Pat Webb - Phase 2 Advisors
 

Easing Ahead?

Weekly Update - September 4, 2012

In This Issue
Performance
Headlines
Recipe
Golf Tip
Health Tip
Green Fact
The Markets:

Markets stayed fairly flat last week ahead of Friday's highly anticipated speech by Ben Bernanke but stumbled on news that the Fed wasn't going to immediately roll out another round of quantitative easing. The S&P fell 0.32%, the Dow lost 0.51% and the Nasdaq lost 0.09% for the week.[1]

 

Bernanke spoke during the Jackson Hole Economic Symposium, an annual meeting of elite economists and central bankers. His speech highlighted that the stagnant job market was of "grave concern" to central bankers and emphasized that the Fed remains ready to take action should economic conditions worsen. Although his language reiterated the Fed's commitment to further quantitative easing, he stopped short of announcing the timing or structure of any further action. Many analysts don't believe the Fed will make any major moves before November, preferring to remain apolitical during the hotly contested election. However, if next week's jobs report disappoints, there is a chance that the FOMC could vote at its mid-September meeting to buy more Treasury bonds or government mortgage-backed securities to lower long-term interest rates and ignite economic activity.[2]

 

Many analysts suspect the next round of quantitative easing (QE3) will arrive as a coordinated blitz between the Fed, European Central Bank, and other central banks around the world who hope to sort out the economic doldrums in one fell swoop. There's been a lot of talk by central bankers at the Fed, ECB, People's Bank of China, and the Bank of England about the need for further easing, and it makes sense for bankers to coordinate their actions to get the biggest bang for their buck. This wouldn't be the first time central banks have worked together; the PCOB, ECB, and BOE lowered rates in tandem as recently as July 2012.[3]

 

With a crucial ECB meeting this week and a ruling on the legality of Europe's permanent rescue fund later this month, September is crunch time for the Eurozone. In order to satisfy markets, the ECB will have to announce very detailed and very aggressive plans to buy up Spanish debt. At this point, anything less would be a tacit affirmation that the Eurozone crisis is beyond central banker control. 

 

Though September is notoriously the worst month of the year for stocks, a combination of important economic meetings and the remaining bullish exuberance of investors could mean this month won't fit the mold.[4] Despite the mild retreat last week, markets are still hovering close to highs not seen since 2007/2008, when markets reached their peak. Only time will tell what is ahead as traders assimilate additional economic reports and the Fed finally shows its hand. 

 

ECONOMIC CALENDAR: 

Monday: Markets closed for Labor Day holiday

Tuesday: Motor Vehicle Sales, ISM Mfg. Index, Construction Spending

Wednesday: Productivity and Costs

Thursday: ADP Employment Report, Jobless Claims, ISM Non-Mfg. Index, EIA Petroleum Status Report

Friday: Employment Situation

 

 

 

Performance


09-014-2012 Weekly update
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

Retail sales jump on back-to-school shopping. August retail sales beat expectations with a 5.4% gain over last year's numbers. Retailers are optimistic about the rest of the year as, historically, a strong back-to-school season foretells robust holiday shopping.[5]

 

U.S. job recovery uneven across states.  Although some states have recovered the majority of jobs lost during the recession, many states still face significant unemployment. While some states are expected to return to peak employment by 2013, 23 states may not fully recover until 2015.[6]

 

Eurozone manufacturing sector declines. The Eurozone manufacturing sector retracted despite factory price cuts as demand stalled across the EU. Factories in Germany and France, Europe's largest economies, saw activity fall for the sixth straight month. Since manufacturing is a core driver of European economies, weak demand will make it harder for the Eurozone to climb out of recession.[7]

 

Fed Beige Book: Economy growing gradually. The Federal Reserve reported the economy grew moderately in July and early August, and hiring was stronger than in the previous six-week period. Strong auto and home sales, and tourism offset weakness in manufacturing.[8]

 


Quote of the Week
"Tell the truth, work hard, and come to dinner on time."

- Gerald R. Ford

Recipe of the Week

Spinach and Goat Cheese Frittata



09-04-2012

This simple one-pot meal rounded out with a green salad and crusty loaf of bread.
Recipe from RealSimple.com.

 

 

 

Ingredients:

3 tablespoons olive oil

1/2 medium onion, thinly sliced

kosher salt and black pepper

5 ounces baby spinach (about 6 cups)

10 large eggs, beaten

4 ounces goat cheese, crumbled (about 1 cup)

5 ounces mixed greens (about 6 cups)

1 tablespoon white wine vinegar

crusty bread, for serving

 

Directions:

1) Heat oven to 400 F. Heat 1 tablespoon of the oil in a medium ovenproof nonstick skillet over medium-high heat. Add the onion and teaspoon each salt and pepper and cook, stirring occasionally, until golden brown, 3 to 4 minutes.

2) Add the spinach and cook, tossing, until wilted, 1 to 2 minutes. Add the eggs, and sprinkle with the goat cheese. Cook until the mixture begins to set around the edges, 1 to 2 minutes. Transfer the skillet to oven and bake until set, 10 to 12 minutes.

3) Dividing evenly, place the greens on plates and drizzle with the vinegar and the remaining oil; season with teaspoon each salt and pepper. Serve with the frittata and bread.

  

 

 

Golf Tip

Treat Thick Grass like Sand

 

When a ball is nestled down in thick, lush grass, it should not be treated as a regular shot. Your normal swing will be twisted and distorted by interaction with the grass, and clean contact will not be made with the ball. With your wedges and short irons, it is often best to approach such shots as though you were hitting from a bunker. Open your stance a bit and hit down just behind the ball with a sharp, descending blow (down and through). You are not going to be hitting the ball itself, but rather, the grass just behind it. Instead of a spray of sand going up, you should get a spray of grass.

 

Healthy Lifestyle

Use Your Weekends to Cook



If you're struggling to execute a healthy meal plan for your family, consider doing your planning and cooking on the weekend. Use Saturday to plan your meals for the week and grocery shop, do some cooking on Sunday. By cooking ahead and refrigerating or freezing portions, you'll have a ready stock of nutritious meals ready for the week, making it less likely you'll snack or order in.

 

Green Living

Turn Down the Thermostat


While many households struggle to find a compromise on temperature that suits everyone, it definitely pays to put some thought into thermostat settings. Most households spend 50-70% of their energy budgets on heating and cooling. For every degree you lower the thermostat in winter, you'll save between 1 and 3 percent of your heating bill and reduce your energy footprint. You can do the reverse in summer to save on air conditioning.

 

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[1] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-august-27-2012.htm 

 

[2] http://www.usatoday.com/money/economy/story/2012-08-30/ben-bernanke-speech-jackson-hole/57470268/1 

 

[3] http://www.reuters.com/article/2012/07/05/us-centralbanks-action-idUSBRE8640RN20120705 

 

[4] http://theweek.com/article/index/218965/the-stock-markets-history-of-september-swoons-by-the-numbers  

 

[5] http://www.usatoday.com/money/industries/retail/story/2012-08-30/back-to-school-shopping-retail-sales/57435222/1 

 

[6] http://www.usatoday.com/money/economy/story/2012-08-29/job-gains-vary-by-state/57443680/1 

 

[7] http://www.cnbc.com/id/48883463 

 

[8] http://www.usatoday.com/money/economy/fed/beigebook/story/2012-08-29/beige-book/57405878/1 


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