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.






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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.