Pat Webb - Phase 2 Advisors
 

Edging Up on Mixed News

Weekly Update - July 23, 2012
In This Issue
Performance
Headlines
Recipe
Golf Tip
Health Tip
Green Fact

The Markets:

 

Markets shook off a raft of disappointing economic data and feeble earnings reports to remain in positive territory this week: The S&P gained 0.43%, the Dow edged up 0.36%, and the Nasdaq rose 0.58%. Persistent speculation that the Fed will step in to boost the economy seems to be bolstering markets.[1] 

 

During his speeches before the House and Senate last week, Bernanke outlined some of the Fed's options to help boost the economy if it is required. Easing tools could potentially include further purchases of Treasury and mortgage-backed securities, or even using the Fed's discount window for direct lending to banks; although many critics question the ability of such actions to do lasting good.[2]

 

Highlighting just how fickle stocks can be, equities initially fell as Fed Chairman Bernanke's Wednesday testimony provided no specific plans for boosting growth, then recovered when he later signaled during Q&A that he's concerned about the economic recovery.[3] It's hard not to be dumbfounded when markets move based on mere words and not on the underlying strength of companies.

 

Analysts believe that although the Fed has not settled on a course of intervention, either a further decline in the job market or an increase in deflation risk will trigger action.[4] Bernanke and his colleagues have two weeks until the next scheduled FOMC meeting in which to review economic data and make a policy decision. 

 

Concerns about Europe dominated the second half of the week and pushed down stocks on Friday. Ratings firm Egan Jones downgraded Spain's sovereign debt rating from CCC+ to CC+ (closer to junk territory) following news that the Spanish region of Valencia would need government help to meet debt obligations. Egan Jones has been aggressive in its downgrading of Spanish debt, and now rates the probability of default at 35%. Despite the recent bailout agreement, analysts worry that Spain may be hiding additional debt obligations owed by its regions.[5]

 

One bright spot closer to home: U.S. Housing starts increased 6.9% in June to beat consensus expectations, and are up 23.6% versus a year ago - the highest level since October 2008. This marks the fifth straight quarter that home building is boosting the economy, and there's still plenty of room to grow. Digging deeper into the data, both single-family and multi-family housing starts are on the rise, and the total homes under construction (started but not yet completed) rose for the tenth straight month. Essentially, this shows that builders are breaking ground on more homes than they are completing. So while the housing market is still far from healthy, this is a sign that stabilizing prices and low interest rates are giving some Americans the confidence to trade up to new homes.[6]

 

ECONOMIC CALENDAR: 

Wednesday: New Home Sales, EIA Petroleum Status Report

Thursday: Durable Goods Orders, Jobless Claims, Pending Home Sales Index

Friday: GDP Report, Consumer Sentiment

 



Performance


07-23-2012 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.

 

Headlines

Unemployment rate jumps. As expected, unemployment claims jumped last week, mostly due to seasonal factors. The increase followed a loss the previous week and resulted in the biggest increase in unemployment claims since April 2011. However, analysts believe the recent gyrations are only statistical noise that will settle soon.[7]

 

Fed survey shows slowing economic growth. The most recent Beige Book survey indicated that several regions had experienced weaker growth in June and early July. While its regions reported gains in housing, job growth was tepid. These numbers formed the base of Bernanke's report to Congress last week.[8]

 

Congress members reconsidering 2013 budget cuts. Despite campaign promises to shrink the deficit, members of congress are analyzing the potential fallout of cutting government spending at a time when the economy is stalling. Consequences could include significant job losses, defense cuts, and reductions in domestic programs.[9]

 

Earnings reports lackluster. Out of the 116 of the S&P 500 companies who have reported, 67% had better-than-expected earnings but 57% missed revenue forecasts, indicating soft demand. However, strong profits amid weak revenue could leave equities poised for growth when the economy picks up.[10]

 

 


Quote of the Week

 

"Winning isn't everything, but wanting to win is."

- Vince Lombardi

 

Recipe of the Week

Tomato and Mozzarella Quesadillas with Basil



07-23-2012 Recipe

Use fresh summer tomatoes for a seasonal treat. Recipe from RealSimple.com.

 

Ingredients:

8 8-inch flour tortillas

12 ounces grated or sliced mozzarella

2 tomatoes, cut into 1/4-inch-thick slices

1/2 teaspoon plus 1/8 teaspoon kosher salt

1/2 teaspoon freshly ground black pepper

1 bunch fresh basil, leaves picked

1/4 cup pine nuts, toasted

4 teaspoons extra-virgin olive oil

 

Directions:

1) Heat grill to medium. Place 4 of the tortillas on a cutting board and top with the mozzarella and tomatoes, leaving a 1-inch border.
2) Season with teaspoon of the salt and the pepper and top with the remaining tortillas. 
3) In a medium bowl, combine the basil, pine nuts, oil, and remaining salt; set aside.
4) Cook the quesadillas around the perimeter of the grill until the cheese melts and the tortillas are crisp and golden, about 2 minutes per side.

5) Immediately cut the quesadillas into wedges and serve with the basil salad.



Golf Tip

Better Chipping

 

In order to be consistent while chipping, it is important to use the proper body motion. There should be a feeling of connection between the arms and the body. The arms and shoulders should form a triangle in front of the center of the body, and this "triangle" must stay intact throughout the swing. Without the triangle thought, it is easy to overuse the arms and hands. 

 

Healthy Lifestyle

Laugh



Laugh. It may seem like a simple thing to do, but many people don't laugh enough. Laughter is not only a great stress reliever that improves mood, but it burns calories and strengthens your core muscles. Simply put, laughter will have positive effects on your mind, body, and emotional and social well-being. So the next time something strikes you as funny, go ahead, laugh long and deep. Your body will thank you.

 

Green Living

Simple Electricity Management

 

You've probably heard that unplugging electrical appliances when you're not using them is a great way to save electricity and reduce your carbon footprint. But since running around the house unplugging everything each day is a hassle, try this:

 

-Plugging groups of appliances (like an entertainment center) into power strips means you can power down your whole house with just a few clicks. 

 

-Use timers to automate your system. Put timers on lights and other appliances to save time and automatically turn things off when you're not using them.  

 

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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 Pending Home Sales Index, a leading indicator of housing activity,  measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops.  The PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years. The results are weighted to produce the index.

 

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.

 

You cannot invest directly in an index.

 

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

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. 

 

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[1] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-july-16-2012.htm

 

[2] http://www.bloomberg.com/news/2012-07-18/bernanke-outlines-range-of-options-for-additional-easing.html

 

[3] http://www.bloomberg.com/news/2012-07-18/bernanke-outlines-range-of-options-for-additional-easing.html

 

[4] http://www.bloomberg.com/news/2012-07-18/bernanke-outlines-range-of-options-for-additional-easing.html

 

[5] http://online.wsj.com/article/BT-CO-20120720-708498.html

 

[6] http://www.usatoday.com/money/economy/housing/story/2012-07-18/housing-starts-june/56297966/1

 

[7] http://www.usatoday.com/money/economy/story/2012-07-19/unemployment-claims-weekly/56329144/1

 

[8] http://www.usatoday.com/money/economy/fed/beigebook/story/2012-07-18/beige-book-growth-hiring-slower/56311866/1

 

[9] http://www.cnbc.com/id/48243216

 

[10] http://www.cnbc.com/id/48262807

 

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