Tri Pillar Investments

Weekly Economic Update, October 26, 2010

editor — Wed, 27 Oct 2010 20:38:49 +0000

Tri Pillar Investments Presents:

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

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

WEEKLY TIP

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

WEEKLY RIDDLE

Before Mt. Everest was measured, in 1819, what was the highest mountain on earth?

Last week’s riddle:
What is placed on a table and cut, but never eaten?

Last week’s answer:

A deck of cards.

October 26, 2010

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

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

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

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

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

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

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+6.76	+10.43	+1.80	+0.84
NASDAQ	+9.27	+14.51	+3.81	-2.85
S&P 500	+6.10	+8.25	+0.06	-1.52
REAL YIELD	10/22 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.50%	1.49%	1.89%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

U.S. stocks climbed higher for the seventh week in eight based on strong corporate earnings and the anticipation of additional monetary stimulus from the Feds. Advances in four of the five trading days last week offset a steep decline on Tuesday caused by China’s unexpected interest rate hike. The Dow Industrials and the S&P both rose 0.6% by the week’s end. Gold eased lower and crude oil was largely unchanged.

Investors were generally pleased with bank results as improving credit trends and reserve releases overshadowed the mortgage controversy and weak loan growth. Wells Fargo shares rose 10.7% reflecting perception of being less affected by mortgage troubles than their competitor, Bank of America, who saw shares fall 4.5%.

Foreign markets, both developed and emerging, ended the week in negative territory in U.S. dollar terms.

In the business sector, more than 100 companies in the S&P 500 Index reported results this week. Apple rode iPhone success to report another impressive quarter. Amazon closed out the week with a strong report. McDonald’s shares climbed to an all-time high after the company’s results showed business is strong worldwide. AT&T outpaced Verizon in wireless subscriber additions in the third quarter.

Looking ahead, the coming week is rich in terms of economic data with more than 1,000 companies slated to release results in the last full week of October. Sectors to watch closely include technology, health care, and energy. Reports are due from oil giants Exxon Mobile and Chevron. There will be forthcoming information on consumer health, including reports on consumer confidence and personal income & spending.

TPI is not just focusing on the short term financial climate. We are utilizing all resources to assess domestic and foreign economies, as well as to gauge investor confidence in order to position our clients’ portfolios in the most favorable situation possible. Please feel free to contact us at any time if you have any questions.

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Weekly Economic Update, October 19, 2010

editor — Wed, 27 Oct 2010 20:37:47 +0000

Tri Pillar Investments Presents:

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

“The hardest tumble a man can make is to fall over his own bluff.”
– Ambrose Bierce

WEEKLY TIP

Ward off impulse buying with a 30-day list. If you feel like you have to have something, put it on your 30-day list. See if you still have the urge to buy it after 30 days; chances are, you won’t.

WEEKLY RIDDLE

What is placed on a table and cut, but never eaten?

Last week’s riddle:
I am a word that signifies a wide natural area – but remove my first letter, and you are left with a word signifying a narrow urban corridor. What word am I?

Last week’s answer:

Valley – remove the V and you get “alley”.

October 19, 2010

CPI UP JUST 0.1%, PPI ADVANCES 0.4%
In September, consumer prices barely increased – in fact, the core Consumer Price Index was flat for the second month in a row. According to the Labor Department, core CPI has risen only 0.8% in the last 12 months – core inflation hasn’t been so tame since 1961. With the economy so sluggish, retailers clearly need to keep their prices low to see if they can promote any demand. Producer prices increased for the third straight month, with the core PPI rising 0.1% for September. The core PPI is up 1.6% over the past 12 months, and the overall PPI has advanced 4.0% in that period.^1,2

CONSUMER SENTIMENT SLIPS A BIT
October’s preliminary University of Michigan/Reuters consumer sentiment index is in, and it shows a mild decline. Analysts weren’t expecting the index to move south, but it went to 67.9 from the final 68.2 September reading.³

RETAIL SALES UP BY 0.6% FOR SEPTEMBER
On Friday, the Commerce Department reported the second straight monthly advance in the category, after a revised 0.7% gain for August. Sales improved across almost all retail categories – they only weakened at clothing stores.³

BUSINESS INVENTORIES GROW IN AUGUST
Business stockpiles increased by 0.6% in that month, according to the Commerce Department. This follows a 1.1% increase for July. Both of those gains will likely constitute major contributions to 3Q GDP. On the downside, business sales only improved by 0.1%, leaving the inventory-to-sales ratio at 1.27 months.⁴

WALL STREET RIDES A 2-WEEK WIN STREAK
The Dow, S&P 500 and NASDAQ all advanced last week. The DJIA gained 0.51% for the week to close at 11,062.78 on Friday. The NASDAQ ended last week at 2,468.77 after a 2.78% weekly gain; the S&P 500 wound up at 1,176.19 after a 0.95% weekly advance.⁵

COMING NEXT WEEK: On Monday, we have a report on September industrial output; on Tuesday, we get data on September housing starts and building permits; on Wednesday, the Federal Reserve’s newest Beige Book comes out; and on Thursday, we receive fresh initial claims numbers and the Conference Board’s leading indicators index for September.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+6.09	+9.94	+1.51	+0.80
NASDAQ	+8.80	+13.60	+3.91	-2.50
S&P 500	+5.48	+7.26	-0.17	-1.44
REAL YIELD	10/15 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.50%	1.50%	1.98%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

A large drop in banking stocks weighed down the Dow and the S&P this past week.

There are increasing concerns that banks will be forced to buy back billions of dollars worth of loans that were incorrectly documented. Consequently, Bank of America shares fell 11 percent this past week, Wells Fargo fell 9 percent, and both JP Morgan and Citigroup fell 5 percent.

The rise in technology companies compensated for the drop in banking stocks and thus U.S. stock prices were still able to post modest gains for the week. One example is Apple, which has traded up for 9 days in a row and has increased 7 percent for the past week. Based partially on the strength of this sector, the S&P jumped 12 percent and the Nasdaq Composite was up 2.8 percent.

Investors are currently influenced by the quality of corporate earnings. The question arises if an individual company’s reported earnings growth is a result of increased revenues or cost-cutting. One example is General Electric, which is the largest conglomerate in the U.S. During the past quarter they reported sales were down 5 percent, but profits came in ahead of Wall Street’s expectations and their CEO was very optimistic about their future. However, investors focused on the lower-than-expected revenues and accordingly GE’s stock price fell 5 percent. Conversely, Google’s reported sales for the third quarter surpassed analysts’ estimates, which was embraced by investors and resulted in an amazing 11percent advance on Friday.

Reference to an intervention at the Fed’s meeting last week held minimal influence over how the markets reacted this week. While it appears that quantitative relief is possible, both stock and bond investors are more concerned about the long-term implications.

In the coming week, investors will be carefully analyzing the quarterly earnings reports for Goldman Sachs, Bank of America, Apple, IBM and American Express.

The variation in activity this week between banking stocks and technologies demonstrates the essential need for diversification of investment portfolios. Diversity has always been a cornerstone of TPI’s philosophy and is necessary in order to minimize the volatility we are currently experiencing. Please feel free to contact us if you have any comments or questions.

Weekly Economic Update, October 12, 2010

editor — Wed, 13 Oct 2010 18:56:11 +0000

Tri Pillar Investments Presents:

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

“The digital revolution is far more significant than the invention of writing or even of printing.”
– Douglas Engelbart

WEEKLY TIP

Update your will. It is just as important as having one. If you drafted a will years ago, the information is likely in need of some adjustments. Be sure to revisit your will often and keep it up to date.

WEEKLY RIDDLE

I am a word that signifies a wide natural area – but remove my first letter, and you are left with a word signifying a narrow urban corridor. What word am I?

Last week’s riddle:
Ian bought a bag of apples on Friday and ate a third of them. On Saturday he ate half of the remaining apples. On Sunday he looked in the bag and found that just two were left. How many apples were originally in the bag?

Last week’s answer:

Six. He had six apples to start with, and ate two the first day and two the second day.

October 12, 2010

JOBS REPORT COULD PROMPT FED RESPONSE
The U.S. economy shed 95,000 non-farming jobs in September – mostly government jobs, according to the Labor Department. Economists surveyed by MarketWatch thought payrolls would shrink by only 8,000 last month. The unemployment rate held steady at 9.6% as the private sector added 64,000 positions. On Friday, stocks posted gains after the news – economists and investors alike felt the report would spur the Federal Reserve toward further quantitative easing.¹

PENDING HOME SALES UP 4.3% FOR AUGUST
The National Association of Realtors reported the second straight monthly advance in this indicator. August pending home sales were still 20.1% below year-ago levels.²

SERVICE SECTOR GROWTH RATE INCREASES
The Institute for Supply Management’s service sector index rose for a ninth straight month, going from 51.8 in August to 53.2 in September. The employment sub-index moved north 2.0 points to 50.2, indicating hiring had increased.³

TWO BIG BANKS HALT FORECLOSURES
Responding to allegations that it may have seized homes using shortcuts and defective documents, Bank of America decided last week to extend its freeze on foreclosures to all 50 states. PNC Financial Services Group also announced last week that it was halting foreclosure sales for one month.⁴

FACTORY ORDERS HINT AT COMPANIES UPGRADING
In August, orders for non-military capital goods excluding aircraft rose 5.1%. This marks the best month for such orders since March 2010, according to Commerce Department data. Overall capital goods orders declined by 0.5%.⁵

DOW CLOSES NORTH OF 11,000
The index gained 1.63% last week to settle Friday at 11,006.48 – the first close over 11,000 since May 3. The NASDAQ advanced 1.31% on the week to settle Friday at 2,401.91. The S&P 500 closed at 1,165.13 Friday after a 1.65% weekly gain.⁶

COMING NEXT WEEK: minutes from the 9/21 FOMC meeting (Tuesday), new jobless claims figures and September PPI (Thursday), and then a plethora of reports to digest on Friday – September CPI, the preliminary October University of Michigan consumer sentiment survey, and new data on retail sales and business inventories.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+5.55	+12.46	+1.39	+0.41
NASDAQ	+5.85	+13.09	+2.98	-2.84
S&P 500	+4.49	+9.35	-0.51	-1.69
REAL YIELD	10/8 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.45%	1.49%	1.90%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

The Dow reached an incredible 11,000 last week, producing U.S. stocks’ highest level of achievement in five months. Equities rallied on Friday despite an initial reaction of disappointment to the much anticipated jobs report. Encouragement continued for the day with a unexpectedly positive capital goods orders report.

Commodities showed improvement for the week with gold realizing a new high of $1346.50 per ounce. Agricultural commodities were boosted by a USDA report forecasting diminished crop yields in the Midwest. This same report also had the effect of boosting agriculture related stock, especially those involved in fertilizers.

In the business sector, Bank of America imposed a 50 state moratorium on foreclosures as concerns about the foreclosure process spread. September chain store sales were in-line to better than expected for the all important back to school period. Abercrombie and American Eagle were among the standouts, while Gap struggled.

Looking forward, earnings will be the focus of attention for the next couple of weeks. The mid-term elections and FOMC meeting will both be occurring in early November. With businesses already running lean, improvement in the top line growth will likely be needed to sustain the earnings growth experienced in the past year.

One aspect of recent market performance that continues to perplex investors is the fact that while gold is going to the moon, 10-year Treasuries yielding 2.4% are getting more attention than blue-chip businesses yielding 4 to 5%. Usually gold is seen as an inflation hedge since it holds intrinsic value. In this case inflation erodes the value of fixed income assets like bonds, so the two should move inversely and this is not happening. Such a unique situation reinforces the value of the advice and services that TPI can provide for our clients. Please do not hesitate to contact us if you ever have any questions or concerns.

Weekly Economic Update, October 5, 2010

editor — Wed, 13 Oct 2010 18:55:05 +0000

Tri Pillar Investments Presents:

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

“There is only one happiness in life – to love and to be loved.”
– George Sand

WEEKLY TIP

If your company offers a 401(k) with dollar-for-dollar matching, consider maximizing your contribution in order to get the maximum match benefit. That match money is there for you; the more you give, the more you get.

WEEKLY RIDDLE

Ian bought a bag of apples on Friday and ate a third of them. On Saturday he ate half of the remaining apples. On Sunday he looked in the bag and found that just two apples were left. How many apples were originally in the bag?

Last week’s riddle:
I have no heart or mind, but I do have two legs. Yet they only touch the ground when I am not carrying things around. What am I?

Last week’s answer:

A wheelbarrow.

October 5, 2010

CONSUMER SPENDING UP 0.4%
August personal spending beat the 0.3% gain forecast by economists polled by Bloomberg News. Personal income was up 0.5% for August, the biggest monthly gain of 2010. The “core” PCE price index (minus food and energy prices) rose just 0.1% in August, a signal of tame inflation. The personal savings rate ticked up to 5.8% from 5.7%.^1,2

MIXED RESULTS FROM CONSUMER POLLS
Early last week, the Conference Board’s consumer confidence index slumped to 48.2 for September, more than five points below forecasts. Yet a fresh Reuters/University of Michigan consumer sentiment survey surprised analysts Friday – that barometer came in at 68.2, above the consensus of 67.0 forecast by Bloomberg and improved from the previous 66.6 reading.^3,4

ISM: MANUFACTURING GROWS MODESTLY
The Institute for Supply Management released its September manufacturing index on Friday. The September reading – 54.4 – indicated further growth, but also the slowest pace of expansion in 10 months.¹

SURPRISE INCREASE IN CONSTRUCTION SPENDING
Analysts surveyed by Reuters felt we would see a 0.4% drop in this indicator for August. Instead, construction spending rose by 0.4% in that month (a month in which housing starts also surged). The downside: investment in private sector projects hit its lowest level since January 1998.⁵

FRIDAY GAINS WRAP UP A DOWN WEEK
The DJIA’s four-week winning streak ended Friday, even as the index gained 41.63 on the first day of October. For the week, the DJIA went -0.28% to 10,829.68, the S&P 500 went -0.44% to 1,146.24 and the NASDAQ went -0.21% to 2,370.75. The final September numbers were pretty spectacular: DJIA, +7.72%; S&P 500, +8.76%; NASDAQ, +12.04%. Statistically, September 2010 was the best September for the Dow and S&P in 71 years. All ten industry groups in the S&P 500 advanced last month.^6,7

COMING NEXT WEEK: On Monday, we get news on August pending home sales & factory orders. Tuesday, ISM releases its September service sector index. Thursday, we have the latest initial claims numbers & August consumer credit. On Friday, we will get the September unemployment rate from the Labor Department; August wholesale inventories data will also be released.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+3.85	+13.89	+0.49	+0.12
NASDAQ	+4.48	+15.23	+2.04	-3.36
S&P 500	+2.79	+11.30	-1.34	-2.02
REAL YIELD	10/1 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.75%	1.50%	1.78%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

Despite overcast projections for a despondent September market, US stocks impressed most investors with a string of weekly gains resulting in the DJIA rising 7.7 % , the S&P rising 8.8%, and the Nasdaq increasing an impressive 12.0 %. The Russell 2000 advanced 12.3 % on the heels of a strong small cap stock performance. Although the market was mixed for the final week of September, energy stocks were leaders as crude oil prices gained 6.6 % to end the week at $81.58/bbl. Gold futures continued their climb, reaching $1,316/oz.

The Bureau of Economic Analysis released their August report on Personal Income and Spending which revealed both had increased more than expected. Commodities in general were supported by talk about a new round of debt purchases from the Federal Reserve.

In business news, Southwest Airlines and Airtran Holdings agreed to a $1.42 billion merger, and Wal-Mart bid $4.6 billion to buy South African retailer Massmart. Walgreen shares rose significantly as the company’s earnings beat expectations driven by higher sales of prescription drugs.

Looking ahead, the most anticipated news will be Friday’s employment report for September. Other major economic reports which are due include August Factory Orders, Initial Jobless Claims, August Consumer Credit, September’s Employment Report, Unemployment Rate, Average Hourly Earnings and August Wholesale Inventories. These results provide more clarity on the strength of the economic recovery.

TPI will provide you with up to the date relevant information through our Newsletters however feel free to contact us at anytime if you have a specific question.

Weekly Economic Update, September 27,2010

editor — Wed, 13 Oct 2010 18:32:37 +0000

Tri Pillar Investments Presents:

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

“Successful people ask better questions, and as a result, they get better answers.”
– Anthony Robbins

WEEKLY TIP

If you’re trying to save money or track your spending, consider using cash. Cash is real. You can see it, and you know when you’re out of it. Money becomes more abstract when you use a credit or debit card, leaving you more open to financial choices you may later regret.

WEEKLY RIDDLE

I have no heart or mind, but I do have two legs. Yet they only touch the ground when I am not carrying things around. What am I?

Last week’s riddle:
It is passed from hand to hand and pocket to pocket, yet whoever takes it doesn’t know it. Whoever knows it doesn’t want it. And whoever makes it makes sure never to mention it. What is it?

Last week’s answer:

Counterfeit money.

September 27, 2010

EXISTING HOME SALES IMPROVE
The National Association of Realtors reported that existing home sales rose 7.6% in August, a rebound from July’s record low. Separately, the Commerce Department said new home sales were flat in August (and 28.9% below year-ago levels). The inventory of unsold new homes decreased 1.4% last month to 206,000 – the smallest number since August 1968.¹

MARKET SEES UPSIDE IN DURABLE GOODS DATA
Overall durable goods orders declined 1.3% in August, but that was better than the 1.4% drop forecast by economists polled by Briefing.com. Minus transportation orders, durable goods orders were up 2.0% last month, far better than the 0.5% rise analysts expected. That news helped fuel a 198-point DJIA rally on Friday.²

ECONOMISTS SAY RECESSION DONE; BUFFETT SAYS NO
The National Bureau of Economic Research now says the “Great Recession” ended in June 2009. But Warren Buffett disagrees. Last week, the “oracle of Omaha” told CNBC: “I think we’re in a recession until real per capita GDP gets back up to where it was before … we’re not gonna be out of it for a while, but we will get out of it.”^3,4

LEADING INDICATORS ADVANCE 0.3% IN AUGUST
Last month, the Conference Board’s Leading Economic Indicators Index had its best increase since May. This is the second monthly advance in a row for the LEI.⁵

GOLD TOPS $1,300 FRIDAY
The Federal Reserve hinted at more quantitative easing last week, which helped gold futures. Gold rose above $1,300 in intraday trading Friday on the COMEX and settled at $1,298.10 per ounce. Silver ended the week at another 30-year peak: $21.40 per ounce after a 2.8% weekly advance.⁶

DOW PUSHES TOWARD 11,000
The DJIA advanced for a fourth straight week, closing Friday at 10,860.26. On the week, it advanced a healthy 2.38%. The S&P 500? Up +2.05% last week to 1,148.64 at Friday’s close. The NASDAQ? Up +2.83% last week to finish at 2,381.22 Friday.⁷

COMING NEXT WEEK: Tuesday, a new Case-Shiller home prices report & the Conference Board’s Consumer Confidence Index; Thursday, the third 2Q GDP estimate & initial claims; Friday, August consumer spending, the University of Michigan’s final September consumer sentiment survey, the September ISM manufacturing index & new auto sales and construction spending figures.

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+4.14	+11.88	+0.85	+0.05
NASDAQ	+4.94	+12.98	+2.50	-3.64
S&P 500	+3.01	+9.31	-1.10	-2.02
REAL YIELD	9/24 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	0.81%	1.64%	1.74%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

U.S. stocks posted a fourth consecutive week of gains as investors focused on the week’s positive data points. An earlier unproductive week in the market concluded on Friday with a stronger than expected durable goods report that sent stocks soaring. The week ended up 2.4 percent with the Dow hitting 10860 and the S&P achieving 1148. Influential factors affecting the market included both a report indicating housing starts were better than expected and another showing lower house prices in July. Leading indicators were better than expected while jobless claims remained high.

Gold prices continued to climb, gaining 1.7 per cent for the week and closing at $1295.95 per ounce. On the corporate equity front, both McDonalds and Microsoft both announced large dividend increases of 11 and 23 per cent respectively. IBM agreed to a purchase of Netezza for $1.7 billion, and Discover Financial reported strong earnings based on increased consumer spending and improved credit quality.

Looking ahead, the third quarter is coming to an end. Investors will be measuring results for more detail and clarity from the corporate sector before the momentum we have seen in September can be maintained. Historically September has proven to be a down month for the markets, but currently equities are on pace for double digit gains.

TPI will continue to use our many resources to position our clients’ portfolios appropriately to take advantage of market fluctuations.

Weekly Economic Update, September 13, 2010

editor — Tue, 21 Sep 2010 19:05:33 +0000

Tri Pillar Investments: Presents

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

“The secret of being boring is to say everything.”
– Voltaire

WEEKLY TIP

Exercise is not only wise, it may also prove economical. In the long run, just keeping fit may save you thousands of dollars (or more) in medical bills that an unhealthy person may incur.

WEEKLY RIDDLE

Where does today come before yesterday?

Last week’s 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 answer:

Beetle.

September 13, 2010

OBAMA PROPOSES NEW TAX CREDITS
Last week, President Obama recommended three new tax measures to Congress and the American people – an extension of the Bush-era tax cuts for all but the wealthiest Americans, an immediate deduction for any capital investment that companies make during 2010 or 2011, and a permanent and expanded R&D credit for businesses. In response, Senate Minority Leader Mitch McConnell (R-KY) called it “a last-minute, cobbled-together stimulus bill” that would not improve a “complete lack of confidence” on Main Street in Democratic Party economic policy.^1,2

TRADE DEFICIT SHRINKS 14%
A report from the Commerce Department says that America’s trade deficit narrowed to $42.8 billion in July, $7 billion less than the June figure. This is a good sign for 3Q growth. It was the biggest month-over-month reduction since February 2009. The report also noted a 1.8% jump in exports, the best monthly gain seen in that category since August 2008.³

WHOLESALE INVENTORIES GROW
Surpassing forecasts, wholesale stockpiles increased by 1.3% in July. That is the best month in two years for this indicator. Durable goods stockpiles maintained by wholesalers increased by 1.0%, and the inventory-to-sales ratio reached its best level since February 2010.⁴

BEIGE BOOK OFFERS MIXED NEWS
The Federal Reserve’s latest snapshot of economic conditions in its 12 districts found “economic growth at a modest pace” in five of them: Kansas City, Dallas, San Francisco, St. Louis and Minneapolis. “Positive developments or net improvements” were also noted in the Boston and Cleveland districts. No improvement was seen in the New York, Richmond, Atlanta, Philadelphia or Chicago districts.⁵

SHORT WEEK BRINGS ANOTHER ADVANCE
In the four market days following Labor Day, the S&P 500 rose 0.46% to 1,109.56. The Dow stayed positive for 2010, rising another 0.14% resulting in a Friday close of 10,462.77. As for the NASDAQ, it gained 0.39% to pull up to 2,242.48 at the closing bell Friday. It was a week of thin volume and mild economic “weather” with no great impact on Wall Street. As of Friday’s close, the S&P 500 was up about 5.7% for the month; the NASDAQ and DJIA were respectively up about 4.5% and 6.1% for September. Next week, we have the latest retail sales and industrial output reports and new CPI and PPI data.⁶

% CHANGE	Y-T-D	1-YR CHG	5-YR AVG	10-YR AVG
DJIA	+0.33	+8.68	-0.40	-0.65
NASDAQ	-1.18	+7.60	+0.62	-4.24
S&P 500	-0.50	+6.27	-2.13	-2.55
REAL YIELD	9/10 RATE	1 YR AGO	5 YRS AGO	10 YRS AGO
10 YR TIPS	1.02%	1.59%	1.64%	4.03%

The TPI Perspective: By Dr. Barry D. Kendell

September continued to show positive momentum as stocks closed higher for the third straight session. July’s trade deficit report was promising with an increase of 1.8 percent in exports as well as a 2.1 percent decrease in imports. In addition, another report sighted a drop in first-time claims for unemployment benefits which in combination helped to push the market up almost 6 percent for the month. Stocks were buoyed further by the Commerce Departments statement that wholesale inventories rose 1.3 percent in July which easily surpassed analysts’ expectations of a 0.4 percent increase.

The S&P 500 is approaching 1116, the 200-day moving average, which could be a market stimulus if sustained. Adobe System shares rose greater than 9 percent for the week following an announcement from Apple that it would be allowing apps created with the Adobe’s Flash software to be used with its iPhone and iPad products. Pacific Gas & Electric shares fell over 8 percent following the news of an explosion of a natural gas pipeline owned by the utility that caused 4 deaths.

On the world scene, it was announced that China’s trade surplus had narrowed in August by more than $8 billion. Imports jumped 35.2 percent from the previous year and this data is seen as a positive factor for U.S. trade.

Looking forward to next week, investors will be watching on Tuesday when August retail sales numbers are released to see if they rose 0.3 percent from July as expected. Best Buy, FedEx, Kroger and Oracle are among the companies due to report earnings.

The political campaign season is ramping up, and the President has been announcing various economic plans to help jump start employment. Over the next eight weeks there will be many loud and bitterly fought battles for the House and Senate. Some of the issues, such as whether or not tax rates will rise for the top 2 percent, will not be decided by Election Day, but there will be a sense of a general referendum on tax policy. This is a good time to consider a cautious philosophy for any new investment money. TPI is monitoring the election process very closely and will continue to keep our client’s portfolios in the strongest possible investment position.

Weekly Economic Update, September 7, 2010

editor — Tue, 21 Sep 2010 19:02:03 +0000

Tri Pillar Investments: Presents

MONTHLY ECONOMIC UPDATE

MONTHLY QUOTE

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

MONTHLY TIP

Updating your will is as important as having one. If you drafted a will years back, it likely needs some adjustments. Revisit your will often and keep it up to date.

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.)

September 2010

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.

The TPI Perspective: By Dr. Barry D. Kendell

US stocks gained last week for the first time in a month during some of the lightest trading seen year to date. The week started out with a triple-digit decline on Monday. A rally on Wednesday occurred after positive readings came from both Chinese and US manufacturing. Thursday showed modest but steady growth. Friday’s August job report revealed fewer loses overall than what was expected with some gains in the private sector.

The primary driving force of last week’s rally was the economically sensitive cyclical. For example, Construction & Housing and Transportation were both up approximately 4 percent. Likewise, Consumer Discretionary sectors fared well. Overseas, Latin American and European large caps showed gains as much as 4 percent.

Hewlett-Packard won the bidding war with Dell for 3PAR, costing them $2.1 billion cash. They also announced a $10 billion share buyback which resulted in HP shares rising 6.2 percent for the week. If our clients watched Troy on Fox Business just a couple of weeks ago, you may recall that one of his stock picks for that show was Hewlett-Packard!

Was last weeks strong market performance new momentum by investors who sense a self-sustaining economic recovery is in place? We are certain to see a very bumpy road over the next several months especially with pending elections. TPI’s philosophy is to maintain consistency in portfolio investment strategy rather than being reactionary.

Weekly Economic Update, August 30, 2010

editor — Thu, 02 Sep 2010 18:26:40 +0000

Tri Pillar Investments: Presents

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

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

WEEKLY TIP

To help keep your accounts secure, you should change Internet passwords often, never share them or write them down, and make them obscure. Never use your birth or anniversary date as a password.

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.

August 30, 2010

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.

The TPI Perspective: By Dr. Barry D. Kendell

This was another volatile trading week, with small gains in the small cap equities but a slight drop in the large caps. Friday’s late week results were buoyed by Bernanke’s statement that conditions remained conducive for economic growth in 2011. Both existing and new home construction and sales plummeted in July.

Better news came from an announcement that the jobless claims fell for the first time in four weeks. One of the more interesting activities in the market centered around the ongoing battle between Hewlett-Packard and Dell for the takeover of 3Par. Currently HP has made an offer that is 67 per cent higher than Dell’s original bid.

Next week’s investor focus will be on reports of the consumer confidence and manufacturing activity which will lead into Friday’s August payroll report.

Fidelity reports that due to heightened market risk, that they are trimming their stock fund exposure, while establishing positions in less risky emerging market bond funds and Annuity Models.

TPI along with its investment partners monitor market activities and patterns regularly and are able to ensure our client portfolios are positioned appropriately for the best possible return.

Weekly Economic Update, August 23, 2010

editor — Wed, 25 Aug 2010 18:21:25 +0000

Tri Pillar Investments: Presents

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

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

WEEKLY TIP

Spammers love to create emails that LOOK like they’ve legitimately come from your bank or credit card issuer. How can you be safe? Never use a “click here to log in” link. Always go directly to the website address for your bank or credit card provider and log in there.

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.

August 23, 2010

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.

The TPI Perspective: By Dr. Barry D. Kendell

During a very volatile week, stocks finished down slightly on the heels of the previous weeks poor performance. The Dow Jones Industrials shed just under 1.0% while the S&P 500 retreated 0.6%. There was comparatively low trading volume which often exacerbates the market swings which were experienced. Large stocks declined for a second straight week. Small stocks and Technology shares did outperform however and this was reflected in the Russell 2000 and tech-rich Nasdaq Composite holding level. There was an unexpected increase in the weekly initial jobless claims which has consumer confidence low and spending depressed.

Overall however, second quarter profits have generally improved from a year ago, and even from the prior quarter. Top-line growth has also improved in a number of sectors, but not as much as the investor community would like. The top performing stock funds for the week were mid-cap growth funds which benefited by having a tech component in their portfolios. In overseas markets, stocks performed better than in the U.S., particularly in Canada and Japan. Based on a global view that inflation is dead, Fidelity’s Spartan Long-Term Treasury, an interest-rate-sensitive taxable bond fund, was up a whopping 2.8% over the prior four days. In the market, Intuit and Salesforce.com both had a standout week with the shares in both companies gaining 16%.

A noteworthy transaction this week included Intel’s $7.7 billion cash purchase of McAfee which drove the McAfee stock up 58% for the day. General Motors filed for an IPO and is expected to raise as much as $15 billion later this year.

Looking ahead to next week, there will be few earnings reports but economic data due out includes existing home sales, durable goods orders and the second-quarter GDP. TPI believes that stock valuations are attractive at present levels when benchmarked against consensus forward earnings estimates.

Weekly Economic Update, August 9, 2010

editor — Wed, 11 Aug 2010 18:50:29 +0000

Tri Pillar Investments: Presents

WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE

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

WEEKLY TIP

Use just one credit card (not debit card) for online purchases – this makes detecting any fraudulent charges easier, and you’re protected under the Fair Credit Billing act. Try not to use your debit card, as it may expose your bank account if intercepted.

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.

August 9, 2010

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.

The TPI Perspective: By Dr. Barry D. Kendell

Friday was a pivotal day for the markets in the U.S. as the Department of Labor released its employment report. The unemployment rate stayed at 9.5% for the month of July. Nonfarm payrolls fell 131,000 which was only partially offset by the private sector adding 71,000 new jobs. These results follow a drop of 221,000 jobs in June, much of which was related to the laying off of Census workers. This has been perceived as another sign that the slowdown in U.S. growth is the real problem with the global economy, not the European debt crisis that influenced financial markets for much of the spring.

With these disappointing results, investors fled stocks and instead went to assets which are perceived as being safer. Foreign currency and bond prices rose, which sent interest rates back to near historic lows. Gold also rose $7.50 to $1,206.80 an ounce which was the first time since July 15^th that the price closed above $1,200. The euro has bounced back from the losses it saw due to European government debts and is now at a four-month high against the dollar. The Dow ended up 1.8% overall for the week.

Attention for next week will be on the upcoming Federal Reserve’s meeting. The Fed has let several economic stimulus programs expire such as purchasing mortgage-backed securities, and investors are now wondering whether the central bank will be taking new steps to stimulate the economy.

On a historical note, thirty-eight years ago, then president Richard Nixon saw an opportunity to create a dialogue with China, and in 1972 he visited Mao Zedong in Beijing. Not many would have envisioned that China would become one of our key trading partners and have the second largest economy on earth. The historical shift in the world’s wealth to countries such as China provides many investment opportunities for our clients. TPI will continue to monitor and analyze all foreign markets and use this information to provide valuable advice for the diversification of individual portfolios.