Mining For Opportunities

Weekly Update - June 4, 2012

In This Issue

Performance

Headlines

Recipe

Golf Tip

Health Tip

Green Fact

The Markets:

Gloomy economic data disturbed markets last week and set off alarm bells that the U.S. economy may be following Europe and Asia into a slowdown. Friday's grim jobs report showed that the economy added just 69,000 new jobs in May, far below consensus estimates, and the unemployment rate rose to 8.2% from April's 8.1%. Equity markets tumbled on the news, and the Dow showed its worst performance of the year, dropping 2.70%, while the S&P and Nasdaq lost 3.07% and 3.17%, respectively.[1] The Dow Jones Industrial Average has now slipped into negative territory for the first time in 2012, exactly one month after closing at a multi-year high.[2] Meanwhile, the S&P 500 is still up 1.6% year-to-date, and the Nasdaq Composite is up 5.5%.

Earlier in the week, the first quarter GDP growth estimate was revised downward to 1.9%, from the 2.2% originally reported. Although analysts had initially expected GDP growth of at least 2% in 2012, that number is beginning to look overly optimistic. Revisions to reported estimates are worth paying attention to because they can serve as leading indicators of which direction the economy is going next.[3] The jobs data is troubling and has potential to further stall the economic recovery. Rationalizations that a warm winter artificially shifted job growth earlier in the year appear increasingly thin. The job market is simply not growing enough to ignite a robust recovery.

Thankfully, the economy is still resilient in some areas. Inflation remains reasonably low, auto sales have continued to grow, and falling energy prices are easing the strain on consumer pocketbooks, opening the door to increased consumer spending. Even so, some analysts believe that we are falling into a familiar pattern where the economy gains traction early in the year only to falter in the second quarter. With both perspectives in mind, it would be premature to predict which way things will move next. Interestingly, in 2011, the Dow's first close in negative territory for the year was on August 4th, but the year still ended with a 5.5% gain.[4]

While it's hard to dredge up the fortitude to stay invested when faced with such a slate of bad news, we haven't yet seen the effects of lowered gas prices on consumer spending, and the U.S. is still much better off than Europe. We live in a dynamic economic system; when one asset class goes down, another comes up. We can't predict the future, but we should always continue looking for opportunities!

ECONOMIC CALENDAR:

Monday: Factory Orders

Tuesday: ISM Non-Mfg Index

Wednesday: Productivity and Costs, EIA Petroleum Status Report, Beige Book

Thursday: Jobless Claims, Ben Bernanke Speaks 10:00 AM EST

Friday: International Trade

Performance

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. N/A means not available.

Headlines:

Factory activity growth slows in May. The Institute for Supply's monthly report indicated that U.S. manufacturing grew at a slower rate in May, pushed lower by weaker hiring and declining production. However, positive new orders data suggest that manufacturing will pick up in June.[5]

Falling gas prices provide reprieve for consumers. A lengthy plunge in oil prices has pushed gas to prices as low as $2.99 in some areas, while the national average has dropped 30 cents since April to $3.61. The drop could give consumer confidence a much-needed boost as Americans have more discretionary income to spend.[6]

Consumer spending rises 0.3% in April. Although consumer spending edged up from March's 0.2%, the growth was the slowest in five months, indicating that Americans may have trouble sustaining future spending.[7]

Spanish P.M. opens door to unified European fiscal authority. In a speech, the Spanish prime minister reiterated a commitment to sticking with austerity plans to usher Spain out of a looming crisis and indicated support for the creation of a single fiscal body to maintain the integrity of the euro.[8]

"It is hard to fail, but it is worse never to have tried to succeed."
- Theodore Roosevelt

Roasted Pork Chops With Peaches

Brighten pan-roasted pork chops with seasonal peaches.

Recipe from RealSimple.com.

Ingredients:

1 10-ounce package couscous

1 tablespoon olive oil

4 bone-in pork chops (3/4 inch thick; about 2 pounds total)

Kosher salt and black pepper

2 peaches, cut into wedges

1 small red onion, cut into thin wedges

3 tablespoons white wine vinegar

1/2 cup fresh basil leaves

Directions:

1) Heat oven to 400° F. Cook the couscous according to the package directions.

2) Meanwhile, heat the oil in a large ovenproof skillet over medium-high heat.

3) Season the pork with ½ teaspoon salt and ¼ teaspoon pepper and cook until browned, 3 to 5 minutes per side. Transfer to a plate.

4) Add the peaches, onion, vinegar, and ¼ teaspoon each salt and pepper to the skillet and cook, tossing, for 1 minute.

5) Return the pork (and any accumulated juices) to the skillet. Transfer to oven and roast until the pork is cooked through and the peaches are tender, 8 to 10 minutes.

6) Sprinkle the pork and peaches with the basil and serve with the couscous.

Total time: 50 minutes.

Three Wood Putt

You know that annoying putt that has the ball resting right up against the cut on a green? You can't hit a wedge, and if you try to use your putter, you'll either grab the grass, or top the ball and bounce it halfway to the hole.

There may be a solution for you: Take out your three wood. Why does this work? A putter or an iron has a thin flange on the bottom of the club that causes it to grab, throwing the momentum and direction of the club off target. The three wood on the other hand, has a long, flat bottom that bounces into the rough and stays true.

To execute this shot effectively, take your regular putting stance and putt the ball as you would normally, but choke up on your grip to where it meets the shaft. After a few tries on the practice green, you'll be putting out of this trouble spot with much more consistency.

Use Your Non-Dominant Hand

Many of us wish we could reclaim that flexibility of our childhood minds when learning new skills. A simple trick can help us regain a similar sense of mindfulness. When you use your non-dominant hand, you have to work much harder to complete even simple tasks, which can improve your mental flexibility. Using your other hand "can help us become more flexible and discover that we are never too old to learn new tricks," writes Jan Chozen Bays, M.D. So, to encourage your brain to remain flexible, take as many opportunities as possible to use your non-dominant hand to brush your teeth, apply lipstick, eat, or even write and draw.

Reduce Waste with Reusable Containers

A great way to reduce the waste your family produces is by supplying your own leftover containers whenever possible. If you're eating at a restaurant that you know serves large portions, consider bringing a small container from home to place leftovers in, instead of asking for a disposable box. When shopping, bring your own washable tote bags instead of using disposable grocery bags.

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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.

Diversification does not guarantee profit nor is it guaranteed to protect assets

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.

The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted and weighted to produce the HMI.

The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a composite index.

The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several individual leading economic indicators, which are weighted to produce the complete index.

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.

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[1] http://biz.yahoo.com/mu/update.html

[2] http://online.wsj.com/article/BT-CO-20120601-709511.html

[3] http://news.yahoo.com/three-voices-jobs-report-whats-ahead-220043601--finance.html

[4] http://online.wsj.com/article/BT-CO-20120601-709511.html

[5] http://www.usatoday.com/money/industries/manufacturing/story/2012-06-01/factory-activity-ism/55328286/1

[6] http://economywatch.msnbc.msn.com/_news/2012/06/02/12013100-gas-prices-are-silver-lining-as-economy-weakens?lite

[7] http://www.usatoday.com/money/story/2012-06-01/consumer-spending-april-report/55326804/1

[8] http://news.yahoo.com/spain-pm-insists-sticking-austerity-measures-143425228--finance.html

Pat Webb
Pat Webb - Phase 2 Advisors
8100 Turman Ct
Fort Collins, CO 80525
970-776-3306
patwebb@phase2adv.com
http://www.phase2adv.com