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [9/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [9/3/10]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Free Market Update for the Week of August 30, 2010

Mark Lund, The Investor Coach — Mon, 30 Aug 2010 17:23:19 +0000

WEEKLY QUOTE
“When there is an original sound in the world, it makes a hundred echoes.”
– John A. Shedd

BERNANKE REASSURES WALL STREET
At the annual Federal Reserve summer retreat at Jackson Hole, WY on Friday, Fed chairman Ben Bernanke said that the central bank “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.” Translation: we are ready to do what it takes to support the economy. Bernanke stated that the Fed still had plenty of tools to fight deflation, with buying more Treasuries a prime option. He did not mention buying private assets. The Dow rallied for a gain of 164.84 Friday.^1,2

BREATHTAKING DROP IN HOME SALES
In July, demand in the housing market is usually at its highest. So the July housing numbers were confounding even with the absence of taxpayer credits: new home sales down 12.4% from June, existing home sales down 27.2% from June. In year-over-year terms, the rate of new home purchases was 32.4% below July 2009 while sale prices were -4.8% from last year’s median. (Analysts polled by Thomson Reuters had forecast July new home sales to be flat.) The National Association of Realtors said residential resales were down 25.5% from a year ago; however, the median sale price was 0.7% higher than in July 2009.^3,4

SLIGHT GAIN IN DURABLE GOODS ORDERS
The 0.3% July increase underwhelmed analysts, who had expected a 3.0% gain. Excluding transportation orders, durable goods orders were -3.8% last month.³

CONSUMER SENTIMENT IMPROVES
The final August consumer sentiment poll is in from the University of Michigan and Reuters. The 68.9 index reading is an improvement from the final 67.8 mark in July; we are still a long way from seeing this index above 80, which was common before the recession.⁵

GOLD & OIL PRICES RISE
In fact, gold was up for the fourth week in a row – futures gained 0.72% last week to settle at $1,236.00 Friday. Gold is up 4.60% across that four-week stretch. Oil futures advanced 2.47% on Friday to pull off a 1.83% weekly gain and settle at $75.17 per barrel on the NYMEX.⁶

STOCKS SLIP DESPITE FRIDAY RALLY
The Dow actually closed below 10,000 on Thursday; fortunately, it regained that level, settling Friday at 10,150.65. The NASDAQ and S&P 500 also had slight weekly declines, respectively settling at 2,153.63 and 1,064.59 at week’s end.⁷

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	-2.66	+5.95	-0.47	-0.98
NASDAQ	-5.09	+6.21	+0.31	-4.71
S&P 500	-4.53	+3.26	-2.33	-2.97
REAL YIELD	8/27 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.05%	1.75%	1.81%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 8/27/10^7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
A woman walking along a canal sees a boat full of people, yet there isn’t a single person on board. How could this be?

Last week’s riddle:
The more of them you take, the more you leave behind. What are they?

Last week’s answer:
Footsteps.

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Citations.
1 - swampland.blogs.time.com/2010/08/27/bernanke-gets-forcefully-vague/ [8/27/10]
2 - marketwatch.com/story/bernanke-talks-tough-on-deflation-2010-08-27 [8/27/10]
3 - nytimes.com/2010/08/26/business/26econ.html [8/25/10]
4 - realtor.org/press_room/news_releases/2010/08/ehs_fall [8/24/10]
5 - bloomberg.com/news/2010-08-27/u-s-consumer-sentiment-rises-to-68-9-from-an-eight-month-low-index-shows.html [8/27/10]
6 - blogs.wsj.com/marketbeat/2010/08/27/data-points-energy-metals-349/ [8/27/10]
7 - cnbc.com/id/38789911 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/27/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/27/10]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Free Market Update for the Week of August 23, 2010

Mark Lund, The Investor Coach — Mon, 23 Aug 2010 16:12:44 +0000

WEEKLY QUOTE
“Chance favors only the prepared mind.”
– Louis Pasteur

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

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

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

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

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

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

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	-2.06	+9.24	-0.65	-0.78
NASDAQ	-3.94	+9.58	+0.41	-4.49
S&P 500	-3.89	+6.38	-2.43	-2.85
REAL YIELD	8/20 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.05%	1.60%	1.85%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 8/20/10^6,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
The more of them you take, the more you leave behind. What are they?

Last week’s riddle:
What appears once in a minute, twice in a moment, but never in a decade?

Last week’s answer:
The letter M.

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

PAYING FOR COLLEGE WHILE SAVING FOR RETIREMENT

Mark Lund, The Investor Coach — Tue, 10 Aug 2010 16:20:21 +0000

These two objectives are not mutually exclusive.

It can be done. All across America, families are meeting a mighty financial challenge – the challenge of paying college costs with retirement potentially on the horizon. How do they do it? They go about it consistently; they also get creative.

First, make sure the priorities are in the right order. Strange as it may sound, your retirement may need to take precedence over your child’s college education.

Think about it. Your son or daughter might qualify for student loans or financial aid. By the time they are 30 or 35, they will have the earnings potential to pay those loans back. Do you see any ads out there for “retirement loans” or “retirement aid”? For most, it is much harder to earn money at age 65 than at age 35. Because of this, many choose to allow the younger generation to assume the debt.

The following are some short-term and long-term ideas you may want to consider if you have college costs on your mind:

Save for college the DCA way. While dollar-cost averaging is a useful way to build retirement savings, its merit often goes unrecognized when it comes to saving for higher education. If you could put $40 a month even in a basic savings account with a tiny interest rate, over 10 years that is approaching $5,000. That’s nothing to sneeze at, and will certainly help out. Move the money from a checking account each month into a savings account, or …

Consider a tax-advantaged college savings plan. Contribute to a 529 plan, which features tax-advantaged growth and tax-free withdrawals when the withdrawn funds are used to pay qualified education costs. Not all 529 plans are the same – in fact, some of them will even provide a small cash “match” or “sign-up” bonus when you start your plan. Some 529 plans are even “prepaid” – that means you may be able to secure future tuition rates at current prices, usually at in-state public colleges. Another advantage of the prepaid plans – they are often guaranteed by the state.^1,2

Exploit your credit card. No, don’t pay for college with it … well, at least not directly. Some credit cards give you a cash-back rewards option. You may as well put the rewards toward college. Some of the major banks let you do this and so do online shopping websites such as Upromise.

Keep your income as low as possible in the base income year. That is the calendar year that starts as your child is in the middle of his or her junior year in high school. That is the year when college financial aid departments start to look at a family’s earned and received income. If you can avoid taking capital gains or a distribution from a 401(k) or 403(b) in that year, that will keep your taxable income low. Will Roth IRA conversions raise eyebrows? Yes, they will.

However, don’t stop contributing to your own retirement savings accounts, and feel free to pay off consumer debts with the money from your savings and checking accounts – the assets in these accounts aren’t used in financial aid formulas.¹

Let the college know if your financial situation has changed. Has the value of your home fallen? Is your business netting you far less than it once did? Financial aid departments should be willing to review these developments and may be able to adjust aid for your student accordingly.

Make it a family affair. Close friends and family members may be willing (or even excited) to make ongoing contributions to a college savings plan for your child, and/or an annual “birthday” contribution. They may find giving such a gift to be much more meaningful and fulfilling than a mere toy or item of clothing.

In short, hunting for every scholarship or alumni connection you can and finding a great school at a reasonable price – that’s important. But it may be just as useful (if not more) to be both creative and consistent as you save for college. While it has always been a challenge, by putting some thought into it, most families and students can find ways to respond.

Citations

1 – articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/financial-aid-101-how-to-get-more-cash.aspx [7/16/10]

2 - money.usnews.com/money/blogs/On-Retirement/2010/07/23/how-to-pay-for-college-without-sacrificing-your-retirement [7/23/10]

Disclosures

Dollar cost averaging does not ensure a profit nor does it protect against a loss in declining markets. It involves continuous investment in securities regardless of fluctuating price levels. Investors should consider their ability to continue purchases in periods of high prices.

Investor must consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer’s official statement and the official statement should be read carefully before investing.

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative’s Broker/Dealer. This information should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 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.. www.petermontoya.com, www.montoyaregistry.com, www.marketinglibrary.net

August 2010 Growth Report

Mark Lund, The Investor Coach — Mon, 09 Aug 2010 17:02:46 +0000

MONTHLY QUOTE
“Praise is comforting, but not valuable.”
– Peter Stone

THE MONTH IN BRIEF
July is historically a good month for stocks, and July 2010 was no exception. Bulls took back Wall Street, encouraged by earnings reports (as of July 31, about two-thirds of companies in the S&P 500 had published earnings with about 75% beating expectations). The DJIA enjoyed its best month in a year.¹ Financial reforms were passed on Capitol Hill, and President Obama’s signature made them law. Rates on conventional mortgages hit lows unseen since the 1950s.The spring correction became a memory, even as analysts worried about a double dip and a stalling recovery.

DOMESTIC ECONOMIC HEALTH
A poll of “Main Street” revealed an American consumer who was markedly less optimistic. The final July University of Michigan/Reuters poll came in at 67.8; compare that to 76.0 for June. (That 67.8 was also a nine-month low.) The Conference Board poll also went south, declining from a 54.3 for June to a 50.4 in July. One minor morale boost happened early in July when June’s unemployment rate was announced by the Labor Department: 9.5%, down 0.2% from June and better than the 9.8% Wall Street analysts were expecting.^2,3

The manufacturing and service sectors were growing, just not booming – at least according to the latest readings from the respected ISM indexes. The non-manufacturing (service sector) index came to 53.8 for July after three straight months at 55.4, and the manufacturing index went from a 56.2 for June to a 55.5 in July (but that was much better than the 54.1 mark that analysts had predicted).^4,5 Other indicators were less encouraging. We learned factory orders had fallen 1.4% for May, while durable goods orders had dropped by 1.0% for June (economists polled by MarketWatch had forecast a 1.1% advance). The Commerce Department also estimated retail sales down 0.5% for June.^6,7,8

Analysts had new reason to discuss deflation. For the first time since the presumed depths of the recession (October-December 2008), the Consumer Price Index declined for a third straight month. In June, it was down 0.1%, although the Labor Department did estimate core CPI at +0.2% for June.⁹

In other news, the 2Q GDP number came out: +2.4%. No one was too excited about it. The Dodd-Frank financial reform bill was signed into law (the “no more bailouts” bill). Besides trying to prevent a repeat of TARP, it green-lighted the creation of a new watchdog agency to help protect and educate consumers in the financial arena, opened up derivatives trading to the public eye, and set the FDIC insurance limit permanently at $250,000.^10,11 With other signatures, President Obama extended long-term jobless benefits for another six months and allowed homebuyers another three months to claim federal tax credits of up to $8,000.^12,13

GLOBAL ECONOMIC HEALTH
The fire was almost out in the European Union – or maybe it was just smoldering. The EU and the International Monetary Fund had put the debt crisis in Greece on the back burner with a 110 billion euro bailout (plus about $1 trillion worth of rescue packages for other EU nations with scarily high debt levels). The EU also conducted a stress test of 91 banks – all but a handful passed the test, which many economists thought was too easy. At the top of August, the euro was at a high unseen since March: $1.3261.¹⁴

The whole world watches Chinese manufacturing closely, and China’s official PMI index came in at 51.2 for July – a little disappointing, but easing concerns that its economy might be overheating. (However, a private sector PMI from that nation, the HSBC China PMI, went to 49.4 in July, indicating a bit of sector contraction plus the fourth month of decline in a row.) The pace of manufacturing declined across Asian economies in July, although the PMI in India improved for the sixteenth consecutive month. The EU’s manufacturing index also improved in July, going from 55.6 in May to 56.7 with Germany driving sector growth.^5,15

WORLD MARKETS
Indices around the world advanced dramatically last month. The MSCI World and Emerging Markets indices respectively gained 8.02% and 8.00%. Other big gains were recorded by Brazil’s Bovespa (+8.84%), Argentina’s MERVAL (+8.70%), the RTSI in Russia (+9.16%), the Shanghai Composite (+7.24%) and even the FTSE in Great Britain (+8.05%). India’s Sensex (+2.43%), China’s Hang Seng (+ 3.41%), Germany’s DAX (+3.37%) and France’s CAC 40 (+4.77%) all had nice months. The Nikkei 225 rose 0.51%. If you looked long and hard, you could find a down month – such as the July performance of the stock indices of Venezuela (-1.16%) and Vietnam (-1.35%). Year-to-date at the end of July, the global forerunners were Chile’s SSE (+20.79%) and the Jakarta Composite in Indonesia (+20.03%). In contrast, the Nikkei 225 (-10.58%) and the Shanghai Composite (-21.52%) represented the rear of the pack.^16,17

COMMODITIES MARKETS
Would you believe gold had the poorest month of any headline commodity in July? It was -5.15% for the month, and silver also lost some ground, going -3.58%. However, other metals did much better. Copper rebounded in July (+12.79%) and palladium was almost as hot (+12.51%). Platinum pulled off a 3.00% July gain. Among energy futures, oil was up 4.39% for July, natural gas gained 6.65%, and gasoline and heating oil futures respectively rose 2.24% and 1.41%. The big mover was an unglamorous but hugely important crop: wheat. Wheat futures soared 37.74% in July and sugar didn’t do too badly either, jumping 21.86%. Other crops had strong Julys: milk went +10.67%, oats went +12.25%, and corn went +17.90%.¹⁷

REAL ESTATE
Home sales continued to seesaw, affected by the perceived expiration of federal tax breaks. In June, existing home purchases dropped by 5.1% from May levels (an effect from the closing of the deadline for federal homebuying credits). NAR did say they were up 9.8% from June 2009. New home sales rebounded from a startlingly bad May – they rose 23.6% for June. The latest Case-Shiller index (May 2010 data) had new home prices in 20 major cities 1.3% above year-age levels.^18,19,20

Could mortgage rates get any lower? Yes. It seemed every week we reached another all-time low for the national average on the 30-year FRM. In Freddie Mac’s July 28 Primary Mortgage Market Survey, rates on 30-year conventional home loans were averaging 4.54% and rates on 15-year FRMs were averaging 4.00%.²¹

LOOKING BACK … LOOKING FORWARD
The S&P 500 and the Dow had their best months in a year in July, and the NASDAQ logged its first monthly gain since April. At the end of July, the DJIA was back in the black.¹

% CHANGE	Y-T-D	1-MO CHG	1-YR CHG	10-YR AVG
DJIA	+0.36	+7.08	+14.33	-0.05
NASDAQ	-0.64	+6.90	+13.63	-4.01
S&P 500	-1.21	+6.88	+11.64	-2.30
REAL YIELD	7/30 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.14%	1.78%	1.92%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 7/30/10^1,22,23,24
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

In August, we have the widely held perception that the recovery is crawling along. We now have news from the Commerce Department that both consumer spending and consumer income were flat for July, adding fuel to that fire.²⁵ Again and again, the stock market has recovered from downturns faster than the economy. Another stimulus is probably not in the cards. So we are in sit-and-wait mode: frustrating perhaps, but the Great Recession was one of the severest in memory. Talk of a double-dip has begun to fade a bit, however, and stocks are currently pretty cheap. At the end of June, who would have guessed July would have been so fantastic? Hopefully, we will see stocks rise a bit, if not in late summer then perhaps after election time.

Finally, here are the important economic releases for the rest of August. We have the ISM services index for July (8/4), the July jobless report (8/6), an FOMC rate decision and June wholesale inventories (8/10), July CPI and retail sales, June business inventories and the preliminary August University of Michigan consumer sentiment survey (8/13), July PPI, housing starts and building permits and June factory output (8/17), July new home and existing home sales (8/24), July durable goods orders (8/25), July personal income and personal spending (8/30), and the June Case-Shiller home price index and the Conference Board’s August barometer of consumer confidence (8/31).

MONTHLY RIDDLE
What do the words Potato, Voodoo, Grammar, Revive and Banana have in common?

Last month’s riddle:
An auto dealership sold 150 cars in a special 6-day tent sale offer. Each day the dealership sold 6 more cars than the day before. How many cars were sold on the 6th day?

Last month’s answer:
40 cars. On the first day, the company sold x cars. On the second day, x + 6, on the third day, x + 12, on the fourth day, x + 18, on the fifth day, x + 24, and on the sixth day, x + 30. If you add all the days together you get the equation: x + (x + 6) + (x + 12) + (x + 18) + (x + 24) + (x + 30) = 150 cars sold. 6x + 90 = 150 and so x = 10. So, on day 6 (x + 30) = 40.

Citations.
1 - cnbc.com/id/38494013 [7/30/10]
2 - thestreet.com/story/10822616/1/consumer-sentiment-hits-9-month-low.html [7/30/10]
3 – forbes.com/2010/07/02/labor-markets-bumpy-road-markets-economy-jobs-unemployment.html [7/2/10]
4 – marketwatch.com/story/us-service-sector-weakens-a-bit-in-june-2010-07-06 [7/6/10]
5 – foxbusiness.com/markets/2010/08/02/rallies-europe-asia-gains/ [8/2/10]
6 – dailyfinance.com/story/May-factory-orders-fall-economic-slowdown/19539948/ [7/2/10]
7 - marketwatch.com/story/surprise-drop-in-june-us-durable-goods-orders-2010-07-28?dist=beforebell [7/28/10]
8 - online.wsj.com/article/SB10001424052748703792704575366743747967242.html [7/15/10]
9 - reuters.com/article/idUSTRE65M2WK20100716 [7/16/10]
10 - usatoday.com/money/industries/banking/2010-07-22-regs22_ST_N.htm [7/22/10]
11 - latimes.com/business/la-fi-financial-reform-20100716,0,2303004.story [7/16/10]
12 - washingtonpost.com/wp-dyn/content/article/2010/07/22/AR2010072203825.html [7/22/10]
13 – marketwatch.com/story/home-buyers-win-more-time-to-claim-tax-credit-2010-07-02 [7/2/10]
14 - google.com/hostednews/ap/article/ALeqM5jBXhqoTrl7rt2PecP1DmklW1Pi1gD9HC02E80 [8/3/10]
15 - online.wsj.com/article/SB10001424052748704271804575405091292123812.html [8/3/10]
16 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [7/30/10]
17- cnbc.com/id/38494013/page/2 [7/30/10]
18 - realtor.org/press_room/news_releases/2010/07/ehs_june_above [7/22/10]
19 - reuters.com/article/idUSTRE65M2WK20100716 [7/26/10]
20 - articles.latimes.com/2010/jul/28/business/la-fi-home-prices-20100728 [7/28/10]
21 - freddiemac.com/pmms/release.html?week=30&year=2010 [7/29/10]
22 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
22 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
22 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F31%2F00&x=0&y=0 [7/30/10]
23 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/30/10]
23 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/30/10]
24 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]
25 - online.wsj.com/article/BT-CO-20100803-708949.html [8/3/10]

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. 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 Bovespa, the benchmark stock index of Brazil, is the second largest in the Americas, and the leading exchange in Latin America. The MERVAL Index is the most important index of the Buenos Aires Stock Exchange. The RTS Index (RTSI) is an index of 50 Russian stocks that trade on the RTS Stock Exchange in Moscow. The Shanghai Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. 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 Nikkei 225 is the benchmark stock market index for the Tokyo Stock Exchange (TSE). The Caracas Stock Exchange or Bolsa de Valores de Caracas (BVC) is a stock exchange located in Caracas, Venezuela. Ho Chi Minh City Stock Exchange (HSX), located in Ho Chi Minh City, is the largest stock exchange in Vietnam. The Santiago Stock Exchange (SSE), founded on November 27, 1893, is Chile’s dominant stock exchange. The JSX Composite is an index of all stocks that trade on the Indonesia Stock Exchange. 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

Free Market Update for the Week of August 9, 2010

Mark Lund, The Investor Coach — Mon, 09 Aug 2010 16:13:31 +0000

WEEKLY QUOTE
“There have been as great souls unknown to fame as any of the most famous.”
– Ben Franklin

UNEMPLOYMENT REMAINS AT 9.5%
The American economy added 71,000 jobs in July but lost 202,000 others (143,000 of those positions were short-term Census Bureau hires). The private sector added 630,000 jobs during the first seven months of 2010; that 90,000 per month is far short of the 150,000 per month that would be commensurate with population growth. The bright spot: economists had presumed the jobless rate would edge up to 9.6% in July.¹

ISM: MANUFACTURING & SERVICE SECTOR GROWING
The Institute for Supply Management’s service sector index rose to 54.3 for July, a nice surprise (economists polled by Bloomberg had forecast a dip to 53.0). The new orders and employment components of the service sector index both showed growth. ISM’s manufacturing index came in at 55.5 for July, beating a Briefing.com consensus forecast of 54.2. (However, the Commerce Department noted that factory orders declined by 1.2% in July following a 1.0% fall in June.)^2.3,4

SAVING OUTPACES SPENDING
Personal spending and personal incomes were both flat last month according to the Commerce Department. The personal savings rate increased again to 6.4% - it has risen monthly since February, and it hasn’t been under 5.0% since October 2008. (During 2007, the personal savings rate averaged just 2.1%.) The good news is that households are accumulating cash reserves; the bad news is that the primary engine of the economy is subdued.⁵

FEWER HOMEBUYING CONTRACTS SIGNED IN JUNE
Pending home sales decreased by 2.6% in June, according to the National Association of Realtors; the number was 19.0% below year-ago levels. The June dip may reflect buyers rushing to sign contracts before federal incentives could expire.⁶

15-YEAR FRMs BELOW 4.0%; 30-YEAR FRMs BELOW 4.5%
Freddie Mac reported the average rate on a 30-year home loan at 4.49% last week; a year ago, the national average was 5.22%. Rates on 15-year FRMs were 3.95% last week, compared to 4.63% at this time in 2009.⁷

STOCKS GAIN FOR SECOND STRAIGHT WEEK
The DJIA rose 1.79% last week, the NASDAQ advanced 1.50%, and the S&P 500 gained 1.82%. At Friday’s closing bell, the S&P 500 was at 1,121.64, the NASDAQ at 2,288.47, and the Dow at 10,653.56.⁸

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+2.16	+15.10	+0.18	-0.20
NASDAQ	+0.85	+15.98	+1.02	-4.08
S&P 500	-0.59	+12.49	-1.71	-2.42
REAL YIELD	8/6 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.04%	1.87%	2.00%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 8/6/10^8,9,10,11
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
Two fathers and two sons went truffle hunting. Each found a truffle yet they found only three in all. Why?

Last week’s riddle:
Six cups are lined up in a row. Cups 1-3 on the left are full of juice; cups 4-6 on the right are empty. How can you arrange this row so empty and full glasses alternate while moving only one cup in the process?

Last week’s answer:
Pour the juice from the second cup into the fifth cup.

Citations.
1 - money.cnn.com/2010/08/06/news/economy/jobs_july/ [8/6/10]
2 - dailyfinance.com/story/investing/services-sector-index-unexpectedly-rose-in-july/19580447/ [8/4/10]
3 - thestreet.com/story/10823959/1/ism-index-growth-slows-to-555.html [8/2/10]
4 - reuters.com/article/idUSN023868020100803 [8/4/10]
5 - suntimes.com/business/currency/2563780,CST-NWS-savings04.article [8/4/10]
6 - seattletimes.nwsource.com/html/businesstechnology/2012519621_apuspendinghomesales.html [8/3/10]
7 - online.wsj.com/article/SB10001424052748703748904575411193528926092.html [8/6/10]
8 - cnbc.com/id/38596993 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]
9 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]
10 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/6/10]
10 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/6/10]
11 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Free Market Update for the Week of August 2, 2010

Mark Lund, The Investor Coach — Mon, 02 Aug 2010 15:54:03 +0000

WEEKLY QUOTE
“Live out of your imagination, not your history.”
– Dr. Stephen Covey

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

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

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

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

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

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DIJA	+0.36	+14.33	-0.33	-0.05
NASDAQ	-0.64	+13.63	+0.64	-4.01
S&P 500	-1.21	+11.64	-2.15	-2.30
REAL YIELD	7/30 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.14%	1.78%	1.92%	4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 7/30/10^5,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
Six cups are lined up in a row. Cups 1-3 on the left are full of juice; cups 4-6 on the right are empty. How can you arrange this row so empty and full glasses alternate while moving only one cup in the process?

Last week’s riddle:
This vehicle has wheels and often flies, but it is certainly not an aircraft. What is it?

Last week’s answer:
A garbage truck.

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

Free Market Update for the Week of July 26, 2010

Mark Lund, The Investor Coach — Mon, 26 Jul 2010 16:19:19 +0000

QUOTE OF THE WEEK:
“The world demands the qualities of youth: not a time of life but a state of mind,
a temper of will, a quality of the imagination, a predominance of courage over timidity
of the appetite for adventure over the love of ease.” – Robert F. Kennedy

Existing home sales fall … and mortgage rates fall further
The June existing home sales figures from the National Association of Realtors show a 5.1% drop from May, an effect from the closing of the deadline for federal homebuying credits. On the positive side, NAR reports that sales are up 9.8% from a year ago. Interest rates on conventional home loans hit a record low of 4.56% in Freddie Mac’s July 21 survey; average rates on 15-year FRMs also fell to a two-decade low of 4.03%.^1,2

Long-term jobless benefits extended
President Obama extended emergency unemployment benefits for about three million Americans Thursday, not long after the measure made it past strong opposition in the Senate. The program had ended in June; Obama’s signature extends it for six more months.³

FDIC insurance permanently bumped up to $250,000
This is a byproduct of the financial reform bill. The current $250,000 FDIC insurance limit for banks and credit unions was set to expire in 2013. Incidentally, the $250,000 ceiling has been made retroactive with regard to the six U.S. banks that failed from January 1, 2008 - October 3, 2008, such as IndyMac.⁴

Conference Board’s leading indicators retreat 0.2%
They lost a little steam in June, but they beat expectations: economists surveyed by Thomson Reuters had expected the CB index to fall 0.3%. May’s increase was revised upward to 0.5%.⁵

Dow gains 300+ points in a week
The DJIA settled at 10,424.62 Friday, gaining 0.99% last week. The S&P 500 and NASDAQ respectively rose to 1,102.66 and 2,269.47. Strong earnings reports helped the Dow advance by triple digits on Thursday, and when 84 of 91 European banks passed an EU stress test, the DJIA climbed 102.32 on Friday. On the NYMEX, oil futures slipped a little more than 3% last week to close at $78.98 Friday.⁶

% Change	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG	R I D D L E O F T H E W E E K
DJIA	-0.03	+14.94	-0.43	-0.24	This vehicle has wheels and often flies, but it is certainly not an aircraft. What is it?
NASDAQ	+0.01	+14.99	+0.82	-4.30
S&P 500	-1.12	+12.94	-2.12	-2.47
*Real Yield*	7/23	1 YR AGO	5 YRS AGO	10 YRS AGO
10YrTIPS	1.24%	1.80%	1.89%	4.03%
(Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov, 7/23/10)^6,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.					Contact my office or see next week’s Update for the answer!

Last week’s riddle: Observe the following sequence of numbers: 11, then 1,331, then 161,051, then 19,487,171. Given this sequence, what would the next number be?

Last week’s riddle answer: 2,357,947,691. The numbers are 11 to the first power, 11 to the third power, 11 to the fifth power and 11 to the seventh power. Therefore, the missing number is 11 to the ninth power.

Citations.
1 - realtor.org/press_room/news_releases/2010/07/ehs_june_above [7/22/10]
2 - mercurynews.com/breaking-news/ci_15576555 [7/22/10]
3 - washingtonpost.com/wp-dyn/content/article/2010/07/22/AR2010072203825.html [7/22/10]
4 - usatoday.com/money/industries/banking/2010-07-22-regs22_ST_N.htm [7/22/10]
5 - usatoday.com/money/economy/2010-07-22-jobless-claims_N.htm [7/22/10]
6 - cnbc.com/id/38382997 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%23F2%2F09&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%23F2%2F09&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F23%2F09&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F22%2F05&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F22%2F05&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F22%2F05&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F24%2F00&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F24%2F00&x=0&y=0 [7/23/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F24%2F00&x=0&y=0 [7/23/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/23/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/23/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Free Market Update for the Week of July 19, 2010

Mark Lund, The Investor Coach — Mon, 19 Jul 2010 14:23:19 +0000

QUOTE OF THE WEEK:
“To be humble to superiors is duty, to equals courtesy, to inferiors nobleness.”– Ben Franklin

Consumer prices decrease a bit; consumer sentiment drops notably
In June, the Consumer Price Index fell for the third month in a row, heading south 0.1%. Analysts thought the June reading would be flat. The Labor Department noted that core CPI did rise 0.2% last month, largely due to rent costs increasing. The last time CPI went negative for three straight months was October-December 2008. Separately, the preliminary July Reuters/University of Michigan consumer sentiment index came in at 66.5 compared to 76.0 in June – analysts expected a number in the mid-seventies.¹

Dodd-Frank bill off to Obama’s desk
The Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act Thursday by a 60-39 vote, with President Obama’s signature expected next week. The legislation is intended to protect consumers in the financial arena and prevent a repeat of TARP. Detractors think it gives too much power to regulators and might even open the door for further bailouts. House Minority Leader John A. Boehner (R-OH) called it “killing an ant with a nuclear weapon.”²

Shops sell less in June
Retail sales were down 0.5% last month, according to the Commerce Department, marking the second straight month of retreat. Additionally, business inventories gained 0.1% for June (the fifth monthly gain in a row for that category).³

Producer prices fall 0.5% last month
The trend here may look deflationary: as with the CPI, this was the third straight monthly decline. However, the Bureau of Labor Statistics noted that core PPI increased by 0.1% for June.⁴

Friday selloff means a down week
Stocks were doing well last week until the market saw the latest consumer confidence and big-bank revenue reports. As a consequence, a seven-day Dow win streak ended. The S&P 500 lost 1.21% last week, concluding Friday’s market day at 1,064.88. The NASDAQ only lost 0.79% to 2,179.05 and the DJIA slipped 0.98% last week to settle Friday at 10,097.90.⁵

% Change	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG	R I D D L E O F T H E W E E K
DJIA	-3.17	+15.91	-1.02	-0.65	Observe the following sequence of numbers: 11, then 1,331, then 161,051, then 19,487,171. Given this sequence, what would the next number be?
NASDAQ	-3.97	+15.60	+0.21	-4.90
S&P 500	-4.50	+13.20	-2.66	-2.95
*Real Yield*	7/16	1 YR AGO	5 YRS AGO	10 YRS AGO
10YrTIPS	1.25%	1.82%	1.95%	4.03%
(Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov, 7/16/10)^5,6,7,8 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.					Contact my office or see next week’s Update for the answer!

Last week’s riddle: Name the number that is 5 greater than the number which is one-fifth of one-fifth of one-half of 1050.

Last week’s riddle answer: 26. (As in 1050 ÷ 5 = 525 ÷ 5 = 105 ÷ 5 = 21 + 5 = 26.)

Citations.
1 - reuters.com/article/idUSTRE65M2WK20100716 [7/16/10]
2 - latimes.com/business/la-fi-financial-reform-20100716,0,2303004.story [7/16/10]
3 - online.wsj.com/article/SB10001424052748703792704575366743747967242.html [7/15/10]
4 - theatlantic.com/business/archive/2010/07/producer-prices-fell-by-05-in-june/59799/ [7/15/10]
5 - cnbc.com/id/38282532 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F16%2F09&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
6 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
7 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/16/10]
7 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/16/10]
8 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Free Market Update for the Week of July 12, 2010

Mark Lund, The Investor Coach — Mon, 12 Jul 2010 16:18:24 +0000

QUOTE OF THE WEEK:
“Each morning when I open my eyes I say to myself: I, not events, have the power to make me happy or unhappy today. I can choose which it shall be. Yesterday is dead, tomorrow hasn’t arrived yet. I have just one day, today, and I’m going to be happy in it.” – Groucho Marx

Service sector grows; pace of expansion moderates
Last week, the Institute for Supply Management reported its June non-manufacturing index at 53.8. The index had come in at 55.4 in March, April and May. So we are still seeing growth in the service sector, just at a slightly slower rate. Economists polled by MarketWatch were expecting a 54.5 reading. The 53.8 is the lowest mark since February, but the index has been above 50 (indicating growth) all year.¹

Continuing unemployment claims reach a 9-month low
Thursday, the Labor Department announced that 4.41 million people were receiving jobless benefits after an initial week of aid during the week of June 26. That is the lowest such figure since November.²

Sales up 3.1% over last year at major retailers
That’s what a Thomson Reuters survey of 28 big mall chains just found – June retail purchases at these shops were 3.1% better than in June 2009. The most notable year-over-year gain among the 28 store brands? Nordstrom’s, where sales were up 14.1% in June from 12 months ago.³

Wholesale inventories build in May
They increased 0.5% in that month as wholesale sales fell 0.3%. In year-over-year figures, the Commerce Department said stockpiles were down 2.1% from May 2009, while wholesale sales had increased 15.1%.⁴

Bulls stampede as confidence returns
The first glimmer of a new earnings season and good news about jobless claims motivated buying on Wall Street. Last week, the DJIA gained 5.28%, settling at 10.197.72 Friday; the NASDAQ and S&P 500 respectively gained 5.00% and 5.41% in the best week in nearly a year for stocks.⁵

Note: last week’s article mentioned that the federal homebuyer tax credit had been extended through September 30. Please note, however, that only the credit has been extended - not the deadline for contracts. The deadline to buy (or enter into a binding contract to buy) a principal residence was April 30.⁶

% Change	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG	R I D D L E O F T H E W E E K
DJIA	-2.21	+24.62	-0.48	-0.42	Name the number that is 5 greater than the number which is one-fifth of one-fifth of one-half of 1050.
NASDAQ	-3.20	+25.33	+0.79	-4.48
S&P 500	-3.33	+22.13	-2.21	-2.70
*Real Yield*	7/9	1 YR AGO	5 YRS AGO	10 YRS AGO
10YrTIPS	1.26%	1.87%	1.83%	4.03%
(Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov, 7/9/10)^6,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.					Contact my office or see next week’s Update for the answer!

Last week’s riddle: It can certainly be measured, yet it has no length, width or height. What is it?

Last week’s riddle answer: The temperature.

Citations.
1 – marketwatch.com/story/us-service-sector-weakens-a-bit-in-june-2010-07-06 [7/6/10]
2 – cnbc.com/id/38144446/ [7/8/10]
3 – articles.latimes.com/2010/jul/08/business/la-fi-retail-sales-20100707 [7/8/10]
4 – online.wsj.com/article/SB10001424052748704075604575356804274113436.html [7/9/10]
5 – cnbc.com/id/38171128 [7/9/10]
6 – irs.gov/newsroom/article/0,,id=204671,00.html [7/6/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%9F2%2F09&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%9F2%2F09&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F9%2F09&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F8%2F05&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F8%2F05&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F8%2F05&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F10%2F00&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F10%2F00&x=0&y=0 [7/9/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F10%2F00&x=0&y=0 [7/9/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/9/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/9/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

July 2010 Growth Report

Mark Lund, The Investor Coach — Thu, 08 Jul 2010 15:46:10 +0000

QUOTE OF THE MONTH:
“Champions keep playing until they get it right.” – Billie Jean King

The month in brief
June was not a good month for U.S. economic indicators, and therefore not a good month on Wall Street. Concerns surfaced that the recovery was running out of gas, and that the economic rebound we had witnessed over the last year was an effect of federal measures. The housing market figures were particularly sad. Additionally, worries about Europe were joined by concerns about China. June was better than May on Wall Street, but that’s not saying much.

Domestic economic health
Make no mistake - we are headed in the right direction,” President Obama reassured the country on July 2. “But . . . we’re not headed there fast enough for a lot of Americans. We’re not headed there fast enough for me, either.”¹ Indeed, all kinds of May economic data seemed to point to a slowdown – and some of it indicated deflation.

Housing market malaise aside, factory orders were down 1.4% for May, and durable goods orders diminished by 0.6%.² The ISM manufacturing index was 59.7 for May yet a disappointing 56.2 for June (its May service sector index was over 50 at 55.4).^3,4 Retail sales for May unexpectedly fell 1.2%, and auto sales fell 10.8% (though those figures were respectively 6.9% and 14.4% above year-ago levels).^5,6

June’s jobless rate was down 0.2% to 9.5%, but as an effect of the U.S. Census layoffs, you had just 83,000 jobs added and 125,000 jobs shed.¹

Personal spending was a bright spot: consumer spending was up 0.2% for May, with wages up 0.4%. Consumer prices retreated 0.2% in May, and producer prices fell 0.3%.^7,8

Global economic health
As June drew to a close, the big news item was not from Europe but from Asia. China’s benchmark manufacturing index registered 52.1 for June, down from 53.9 in May and the second straight month of decline. PMI indices in India, Taiwan, South Korea and Australia dipped in June as well – all of them still showed growth, but at a slower pace.⁹ This added to concerns about a global slowdown.

As for the European Union, the EU announced that no member country would need to have its debt restructured. Former EU Commission President (and former Italian prime minister) Romano Prodi went on record with his proclamation that the “worst part” of the debt crisis in Europe was over, with little risk of any EU country ditching the euro.^10,11

World financial markets
Some stock indices fared better than ours. The Dow Jones Stoxx Europe 600, for example, lost but 0.67% last month. England’s FTSE 100 slipped 5.23%. There were even gains: the Stock Exchange of Thailand rose 6.3. Indonesia’s JSX Composite and the KSE in Pakistan both advanced 4.2%. South Korea’s KOSPI rose 2.8% while the Hang Seng went up 1.8% for June. The Taiwan 50 and the CAC 40 respectively dropped 1.7% and 1.8%. Russia’s RTSI fell 3.3% and the Shanghai A Shares Index dipped 7.5%. Germany’s DAX managed a flat month.The MSCI World Index fell 3.56% in U.S. dollar terms, while the MSCI Emerging Markets index lost only 0.91% on the month.^12,13,14

Commodities markets
Key metals, energy futures and the dollar did well in June. In the middle of last month’s market turmoil, gold rose 2.75% (by the way, the 2Q gain was 11.87%). Gold topped the $1,250 mark in June and ended the month at $1,245.50 per ounce. Copper prices fell another 5.20% to $2.94 a pound. Natural gas futures rose 6.33% while oil futures pulled off a 2.24% monthly gain. The U.S. Dollar Index rose 0.10% last month, and that also put it up 10.60% on the year.^15,16

Housing & interest rates
June was a month characterized by lows. The spirit in the real estate market was pretty low after the May home sales data was released; it seemed to hint that the housing rebound of the last few months was too reliant on federal stimulus measures. Without the $8,000/$6,500 federal tax credit in place, new home sales sank a jarring 32.7% according to the Commerce Department. The National Association of Realtors said existing home sales also slipped for May, falling 2.2%. May housing starts were down also: 10.0% overall and 17.2% for single-family homes.^17,18

Another kind of low resulted in more positive headlines. At the end of June, mortgages had become almost as cheap as they were during the 1950s. On June 30, Freddie Mac’s Primary Mortgage Market Survey had average interest rates on 30-year FRMs at 4.58%, with rates on 15-year FRMs averaging 4.04%, rates on 5/1-year ARMs at 3.79% and rates on 1-year ARMs at 3.80%.¹⁹

Looking forward
As we get into July, Wall Street has a number of things on its mind – the strength of the recovery, the concern about economies in Asia and Europe slowing down or struggling with debt, the apparent fragility of the housing market. Looking at barometers like consumer spending and the ISM indices, the economy is still growing. The question is, can it grow fast enough or strongly enough to please the investor? We are getting into another earnings season in mid-July, which should provide a bit of a boost. Unemployment is the prime domestic economic indicator in the way of the bulls right now.

And now, major economic releases for the rest of July: the June ISM service-sector index (7/6), May wholesale inventories (7/9), June retail sales and May business inventories (7/14), June PPI and industrial production (7/15), June CPI and the University of Michigan’s July consumer sentiment index (7/16), June housing starts and building permits (7/20), June existing home sales and the Conference Board’s June leading indicators (7/22), June new home sales (7/26), the Conference Board’s July consumer confidence survey and the Case-Shiller home price index for May (7/27), June durable goods orders and the Fed’s July Beige Book (7/28) and advance 2Q GDP (7/30). June’s consumer spending data comes out on August 3.

Looking back
The big indices did not lose as much territory in June as they did in May, but as you see there is much ground to be made up in the second half. The box at left shows how things stood at the close on June 30.

% Change	Y-T-D	6/10	2Q 2010	1-YR CHG	R I D D L E O F T H E M O N T H
DJIA	-6.27	-3.58	-9.97	+15.71	An auto dealership sold 150 cars in a special 6-day tent sale offer. Each day the dealership sold 6 more cars than the day before. How many cars were sold on the 6th day?
NASDAQ	-7.05	-6.55	-12.04	+14.94
S&P 500	-7.57	-5.39	-11.86	+12.12
*Real Yield*	6/30	1 YR AGO	5 YRS AGO	10 YRS AGO
10YrTIPS	1.15%	1.78%	1.67%	4.34%
(Source: CNBC.com, ustreas.gov, 6/30/10)^16,20,21 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.					Contact my office or see next month’s Update for the answer!

Last month’s riddle: You stand 8’ away from a door. With each move, you advance half the distance to the door. How many moves will it take to reach the door? (You may want to use pen and paper as you consider this.)

Last month’s riddle answer: You will never actually reach the door. If all you do is advance half the distance to the door with every move, you will simply get closer and closer to it but still have half of the remaining distance left.

Citations.
1 – washingtonpost.com/wp-dyn/content/article/2010/07/02/AR2010070202004.html [7/2/10]
2 – dailyfinance.com/story/May-factory-orders-fall-economic-slowdown/19539948/ [7/2/10]
3 – briefing.com/Investor/Public/Calendars/EconomicReleases/napm.htm [7/2/10]
4 – ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943 [6/3/10]
5 – census.gov/retail/marts/www/marts_current.html [6/11/10]
6 – latimes.com/business/la-fi-auto-sales-20100702,0,347088.story [7/2/10]
7 – voices.washingtonpost.com/economy-watch/2010/06/may_income_spending_and_person.html [6/28/10]
8 – marketoracle.co.uk/Article20466.html [6/21/10]
9 – online.wsj.com/article/SB10001424052748703426004575339730963818218.html [7/2/10]
10 – online.wsj.com/article/BT-CO-20100702-703545.html [7/2/10]
11 – businessweek.com/news/2010-07-02/prodi-says-worst-of-eu-crisis-over-sees-common-fiscal-policy.html [7/2/10]
12 – blogs.wsj.com/marketbeat/2010/06/30/data-points-europe-53/ [6/30/10]
13 – emerginvest.com/WorldStockMarkets/Countries.html [7/1/10]
14 –indexq.org/stock/history/2010/06/20100630_en.php [7/2/10]
15 – blogs.wsj.com/marketbeat/2010/06/30/data-points-energy-metals-310/ [6/30/10]
16 – cnbc.com/id/38027917 [6/30/10]
17 – dailyfinance.com/story/real-estate/may-new-home-sales-plunge-32-7/19527532/ [6/23/10]
18 – voices.washingtonpost.com/economy-watch/2010/06/housing_starts_down_in_may.html [6/16/10]
19 – cnbc.com/id/38037896 [7/1/10]
20 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=6%2F30%2F09&x=0&y=0 [6/30/10]
20 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=6%2F30%2F09&x=0&y=0 [6/30/10]
20 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=6%2F30%2F09&x=0&y=0 [6/30/10]
21 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/3/10]
22 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting 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. The Dow Jones STOXX (Price) Index is a broad based capitalization-weighted index of European stocks. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. The Stock Exchange of Thailand (SET) is the national stock exchange of Thailand. The JSX Composite is an index of all stocks that trade on the Indonesia Stock Exchange. The Karachi Stock Exchange or KSE is a stock exchange located in Karachi, Sindh, Pakistan. Founded in 1947, it is Pakistan’s largest and oldest stock exchange, with many Pakistani as well as overseas listings. The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Stock Market Division. The Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. The TSEC Taiwan 50 Index is a capitalization-weighted index of stocks that comprises 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The RTS Index (RTSI) is an index of 50 Russian stocks that trade on the RTS Stock Exchange in Moscow. The Shanghai A-Share Stock Price Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares listed on the Shanghai Stock Exchange that are restricted to local investors and qualified institutional foreign investors. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. 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. 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.