Pat Webb - Phase 2 Advisors
Weekly Market Update
Week of May 23, 2011
The Markets:

The sovereign debt situation in Europe and particularly in the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) has been a feature in the news since early last year. In recent days though, additional attention has been drawn to this issue as international ratings agency, Fitch, lowered Greece's credit rating further into junk status Friday. They also warned that any attempt to extend the maturities of Greek sovereign debt would be treated as a default.[1]


Likewise illuminating the significance of this problem, eighty-five percent of international investors surveyed by Bloomberg last week said Greece will probably default on its debt, with majorities predicting the same fate for Ireland and Portugal. The European Commission said on May 13 that Greece's debt will reach 166 percent of gross domestic product next year, the highest for any country in the euro's history.[2]


Perhaps you are wondering why debt problems on the other side of the world matter here in the U.S. Admittedly, Greece's annual output is only about one-half of one percent of the world's output and less than three percent of Europe's GDP.[3] But if the problems extend into other Eurozone countries, triggering additional defaults, a slowdown in European growth could occur, creating further drag on the world economy.


To bring matters closer to home, with U.S. debt projected to grow more than 275 percent by 2035[4], the U.S. has financial problems too. American political leaders disagree on how to solve these problems just as Greece's leaders do. This is another reason why many people are watching Europe so closely - they recognize that important lessons can be learned by evaluating how debt problems abroad are resolved.

No one can say with certainty how the sovereign debt crisis will be resolved. Regardless of what happens though, rest assured that we will continue to monitor the situation both domestically and abroad, and will keep you informed about anything with the potential to affect your finances.

Tuesday: New Home Sales
Wednesday: Durable Goods Orders, EIA Petroleum Status Report
Thursday: GDP, Jobless Claims, Corporate Profits
Friday: Personal Income and Outlays, Consumer Sentiment, Pending Home Sales Index                



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.


The average U.S. price of a gallon of gasoline has dropped about 9 cents over the past two weeks bringing the national average for a gallon of mid-grade to $4.05. For premium it's $4.16 a gallon.[5]

With the effects of the earthquake in Japan rippling through the auto industry and causing shortages, prices are rising for both new and used cars. It is also anticipated that fewer models and options will be available come summer, especially for the hybrids and fuel-efficient vehicles that Japan produces.[6]

Oil slid to its lowest price in almost three months last week as a stronger dollar, increasing crude-oil stockpiles, and decreasing demand all took a toll on prices. Crude oil for June delivery dropped 46 cents to $96.91 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 22.[7]

The number of American households behind on mortgage payments hovered at its lowest level in nearly two years during the first quarter, but the number of borrowers in foreclosure stayed near record high levels, the Mortgage Bankers Association said on Thursday.[8]


Quote of the Week
"Don't find fault, find a remedy." - Henry Ford
Recipe of the Week

Berry-Lemon Trifle


From: Better Homes and Gardens

2 cups cubed angel food cake
1 8-ounce carton lemon low-fat yogurt
1/4 of an 8-ounce container frozen light whipped dessert topping, thawed
1 cup mixed berries
Fresh mint (optional)

Divide angel food cake cubes among 4 dessert dishes. In a small mixing bowl fold together the yogurt and whipped topping. Dollop yogurt mixture atop cake cubes. Sprinkle with berries. If desired, garnish with fresh mint. Makes 4 servings. Total preparation time is 15 minutes.

Golf Tip of the Week

Take a Deep Breath

Taking a deep breath before you swing will help put oxygen in your system and keep your head clear. It gives your cells energy to allow your muscles to perform their best. Put simply, deep breathing helps you hit better shots. Why do you think most basketball players precede their free throws by taking a few good, deep breaths? Many bad swings are made during moments when we are short of breath. Why do you think they call it choking? So take a deep, relaxed breath before you swing.

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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.


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Pat Webb
Pat Webb - Phase 2 Advisors
8100 Turman Ct
Fort Collins, CO 80525