Are the markets setting up for a positive 2011?

And, A note from us to you…

U.S. founding father Thomas Paine wrote: “The real man smiles in trouble, gathers strength from distress, and grows brave by reflection.” As we ponder the experiences of 2010, we cannot help but see timeless value in his words.

As one year draws to a close and the next unfolds before us, we are moved to reflect on the people and experiences that brought us to this point. Such reflection is essential because it helps us to be thankful for what we have, to grow in acuity, and to make prudent plans for the future.

From our perspective, providing you with sound financial guidance is about much more than numbers. It is about helping you ‘smile in times of trouble and gather strength in times of distress.’ More than that, it is about helping you ‘reflect’ on your personal experiences and aspirations so you can convert those into worthwhile, attainable goals for the future.

From the day we started working together, your goals became our goals; your trials, our trials. We consider it a privilege to serve you in this capacity, and we hope that you enjoy working with us as much as we enjoy working with you.
Thank you for all that you do. We look forward to continually growing our relationship in the years ahead!

THE MARKETS:

The final weeks of the year are traditionally light for the markets and 2010 is no exception so far. Thursday closed the week on a quiet note as the Dow rose a stingy 0.1%, and the three major indexes only moved about 1% higher for the week. Leading up to the Christmas holiday, it seems that both stocks and traders slipped quietly into vacation.

While gains have been modest in recent weeks, stocks are still on track to post double-digit increases for the year. And with good news surrounding consumer spending and consumer sentiment, the economy appears to have earned a break. The Commerce Department said spending rose 0.4% in November, slightly higher than economists had predicted, and experts calculate that the 2% cut in employee’s 2011 payroll taxes may fuel further spending in the year ahead. Interestingly, even if spending doesn't increase at all in December, it is on track to grow at an inflation-adjusted 4% annual rate in the fourth quarter, which would mark its fastest pace since 2006. "It looks like we've transitioned into a period of solid consumer spending," said Barclay’s Capital economist Dean Maki. "That makes it hard not to be optimistic about economic growth."

Obviously there are still a number of hurdles for the economy to overcome. Despite a recent increase in new home sales, we are still contending with a depressed housing market that could further damage household finances, prompting people to cut back spending. And at more than $91 a barrel, recent price hikes have earned oil a lump of coal in its stocking too. With oil prices at their highest levels in over two years and gasoline selling for an average $3.01 per gallon, this has the potential to squeeze a few pocketbooks.

Still, most of the economic news arrives just in time to offer fresh hope for the new year. Morgan Stanley economists boosted their fourth quarter GDP forecast to 4.5%, supported by the Commerce Department’s report that total orders for durable goods, excluding transportation, rose 2.4%, the best performance since last March. This increase in production bodes well for employment, where the recent drop in initial unemployment claims offers an additional glimmer of hope.
All in all, the year has ended more positively than it began. Stay tuned for our 2010 recap due in the week ahead. See you next year!

ECONOMIC CALENDAR:
Tuesday – Redbook, S&P Case-Shiller HPI, Consumer Confidence
Wednesday – EIA Petroleum Status Report
Thursday – Jobless Claims, Chicago PMI, Pending Home Sales Index, EIA Natural Gas, Farm Prices, Fed Balance Sheet, Money Supply
Friday – U.S. Holiday: New Year’s Day Observed

Data as of 12/23/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 1.12 12.7 12.2 -0.19 -0.38
Dow 0.65 10.9 10.6 1.27 0.88
NASDAQ 1.07 17.5 17.5 3.70 0.59
MSCI EAFE 0.65 4.20 4.61 -0.49 1.29
10-year Treasury Note (Yield Only) 3.48 N/A 3.75 4.38 5.00

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:
China's central bank has raised its interest rate for the second time in just over two months as the nation fights to keep inflation in check.
The gap between the rich and the middle class is larger than it has ever been due to the bursting of the housing bubble. The richest 1% of U.S. households had a net worth 225 times greater than that of the average American household in 2009, according to analysis conducted by the Economic Policy Institute, a liberal think tank. That's up from the previous record of 190 times greater, which was set in 2004.
The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That's about 43 million people, or about one out of every seven Americans.
Taxpayers who claim deductions for home-mortgage interest, gifts to charity and state and local taxes will have to wait until middle to late February to file their 2010 returns. The Internal Revenue Service attributed the late start of the filing season to changes in tax law for 2010 that were finished last week. The agency needs extra time to put processing systems in place, the IRS said Thursday.

QUOTE OF THE WEEK:

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”– Michelangelo

How will the extension of the Bush Tax Cuts benefit the economy next year? by Ken Mahoney

After months of speculation about the future of Bush era tax cuts, closure finally came late Thursday when the House of Representatives approved an $858 billion tax package to extend them through 2012. The approval of the plan has been marked by an optimistic attitude in the markets and positive speculation about the future of the economic recovery. While the S&P 500 only edged up one point this week, it has gained nearly 6% since Obama agreed to compromise with Republicans on the tax plan , and all major indexes either closed at or touched 52-week highs at some point during the last five trading days.

The economy is also showing signs of gaining ground, as a slew of upbeat statistics – from rising retail sales to falling unemployment claims – indicate. The economy grew at an annualized pace of 2.5% in the third quarter, and expanded growth is expected into next year. In an interview late Friday, Former Federal Reserve Chairman Alan Greenspan told Bloomberg: “The U.S. economy unquestionably has some momentum. The fourth quarter looks good. The growth rate could be 3.5 percent or more.” He later expressed this pick up in the economy should lead to increased hiring, and that the unemployment rate should drop next year. This would certainly be a welcome development!

It will be interesting to see what affect the new tax bill has on stock market performance in the shortened trading week ahead. Regardless of how things go, we hope you will relax and enjoy some quality time off with your family and friends.

ECONOMIC CALENDAR:

Tuesday – Redbook
Wednesday – GDP, Corporate Profits, Existing Home Sales, EIA Petroleum Status
Thursday – Durable Goods Orders, Personal Income and Outlays, Jobless Claims, Consumer Sentiment, New Home Sales, EIA Natural Gas
Friday – U.S. Holiday: Christmas Observed

Data as of 12/17/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 0.28 11.5 13.5 -0.37 -0.52
Dow 0.72 10.2 11.5 1.13 1.01
NASDAQ 0.21 16.5 21.2 3.47 -0.04
MSCI EAFE -0.10 2.58 4.69 -0.71 1.02
10-year Treasury Note (Yield Only) 3.30 N/A 3.49 4.45 5.18

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

The largest forfeiture settlement in U.S. history has recovered about half of Bernard Madoff’s stolen money. Barbara Picower returned $7.2 billion from her deceased husband’s estate. Jeffry Picower was a Florida businessman who had been the single-largest beneficiary of the fraud.

Bank of America said it will not process payments intended for WikiLeaks despite threats from the group that their next large documents release will be bank information. In related news, WikiLeaks founder, Julian Assange was released on bail this week from a jail in Britain, where he is fighting extradition to Sweden over alleged sexual offenses.

Americans spent $942 million online December 17, 61% more than they spent the same day last year, thanks to the more than 1,500 online merchants who participated in Free Shipping Day.

EU leaders outlined a plan for a new fund to fight future crises. Intended to take effect in 2013, the plan will replace the existing 750 billion euro ($998.8 billion) European Financial Stability Facility (EFSF). The meeting failed to create measures to limit borrowing costs which have forced rescues of Greece and Ireland and threaten other high-debt countries on the euro-zone periphery.

QUOTE OF THE WEEK:

“ Congress has voted to extend the Bush tax cuts. Is it me, or is George W. Bush getting more done now than when he was in office?
Jay Leno



The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Rockland County
Chestnut Ridge NY

Can the Santa Claus Rally continue? (And year end tax moves) by Ken Mahoney

Many economic indicators have shown gradual improvement in recent months, and this seems to be reflected by a growing sense of optimism on Wall Street.
Despite an unusually flat stretch for the markets, stocks gained on Friday and the S&P 500 closed at its highest level since September 2008. Gains came after newly released government data showed a narrowing U.S. trade deficit, thus boosting hopefulness about further economic growth early in 2011. A separate report on consumer sentiment also came in better than expected, helping the Dow lock in a gain of 0.4%, the S&P 500 add 1.3%, and the Nasdaq rise 1.5% for the week.

If things continue as they are, the Dow and S&P 500 are on track to finish 2010 with 10% gains each, while the Nasdaq is up 16% year to date. Alec Young, equity strategist at Standard & Poor's, was quoted by CNN Money on Sunday and said, "The market has been doing pretty well. The recovery continues nice and steady in the U.S. and the market looks like it could go higher if that stays intact." And regarding the economy, John Canally, chief economist at LPL Financial was quoted by MarketWatch as saying, “Long term, the economy has turned the corner.” Hopefully these gentlemen are right, but of course, this paragraph did start with the word “if”. And when it comes to the stock market, few things are certain.

With the holiday shopping season well under way, much attention will be focused on retail sales figures due this Tuesday. Many analysts predict they will confirm a strong start to the post-Thanksgiving shopping season, and since consumer spending represents the single biggest component of U.S. economic growth, positive sales figures bode well for the overall health of the economy.

Also this week, eyes will be turned to Washington for signs a compromise has been reached regarding extending Bush-era tax cuts. The final outcome of the tax debate has been a major source of uncertainty for the markets, and putting the issue to bed is likely to have a stabilizing effect.

Each week, it may seem this commentary introduces new factors that affect the stock market, the economy, and our perception of how well things are going in the world. But regardless of what we report to you, rest assured that our goal is always the same – to educate you and to remain ever alert to the various challenges and opportunities that exist in the framework of working toward your goals. We hope you have a great week!

ECONOMIC CALENDAR:
Tuesday – Producer Price Index, Retail Sales, Business Inventories, FOMC Meeting Announcement
Wednesday – Consumer Price Index, Empire State Manufacturing Survey, Industrial Production
Thursday – Housing Starts, Jobless Claims, Philadelphia Fed Survey
Friday – Leading Indicators

Data as of 12/10/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 1.28 11.2 12.5 -0.30 -0.95
Dow 0.25 9.42 9.65 1.17 0.65
NASDAQ 1.78 16.2 20.4 3.37 -0.96
MSCI EAFE 0.38 2.68 3.81 -0.31 0.92
10-year Treasury Note (Yield Only) 3.02 N/A 3.48 4.54 5.34

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

Higher food prices continue to be the main driver of inflation in China, raising the likelihood of an imminent interest rate hike as the country tries to reel in its red-hot economy.

American homes are expected to be worth $1.7 trillion less in 2010 than they were worth last year, according to a report released Thursday by real estate website Zillow. This year's drop in home values is 63% bigger than the $1 trillion dip in 2009, and brings the total value lost since the housing market's peak in 2006 to a whopping $9 trillion.

Sadly, Mark Madoff, the oldest son of convicted swindler Bernard Madoff, committed suicide on Saturday, two years to the day after his father’s arrest.
A powerful, gusty storm dumped mounds of snow across the upper Midwest on Sunday, closing major highways in several states, canceling more than 1,600 flights in Chicago and collapsing the roof of the Minnesota Vikings' stadium.

Credit card offers are surging again after a three-year slowdown, as banks seek to revive a business that brought them huge profits before the financial crisis wrecked the credit scores of so many Americans. HSBC mailed more than 16 million card offers to this group in the third quarter of this year, Citigroup 14 million and Discover 10 million, all roughly tenfold increases over the same period last year, according to Synovate Mail Monitor, a market research firm. Capital One’s rate rose fiftyfold, to 22 million.


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Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!.

Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

The Markets Split Personality and Year End Tax Savings Solutions by Ken Mahoney

Does it ever seem to you that news headlines possess a split personality? That everything is always rosy or doom and gloom with no middle ground? This perception scares many people out of investing leading them to conclude that such unpredictability is a risk they can do without. Is this a recent phenomenon?
While it may be obvious that sensational headlines are designed to get an audience’s attention, media influence over public opinion is a long-held tradition. Consider a few headlines from years past:

Can Capitalism Survive? – 1975
Is There Light at the End of the Tunnel? – 1992
Awash in Troubles – 1984

Do any of these headlines sound familiar, even recent? If the years weren’t printed next to them, would you conclude that two of them are over 25 years old? Often, such dire predictions leave something out. In many cases, even as the news is inundated with pessimistic headlines, positive long-term trends are in development.

Just this Sunday, Fed Chairman Ben Bernanke appeared on CBS’ 60 Minutes. Included among his comments were positive statements such as, “I have every confidence that this economy will recover, and recover in a strong and sustained way. The American people are among the most productive in the world. We have the best technologies. We have great universities. We have entrepreneurs. I just have every confidence that as we get through this crisis, that our economy will begin to grow again, and it will remain the most powerful and dynamic economy in the world."

To our point, just an hour after the Fed Chairman’s interview, CNN lead with this headline: Bernanke on '60 Minutes': Grim Outlook. Granted, not everything Bernanke said was positive, but why did CNN choose to highlight the negative? Because sensational headlines sell. Remembering this fact can help you avoid making rash, emotional decisions, and may even help you sleep better at night.


Data as of 12/03/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 2.97 9.83 11.4 -0.64 -0.69
Dow 2.62 9.15 9.80 0.93 0.97
NASDAQ 2.24 14.2 19.3 2.80 -0.20
MSCI EAFE 3.68 2.32 0.30 -0.19 1.01
10-year Treasury Note (Yield Only) 2.86 N/A 3.38 4.52 5.51

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

ECONOMIC CALENDAR:

Tuesday – Consumer Credit
Wednesday – EIA Petroleum Status Report
Thursday – Jobless Claims, EIA Natural Gas Report
Friday – International Trade, Consumer Sentiment, Treasury Budget

HEADLINES:

The U.S. Senate on Saturday defeated two attempts by Democrats to extend the Bush-era tax cuts for the middle class permanently. After the Senate voted, President Barack Obama told Democratic congressional leaders he would be open to a temporary extension of the Bush-era tax cuts for the affluent, but he would demand concessions from the GOP.

The United States has reached a tentative free trade agreement with South Korea, the White House said Friday. The agreement, which must be ratified by Congress, strengthens economic ties between Washington and Seoul at a time when the longtime U.S. ally faces an increasingly hostile northern neighbor. If ratified, the agreement would eliminate tariffs on over 95% of industrial and consumer goods within five years.

A surprising increase in the number of unemployed Americans wasn't enough to stall oil's momentum Friday as it cruised to a 26-month high. Benchmark oil settled up $1.19 at $89.19 a barrel on the New York Mercantile Exchange. It's the second time in less than a month that oil has reached the level where it was in the fall of 2008. There are widespread expectations that the price will hit $90 a barrel by year's end and head toward $100 a barrel by next spring when traders begin looking ahead to the summer driving season.
Nonfarm payrolls rose by 39,000 in November, far lower than the 155,000 gain expected by economists surveyed by MarketWatch and the upwardly revised figure of 172,000 jobs gained in October.

As the end of 2010 approaches we know you are busy with holidays, family, and travel, but it is also a good time to do some last minute tax planning. As a courtesy, we want to provide you with a few eleventh-hour tax tips you may find useful. Although tax planning is rarely fun, these strategies could help you keep more of your hard earned money:

 Vehicles: If you purchased a vehicle in 2010, including a motor home, you can deduct state and local sales taxes and fees. [1]

 Go Green: There is still a tax break available for the purchase or lease of certain hybrid vehicles. [2] In addition, energy-efficient home improvements like insulation qualify for deduction of 30% of the cost, up to $1500 and can be claimed on your 2010 taxes. There is also a renewable-energy credit that lets you deduct expenses for items like geothermal heat pumps, solar panels, and wind-energy systems. (Note: Some of these devices need to be installed this year to earn the credit. [3])

 Accelerated Payments: Paying your mortgage payments into the new year allows for an itemized deduction. You may also want to pay property taxes this year in order to claim the added standard amount on your 2009 return. [4]

 Charitable Donations: If you have stock you would like to donate, you can deduct the full market value and skip paying capital-gains (the charity doesn't pay either). [5] Remember to get a receipt and an acknowledgment from the charity for gifts of $250 or more.

 IRA Contributions and Distributions: You may want to consider IRA withdrawals to pay for education, including that of your grandchildren without owing the 10% penalty. [6] Depending on your income, you may be able to deduct your IRA contribution as well. [7]

 Alternative Minimum Tax (AMT): If your income is above about $75,000 and you have significant write-offs for personal exemptions, state and local income and property taxes or interest on a home equity loan not used to improve a house, you may want to discuss whether you qualify for the AMT with your tax professional. [8]

 Possible Deductions: This is an excellent time of year to get organized. Gathering cash receipts will help you calculate possible deductions and miscellaneous payments. Examples:
• Do you have a hobby or activity that might also qualify as for-profit income? If so, these losses might also be eligible for deduction. 6
• Prepaying college tuition for your children or grandchildren, could allow you to qualify for the American Opportunity Credit, [9] Lifetime Learning credits, or other deductions. [10] Paying ahead for next year's tuition costs could provide a nice write-off this year.
A few extra notes for those of you who are still working:

 401(k): If you are still working, maximize your 401(k) contributions, up to $16,500 or $22,000 if you will be over 50 in 2010.12

 Making Work Pay Credit: In July, you may have noticed an increase in your earned income thanks to this credit. Earned income went up by 6.2%, though certain AGI amounts will affect the amount you can claim. You may have received the credit, but earned too much to be entitled to it. Unless you adjust withholding before the end of the year, you may have to give the money back, either in the form of a smaller tax refund or a higher tax bill next spring.12

 Withholding Adjustments: You may also want to adjust your withholding if you have more than one job, both you and your spouse work, you can be claimed as a dependent, or you have taxes withheld from a pension check.12

 Stimulus Checks: Employed retirees can only keep $150 of their $250 economic-stimulus check. You may want to have money withheld from your check to avoid owing taxes next spring.12

 Flexible Spending Accounts: This time of year is when you probably need to specify how much salary you’ll contribute to your flexible spending accounts. Not only is it appropriate to review your changing needs, but tax-free withdrawals can then be taken from these accounts for medical and dental insurance premiums, uninsured medical and dental expenses, and child-care costs.6 You will forfeit any balance left in these accounts at the end of the year, so take advantage now by filling prescriptions early, making medical or dental appointments, or scheduling elective surgeries.6

Please check with your accountant or tax preparer as the applicability of the above

QUOTE OF THE WEEK:

There are always flowers for those who want to see them. – Henri Matisse



.





Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!.


Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

It’s a small world after all… By Ken Mahoney

People around the world are arguably more connected now than any other time in history. During the past hundred years, remarkable advances in science, trade, and technology have drawn us closer together. Just 15 years ago, who would have thought we would be able to use our mobile devices to video conference with individuals on the other side of the world? So many things that once seemed impossible have now become everyday occurrences. And yet, this trend toward globalization has also raised significant challenges – some of which we are battling right now.

In recent days, news sources have been commenting on how developments abroad could affect the condition of the U.S. Economy. For example, a FOX News headline from Saturday read: International Crises Threaten to Overshadow Obama's Economic Message , and TIME Magazine online asked Sunday: Will North Korea's Artillery Blast the Global Economy? As these headlines emphasize, the actions of our distant neighbors give many pause for concern. How should we react to such news?

Back in the spring, you may recall that problems in Greece and the so-called PIIGS (Portugal, Ireland, Italy, Greece, Spain) countries caused markets around the world to fall and raised fears of a global double-dip recession. Before long though, the Greek bailout plan and the establishment of a European bailout fund quieted those fears for a time and the markets experienced a nice summer rally. Or you may recall back in March that North Korea sank a South Korean naval vessel, but there was no medium or long-term damage done to either the economy of South Korea, the U.S., or the wider East Asian region. What do these examples teach us?

There will always be bad news to shake up the stock market and rattle investors. And while past performance is no guarantee of future results, declines are historically followed by advances. And, of course, hindsight is always 20/20. When it comes to investing, there are no crystal balls. It is for this reason that we are wise to maintain a long-term approach, stay focused on our objectives, diversify as much as possible, and make adjustments where necessary.

In a way, the words of White House chief spokesman Robert Gibbs on Tuesday capture the essence of the point we are trying to make. Speaking about how the time Obama spends focused on international issues could distract from time spent working on the domestic economy, he said: "there are events that happen like North Korea that you have to address as they happen, not how you would plan for them to happen."
Please rest assured that we are ever alert to the changing world scene, and that we will keep you informed about events that could affect you and adjustments that should be made.

Data as of 11/26/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 -0.86 6.66 7.09 -1.24 -1.14
Dow -1.00 6.37 6.00 0.29 0.59
NASDAQ 0.65 11.7 16.5 2.40 -1.27
MSCI EAFE -4.15 -0.71 0.90 -0.51 0.88
10-year Treasury Note (Yield Only) 2.88 N/A 3.45 4.43 5.62

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.


HEADLINES:

Online sellers kick off the week with one of their biggest sales days of the year - Cyber Monday. E-tailers consider it their version of Black Friday. It is the day that Web merchants furiously push big discounts, free gift cards, free shipping and any other gimmick they can think of to entice consumers to spend even more of their holiday shopping dollars online.

ComScore, a digital marketplace research firm, expects online sales for the 2010 holiday season will reach $32.4 billion, marking an 11% increase over the previous year for the combined November-December gift-buying period.

Billionaires Warren Buffett and Bill Gates said Sunday in addition to their enormous philanthropic contributions, they are willing to pay higher U.S. taxes. The pair appeared on ABC's "This Week" to discuss "The Giving Pledge," a program that recruits the wealthy to donate at least half of their wealth to philanthropic causes, which if successful would raise $600 billion. "The rich are always going to say … just give us more money, and we'll go out and spend more, and then it will all trickle down to the rest of you, but that has not worked the last 10 years, and I hope the American public is catching on," Buffett said.

The pound posted its biggest weekly drop against the dollar in more than six months as concern that China is moving to slow its economy and tensions between North and South Korea diminished demand for riskier assets. The pound dropped to $1.5602 as of 4:30 p.m. in London yesterday, a weekly decline of 2.4%. It’s the third weekly decline against the dollar in a row and the biggest since the week ending May 7.




Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!.


Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Goldilocks, where are you? Some country’s economies are too hot, or too cold…

Last week drew attention back to the health of the global economic recovery as the Dow fell 2.2%, the Nasdaq slid 1.5%, and the S&P slumped 1.2%, for their biggest point and percentage drops in three months.

The week’s downturn can be largely attributed to ongoing concern about Europe’s debt crisis, particularly in Ireland, and to the fact that China is considering policies to slow its economic growth in order to counter inflation. Speculation that these new policies will decrease China's demand for natural resources resulted in a decline among materials and energy stocks, as well as crude oil prices.

On the bright side, although these losses end a five-week winning streak, the S&P 500 still closed above its 200-week moving average for the second week in a row – something that has not happened since mid-June 2008.

Also last week, the U.S. government embarked on its second round of quantitative easing (QE2) in response to slow employment growth, global economic concerns, and fears of deflation. On Friday the Federal Reserve purchased $7.3 billion of the $600 billion in securities slated for purchase through June 2011. QE2 is intended to increase the supply of money and lower interest rates in an effort to prompt spending and boost available credit.

Critics contend that the Fed’s plan will increase financial speculation and produce inflation, while its positive impact on average consumers will be limited. To date, commodity prices have soared in response to QE2, with wheat, corn, cotton, sugar and coffee — all broadly used consumer items — listed among the gainers. One concern about this is that any permanent rise in costs for basic goods will be passed on to consumers. Foreign governments, including China, are also concerned about the manipulation of U.S. currency, leading to fears about a drop in foreign Treasury buying. To critics, Fed Chairman Ben Bernanke counters that the Fed's job is to focus on the U.S. economy, not everyone else's.

While the U.S. monitors overseas financial policy, foreign markets watch U.S. economic policy to determine their level of investment. As your financial advisors, we must do something similar when making decisions about what is best for you. As technology and trade increasingly connects our world, it becomes ever more critical for us to remain sensitive to changing global economic issues, as well as current U.S. policies, and to keep you informed about how such factors could affect the health of your investments. This weekly email update is one of the ways we aim to educate you about such matters. We hope you enjoy reading it.

ECONOMIC CALENDAR:

Monday – Retail Sales, Empire State Manufacturing Survey, Business Inventories
Tuesday – Producer Price Index, Treasury International Capital, Industrial Production, Housing Market Index
Wednesday – Consumer Price Index, Housing Starts, EIA Petroleum Status Report
Thursday – Jobless Claims, Leading Indicators, Philadelphia Fed Survey, EIA Natural Gas Report

Data as of 11/12/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 -2.17 7.54 10.3 -0.58 -1.22
Dow -2.20 7.33 9.76 0.95 0.56
NASDAQ -2.36 10.9 17.2 2.87 -1.69
MSCI EAFE -2.97 3.18 3.16 0.50 0.83
10-year Treasury Note (Yield Only) 2.54 N/A 3.45 4.56 5.80

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

President Obama has identified another big goal for the upcoming lame duck session of Congress: The pending Strategic Arms Reduction Treaty with Russia. The START treaty, which has been pending in the Senate for months, would reduce the limit on strategic warheads to 1,550 for each country from the current ceiling of 2,200. It also would set up new procedures to allow both countries to inspect each other's arsenals to verify compliance.

Germany is pressing Ireland to seek aid before a Nov. 16 meeting of European finance ministers to calm market volatility and win agreement on making investors help pay for future bailouts, a German government official said Saturday.

Buyers spent over $2 million at an auction of ponzi schemer Bernie Madoff's stuff on Saturday. Ruth Madoff's 10.5-carat diamond engagement ring went for just over half a million, a lot containing those sweet monogrammed slippers went for $6,000, and for some reason a middle-aged man from Long Island paid $1,700 for "a batch of Bernie's unused boxers and socks." He told the Post, "They are brand new so I don't have to buy socks for the next two or three years. I don't really know about the boxers. I just bought it for the socks."

This Thursday is the day when President Obama and the Democratic and Republican leadership on Capitol Hill meet to formally kick off negotiations about possible compromises over the extension of the Bush tax cuts, which are set to expire Dec. 31.






Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!.


Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

How will the ‘shift in power’ of congress affect investors? by Ken Mahoney

Republicans have seized control of the House and increased their presence in the Senate. How will this shift in power affect investors? We can only speculate.

Thankfully, we aren’t completely in the dark when speculating, as history provides some clues. While we cannot possibly discuss the potential impact on every type of investment in this brief commentary, let’s focus on two; stocks and bonds.

STOCKS:
It is commonly held that Republicans are “business friendly”, and thus good for the stock market when they are the controlling party, but there is no solid data to back this up. Additionally, stock returns in years when power is split between the White House and Congress show no clear pattern. Some historical averages however, are interesting to note. Since 1945, the Standard and Poor's 500 index has gained 4% in years when Congress was split between parties, 8% when Congress was controlled by one party but the White House another, and 11% when a single party was in control of Washington.
Also noteworthy though, is an observation made by the Wall Street Journal while commenting on the future of the stock market in light of recent election results: “Watch out for anyone who tells you "divided government is good for the stock market. The historical basis for this – such as data since 1949 via the Stock Trader's Almanac – Is meager. You can't extrapolate universal rules from such a small amount of data.”

BONDS: Two months ago, the GOP issued their 48-page Pledge to America. In it, they laid a plan for trillions in tax cuts, but few intentions to cut spending. Where bonds are concerned, if taxes are cut and deficits rise, the government will likely issue more bonds. The result could be a depression in prices and an undermining of confidence in federal finances. While this scenario wouldn’t be so bad if bonds were already cheap, it is a concern when bond prices are high as they are right now.

One thing is certain – 2011 will be an interesting year. The President’s party no longer has control of Congress. It will be the second year of a slow economic recovery, and one year before the next presidential election. With so many economic and policy issues remaining uncertain, the way politicians handle their responsibilities will be closely scrutinized.

In summary, it is important to remember that when it comes to investing (and politics for that matter), forecasting the future is impossible. At best we can speculate calculatedly. As your financial professionals, it is our job to stay alert to critical changes that could impact your portfolio, and to make necessary adjustments so you can stay on track with your long-term goals. You could say that’s our Pledge to You.

ECONOMIC CALENDAR:
Tuesday – Redbook
Wednesday – International Trade, Jobless Claims, EIA Natural Gas Report, EIA Petroleum Status Report, Treasury Budget
Thursday – U.S. Holiday – Veterans Day
Friday – Consumer Sentiment

Data as of 11/05/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 3.60 9.93 14.9 0.09 -1.41
Dow 2.93 9.74 14.4 1.73 0.58
NASDAQ 2.85 13.6 22.5 3.78 -2.53
MSCI EAFE 3.84 5.74 8.16 1.09 0.86
10-year Treasury Note (Yield Only) 2.61 N/A 3.53 4.66 5.80

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:
Government-controlled mortgage buyer Fannie Mae is asking for $2.5 billion in additional federal aid after posting a narrower loss in the third quarter. Fannie Mae also said Friday it was likely that the market disarray and suspension of foreclosures due to big lenders' problems with flawed documents will have a negative impact on the delinquency rates of its loans, its expenses and foreclosure timelines.

U.S. securities regulators are close to approving a plan to ensure markets remain liquid even in times of crisis, the chairman of the Securities and Exchange Commission said on Friday. At a meeting to discuss the May "flash crash" that sent the Dow Jones industrial average into a brief 700-point freefall, SEC chief Mary Schapiro and other regulators were zeroing in on new rules to prevent another uncontrollable market plunge.

MSNBC host Keith Olbermann was suspended indefinitely without pay for making political donations in violation of the channel’s policies. “I became aware of Keith’s political contributions late last night,” Phil Griffin, president of MSNBC, said today in an e-mail. “Mindful of NBC News policy and standards, I have suspended him indefinitely without pay.”

Friday’s Labor Department report showed that the United States economy added 151,000 jobs in October. It was certainly a welcome change after four months of job losses but not strong enough to make a dent in unemployment. Nearly 15 million people are still out of work, and the unemployment rate remains at 9.6 percent.



Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!.


Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Earnings, Earnings, Earnings, and Elections
By Ken Mahoney

In real estate, we are taught over and over again it's “location, location, location”. Well for particular stocks, stock sectors and stock markets, it should be “earnings, earnings, earnings”.

While there are a number of factors that may affect the stock market including government policy, interest rates and investor confidence, these factors always impact earnings. And this past earning season seems to have done pretty well.

As we know from history, October can be spooky and we’re not talking just about Halloween. Ironically, it’s been during October that we’ve seen particularly scary stock markets with the October 1929 crash, the October 1987 crash and the October 2008 crash. At this moment however, the stock market has some strength and momentum. There are a number of reasons why the stock market may have momentum now including perhaps another round of quantitative easing, and maybe a more business friendly Congress. And perhaps it's earnings.

Many people don’t understand the disconnect between Wall Street and Main Street, especially while Main Street is still suffering. Daily we hear reports about housing foreclosures and high unemployment. What we don’t pay enough attention to is what is happening overseas - PIIGS (Portugal, Italy, Ireland, Greece, and Spain) saddled with too much debt, economic and social unrest and their attempts to deal with that debt. That story played out very strongly this past summer as the U.S. markets were powerfully impacted by those conditions.

In addition, I don't think enough attention is paid to BRIC (Brazil, Russia, India, and China). These countries are growing. U.S. companies penetrating and selling to those markets are doing very well. According to some reports, S&P 500 companies earn more than 40% of their profits overseas. So, when you scratch your head to try to understand how the stock market is doing well despite our lows here in the U.S., maybe if you look at abroad you can understand why this is all happening and that's because companies are getting their earnings, earnings, earnings from overseas.

October provided another example that the stock market and the economy do not always move in tandem. For the month, the Dow posted its best October since 2006, rising 3%, the S&P advanced 4%, and the Nasdaq leapt 6% . Meanwhile, the government’s initial reading on Gross Domestic Product – the broadest measure of the economy – showed that the current recovery is still one of the weakest in generations.

For three months ending in September, GDP grew at an annual rate of only 2%. During the past 30 years, the average growth rate during a U.S. economic expansion has been 3.6%. During the end of 2009, growth was as strong as 5%. In light of these figures, the past two quarters have been understandably disappointing (2Q growth was 1.7%). What do these numbers mean in plain English? On the bright side, they mean the economy isn’t shrinking; or worse, freefalling, as some naysayers have predicted. They also show that we are moving in the right direction – even a 0.3% increase is worth noting. From another perspective though, the lackluster growth we are seeing is too slow to bring down the unemployment rate, and likely too slow to keep the Federal Reserve from intervening with another round of quantitative easing.

Even as voters hit the polls Tuesday, the Fed’s FOMC (Federal Open Market Committee) is set to convene its 8th meeting of the year. As investors digest election results the following day, economists expect the Fed to announce plans stimulate the economy with another $500 billion to $1 trillion injection.

Also anticipated this week is the government’s closely watched jobs report due Friday. Employers are expected to have added 45,000 jobs in October, and the unemployment rate is projected to hold at 9.6%. Since the jobs report comes out after the Fed’s plans for quantitative easing are announced, investors will surely be analyzing it for signs as to whether QEII was warranted.
Between the election, the Fed’s FOMC meeting announcement, and the jobs report, the first week of November will be a busy one.

ECONOMIC CALENDAR:

Monday – Personal Income and Outlays, ISM Manufacturing Index, Construction Spending
Tuesday – Motor Vehicle Sales
Wednesday – ADP Employment Report, Factory Orders, ISM Non-Manufacturing Index, EIA Petroleum Status Report, FOMC Meeting Announcement
Thursday – BOE Announcement, Jobless Claims, Productivity and Costs, ECB Announcement, EIA Natural Gas Report
Friday – Pending Home Sales Index, Employment Situation, Consumer Credit

Data as of 10/29/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 0.02 6.11 10.9 -0.25 -1.42
Dow -0.13 6.62 11.6 1.38 0.50
NASDAQ 1.13 10.5 19.5 4.00 -2.35
MSCI EAFE -0.49 2.25 5.46 0.57 0.75
10-year Treasury Note (Yield Only) 2.56 3.84 3.50 4.57 5.71

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

Monster Worldwide (jobs website operator) reported third-quarter results Thursday that easily topped forecasts, and the company raised its fiscal outlook. During the company's conference call, Monster CEO Sal Iannuzzi said that "while economies still aren't as strong as any of us would like to see them around the world, they are picking up." He added that "the momentum clearly in Europe, United States, North America and Asia is significantly more positive than it was a year ago."

For the school year 2010-11, in-state tuition and fees at public four-year colleges and universities rose to $7,605, up 7.9% from a year ago, the College Board reported Thursday. At private four-year institutions, the average cost rose 4.5% to $27,293.

September’s new-home sales climbed 6.6% from a month earlier to a seasonally
adjusted annual rate of 307,000 the Commerce Department said Wednesday. When compared to a year earlier, the rate tumbled 21.5%. September saw the fourth-worst monthly reading since 1963, though these statistics are notoriously prone to later revisions.

Two packages found on cargo flights from Yemen bound for the U.S. contained explosive material, President Barack Obama said Friday, after U.S. and European authorities went on high alert following the discovery of the parcels. President Obama said authorities had uncovered a “credible terrorist threat.” Both packages were addressed to Jewish organizations in Chicago.

Ken, what do you think about the falling dollar and the rising price of gold?
This is a very sophisticated question. I hear a lot of people saying gold is the currency of the future. Generally, the value of the dollar is lower because you have lower interest rates. When the value of the dollar goes down, the price of gold goes higher as a hedge for a lot of investors and institutions. Conversely, if rates go up, the value of the dollar goes higher and gold would, perhaps, go down because there is an inverse relationship.

It is very cyclical and right now we're going through a rate environment that keeps going down. Sometimes, when there is very low inflation, low interest rates are not enough to maintain the desired level of money supply. The Federal Reserve Bank is expected to implement a concept known as “quantitative easing” which includes the government buying up bonds and still trying to push rates down lower to stimulate the economy and demand.

While gold will go up under those conditions, interest rates will also start going higher, the economy will start to do better and you will, then notice gold start to pull back. One thing to note about gold is that it is not a building material like copper or other metals. Though gold is important – it is used as a way to hedge against currency – it is not used as a significant source in construction unless, of course, you are modeling your bathroom with gold fixtures.

Also, in the last several years gold has dramatically beat stocks and bonds. But, again, this is cyclical because over the last 10, 20, 30 years, stocks and bonds have generally performed better than gold.

Over the past several years gold has become very a popular investment but I would watch out from running with the herd. Again, it works well for awhile and the momentum is with gold right now but again I would caution anyone to try to follow past performance over the last couple years and characterize gold as the definite investment. If anything, a sophisticated investor will opt to pick up an investment that's out of favor and that's important to consider.

As far as whether I see gold as the currency of the future I don't think so. I don't think the currency of the future is gold because you still have other currencies from around the world; you'll still have the Euro, you’ll still have the sterling pound and you'll still have the dollar. With all these different currencies out there I don't think they're going to mold into that of gold.

Finally, and as an aside, I want to comment on the comparison of BRIC (an acronym for the combined economies of Brazil, Russia, India and China) versus PIIGS (an acronym used to refer to the five Eurozone nations – Portugal, Italy, Ireland and Spain). A lot of attention has been paid to PIIGS as all have debt issues and other economic problems in their respective countries. What we don't hear enough about is BRIC where the largest amount of growth is in the world. If you put it together, basically, you have PIIGS versus BRIC - PIIGS and debt bringing down the rest of the world versus BRIC and growth bringing up the rest of the world.

How does currencies, gold, and international trade affect your finances? By Ken Mahoney

What is the G-20? What is a currency war? And what does any of this have to do with my money? If you’ve been asking yourself these questions, you’re not alone. The relationships that exist between global currencies and the officials who control monetary policy have been a regular feature in recent headlines. Why?

Currency values affect international trade. When the value of a nation’s currency is low, it encourages countries with higher valued currency to spend money there because their exports are “cheaper” so to speak. When the value of a nation’s currency is high, its exports become “more expensive”, and nations with lower valued currency are discouraged from purchasing goods and services produced there. While recovering from a global recession that brought high levels of debt and unemployment, it’s no wonder countries would want an advantage when peddling their wares abroad. This scenario explains why there has been a measure of tension between the U.S. and China in recent weeks.

China’s currency (the Yuan) is widely seen as being at least 20% artificially undervalued, which has driven up Chinese exports, but has also amassed a U.S. trade deficit with China of $227 billion in the last year alone. Ripple effects of this trade deficit are being felt throughout the U.S. political system. In Congress, the House of Representatives has already passed a bill that would give the administration power to penalize countries judged to be manipulating their currency values to gain a competitive edge in international trade.

On Saturday, the Group of Twenty (G-20) Finance Ministers and Central Bank Governors met in Gyeongju, South Korea to pursue an end to battles over currencies, with the goal of maintaining trade balances. At this meeting, the world’s currency keepers agreed to "be vigilant against excess volatility and disorderly movement in exchange rates" and China agreed to "move towards more market-determined exchange-rate systems that reflect underlying fundamentals." Although the language is not strong enough to impose strict guidelines on anyone, the G-20 agreed to adopt "indicative guidelines," an intentionally vague phrase that is yet to be clarified.

So how does all of this relate back to the average American investor? First, it is a reminder that taking a global approach to investing is prudent. Because currency values – like many other factors – commonly affect a country’s economic stability, it is better to avoid keeping all your proverbial eggs in one basket. Second, it can help you keep the right perspective when the dollar falls in value. Although a severely undervalued dollar would be bad, a slightly undervalued dollar can invite foreign money into our economy, boost domestic manufacturing, and create jobs.

ECONOMIC CALENDAR:
Monday – Existing Home Sales
Tuesday – Consumer Confidence, S&P Case-Shiller HPI (Home Price Index)
Wednesday – Durable Goods Orders, New Home Sales, EIA Petroleum Status Report
Thursday – Jobless Claims, EIA Natural Gas Report
Friday – GDP, Employment Cost Index, Chicago PMI, Consumer Sentiment

Data as of 10/22/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 0.59 6.10 8.25 0.06 -1.53
Dow 0.63 6.76 10.4 1.80 0.89
NASDAQ 0.43 9.27 14.5 3.81 -2.88
MSCI EAFE -0.42 2.72 1.44 1.10 1.03
10-year Treasury Note (Yield Only) 2.58 3.84 3.42 4.39 5.64

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

Since August 27, when Federal Reserve Chairman Ben Bernanke signaled the central bank was likely to pump more dollars into the economy, the greenback’s value has fallen about 4.8% against the currencies of U.S. trading partners (data through October 15). Given the historical behavior of U.S. exports and imports, a sustained move of that magnitude should shrink the U.S. trade deficit by nearly $140 billion over the next two years. That’s the equivalent of an added 0.5 percentage point of economic growth in each year.

The Bureau of Labor Statistics has released data on regional and state unemployment for September. “Twenty-three states and the District of Columbia recorded unemployment rate decreases, 11 states registered rate increases, and 16 states had no rate change", the U.S. Bureau of Labor Statistics said as it compared numbers to August figures.

U.S. Treasury Secretary Timothy Geithner met China's Vice-Premier Wang Qishan on Sunday and "exchanged views" about economic relations between their countries, both sides said.

The simple credit card is on its way toward a makeover. The familiar plastic cards may one day be overtaken by credit-transactions over cell phones. Next month, Citibank will begin testing a card that has two buttons and tiny lights that allow users to choose at the register whether they want to pay with rewards points or credit, at most any merchant they please.

There is more positive news recently; can that hold the Dow over 11,000? by Ken Mahoney

Fortune magazine showcased a headline on Friday that read, “Who can magically fix the economy?” A picture of a magician pulling a skunk out of Uncle Sam’s hat was comically pictured below. The article went on to read: “There is nothing that the U.S. government or the Federal Reserve or tax cutters can do to make our economic pain vanish overnight. There are no all-powerful, all-knowing superheroes or super villains who can rescue or tank the economy all by themselves.”

Do you agree with the quote above? We do. The simple truth is, no one has a magic wand. Some politicians peacock as if they do. Some analysts would have you think they do. But as a nation, we’ve suffered a huge financial setback. Home values – investment accounts – jobs – all have taken a big hit. It took us a long time to get into this mess, and it will take us a long time to come out of it. Just because the “great recession” technically ended in June of 2009 , doesn’t mean we’ve healed. Despite the best efforts of the Fed, Congress, President Obama, and the famous talking heads, the recovery will take time.

So what’s the good news? We’re headed in the right direction and Americans seem to be sensing that. For the third straight month, retail sales are on the rise nationwide. Shoppers spent more than $367 billion at retailers in September, which reflects a 7.4% year-over-year increase. Because personal consumption expenditures comprise 70% of national output, these healthy percentage gains create a solid base for U.S. Gross Domestic Product (GDP). The level of total U.S. retail sales has now recovered two-thirds of its recessionary peak-to-trough decline from late 2007 through the end of 2008.

In other positive news, since June, the private sector has added an average of 85,000jobs a month. By contrast, the economy lost 8 million jobs in 2008 and 2009.
Speaking on Friday, Federal Reserve Chairman Ben Bernanke said banks are slowly becoming more proactive in seeking out credit-worthy borrowers, and added that he expects a pickup of economic growth next year due to a "somewhat faster pace" of household spending. Tempering his optimism, he did express that economic growth would continue to be "relatively modest" due to persistent high unemployment and dampened consumer demand.

One of Bernanke’s comments is particularly noteworthy in the context of this discussion. "Sustained expansion must ultimately be grown by private demand," he said. So regarding the “magic wand” we mentioned earlier, if anyone has it, it looks like it is the American Public. Hire people – lend money – spend money. Take these actions, and the wheels of capitalism will turn.

ECONOMIC CALENDAR:

Monday – Industrial Production
Tuesday – Housing Starts
Thursday – Jobless Claims, Leading Indicators, Philadelphia Fed Survey
Friday – G20 finance ministers and central bank governors meet in Seoul, South Korea

Data as of 10/15/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 0.95 5.48 7.26 -0.17 -1.44
Dow 0.51 6.09 9.94 1.51 0.85
NASDAQ 2.78 8.80 13.6 3.91 -2.56
MSCI EAFE 1.16 3.19 1.80 0.72 0.98
10-year Treasury Note (Yield Only) 2.38 NA 3.47 4.49 5.72

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.

HEADLINES:

President Barack Obama will press Congress to approve $250 stimulus payments to seniors, veterans and the disabled, the White House said Friday amid persistent worries about the US economic recovery. The Social Security Administration earlier announced it would not be making cost of living adjustments to pension payments to seniors for the second year running.

Countrywide's notorious ex-CEO Angelo Mozilo settled with the Securities and Exchange Commission over a civil fraud and insider trading case on Friday. Mozilo agreed to repay $45 million of profit made and another $22.5 million in civil penalties, the SEC said.

U.S. retail sales rose for a third consecutive month in September, posting a stronger-than-expected increase that should fend off fears of a double-dip recession but doesn't signal a strong recovery.

U.S. President Barack Obama on Saturday said he wants to strengthen the labor market by closing tax loopholes that would encourage companies to send jobs overseas. Mr. Obama said he's aiming to replace the tax loopholes with new policies that would allow companies to write off the cost of new equipment, provide tax breaks for clean-energy manufacturing and make the research and experimentation tax credit permanent.
The U.S. government debt is expected to increase by 32% over the next five years if U.S. economic growth stays as slow as it is now, according to the International Monetary Fund.

The Dow Jones is at 11,000, can the momentum continue? by Ken Mahoney

Stocks have gained in five out of the last six weeks, and the Dow Jones Industrial Average closed above 11,000 for the first time in five months Friday.

Bolstering results last week, Friday’s depressed jobs report lifted expectations that the Federal Reserve will soon step in to stimulate the economy yet again, and earnings season kicked off with a bang. Several companies posted profits that beat Wall Street estimates and raised its outlook for the year. In the coming week, 15 S&P companies are set to report, and according to Thompson Reuters, third-quarter year-over-year results are expected to be up 24%. With such strong numbers anticipated this earnings season, many analysts predict that the market will continue to inch higher.

There isn’t much market-moving activity expected in the early part of the week, but Thursday begins a flood of economic data, including the next batch of U.S inflation figures. The Fed said in its last statement that inflation is lower than it would like, and this led many to predict that they will proceed with another round of quantitative easing – likely pulling the trigger at the next policy-setting meeting in November.

Through “quantitative easing”, the Federal Reserve buys up big chunks of government debt with money it creates from nothing – often colloquially described as "printing money”. Some economists insist that with unemployment stuck near 10% and inflation below target, the Fed cannot sit idly by without taking this action. Others remain vocally opposed due to the side effects of additional pressure on the U.S. dollar and a spike in commodity prices. So, will they? Or won't they? Investors will be alert for further signals.

Friday’s retail sales figures will also be in focus as investors try to gauge the appetite of the American consumer. Since consumer spending accounts for over 70% of economic activity, any sign that wallets are open is a welcome one.

ECONOMIC CALENDAR:

Wednesday – Treasury Budget
Thursday – International Trade, Producer Price Index, Jobless Claims
Friday – Consumer Price Index, Retail Sales, Empire State Manufacturing Survey, Consumer Sentiment, Business Inventories, Federal Reserve Chairman Ben Bernanke speaks to the Boston Fed's conference on Revisiting Monetary Policy in a Low Inflation Environment

Data as of 10/08/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 1.65 4.49 9.35 -0.51 -1.73
Dow 1.63 5.55 12.5 1.39 0.39
NASDAQ 1.31 5.85 13.0 2.98 -2.85
MSCI EAFE 2.52 1.89 2.75 0.31 0.49
10-year Treasury Note (Yield Only) 2.53 N/A 3.26 4.36 5.82

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.

HEADLINES:

The federal government ran a deficit of nearly $1.3 trillion in the fiscal year that ended Sept. 30, according to preliminary estimates released Thursday by the Congressional Budget Office. The Treasury Department will deliver the official deficit numbers later this month. According to the CBO, the fiscal year 2010 deficit came in $125 billion below last year – the worst on record since World War II.

President Barack Obama plans to veto a bill whose opponents say would make it harder for homeowners to stop foreclosures. The move marks the Obama administration's most direct intervention so far into a growing debacle tied to how banks foreclose on homes, and the first effective veto of Mr. Obama's presidency. The veto could make it more difficult for banks to complete paperwork and speed the foreclosure process, and could give homeowners more time to rework loans.

U.S. payrolls dropped by 95,000 in September as private employers added 64,000 workers, while governments shed 159,000, half of them temporary Census workers, the Labor Department said Friday. State and local governments shed 83,000 workers. The unemployment rate was unchanged at 9.6%.

The dollar fell against the euro for a fourth week in the longest stretch of losses in almost two years as bigger-than-expected U.S. job cuts spurred speculation that the Federal Reserve will buy more debt.


further information.

Does October have to be ‘spooky’ for the markets? by Ken Mahoney

Thursday marked the end of a quarter and the end of a month. Both turned out to be favorable for equity markets. Although September is historically one of the slowest months of the year, this September wasn’t slow at all. Last week’s slight drop followed four straight weeks of gains that allowed the month to go down as the strongest September since the days of World War II – 1939 to be exact. For the month, the S&P gained 8.8%, the Dow rose 7.72%, and the Nasdaq advanced 12.04%. For the quarter, the S&P gained 10.7%, the Dow added 10.4%, and the Nasdaq rose 12.3%, even as the U.S. economic recovery remained tepid.

A note out of Bespoke last Friday noted that "when the S&P 500 has been positive in September, the index has averaged a gain of 5.51% over the last three months of the year with positive returns 80% of the time...During mid-term elections, the average returns have been even better. When September is an up month during a mid-term election year, the S&P 500 has averaged a 3.5% gain during the month of October and a gain of 11.3% during the 4th quarter." So hopefully no goblins for October ??

Source: cnnmoney.com

Meanwhile, in a report released Friday, the Securities and Exchange Commission and the Commodity Futures Trading Commission said that a large investor – left unidentified – used automated trading software to sell futures contracts called E-minis at a time in the afternoon when the markets were already stressed, and that this action sparked the "flash crash" of May 6. The report indicates that this selloff in the futures market then spilled over into the market for individual stocks. As conditions worsened, the liquidity in the market dissolved because automated systems used by many firms paused when prices began falling severely. The ensuing plummet sent the Dow Jones industrial average down nearly 1,000 points, and briefly erased $1 trillion in market value. It was the largest one-day point drop on record.

The SEC-CFTC report detailed technical factors that led to the market turmoil, but it did not contain any specific policy recommendations that would prevent another flash crash from happening. The report has been submitted to a special advisory committee, which will eventually make recommendations to Congress related to market structure issues and incongruent trading rules across various markets.

Back in May, as an initial response to the crash, the SEC adopted a rule instituting a circuit-breaker “pilot” program for all exchanges to halt or slow down trades of a particular stock if the price moves 10% or more in a five-minute period. In September, the agency expanded the circuit-breaker program to all stocks of the Russell 1000 index as well as 344 specified ETFs. The SEC is expected to use the results of this new report to justify additional measures.
If you’re feeling ambitious, you can read the full 104 page report from the SEC here:
http://www.sec.gov/news/studies/2010/marketevents-report.pdf
Or you can check out the edited summary from MarketWatch here:
http://www.marketwatch.com/story/text-of-flash-crash-reports-summary-2010-10-01
As your financial advisors, we consider it our responsibility to understand factors that have affected, are affecting, or could affect your financial future. We also aim to educate you about such factors so that you can feel comfortable with the recommendations we make. If you ever have questions about this or any other matter, please don’t hesitate to reach out to us. We consider it an honor and a privilege to be good stewards of the assets you have entrusted to our care.

Key things to watch this week:

Monday – Factory Orders,
Tuesday – ISM Non-Manufacturing Index
Thursday – Jobless Claims, Consumer Credit
Friday – Employment Situation

Data as of 10/01/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 -0.21 2.79 11.3 -1.34 -2.02
Dow -0.28 3.85 13.9 0.49 0.17
NASDAQ -0.44 4.48 15.2 2.04 -3.55
MSCI EAFE 0.16 -0.82 2.82 -0.64 0.19
10-year Treasury Note (Yield Only) 2.61 N/A 3.19 4.33 5.78

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.

HEADLINES:
Beijing warned Washington on Thursday that economic ties might be damaged after American lawmakers escalated the conflict over China's currency controls, inching the two economic giants closer to a trade war.
Americans bought cars and trucks last month at the strongest pace since 2009's cash-for-clunkers program, giving Chrysler and Ford sharp increases – a trend that could give the industry and consumers a psychological boost in the year's final quarter, executives and economists said. U.S. auto sales jumped 28.5% in September, helping to lift year-to-date sales 10.3%.
The federal government is looking to raise corporate average fuel economy requirements to something between 47 and 62 miles per gallon by 2025, according to documents released Friday by the National Highway Traffic Safety Administration and the Environmental Protection Agency.
Personal income rose 0.5% in August, the largest increase this year, while spending by individuals remained steady, according to a government report released Friday. Personal income increased $59.3 billion, or 0.5% last month, the Commerce Department said. That's more than the 0.3% rise economists expected.
The dollar fell Friday, hitting a six-month low versus the euro, after a report showing weakness in the U.S. manufacturing sector supported investors who expect the Federal Reserve to resume large-scale bond purchases in coming months to boost the U.S. economy.
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Sources:
Marketwatch
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Barrons
CNN Money
http://technews.tmcnet.com/topics/associated-press/articles/106097-china-warns-us-currency-bill-might-harm-ties.htm
http://www.freep.com/article/20101002/BUSINESS01/10020307/1322/Automakers-post-solid-Sept.-gains
http://money.cnn.com/2010/10/01/autos/2025_fuel_economy/index.htm
http://money.cnn.com/2010/10/01/news/economy/personal_income_spending/index.htm
http://www.marketwatch.com/story/dollar-weakness-continues-on-fed-fears-2010-10-01

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

The US Markets are now up 4 weeks in a row, Now What? By Ken Mahoney

The recession is over and it ended 15 months ago. Surprised? According to the National Bureau of Economic Research, an independent group of economists, it’s true. In a statement released on Monday, September 20th, the bureau announced that the recession technically ended back in June 2009. As many economists had expected, this official end date makes the most recent downturn the longest and deepest for the U.S. economy since the Great Depression.

So does this mean that everything is back to normal? I think most of us know better than that. According to a new CNN/Opinion Research Corporation poll, 74% of Americans believe the economy is still in a recession. Even the bureau took care to mention that the end of the recession, by definition, is only the period until the economy reaches its low point – not necessarily a return to its previous vitality. They said, “In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.”

So if the recovery began back in June 2009, why do most Americans think we’re still in a recession? Because to many of them, it feels like it. Often, when referencing events that occur in the economy, the words “official” or “technical” are used. Incidentally, you can find both those words in the first paragraph of this commentary. But as we all know, just because something is “technically” true doesn’t mean it’s practically true. Commenting on this, President Barack Obama said last week, "Obviously, for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, [the recession is] still very real for them." Whether or not you agree with Mr. Obama’s policies, it is easy to see that this statement has some merit. And as long as Americans feel that we are in a recession, the pace of the recovery will be challenged by lower spending, slower hiring, and the like.

On the bright side, the same CNN/Opinion Research Corporation poll found that the percentage of Americans who say the country is in a recession has dropped 13 points since August – a significant spike in sentiment. The stock market is also looking good for the moment, as Friday closed out the week with a surge that put the Dow Jones Industrial Average on track for its best September in 71 years. Even if the recovery isn’t moving as fast as everyone would like, “slow and steady” seems to be its mantra.

Key things to watch this week:

Tuesday – Consumer Confidence
Thursday – GDP, Jobless Claims, Chicago PMI
Friday – Motor Vehicle Sales, Personal Income and Outlays, Consumer Sentiment, ISM Manufacturing Index, Construction Spending

Data as of 09/24/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 2.05 3.01 9.32 -1.10 -2.07
Dow 2.38 4.14 11.9 0.85 0.01
NASDAQ 2.83 4.94 13.0 2.50 -3.74
MSCI EAFE 3.26 -1.02 0.68 -0.25 023
10-year Treasury Note (Yield Only) 2.75 N/A 3.38 4.25 5.83

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.

HEADLINES:
Silver climbed to its highest price since 1980 last week, as the dollar’s slump boosted demand for precious metals as alternative assets. Gold also climbed to another record, topping $1,300 an ounce.
The economy expanded at a 1.6% annual rate in the second quarter, and will probably finish the current quarter at a 1.4% annual rate, according to estimates by St. Louis forecasting firm Macroeconomic Advisers.

Legislation pressing China to raise the value of its currency is set for a vote in the U.S. House next week, as Republicans joined Democrats in expressing frustration that the Yuan is appreciating too slowly.

Nearly 11% of mortgages modified under the government's Home Affordable Modification Program, known as HAMP, have fallen two months behind in payments, according to a banking regulators' report issued Friday.
In his first comments on Iranian President Mahmoud Ahmadinejad’s statement that the Sept. 11 terrorist attacks may have been orchestrated to bolster the U.S. economy and “save the Zionist regime,” President Barack Obama told BBC Persian that “for him to make a statement like that was inexcusable. It was offensive, it was hateful,” Obama said, according to an excerpt of the interview released by the White House.

QUOTE OF THE WEEK:

“
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Do we have ‘irrational negativity’ about the US Markets and Economy? By Ken Mahoney

In his famous "irrational exuberance" speech on December 5, 1996, then Federal Reserve chairman Alan Greenspan posed a rhetorical question: "How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?” With those words, he underscored the influence that emotions can have on financial assets.

Thinking along these lines, it is interesting to note that if there is such a thing as “irrational exuberance”, the opposite must also exist. Let’s call this converse emotion “irrational negativity”. Is there such a thing? The ABC News Consumer Comfort Index is a rolling average based on telephone interviews with 1,000 randomly selected adults over the previous four-week period. Last week, 89% rated the economy negatively, while only 54% rated their own finances negatively. Translation: People think we are worse off than we actually are (irrational negativity).

For the year, the S&P 500 is up 0.94%, the Dow is up 1.72%, and the Nasdaq is up 2.05%. Company earnings are strong, and stocks have moved steadily higher in September thanks to a series of encouraging signals on the economy. Despite this fact, gold set another record last week, and Treasury prices edged higher in a sign that investors remain cautious.

Will people eventually come around? There are reasons to believe they will. One good sign is that Americans are spending more. The U.S. Census Bureau announced Tuesday that consumer spending rose 0.4% from July to August, and 3.6% from 12 months ago, with retail sales up 0.5% and 3.7% respectively. This was the 10th month in a row of year-over-year growth in consumer spending estimates from the Census Bureau, following 14 months of year-over-year declines. All told, Americans spent $363.7 billion at retailers in August – the most since April. Since consumer spending accounts for more than two-thirds of the U.S. economy, this provides yet another silver lining in what many still view as confusing times.

Key things to watch this week:

Monday – Housing Market Index
Tuesday – Housing Starts, FOMC Meeting Announcement
Thursday – Jobless Claims, Existing Home Sales, Leading Indicators
Friday – Durable Goods Orders, New Home Sales

Data as of 09/17/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 1.45 0.94 5.64 -1.81 -2.32
Dow 1.39 1.72 8.42 -0.06 -0.29
NASDAQ 3.26 2.05 8.88 1.44 -3.96
MSCI EAFE 1.55 -2.98 -2.40 0.72 -0.19
10-year Treasury Note (Yield Only) 2.80 N/A 3.40 4.26 5.83

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.

HEADLINES:

President Obama named Harvard law professor Elizabeth Warren a special adviser Friday and tasked her with setting up an agency to look out for consumers in their dealings with banks, mortgage companies and other financial institutions. Calling Warren "one of the country's fiercest advocates for the middle class," Obama said she would ensure the Consumer Financial Protection Bureau ends abusive practices.

Americans' net worth – the value of assets like homes and investments, minus debts like mortgages and credit cards – fell 2.7% last quarter, or $1.5 trillion, the Federal Reserve said Friday. That left net worth at $53.5 trillion – above the bottom hit during the recession ($48.8 trillion in the first quarter of 2009), but below the pre-recession peak of $65.8 trillion.

General Motors announced Friday that it is planning to invest $483 million and add 483 jobs to its engine plant in Spring Hill, Tenn.
The number of people with health insurance in the United States dropped for the first time in 23 years, the U.S. Census Bureau said Thursday. There were 253.6 million people with health insurance in 2009, the latest data available, down from 255.1 million a year earlier.

After months of debate and significant pressure from the White House, the Senate on Thursday passed a $42 billion bill aimed at helping small businesses. The measure is expected to create 500,000 jobs, according to a Senate summary of the bill.

As the tax debate continues, will the market show improvement this fall? By Ken Mahoney

After taking one giant step back on Tuesday followed by three baby steps forward on Wednesday, Thursday, and Friday, U.S. stocks managed to rise into positive territory for the second straight week. Although September is traditionally the worst performing month of the year for equities, stocks have been on the mend so far as reports on the labor market, manufacturing, and business activity have been better than expected. Recent economic reports are confirming that while the rate of economic recovery has slowed, it's still on a positive trajectory.

The President also agrees with this sentiment as expressed by his words Friday at a nationally televised news conference. "While the economy is growing again...the hole in the recession left was huge and progress has been painfully slow," he said. Over the last week, Obama has rolled out a series of new proposals, including a six-year, $50 billion plan to rehabilitate the nation's transportation infrastructure and provide jobs. He also called for federal income tax rates to return to their pre-Bush levels for the 2-3% of Americans who earn more than $250,000 – a move that will bring in $700 billion to the US treasury, Obama said. Critics argue that while $700 billion is a hefty sum, it is hardly enough to close the fiscal gap, and is likely to do more harm than good as the nation’s highest income earners curtail their spending.

In the week ahead, readings on retail sales, industrial production, jobless claims, and consumer prices should help give direction to the markets. And with November elections fast approaching, politics are also in play. Currently, all three indexes are hovering around what analysts consider to be key levels, and are likely to meet continued resistance until more economic numbers come in positive. At this point, most people accept that the recovery is going to be slower than expected. What they are looking for is further confirmation that it is expanding rather than contracting.

Key things to watch this week:

Monday – Treasury Budget
Tuesday – Retail Sales, Business Inventories
Wednesday – Industrial Production, Empire State Manufacturing Survey
Thursday – Producer Price Index, Jobless Claims, Philadelphia Fed Survey
Friday – Consumer Price Index, Consumer Sentiment


HEADLINES:

The Greek government is planning no new austerity measures as part of efforts to pull the country out of debt and might even exit international supervision earlier than expected, the prime minister said Sunday. George Papandreou said Greece was on track to meet targets for reducing its deficit by nearly 40% this year.

China's major economic indicators picked up in August after slowing for several months, data issued over the weekend show, an unexpected rebound that could help prospects for global growth.

Michael Barr, assistant treasury secretary for financial institutions, and Edward DeMarco, acting director of the Federal Housing Finance Agency will testify on Capitol Hill next week on the future of Fannie Mae and Freddie Mac. Barr and DeMarco will appear before the House Financial Services Subcommittee on Capital Markets on September 15.

Work on the ultimate seal of BP's troubled gulf oil well will begin sooner than expected, officials said Friday. The 'bottom kill' procedure, in which the well is filled with mud and cement, will start this weekend – closing for good the well that spewed 4.9 million barrels of oil into the Gulf of Mexico.

Donald Trump offered Friday to purchase the site of the proposed mosque near Ground Zero in order to end the national controversy. His bid includes $4.8 million, the amount that businessman Hisham Elzanaty paid for the two-building site, plus a 25% premium. But Elzanaty's lawyer, Wolodymyr Starosolsky, blasted the offer as a publicity stunt and told The Post that his client "found this letter somewhat laughable."