Greetings!
Did you, by chance, happen to see my receipt? Here is a photo of it. I kept it because I was charged $2.75 on a $400 withdrawal I made from my $100 million dollar savings account!
Alas, it wasn't me, nor even anyone I know, who didn't bother to throw away the receipt showing a $100 million balance. Apparently Mr. Receipt was a hedge fund manager, D. Tepp, who's said to have joked after the withdrawal that he "hadn't used an ATM since Lehman." (8)
I have nothing else to say this week. I hope you had a happy 4th of July! |
| A Money Manager's Point of View |
Question: Would a slowdown or recession in emerging markets alter your view of your emerging local bond exposure or equity exposure?
Answer from our research partners at Litman Gregory: Yes.
An Emerging Markets (EM) slowdown or recession is a one of the many risk factors we are factoring into our assessment of equities and why we are already underweighted to it, as you may already know. We do believe a slowdown or a recession in EM will be a headwind for U.S. corporate profits.
On EM local bonds, the prospect of an EM slowdown or recession alone would not determine our allocation to EM local-currency bonds. There are many variables we consider. In the event of a recession, EM countries will likely lower rates to stimulate their economies, which may yield capital gains for PIMCO Emerging Local Bond, the fund we use to access this asset class, and help offset some currency losses we may see. So, an EM recession by itself will not alter our view on EM local bond exposure. (1)
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Economic Briefs |
SOFT SPENDING DURING THE SOFT PATCH
After ten consecutive months of gains, personal spending was flat for May and actually retreated 0.1% when adjusted for inflation. Weak auto sales may have been the biggest influence. Economists polled by Reuters had projected a 0.1% gain in the indicator. The Commerce Department did note that personal incomes rose 0.3% for the second straight month. The personal consumption expenditures (PCE) price index showed a 2.5% year-over-year advance.(2)
ISM INDEX SURPRISES
Analysts thought the Institute for Supply Management's factory index would decline in June. It didn't. The index rose from May's 53.5 mark to 55.3. The U.S. was the only nation in the world whose benchmark manufacturing PMI rose last month.(3)
CONSUMER CONFIDENCE WANES
This was not surprising given recent headlines. The University of Michigan's final June consumer sentiment poll slipped to 71.5 from May's 74.3 reading, and the Conference Board's June consumer confidence index also declined to 58.5 from last month's revised 61.7 mark. (3,4)
HOME PRICES, HOME SALE AGREEMENTS INCREASE
The National Association of Realtors announced that pending home sales were up 8.2% for May, rebounding from April's 7-month low. There were 17.0% more sales contracts signed last month than in June 2010, which represents the trough for pending home sales since the real estate downturn began. You can't read too much into the April edition of the S&P/Case-Shiller Home Price Index; home prices in 20 major cities were up 0.7% overall, but it was the start of homebuying season. (5,6)
WALL STREET SHIFTS INTO RALLY MODE
Equities looked far more attractive after Greece passed austerity measures and U.S. indicators showed improvement. Here are the five-day gains from the stock market's best week in nearly two years: NASDAQ, +6.15% to 2,816.03; S&P 500, +5.61% to 1,339.67; DJIA, +5.43% to 12,582.77. (7) |
| Market Summary |
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% Change |
Y-T-D |
1Yr Chg |
5-Year Avg | |
DJIA |
+8.68 |
+29.29 |
+2.57 | |
NASDAQ |
+6.15 |
+34.01 |
+5.93 | |
S&P 500 |
+6.52 |
+30.40 |
+1.09 |
(Source: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 7/1/11). Past performance is no guarantee of future results. Indices are unmanaged, and investors cannot invest in them directly. |
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Create a beautiful week!
Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070
Citations: (1) -http://www.advisorintelligence.com
(2) - cnbc.com/id/43546166/ [6/27/11]
(3) - blogs.wsj.com/marketbeat/2011/07/01/ism-much-better-than-expected/ [7/1/11]
(4) - marketwatch.com/story/consumer-sentiment-declines-in-june-2011-07-01 [7/1/11]
(5) - usatoday.com/money/economy/housing/2011-06-29-pending-home-sales_n.htm [6/29/11]
(6) - blogs.forbes.com/morganbrennan/2011/06/29/what-can-homeowners-learn-from-case-shillers-home-price-index/ [6/29/11]
(7) - cnbc.com/id/43608555 [7/1/11]
(8) - http://www.cnbc.com/id/43581957
This material has been prepared and is distributed solely for information purposes only. It is not a solicitation or an offer buy any securities or instrument or to participate in any trading strategy. There is no assurance that a particular trading strategy will achieve investment success.
Securities offered through Geneos Wealth Management, Inc., member FINRA/SIPC. Investment advisory services offered through A & I Financial Services LLC, registered investment advisor. |
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| Words for Thought |
"People are definitely a company's greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps."
Mary Kay Ash
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| Watch Karl Frank's interview on MoneyLine9 9NEWS on May 9, 2011 | |
Click Here
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| Watch Karl Frank on Channel 9 News & Read his article "Where to Invest in Times of Turmoil" | |
Click Here
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| Read about us in the Denver Post | |
Karl Frank & Cameron Morgan were featured in the Denver Post. They talked about how to have a happy holiday while sticking to a budget.
Click here to read the article. |
| Riddle of the Week |
What is the number missing within this sequence? 4, 7, 11, 18, 29, 47, __, 123, 199, 322.
Last week's riddle:
Wilson, Xavier, Yolanda,
and Zach are standing in line at the market. See if you can figure out their order from these clues: Yolanda is between Wilson and Xavier, Zach is next to Wilson, and Xavier is not first.
Last week's answer:
Zach is first, Wilson is second, Yolanda is third, and Xavier is fourth. |
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