HOME SALES, HOUSING STARTS SLIP
Existing home sales decreased 0.9% in April, according to the National Association of Realtors. Annually, sales were off 12.9% from the pace of April 2010 (back when the homebuyer tax credit was in effect). The national median existing home price last month was $163,700, 5.0% below where it was a year before. The inventory of unsold residences increased to a 9.2-month supply, up from an 8.3-month supply in March. A new release from the Commerce Department said housing starts declined by 10.6% in April; building permits decreased by 4.0% last month.1,2

CONFERENCE BOARD LEI INDEX DECLINES
The CB’s Leading Economic Index retreated in April for only the second time since March 2009. The 0.3% slip came after the index rose 0.7% in March and 0.9% in February. On the bright side, the CB’s coincident (i.e., current) economic index improved for the third straight month in April.3

GOLD GETS BACK ABOVE $1,500; GAS PRICES FALL
On Friday, gold prices topped the $1,500 level for the first time since May 12 – the settlement price on the COMEX was $1,508.90 an ounce, concluding a 1.0% advance for the week. Silver pulled off a 0.3% gain last week to settle Friday at $35.09 an ounce. Crude oil fell 0.2% on the week; retail gas prices decreased by almost $0.10 last week, according to AAA’s Fuel Gauge Survey. 4,5,6

STOCKS RETREAT ON INDICATORS, DEBT ISSUES
Investors were largely left cold by this week’s economic reports, and anxieties over the debt of Spain and Greece also affected Wall Street. So, all three major U.S. indexes moved south. On the week, they performed like this: DJIA, -0.66% to 12,512.04; S&P 500, -0.77% to 1,333.27; NASDAQ, -0.71% to 2,803.32. In 2011, we are seeing selling in May: the DJIA and S&P 500 are currently on three-week losing streaks.7

THIS WEEK: Monday offers 1Q earnings from Campbell Soup, and Wall Street will also be eyeing the elections in debt-burdened Spain. Tuesday, we have the report on April new home sales. Wednesday brings us news about April durable goods orders, plus 1Q results out of Costco and Polo Ralph Lauren. Thursday provides weekly jobless claims data along with 1Q results from Sony and BigLots. The major economic releases of the week all arrive Friday: reports on April consumer spending and pending home sales, plus the final May consumer sentiment poll out of the University of Michigan.




This information should not be construed as tax, legal, or 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.


Citations.
1 – realtor.org/press_room/news_releases/2011/05/sales_ease [5/19/11]
2 – marketwatch.com/story/us-housing-starts-decline-106-in-april-2011-05-17 [5/17/11]
3 – conference-board.org/data/bcicountry.cfm?cid=1 [5/19/11]
4 – marketwatch.com/story/gold-futures-advance-in-tug-of-war-market-2011-05-20 [5/20/11]
5 – marketwatch.com/story/crude-oil-futures-retake-some-lost-ground-2011-05-20 [5/20/11]
6 – consumeraffairs.com/news04/2011/05/price-of-gasoline-down-a-dime-in-last-week.html [5/20/11]
7 – cnbc.com/id/43113773 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F20%2F10&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F20%2F10&x=10&y=18 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F20%2F10&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F19%2F06&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F19%2F06&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F19%2F06&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F21%2F01&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F21%2F01&x=0&y=0 [5/20/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F21%2F01&x=0&y=0 [5/20/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [5/20/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [5/20/11]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 – montoyaregistry.com/Financial-Market.aspx?financial-market=who-should-inherit-your-ira-andor-401k&category=22 [5/22/11]

THE MONTH IN BRIEF
The market took most of its cues from earnings in April, and earnings impressed. As the month wrapped up, 63% of the S&P 500 had reported 1Q results and 73% of those firms had beaten earnings estimates. The S&P 500 index climbed 2.85% in April. Home prices all but double-dipped; home sales improved (they seemingly couldn’t get any worse). Key indicators showed trends of economic expansion and renewed consumer spending continuing. Oil, gold, silver and gasoline prices repeatedly made headlines. ₁

DOMESTIC ECONOMIC HEALTH
The economy was growing under price pressures. Consumers were spending more largely because they had to pay more for gas and food (gas prices alone jumped 5.7% in March). Commerce Department data showed a 0.6%increase in personal spending for March on the heels of a revised 0.9% gain for February. Disposable incomes were up just 0.1% in March, and the higher gas and food prices were akin to short-term taxes. The federal government’s Consumer Price Index measured inflation at 0.5% for March, with core CPI at a milder 0.1%; the Producer Price Index was up 0.7% for the month and 5.8% across 12 months. _2,3,4

Few things depress consumers like rising gas prices and high unemployment, so the results of the twin consumer confidence surveys were surprising. The Conference Board’s April poll improved to 65.4 and the University of Michigan’s final April survey came in 69.8, better than March’s final 67.5 reading. Then again, the unemployment rate was down to 8.4% in March – a full percentage point below where it had been in November. That factor and the payroll tax holiday helped the American consumer spend more freely in the face of inflation. _5,6

Expansion in the manufacturing and service sectors had moderated a bit: the Institute for Supply Management’s April manufacturing survey showed PMI at 60.4, down from March’s 61.2; its March service sector index saw a bigger retreat, going from 59.7 to 57.3. Still, the surveys pointed to growth in both sectors. The federal government said factory output rose by 0.7% in March, and it also said that total retail sales were up 0.4% in that month. _3,7,8,9

Standard & Poor’s caused a bit of a shock wave last month when it reduced the credit outlook for the U.S. from “stable” to “negative”. America’s rating over at Moody’s Investors Service remained “stable”. ₁₀

GLOBAL ECONOMIC HEALTH
China’s key PMI slipped half a percent in April to 52.9; India’s advanced a tenth of a percent to 58.0. Both of these manufacturing sector indices have now shown expansion for more than two years. South Korea’s PMI touched its lowest level in six months in April. China’s inflation rate reached a three-year peak in April even with interest rates rising and government directives to keep capital ratios high at banks. China’s GDP is projected at 9.5% for 2011. ₁₁

Factories kept humming in Europe, particularly in Northern Europe. The Markit Eurozone PMI improved to 58.0 in April, close to the almost-11-year high of 59.0 notched in February; sector expansion in Germany and France amounted to the driver. The European Central Bank took the lead among major world banks in raising benchmark interest rates in April – the ECB raised its key rate to 1.25% from an all-time low of 1.0 adopted in response to the global recession. ₁₂

WORLD MARKETS
Global benchmarks produced a mixed bag of gains and losses in April. According to Morningstar, Germany’s DAX had a banner month: +5.98%. France’s CAC 40 went +2.95%, and England’s FTSE 100 went +2.80%. Moving away from northern Europe, things were slightly less rosy. Japan’s Nikkei 225 advanced 0.97%; Hong Kong’s Hang Seng gained 0.82%; China’s Shanghai Composite retreated 0.57%; Australia’s All Ordinaries lost 0.60%; Canada’s TSX Composite fell 1.21%; India’s Sensex slipped 1.59%. The MSCI World Index rose 4.02% in U.S. dollar terms; the MSCI Emerging Markets advanced 2.83%. _13,14

COMMODITIES MARKETS
Silver prices zoomed north 28.2% in April, and gold didn’t do too badly either with an 8.1% monthly gain. In fact, April 2011 was gold’s best month since November 2009. Gold finished April at $1,556.00 on the COMEX. A weak dollar helped, with the U.S. Dollar Index slipping 3.9% for the month.15,16 Like gold, oil has not had a down month since last August. In the last eight months, crude prices have soared 58.4%; last month alone, they advanced 6.8% to settle at $113.93 a barrel on April 29. April was also a superb month for RBOB gasoline futures, which gained 11.5%. _15,17

How did the key crop futures perform in April? Coffee went +13.5%, cocoa +13.1%, corn +9.1%, soybeans -1.2%, sugar -17.9% and cotton -21.1%. The Reuters-Jefferies CRB index (which symbolizes the broad commodities market to many U.S. investors) gained 3.0% in April; it closed the month at its highest level since September 2008. _15,17

REAL ESTATE
The double dip happened – more or less. Last month brought us the February edition of the 20-city S&P/Case-Shiller home price index – and the broad index came in at just 0.01% above its April 2009 low. ₁₈

In better news, the Census Bureau reported an 11.1% improvement in new home purchases for March. The National Association of Realtors noted a 3.7% rise in existing home sales for that month, plus a 5.1% jump in pending home sales. (Scrutiny unearthed interesting details in the NAR data: distressed properties such as short sales and foreclosures accounted for 40% of March existing home sales, and 35% of the homes were bought wholly with cash – an all-time record.) _19,20

Mortgage rates declined across the board last month. At the end of March, Freddie Mac’s Primary Mortgage Market survey had the 30-year FRM averaging 4.86%; in the April 28 survey, the average rate was 4.78%. Average rates for 15-year FRMs had descended from 4.09% to 3.97% during that period. On April 28, Freddie Mac respectively estimated the average interest rates on 5-year ARMs and 1-year ARMs at 3.51% and 3.15%. ₂₁

LOOKING BACK, LOOKING FORWARD
The Dow Jones Industrial Average ended April at 12,810.54 – a close unseen since May 2008. Meanwhile, the CBOE VIX dropped 16.74% in April – its third straight monthly decline. ₁



The old “sell in May, go away” adage may be refuted this month. We have a mood that is decidedly bullish and a stock market that has recently ignored historical norms. The Fed will wrap up QE2 in June, but it may opt for some kind of sequel. The Fed has also indicated that interest rates will remain exceptionally low for the near term; even with the ECB’s recent move to raise its key interest rate by 25 basis points, a round of global tightening doesn’t seem imminent. Some analysts think stocks are overbought, yet there is prevalent optimism to counter that feeling. As we leave this earnings season behind, the focus again shifts to domestic economic indicators. The question now is whether the headline indicators (the jobless rate, existing home sales, personal spending, consumer and wholesale inflation) will be positive enough to send the market higher in May and June.

UPCOMING ECONOMIC RELEASES: For the rest of May, the schedule looks like this: April’s ISM service sector index (5/4), the April unemployment report (5/6), March wholesale inventories (5/10), April PPI, April retail sales and March business inventories (5/12), April CPI plus the initial University of Michigan May consumer sentiment poll (5/13), April building permits, housing starts and industrial output (5/17), April existing home sales and the Conference Board’s LEI index (5/19), April new home sales (5/24), April durable goods orders (5/25), the second estimate of 1Q GDP (5/26), April consumer spending, April pending home sales and the final University of Michigan May consumer sentiment survey (5/27), and finally the March Case-Shiller home price index and the Conference Board’s May assessment of consumer confidence (5/31).

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.




This information should not be construed as tax, legal, or 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.


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]

JOBLESS RATE DOWN 1% SINCE NOVEMBER
In March, the nation’s jobless rate declined to 8.8%. That is the lowest level of unemployment since April 2009 and represents a 1.0% reduction in unemployment in the last four months. The Labor Department said the economy added 216,000 jobs in March, 78,000 in the category of professional and business services._1,2

CONSUMER SPENDING UP 0.7%
Personal spending increased for the eighth month in a row in February, but Commerce Department data showed that much of the gain went to pay for higher food and energy costs. The Personal Consumption Index (PCE) advanced 0.4% for the month. So the inflation-adjusted gain in personal spending was 0.3%. Wages rose by 0.3% in February.₃

ISM: MANUFACTURING GROWTH MODERATES
The March PMI index from the Institute for Supply Management showed a slight reduction in the pace of the sector’s growth: it came in at 61.2 versus February’s 61.4 mark. However, the index has recorded 20 straight months of sector expansion.₄

IN REAL ESTATE, SOME MIXED NEWS
The National Association of Realtors said that pending home sales rose 2.1% in February. The number of contracts for existing home purchases was still down 8.2% from a year ago. In January, the S&P/Case-Shiller home price index fell 1.0% from its December level; if it slips another 1.2%, it will fall below its April 2009 trough, which would signal the dreaded “double dip”._5,6

STOCKS ADVANCE FOR THE WEEK & QUARTER
How did the big indices do last week? DJIA, +1.28% to 12,376.72; S&P 500, +1.42% to 1,332.41; NASDAQ, +1.70% to 2,789.60. In the first quarter, the DJIA gained 6.41%, the NASDAQ 4.83% and the S&P 500 5.42%._7,8

THIS WEEK: Monday, Federal Reserve chairman Ben Bernanke speaks at the Atlanta Fed. On Tuesday, the most recent FOMC minutes will be released, plus the ISM service sector report for March; we also get an earnings report from KB Home. Wednesday brings earnings from Monsanto and Bed, Bath & Beyond. Thursday we have announcements from the European Central Bank and Bank of England along with initial and continuing claims and earnings from Rite-Aid. No major economic releases are scheduled for Friday.




This information should not be construed as tax, legal, or 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.

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.



This information should not be construed as tax, legal, or 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.

INFLATION PICKS UP
The Labor Department announced that the Consumer Price Index advanced 0.5% in February, following 0.4% advances in January and December. Energy prices climbed 3.4% in February and food prices rose 0.8%, the biggest monthly increase since July 2008. Annualized inflation now stands at 2.1% – a full percentage point higher than it was last November. The Producer Price Index climbed by 1.6% last month, the biggest monthly leap since June 2009; this puts annualized PPI at 5.6%. However, core CPI and core PPI did not advance so dramatically. In fact, core CPI and core PPI were both just +0.2% in February. _1,2

LEADING INDICATOR INDEX ADVANCES
The Conference Board index of leading indicators improved by 0.8% for February, which was below the 1.0% advance forecast by economists polled by Reuters but much better than the 0.1% gain for the previous month. The Conference Board’s report called the recent jump in food and energy prices a “headwind” in the face of the recovery. ₃

FEBRUARY SEES PLUNGE IN NEW CONSTRUCTION
Housing starts plummeted by 22.5% in February to 479,000, a number marginally better than the historic low measured by the Commerce Department in April 2009. How much of this is attributable to weather, we don’t know. Building permits touched a record low of 517,000 units last month. ₂

TWO DAYS OF RECOVERY ON WALL STREET
The major U.S. indexes rebounded strongly on Thursday and Friday from YTD lows touched on Wednesday. All three indices lost ground for the week, as these numbers show: DJIA, -1.54% to 11,858.52; S&P 500, -1.92% to 1,279.20; NASDAQ, -2.65% to 2,643.67. The CBOE VIX gained 21.81% on the week but fell 7.32% Friday. ₄

G7 INTERVENES IN JAPAN
The crisis in Japan saw the Yen soaring to a record 76.25, and threat of a recession was looming. But that fear was at least partially reduced when the G7 agreed to intervene to weaken the currency. By Friday the Nikkei 225 index was able to recover some of the ground it lost, but still dipped about 10% on the week. _{8, 9}

THIS WEEK: Monday brings a report on February existing home sales; Fed chairman Bernanke addresses a conference of commercial bankers. Tuesday brings before-the-bell earnings from Walgreens and after-the-bell earnings from Adobe. Wednesday, we learn about new home sales in February; after the bell, we get earnings from General Mills. Thursday offers reports on last month’s durable goods orders and initial and continuing claims, and then after-the-bell earnings from Research in Motion and Oracle. Friday brings the final March reading for the University of Michigan’s consumer sentiment survey and the government’s final estimate of 4Q 2010 GDP.


Material prepared by Peter Montoya Inc. 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.


Citations.
1-latimes.com/business/la-fi-cpi-20110318,0,1486304.story [3/18/11]
2-nytimes.com/2011/03/17/business/economy/17econ.html?_r=1 [3/17/11]
3-reuters.com/article/2011/03/17/us-usa-economy-index-idUSTRE72G47620110317 [3/17/11]
4-cnbc.com/id/42155882 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F18%2F10&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F18%2F10&x=10&y=18 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F18%2F10&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F17%2F06&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F17%2F06&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F17%2F06&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F19%2F01&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F19%2F01&x=0&y=0 [3/18/11]
5-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F19%2F01&x=0&y=0 [3/18/11]
6-treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/18/11]
6-treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/18/11]
7-treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
8-reuters.com/article/2011/03/18/japan-quake-markets-idUSL3E7EI0JO20110318 [03/18/11]
9-money.cnn.com/2011/03/17/markets/world_markets/index.htm?iid=EL [03/18/11]
10-montoyaregistry.com/Financial-Market.aspx?financial-market=common-mistakes-that-ira-heirs-make&category=1 [03/18/11]

JOBS REPORT (NEARLY) LIVES UP TO EXPECTATIONS
Wall Street had high hopes for the February unemployment report. Would it show that more than 200,000 new jobs had been created? Well, it came close – the data revealed 192,000 net new jobs, the best increase in nearly a year. The jobless rate ticked down to 8.9% last month, and the number of underemployed Americans (those either without work or working part-time) dropped to 15.9% from 16.1% in January. On the downside, the Labor Department data showed that just 64.2% of the working-age population was either employed or seeking employment last month. You have to go back to 1985 to find a labor force participation rate that low.1

WAGES UP 1.0% IN JANUARY
The payroll tax holiday promoted a dramatic increase in personal incomes last month. Additionally, the Commerce Department said that the personal savings rate improved by 0.4% in January to 5.8%. Yet personal spending increased by only 0.2% in January and actually slipped 0.1% in inflation-adjusted terms.2

SERVICE & MANUFACTURING SECTORS KEEP GROWING
According to new Institute for Supply Management surveys, the expansion of both sectors continued in February: the service sector reading improved by 0.3% to 59.7 and the manufacturing sector reading went up 0.6% to 61.4.3

OIL, GOLD & SILVER PRICES LEAP NORTH AGAIN
Gold cracked a new ceiling last Wednesday, hitting an intraday high of $1,440.10 per ounce. Friday, U.S. gold futures settled at $1,428.60 an ounce. Gold prices have climbed 6.53% over the last five weeks. Silver hit yet another 31-year high on Friday, with futures hitting $35.32 per ounce. Oil prices rose 6.68% last week alone, settling Friday at $104.42 a barrel; oil futures are up 14.27% YTD on the NYMEX.4,5

A WINNING WEEK (BELIEVE IT OR NOT)
After five rather volatile trading days, the DJIA, S&P 500 and NASDAQ had all managed weekly advances. Their performances for the week: DJIA, +0.33% to 12,169.88; NASDAQ, +0.13% to 2,784.67; S&P 500, +0.10% to 1,321.15.6

THIS WEEK: No major economic releases on Monday or Tuesday. Wednesday brings a report on January wholesale inventories plus 4Q earnings from H&R Block. Thursday offers new initial and continuing claims data. Friday brings the initial March survey on consumer sentiment from the University of Michigan, Census Bureau data on retail sales in February, and a report on January business inventories. (In tech news, the iPad 2 is scheduled to ship Friday.)




Material prepared by Peter Montoya Inc. 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.

Citations.

1 – nytimes.com/2011/03/05/business/economy/05jobs.html [3/4/11]
2 – marketwatch.com/story/income-of-workers-climbs-10-in-january-2011-02-28 [2/28/11]
3 – ism.ws/ISMReport/NonMfgROB.cfm [3/3/11]
4 – cnbc.com/id/41897407 [3/4/11]
5 – blogs.wsj.com/marketbeat/2011/03/04/data-points-energy-metals-466/ [3/4/11]
6 – cnbc.com/id/41907885 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F04%2F10&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F04%2F10&x=10&y=18 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F04%2F10&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F03%2F06&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F03%2F06&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F03%2F06&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F05%2F01&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F05%2F01&x=0&y=0 [3/4/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F05%2F01&x=0&y=0 [3/4/11]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/4/11]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/4/11]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
10 – Financial-Market.aspx?financial-market=financial-planning-where-do-you-begin&category=5 [3/6/11]

A JOBS REPORT MUCH LIKE THE LAST ONE
Unemployment fell dramatically in January: the Labor Department reported a second straight .4% monthly drop, resulting in the largest two-month reduction of the jobless rate since 1958. While the decrease puts unemployment at 9.0% (the lowest figure since April 2009), just 36,000 net new jobs were created. The implication: due to the weather or discouragement, many job seekers didn’t look for work. “The thumbprints of the weather were all over this report,” Bank of America Merrill Lynch economist Neil Dutta told the Associated Press. “We know the job market is recovering.”1,2

CONSUMER SPENDING IMPROVES 0.7% IN DECEMBER
This beat the 0.5% gain forecast by economists polled by Reuters – and it was the sixth straight positive month for the indicator. The Commerce Department also noted that personal wages increased 0.4% in December. The core Personal Consumption Expenditures price index (PCE) was flat for the month; in 2010, core PCE only increased 0.7%.3

ISM: MANUFACTURING, SERVICE SECTOR GROW 2.3%
The Institute for Supply Management’s manufacturing and service sector indices both jumped 2.3% in January. (It was the best month for the non-manufacturing index since August 2005.) The manufacturing index is now at 60.8, and the service sector index is at 59.4. Additionally, the Commerce Department said that December brought a 0.2% improvement in factory orders.4,5,6

STOCKS LEAP NORTH, EVEN WITH UNCERTAINTY
The market largely turned its attention away from Egypt toward 4Q results and domestic economic indicators last week. The weekly gains were the best since early December: DJIA, +2.27% to 12,092.15; S&P 500, +2.71% to 1,310.87; NASDAQ, +3.07% to 2,769.30. As for fear in the marketplace, one measure of it – the CBOE VIX – dropped 20.66% for the week. Gold ended the week at $1,348.30 an ounce and NYMEX crude at $89.03 per barrel, and copper prices hit an all-time peak Friday.7

THIS WEEK: Monday brings 4Q results from Humana and Hasbro; also, President Obama addresses the U.S. Chamber of Commerce. Tuesday brings earnings from UBS and Toyota. Wednesday, we have earnings reports from Cisco, MetLife, Nissan, Prudential and Coca-Cola plus Ben Bernanke testifying before Congress. Thursday we get weekly unemployment figures and 4Q earnings from PepsiCo, Philip Morris and Sprint; it will also be “opening day” for Verizon iPhone sales. Friday offers the initial January consumer sentiment survey from the University of Michigan.





Material prepared by Peter Montoya Inc. 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.


Citations.
1 – usnews.com/opinion/articles/2011/02/04/does-the-unemployment-rate-drop-mean-economic-improvement [2/4/11]
2 – dailyfinance.com/article/unemployment-falls-to-9-percent-lowest/1252302/ [2/4/11]
3 – nytimes.com/2011/02/01/business/economy/01econ.html [1/31/11]
4 – theatlantic.com/business/archive/2011/02/ism-service-sector-activity-strongest-since-august-2005/70723/ [2/3/11]
5 – ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943 [2/3/11]
6 – marketwatch.com/story/dec-factory-orders-up-stronger-than-expected-02-2011-02-03 [2/3/11]
7 – cnbc.com/id/41430183 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F4%2F10&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F4%2F10&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F4%2F10&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F3%2F06&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F3%2F06&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F3%2F06&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=2%2F5%2F01&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=2%2F5%2F01&x=0&y=0 [2/4/11]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=2%2F5%2F01&x=0&y=0 [2/4/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/4/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/4/11]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
11 – http://montoyaregistry.com/Financial-Market.aspx?financial-market=the-financial-security-rulebook-5-crucial-steps&category=3 [2/7/11]