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Posted by: Kim_Hamilton on 10/18/2010 04:26 PM
Updated by: thepinetree on 10/18/2010 08:01 PM
Expires: 01/01/2015 12:00 AM
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Weekly Market Update Week of October 18, 2010 by Donna M. Stevenson of Pacific West Financial Group
Copperopolis, CA...THE MARKETS: 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 supervillains who can rescue or tank the economy all by themselves.”1 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
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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 20092, 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 85,000
jobs a month. By contrast, the economy lost 8 million jobs in 2008 and 2009.4
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
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.8
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.9
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.10
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.11
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.12
QUOTE OF THE WEEK:
“Kind words are the music of the world.” – F. W. Faber
RECIPE OF THE WEEK:
Peanut Butter-Banana Trifles
From: Better Homes and Gardens
The combination of yogurt and peanut butter makes a creamy dessert that gets even
better with slices of banana.
Ingredients:
1-3/4 cups plain low-fat yogurt
2 Tbsp. smooth peanut butter
1 to 2 Tbsp. honey
2 large bananas, sliced
2 cups lightly sweetened multigrain clusters
Directions:
1. In a bowl whisk together yogurt, peanut butter, and honey until smooth. Divide half
the yogurt mixture among four 6-ounce glasses or custard cups. Top with half the
banana slices and half the multigrain clusters. Repeat layers once. Serve immediately.
Makes 4 servings.
Tip: The trifles' yogurt mixture can be made and chilled up to 24 hours ahead. Assemble
trifles just before serving.
GOLF TIP OF THE WEEK:
Steady Eyes For Sure Strokes
When your eyes wander during a putting stroke, the angle of the putter face will also
wander. Train your eyes to remain steadily focused on the ball until the putter head is
past the impact point.
Share the Wealth of Knowledge!
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Securities offered through Pacific West Securities, Inc. 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.
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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.
SOURCES:
Marketwatch
The Wall Street Journal Online
Barrons
CNN Money
1
http://money.cnn.com/2010/10/14/news/economy/no_fix_economy.fortune/index.htm
2
http://money.cnn.com/2010/10/14/news/economy/no_fix_economy.fortune/index.htm
3
http://www.8newsnow.com/story/13333775/consumer-spending-on-the-rise,
http://www.reedconstructiondata.com/news/2010/10/september-u.s.-retail-sales-solid-but-inflation-lacks-sparkle
4
http://www.courthousenews.com/2010/10/15/31117.htm
5
http://www.courthousenews.com/2010/10/15/31117.htm
6
http://www.courthousenews.com/2010/10/15/31117.htm
7
http://www.econoday.com
8
http://www.google.com/hostednews/afp/article/ALeqM5iKyrgFGLjG4s_fPt1BNS_1iuKXHw?docId=CNG.615e81fcbfde979d9
029b9abee0c4ef6.681
9
http://www.thestreet.com/story/10890475/1/foreclosure-crisis-spreads-weekly-financial-recap.html?cm_ven=GOOGLEN
10
http://online.wsj.com/article/SB10001424052748704779704575553811315645280.html?mod=WSJ_newsreel_business
11
http://online.wsj.com/article/SB10001424052748704706904575555643437459432.html?mod=WSJ_hpp_MIDDLENexttoW
hatsNewsSecond
12
http://blogs.wsj.com/economics/2010/10/16/number-of-the-week-slow-growth-adds-to-deficit/
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