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Market Commentary
Economic Updates
Recent News |
Weekly Commentary
April 5, 2010
THE FIRST QUARTER
IN REVIEW
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Data
as of 3/31/10
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1st
Quarter
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1-Year
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3-Year
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5-Year
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10-Year
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Standard
& Poor's 500 (Domestic Stocks)
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4.9%
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46.6%
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-6.3%
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-0.2%
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-2.5%
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DJ
Global ex US (Foreign Stocks)
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1.6
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59.2
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-6.6
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3.8
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0.7
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10-year
Treasury Note (Yield Only)
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3.8
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2.7
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4.7
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4.5
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6.0
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Gold
(per ounce)
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1.0
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21.7
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19.0
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21.1
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15.0
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DJ-UBS
Commodity Index
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-5.1
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20.4
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-8.4
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-4.0
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3.0
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DJ
Equity All REIT TR Index
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9.9
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106.5
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-10.4
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4.0
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11.8
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Notes: S&P 500,
DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested
dividends (gold does not pay a dividend) and the three-, five-, and 10-year
returns are annualized; the DJ Equity All REIT TR Index does include reinvested
dividends and the three-, five, and 10-year returns are annualized; and the
10-year Treasury Note is simply the yield at the close of the day on each of
the historical time periods. Sources:
Yahoo! Finance, Barron's, djindexes.com, London Bullion Market
Association. Past performance is no
guarantee of future results. Indices are
unmanaged and cannot be invested into directly.
N/A means not applicable or not available.
STOCK MARKET RALLY CONTINUED
The stock
market followed 2009's powerful rally with a strong performance in the first
quarter. The S&P 500 rose 4.9%, excluding dividends, which was its best
first-quarter percentage gain since the heady days of 1998, according to
MarketWatch. Strong corporate earnings, solid corporate balance sheets, and
upbeat manufacturing data helped support the stock market's bullish results,
according to The Wall Street Journal.
It wasn't a
straight line up, though. Between late January and early February, the Dow
Jones Industrial Average dropped more than 7% as news of credit tightening in China, sovereign debt woes in Greece, and debates in Washington on healthcare and bank reform
helped scare investors, according to The
Wall Street Journal. The scare was brief as investors quickly "bought
the dip" and sent the averages higher by the end of the quarter.
INTEREST RATES WERE STABLE
The yield
on the 10-year Treasury was essentially unchanged during the quarter as
investors continued to snap up all the debt the government offered, according
to The Wall Street Journal. Demand
for corporate and high-yield bonds was robust which helped keep those rates at
relatively low levels.
Some
investors are concerned that our large budget deficits may result in a glut of
bonds, which could cause interest rates to rise substantially. That could put
the brakes on an economic recovery, but this worry has not come to
fruition--yet.
THE DOLLAR ROSE AGAINST THE EURO
The big
story in foreign currencies during the first quarter was the strength of the
dollar against the euro. According to The
Wall Street Journal, the dollar rose 6% against the euro as debt concerns
in Greece, Portugal, and Spain weighed on the common
currency. Investors are also evaluating the relative strength of the U.S.
economy versus the euro countries and it appears that a consensus is building
that our country may grow faster. If that occurs, it may mean interest rates
could rise sooner in the U.S.,
which would also help support a strengthening dollar.
DOUBLE DIP RECESSION LOOKING LESS
LIKELY
Recent
economic indicators suggest the economy is healing from the severe recession of
2008-2009. For example, the Commerce Department said consumer spending rose in
February for the fifth consecutive month. Consumer spending makes up about 70%
of gross domestic product, according to Morningstar, so a rise in this number
bodes well for the economy. The manufacturing sector is looking robust, too, as
the ISM manufacturing diffusion index rose to 59.6% in March, which was its
highest level since July 2004, according to MarketWatch. Readings over 50% indicate that more firms
said business was improving than said it was worsening. It was also the eighth
straight monthly increase.
Just after
the quarter ended, the Labor Department released the March payroll report and
it showed a gain of 162,000 payroll jobs. It was the third gain in the past
five months and the largest increase since March 2007. This report, coupled
with other economic data, prompted Robert Hall, the head of the National Bureau
of Economic Research's Business Cycle Dating Committee, to say that it is
"pretty clear" that the deepest recession since the 1930s is over,
according to a Bloomberg report. Hall's organization is the
"official" source on declaring the beginning and ending of
recessions. Jeffrey Frankel, another member of the business cycle dating
committee, said, "The most likely date for the recession's end would be
midyear of 2009," according to the same Bloomberg report.
This
mid-2009 date would seem to confirm the validity of the stock market rally that
we've experienced over the past year. The market started rising in March
2009--not too far ahead of the time that Frankel suggested the recession ended.
SUMMARY
The stock
market performed well in the first quarter as earnings growth continued to
shine and the economy continued to mend. Longer-term issues such as large government
deficits, housing weakness, and the withdrawal of stimulus money hang over the
markets like a black cloud, but so far, these concerns have not deterred
investors.
Weekly Focus -
Think About It
"Economic
progress, in capitalist society, means turmoil."
-- Joseph
A. Schumpeter
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Monthly Lifestyle Newsletter
April 2010
Don't
Worry. Be Happy.
Are you a
happy person? Studies have found that a variety of factors directly influence
our day-to-day happiness. For instance, researchers have found that hereditary
personality traits - such as sociability, conscientiousness, and a tendency not
to worry - which directly influence our level happiness, are linked to specific
genes. Although we cannot change our genetic make-up, we can control other factors
that have the potential to increase our happiness. Here are a few:
Practice
optimism.
Optimism is defined as 'an inclination to put the most favorable
construction upon actions or events or to anticipate the best possible
outcome. In one research study, participants were asked to imagine ideal
situations and describe them in journal entries. After several weeks of
journaling, participants reported having a heightened sense of well-being.
By practicing optimism, some people can train themselves to have a
positive outlook - and that can make them happier.
Be
kind to others.
It turns out, Mom was right. There is a benefit to being kind to others - it
can make you happy. Research has found that acts of kindness and
demonstrations of gratitude - such as shoveling a neighbor's driveway, doing
volunteer work, or writing a letter of thanks to a mentor or friend - can
make you measurably happier. In fact, research has found that one act of
kindness can inspire feelings of happiness that linger for as long as
three months.
Listen
to music. Music can
jumpstart certain parts of our brains by releasing endorphins and
melatonin, and sparking feelings of happiness and relaxation. In studies,
patients who listened to music during surgeries had lower blood pressure, reduced
heart rates, and lower anxiety levels than patients who did not listen to
music. In one study, surgical patients who listened to music required less
sedation.
Have
a good laugh.
Laughter is an endorphin trigger. It releases stress hormones and actually
can strengthen your immune system, in addition to making you feel happier.
Whether you prefer a funny television show, the shtick of your favorite
comedian, or a dinner with entertaining friends, make sure you get a
regular dose of laughter.
There is no
reason to mope around in life. If you're feeling blue, take action - make
yourself happy!
Skillet
Bread
Skillet bread
was a staple in the diet of pioneers who traveled by covered wagon across our
great nation. They generally carried just the essentials required for survival.
In terms of food, that might have included coffee, salt, sugar, beans, rice,
and baking soda. Often, their meals were prepared in a skillet over an open
fire. Try this modern day skillet bread recipe if you want to get a flavor of
the old west. Cook it in grandma's cast iron skillet, if you still have it.
Skillet Bread
2 tablespoons
olive oil
1 small
onion, thinly sliced
1 Yukon gold potato,
peeled and thinly sliced
1 tablespoon
rosemary
1 teaspoon sea
salt
¼ teaspoon black
pepper
1 package
refrigerated pizza dough
Cornmeal
Directions
Heat oven to
450° Fahrenheit. Add the oil to a cast iron skillet over medium heat. Add the
onion and sauté until golden. Transfer the onion to a bowl. Add the potato,
rosemary, salt, and pepper to the bowl. Mix these ingredients thoroughly.
Wipe the
skillet clean and turn it upside down. Sprinkle the bottom (which will be your
cooking surface) with the cornmeal to prevent sticking. Shape the pizza dough to
fit the skillet bottom and put the dough on the bottom of the skillet, which
has been sprinkled with cornmeal. Arrange the potato mixture evenly over the
dough, leaving a 1-inch border. Bake for about 20 minutes. Serve in wedges.
What Do You
Know About Citrus X Paradisi?
Citrus X Paradisi was called the forbidden fruit when it was discovered
in the mid-1700s in Barbados
and Jamaica.
Today, we know it as the grapefruit!
1. Grapefruit are believed to be an
accidental hybrid of which two fruits?
a. Limes and oranges
b. Lemons and oranges
c. Pummelos and grapes
d. Pummelos and oranges
2. Grapefruit peel is:
a. An important source of pectin
b. Squeezed and the oil is used for soft
drink flavoring
c. A source of flavoring for tonic water
and bitter chocolate
d. Combined with dried pulp and used as
cattle feed
e. All of the above
3. Why was this fruit nicknamed
grapefruit?
a. It is the color of wild grapes
b. It is the shape of a large grape
c. It is a hybrid of a grape and a
pummelo
d. It grows in bunches
4. A grapefruit is what percentage juice?
a. 25%
b. 50%
c. 75%
d. 90%
How Does Your
City Stack Up?
If you're
thinking of moving to another city once you retire, or are considering living
somewhere else for part of the year, it's important to do some research and
make an informed decision about your new hometown. A website called Sperling's Best Places can help. It provides
all kinds of valuable information about cities and states across America. You
can compare the cost of living, population characteristics, current and
projected economic conditions, cost of housing, and other information about
cities, counties, and states across America. For example, did you know
that:
Tucson, Arizona
has significantly better air quality than Phoenix
or Sedona, Arizona, but worse water quality than
both of those cities?
The median home price in Punta Gorda, Florida
is almost 40% higher than the median home price in Homosassa, Florida
and that the value of homes in Punta Gorda fell significantly further than
the value of homes in Homosassa during the housing crisis?
During the next 10 years, Gardnerville
Ranchos, Nevada - a popular retirement
community - is expected to experience more robust jobs growth than Pahrump, Nevada?
However, the cost of living in Pahrump is generally lower than the cost of
living in Gardnerville Ranchos.
Even if
you're not planning to move, it can be interesting to see how your town
compares to others. It's possible that a nearby locale may have a more
attractive profile - such as lower cost of living, more stable home values, or
better economic prospects - than the area you currently live in. Check it out
on Sperling's website.
Answers:
1d. Pummelos and oranges
2e. All of the above
3d. It grows in bunches
4c. A grapefruit is 75% juice
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Best regards,
Jim Forcella, CFP®, CFS
LPL Branch Manager
LPL Investment Adviser Representative
CA Insurance License #0635256
P.S. - Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
Closing Reminders - Should your personal or financial situation change (i.e. Marital or employment status, beneficiary changes or income needs) please contact us at 530.222.6301 or 800.546.5573 for either a phone review, or an appointment. We want to ensure that your current financial objectives meet your personal circumstances.
Forcella Wealth Management Information - Are you receiving too much mail regarding your investments? You now have the option to receive your LPL Financial communications electronically! LPL Financial is pleased to offer the convenience of viewing shareholder communications, including the fund prospectus, annual reports, and proxy statements online. Visit the link below to be directed to a secure website where you will enter your LPL Financial account number and Email address. You will no longer receive shareholder communications information through the mail but can request a hard copy at any time. Please feel free to contact us if you have any questions regarding this form.
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Forcella Wealth Management
1600 Victor Ave ● Redding, CA 96003
Phone 530.222.6301 ● Toll Free 800.546.5573 ● Fax 530.226.1677
jim.forcella@lpl.com ● www.forcellawealth.com
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* This newsletter was prepared
by PEAK.
* 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 DJ Global ex US is an
unmanaged group of non-U.S. securities designed to reflect the performance of
the global equity securities that have readily available prices.
* 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.
* Gold represents the London
afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is
designed to be a highly liquid and diversified benchmark for the commodity
futures market. The Index is composed of futures contracts on 19 physical
commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR
Index measures the total return performance of the equity subcategory of the
Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! 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.
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Securities Offered Through LPL Financial Member FINRA/SIPC
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