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.


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.

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.