Pat Webb - Phase 2 Advisors
Digging Deeper 
Weekly Update - July 9, 2012
In This Issue
Golf Tip
Health Tip
Green Fact
The Markets: 
The major indices closed mixed last Friday as a week of slow trading was capped by a market-wide selloff on Friday. The retreat was driven by a mediocre June jobs report and fears about a jobless recovery. The S&P closed down only 0.55%, the Dow lost 0.84%, and the Nasdaq rose 0.08%. [1]

The U.S. suffered its third month of sub-100,000 jobs growth in June, adding just 80,000 new jobs. The economy needs an average growth of at least 125,000 new jobs per month in order to be considered healthy.[2]  However, let's take a moment to dig a little deeper and consider what lies behind the jobs numbers each month. One of the complications of calculating jobs growth is seasonality, which economists have to estimate based on their knowledge of annual trends. Currently, we're in one of the slow periods of the year, when factories slow production and retailers see fewer sales. Economists only expected to see 90,000 new jobs; although we missed that number, the situation is not as grim as it appears.

A more positive indicator that we saw in the jobs report is that the number of temporary workers grew by 25,000, accounting for nearly one-third of the new jobs last month.[3] This is good news because the hiring of temporary workers historically presages that of permanent employees. Hiring full-time employees is a significant investment that businesses may be reluctant to take on in a shaky economy. Temporary employees can fill the gap without a significant investment. As employers become more confident of their own needs and the economy, they often convert temporary employees into permanent staff.[4] 

Two more positive indicators could mean that the jobs market is emerging from a spring slump. The number of Americans applying for jobless benefits fell to a three-month low in June, and the number of layoffs announced in June fell to a 13-month low - about 40% less than May's number of layoffs. Both of these reports indicate that employers are becoming motivated to keep existing employees and reduce layoffs. That plus the increase in temp worker hiring could mean there's hope for a rosier employment picture later this year.[5] 

While the job market and economy are far from healthy and we are unlikely to see the robust employment numbers of earlier this year, we can hope to see moderate employment growth ahead. Falling gasoline prices may increase consumer spending and businesses will see their prospects improve, improving the overall employment outlook. Keep in mind while reading the media's spin on economic reports that they often tell a small part of the picture. Headlines tend to focus on the worst-case scenario without taking the time to explain the data that can be understood by digging deeper.

Wednesday: International Trade, EIA Petroleum Status Report, FOMC Minutes
Thursday: Jobless Claims, Import and Export Prices, Treasury Budget
Friday: Producer Price Index, Consumer Sentiment


07-09 Chart
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.

Greek aid halted until austerity back on track. According to an EU finance official, Greece will not receive its next aid disbursement until it continues the implementation of economic reforms demanded by European creditors. Auditors will assess the current state of its accounts after two difficult elections.

Congress passes student loan extension. The House and Senate passed a transportation bill that included an extension of the low interest rates on government-subsidized student loans. The measure passed just days before rates were scheduled to double. 

China cuts lending rates again in surprise move. The interest rates cut, the second in less than a month, signals that the world's second-largest economy could be in trouble and that Communist Party leaders are getting serious about boosting the economy. By lowering borrowing costs for homebuyers and business owners, finance officials hope to increase private sector activity.

Obamacare opponents focus on state exchanges. Critics of the new healthcare act are focusing their efforts on challenging federal subsidies and tax credits in states which fail to set up insurance exchanges and require federal intervention. At issue is the language of the act, which specifies that subsidies are only available for insurance purchased in state exchanges, but makes no mention of federally-run exchanges.

Quote of the Week
"Life isn't about finding yourself. Life is about creating yourself."
- George Bernard Shaw
Recipe of the Week

Upside-Down Plum Cake


Ripe plums star in this easy cake recipe from

1/2 cup (1 stick) plus 1 tablespoon unsalted butter, plus extra for the pan, at room temperature
4 firm, ripe plums, each cut into 8 wedges
1/4 cup plus 2/3 cup granulated sugar
1 cup all-purpose flour
3/4 teaspoon baking powder
1/4 teaspoon baking soda
1/4 teaspoon kosher salt
1 large egg
2/3 cup sour cream
1 teaspoon pure vanilla extract

1) Heat oven to 350 F. Butter an 8-inch cake pan and line the bottom with parchment paper.
2) Melt 1 tablespoon of the butter in a large skillet over medium-high heat. Add the plums and 1/4 cup of the sugar and cook, tossing, until the sugar dissolves and the juices from the plums become syrupy, 3 to 4 minutes. Arrange the plums in the cake pan in slightly overlapping concentric circles, starting from the outside. Spoon any pan juices over the top.
3) In a small bowl, whisk together the flour, baking powder, baking soda, and salt.
4) With an electric mixer, beat the remaining 1/2 cup of the butter and 2/3 cup of the sugar until fluffy. Beat in the egg, sour cream, and vanilla. Gradually add the flour mixture, mixing just until incorporated.
5) Pour the batter over the plums and bake until a toothpick inserted in the center comes out clean, 50 to 55 minutes. Let cool in the pan for 1 hour. Place a large plate over the cake pan and invert the cake onto the plate. 

Golf Tip

More Power

If you'd like more power behind your swing, you must avoid shifting your weight too much. To make sure you make a full turn with the proper weight shift, take your regular stance, then turn and point your right toe to the left. This will restrict your hip-turn and allow your arms to stay wider at the top of your back swing.
Another way to fix a reverse weight shift is to practice with a ball under your right heel. This, too, will restrict you from turning too much.
Healthy Lifestyle

Go One Step at a Time

In honor of the upcoming summer Olympics, this week's health tip is from gold medalist swimmer Natalie Coughlin.
While most of us don't have the time or stamina to work out like an Olympic athlete, committing to a healthy lifestyle is all about developing the right attitude. Don't overwhelm yourself with unattainable goals, like how hard it is to go from couch potato to gym rat, but focus on the small, healthy choices you can make each day to get yourself closer to your goals. Even small changes in diet and exercise can mean big long term improvements in health and lifestyle.
Green Living

Green Your Ride

By 2016, American cars will be required to be more gas-efficient, averaging 35.5 mpg or better. Until then, use these tips to get better gas mileage from your car:


* Slow down. Every 10 mph you drive above 60 mph is like adding $0.50 to the price of each gallon of gas, since higher speeds equal higher gas consumption.
* Pump it up. Check your tire pressure at least monthly against the recommended pressure listed in your car's manual. Doing so can improve your car's gas mileage by about 3%.
* Replace the air filter. Replace filters and sensors regularly to improve the air flow to your engine. Replacing the oxygen sensor can improve gas mileage by as much as 15%.
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Pat Webb
Pat Webb - Phase 2 Advisors
8100 Turman Ct
Fort Collins, CO 80525