Quote of the week

It is wonderful what we can do if we are always doing – George Washington

New home sales up … 26.9%? Yes. The stampede was on in March as buyers raced to qualify for expiring tax credits, leading to the greatest month-over-month jump in new home purchases since 1963. According to the Census Bureau, new home prices averaged $258,600, almost unchanged from 12 months ago.₁

Existing home sales also jump. National Association of Realtors data had residential resales up 6.8% for March. In year-over-year terms, sales were 16.1% improved.₂

Notable gain in PPI. In March, wholesale inflation increased by 0.7%, above the 0.4% forecast by economists. Labor Department figures showed core PPI (minus energy and food costs) up by 0.1%.₃

Durable goods orders down. They slipped by 1.3% last month according to the Commerce Department. The silver lining? With transportation orders taken out, the category was +2.8% in March.₄

(Further) indications of improvement. The Conference Board’s index of leading indicators went up 1.4% in March, the twelfth straight monthly gain. February’s gain was revised upward to 0.4%.₅

8 straight for the Dow. Eight consecutive winning weeks, that is – on Friday, the Dow closed at 11,204.28 after rising 1.68% across five trading days. Even with fresh concerns over the debt of Greece, the NASDAQ gained 1.97% last week and the S&P 500 advanced 2.11%

Citations.

1 money.cnn.com/2010/04/23/news/economy/new_home_sales/index.htm [4/23/10] 2 npr.org/blogs/thetwo-way/2010/04/home_sales_rise_68.html [4/23/10]3 smartmoney.com/Investing/ETFs/Late-Rally-Boosts-ETFs-and-Stocks/ [4/22/10]4 online.wsj.com/article/SB10001424052748703709804575201793952864632.html [4/23/10]5 marketwatch.com/story/march-leading-indicators-rise-recovery-continuing-2010-04-19 [4/19/10]6 cnbc.com/id/36738472 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [4/23/10]8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [4/23/10]9 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

Events and data in recent weeks have prompted market participants to view the tailwinds that caused the markets to go sailing higher for much of 2009 as beginning to fade. They now view them as having become more balanced with the rising headwinds associated with increasing global frictions.

We continue to expect the powerful economic and profit growth to weaken in the second half of 2010. The weakening is likely to result from the fading of the extraordinary global policy efforts that created a tailwind for growth and the rise of new headwinds as some actions are reversed. The early stage of this transition is already underway leading to heightened market volatility. While there is still plenty of good news acting as tailwinds for the markets, there is increasingly more of a balance with the bad news, or headwinds. The winds of change blowing in the markets include the following:

Tailwinds

1. -The Federal Reserve (the Fed) is our friend (for now)
2. -U.S. Gross Domestic Product (GDP) growth is above average
3. -S&P 500 earnings growth is strong
4. -Credit and housing markets continue to heal
5. -China’s double-digit GDP growth (but slowing loan growth)
6. -Steep yield curve
7. -Massive global fiscal stimulus in the pipeline

Headwinds
-No job growth (yet)
-Federal, state and local budgets are awful
-Anti-business tone in Washington
-Commercial real estate woes remain
-China and India inflation risks
-European debt problems exacerbated by weak economies
-Bank lending is weak

These are not in any particular order since the importance placed on them by the market varies from day to day. Some of them will switch from being tailwinds to headwinds this year, like the actions of the Federal Reserve, while others may switch from being headwinds to tailwinds such as job

Want more details?  Click here to explore each of the winds that are currently driving the choppy market environment.

LPL Financial Research Weekly Market Commentary

Beware of the financial schemes aimed at mature Americans.

Provided by Los Angeles Financial Planner, Rose Greene, CFP ®

Retirement lasts longer and longer, and the retired population is growing. So the conditions are right for a “perfect storm” of financial swindles aimed at baby boomers and elders. Just an alert … here are some common scams to watch out for …

The fill-in-the-form scam. In this scam, a “senior specialist” or “senior benefit consultant” calls you or sends you a letter and offers to help you create a living trust or living will or qualify for prescription benefits. (Yes, this can even happen at the mall or the senior center or the health fair.) This can be a pretext to collecting all kinds of financial information from seemingly simple forms. If people want sensitive personal information, ask them point blank why they need it, and ask them to show you information about their business or agency. (That’s a good rule of thumb in any face-to-face interaction that makes you feel suspicious.)

Photo by AM Rosario

The offshore bank scam. This one has been going on for years. It works like this: you get a letter that lets you know about a “great opportunity usually reserved for the rich.” Usually it contains phrases like “bank debentures” and “offshore trading” and a headline like “Why Wall Street Doesn’t Want You to Know About This”. It mentions tax-free income, maybe even immediate income. But there is no legitimate investment: your money is simply taken and stashed. There are reputable offshore investment companies, but there are also some sophisticated white-collar criminals hiding behind bogus offshore entities. Very, very few licensed financial services professionals specialize in offshore investing.

The foreign lottery scam. Wow, great news – you have just won an amazing amount of money! The only thing is … you’ve won this money in some kind of international sweepstakes. (Hmm – do you remember entering any such contest?) How can you claim your prize? All you have to do is pay off some “fees and taxes” since the lottery is based overseas. Sometimes bogus cashier’s checks are sent with these kinds of announcements, adding insult to injury.

The home repair scam. Another old favorite. It used to be done door-to-door, now it is arranged mostly over the phone. This usually involves an initial payment to a “salesman” who claims to be calling you legally since his company has had some undefined prior contact with you. A “handyman” shows up on schedule (or perhaps not even on schedule) and takes his sweet time on the repair. Which by the way, is usually not done well. Or maybe it’s done too well: step two often involves a call or visit from a “bill collector” explaining that there were cost overruns with the work and that you owe more money.

The recovery room scam. A phone call or letter from what seems to be a credit bureau tells you that you are a victim of identity theft. But don’t worry. All you have to do is pay a “recovery fee” (upfront, of course) to restore your credit. This scam can also be a “second act” pitched to an already defrauded party: it has been “discovered” that you are a fraud victim, but just pay a fee now and the “consumer affairs department” will make it right.

Your defenses. The Internet is your friend here: when you get nebulous or suspicious offers in the mail or over the phone, use Google or Yahoo! or any of the other Internet search engines to see if what you are being offered is a scam. In short, make educated decisions. You can also talk to your financial advisor or your attorney. The great majority of victims do not.

Rose Greene, CFP ® is a Representative with LPL Financial, Member FINRA/SIPC and may be reached at http://www.rosegreene.com, (310) 399-1200 or rose@rosegreene.com.

Quote of the week.

Reputation is what other people know about you. Honor is what you know about yourself.”

– Lois McMaster Bujold

4Q GDP: 5.7%: That is the preliminary reading from the Commerce Department, and that is the best reading since 3Q 2003. Economists

pointed out that much of the increase reflected companies rebuilding their inventories rather than personal spending.1

Consumers think positive. The final University of Michigan/Reuters consumer sentiment index for January improved 1.6 points to 74.4. Economists polled by Briefing.com felt it would come in at 73.0.2

New concerns about home sales. Both new and existing home sales retreated markedly in December with the threat of federal tax credits being pulled. Existing home sales fell by 16.7% in that month while new home sales slipped 7.6%. In annual terms, residential resales for 2009 were about 5% higher than 2008 totals. Just 373,000 new single-family homes were sold in 2009, the fewest since the government began tracking sales stats in 1963.3,4

A $5K hiring rebate? Last week, President Obama pitched the idea of giving companies of all sizes a $5,000 credit to offset payroll taxes for each new worker, up to a $500,000 ceiling. Net new hires (increasing employee hours) and salary increases could also make companies eligible. A proposal to enact the plan is now in the Senate.5

Dollar hits highest level since August. The buck went on an intraday climb to 90.92 yen and the euro traded below $1.39. The new GDP report helped.6

So long to a subpar month. Stocks retreated in the last week of January, with the Dow ending the month at 10,067.33, the NASDAQ at 2,147.35 and the S&P 500 at 1,073.87.7

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 1/29/10)7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

_____________

Quote of the week. “Cheers to a new year and another chance for us to get it right.”– Oprah Winfrey

Consumers think positive. The latest index of consumer attitudes from the Conference Board came in at 52.9 last week, surpassing the 52.5 forecast in a Reuters poll of analysts and the 50.6 mark recorded in November. The expectations index (the “how do you feel about the next 6 months” gauge) hit 75.6, the best reading since December 2007.¹

Initial claims suggest happier 2010. They fell again in the Labor Department’s December 26 report, down to 432,000 – the lowest figure since July 2008. Analysts polled by Briefing.com thought they would rise to 460,000. Initial jobless claims have trended downward since late March.²

Mortgage rates & home prices rise. Checking the newly released October Case-Shiller home price index, we see that residential prices rose by 0.4% nationally with gains in 11 of 20 metro areas. The latest index has prices up 3.5% nationally since May. Rates on 30-year FRMs increased for the fourth straight week to 5.14% in Freddie Mac’s last national survey of 2009.^3,4

A very good year for gold and oil. Gold gained 23.96% in 2009, ending the year at $1,096.20 an ounce. Crude oil rose 77.94% in 2009 (and 1.68% last week) to finish the year at $79.36 a barrel. From the end of 1999 to the end of 2009, gold prices rose 278.52% and oil prices gained 210.00%.⁵

And finally … At the close of the final market day of 2009, the DJIA stood at 10,428.05, the NASDAQ at 2,269.15, and the S&P 500 at 1,115.10. All three of the indices posted weekly losses, but Wall Street was savoring the big picture: the great 2009 gains and the 64.83% advance of the S&P 500 since its March 9 close.⁶

(Source: CNNMoney.com, ustreas.gov, bls.gov, 12/31/09)^6,7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be

invested into directly. These returns do not include dividends.

Riddle of the week. A man jumped out of a small plane without a parachute. When he hit the ground, he wasn’t injured at all. Why?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: What number should be next in this series: 9, 16, 25, 36?

Last week’s riddle answer: The next number is 49. 3² = 9, 4² = 16, 5² = 25, 6² = 36, and so on.

____________________________

This material was prepared by Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

Citations.