Periscope: Events at Home and Around the World

A & I Financial Services LLC Newsletter

For the Week of

February 24, 2011

Greetings!

With the recent headlines, you'd think the world was falling apart. It appears that the excitement in Egypt has spread to Libya, Bahrain, and all the way over the ocean to Mad-town (Madison) Wisconsin.

This, of course, is the age of the Internet, and news spreads fast. But the events are so different. and the countries' situations each so dramatically different from each other, that we are truly drawing unfair comparisons.

On Tuesday, February 22nd, 2011, US stock markets declined sharply in response to the unrest. Oil prices surged. This type of short-term volatility is unpredictable and ultimately not helpful to us as investors. Instead, we need to keep our eyes on the long-term prize.

Some of our investments are positioned to benefit from oil increases. Some of our investments may, in the wake of the market's decline, move to the sidelines. We simply follow the trends and react carefully and quickly.

The US markets in particular have been rising at a fairly good clip in 2011. A pull-back may be due. Because of the length of this up-trend, we expect this could be a good buying opportunity for money investors may have sitting on the sidelines.

Economic Briefs

INFLATION UP 0.4% FOR SECOND STRAIGHT MONTH
The federal government's Consumer Price Index hasn't seen back-to-back increases of this magnitude since June-July 2008. As overall CPI rose 0.4% in January, core CPI rose 0.2% - the biggest increase in that indicator in 15 months. In addition, the Labor Department's Producer Price Index climbed 0.8% for January.(1)

CONFERENCE BOARD LEI TICKS UP 0.1%
January brought a tiny increase in the Conference Board's Leading Indicator Index. New manufacturing orders, consumer expectations and low interest rates were the indicators pushing the index into positive territory.(2)

RETAIL SALES, INDUSTRIAL OUTPUT DISAPPOINT
Blame the weather, not the shopper: the Commerce Department said retail sales were up 0.3% for January, underneath the 0.5% gain forecast by economists surveyed by Bloomberg News. On the upside, retail sales posted their seventh straight monthly gain. The weather also may have been a factor in the 0.1% retreat in U.S. industrial production last month. The Federal Reserve did revise December's gain in that indicator from 0.8% to 1.2%.(3,4)

HOUSING STARTS UP 14.6%
This is the biggest jump in new construction in four months, according to the Commerce Department. While building permits fell 10.4% from December levels, that comes on the heels of a 15.3% rise in December as firms rushed to get permits before building code changes took effect for 2011 in several states.(5)

STOCKS ON PACE FOR A FINE FEBRUARY
Last week continued the pattern we've seen recently, with the Dow calmly gaining between 10-100 points on the typical trading day. The numbers for the week: DJIA, +0.96% to 12,391.25; NASDAQ, +0.87% to 2,833.95; S&P 500, +1.04% to 1,343.01.(6)

Market Summary