Pat Webb - Phase 2 Advisors
 
Resilient Markets Shrug Off Concerns
Weekly Update - March 4, 2013
In This Issue
The Markets
Performance
Headlines
Recipe
Golf Tip
Health Tip
Green Fact
The Markets:

Markets stumbled early in the week on concern that Italy's deadlocked election results might threaten Europe's economic recovery. However, they picked up steam later in the week, bolstered by strong economic data. While Friday's sequestration deadline weighed on investor nerves, markets still ended the week in the black, with the S&P 500 gaining 0.17%, the Dow gaining 0.64%, and the Nasdaq gaining 0.25%.[1]

As many expected, the sequestration deadline came and went on March 1, demonstrating Washington's unwillingness to compromise on either side of the issue. With no deal in sight, President Obama formally ordered the start of $85 billion in government spending cuts Friday evening. Markets shrugged off the sequestration deadline, perhaps trusting that lawmakers will pull themselves together before the full weight of the cuts are felt. Although spending cuts have been ordered, it will take time for the gears of government to turn, and the major effects may not be felt until early April, when the first furloughs begin.

Fed Chairman Ben Bernanke made several speeches last week with a clear message: The Fed will keep long-term interest rates low to encourage economic growth. Despite some dissension in the ranks, the Fed will continue its program of loose monetary policy while closely monitoring financial markets to curb inflation risks.[2]

Also making headlines last week, the results of Italy's election show a close split that leaves the country without a plausible governing coalition. Voters showed their frustration with austerity measures and lack of economic growth by splitting their votes among three politicians who are unlikely to hold a political mandate strong enough to confront Italy's worst recession since WWII. In order to stave off additional economic trouble, Italians must be willing to accept serious structural changes in the future.[3] 

Investors reacted positively to a number of economic reports showing that the U.S. economy is doing well. Despite new payroll taxes, consumer spending grew a modest 0.2% in January;[4]  this is great news because consumer spending often drops after the holidays as Americans tighten their belts. In the housing sector, sales of new homes increased nearly 16% to the highest level since July 2008. At the same time, sales of existing homes has fallen but the increasing demand for new homes has added momentum to the housing recovery.[5]

ECONOMIC CALENDAR:
Tuesday: ISM Non-Mfg. Index
Wednesday: ADP Employment Report, Factory Orders, EIA Petroleum Status Report, Beige Book
Thursday: International Trade, Jobless Claims, Productivity and Costs
Friday: Employment Situation

 

Performance


 Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Headlines

Manufacturing jumps in February. U.S. manufacturing grew last month at the fastest pace in 20 months, a good sign for the economy.[6]  

Pope Benedict XVI bids farewell. In the first papal retirement since the 1400's, Pope Benedict stepped down on Thursday. Cardinals will convene in Rome to elect the next pope from among their number.[7]

Americans see monthly income drop. Personal income declined in January by the largest amount in 20 years, hit by a one-two punch of unusually high December income and January's new payroll tax. Monthly income was high in December as companies paid out early dividends to avoid tax hikes. The new payroll tax took an additional toll, as most workers will pay an additional 2% in taxes this year.[8]

Consumer confidence jumps in February. Consumer confidence moved higher for the second consecutive month, according to initial readings. The rebound suggests that despite some uncertainty around budgetary issues, Americans are adjusting to smaller paychecks and are still feeling optimistic about the future.[9]

  

Quote of the Week
"Imagination is more important than knowledge." -Albert Einstein
Recipe of the Week
Jam Thumbprints




Dot basic sugar cookies with delicious jam to create this simple treat.
Recipe from RealSimple.com.

Ingredients:
1 Roll of store-bought sugar cookies or any basic sugar cookie dough
1 Jar of your favorite jam or jelly

Directions:

  1. Roll the sugar cookie dough into tablespoon-size balls and place on baking sheets (do not substitute slice-and-bake dough).
  2. Make a well in each ball with your thumb. Fill the wells with a total of 1/3 cup apricot jam or raspberry jam.
  3. Bake at 350 F on parchment-lined baking sheets until just beginning to brown, 15 to 18 minutes.
  4. Cool slightly on baking sheets, then transfer to wire racks to cool completely.

 

 

Golf Tip
Try the Logo Lineup

One of the most common errors when putting is poor alignment.  Specific sources of trouble can be posture, head position, or ball position.  Many golfers have not trained their eyes to see the line correctly and are aiming their putter to the right or left of the hole without being aware of it.

The next time you head out to play or practice, try experimenting with lining up the logo or marked line.  Start by practicing 2 or 3 footers to ensure that your aim is true. If you have aligned properly, you will see the logo turning straight over the top of the ball as it falls into the hole. Once you are comfortable with these short putts, begin to practice from longer distances.

Healthy Lifestyle
Lean Beef is a Superfood

According to AARP, lean beef is an important addition to the diet since it's full of iron and zinc, two nutrients that protect against infections. Plus beef is a great source of the antioxidant selenium, which helps repair cells. To limit fat intake while maximizing benefits, choose lean cuts of beef and limit portions to 3 ounces.


Green Living
Install a Water Filter
 
Love the taste of clean, filtered water? Add a water filter to your home tap for clean, safe water without all the waste associated with plastic bottles. While a whole-house filter can be expensive, over time, it will save the average household money over buying bottled water.

Share the Wealth of Knowledge!


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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.

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.

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[1] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-february-25-2013.htm
Pat Webb
Pat Webb - Phase 2 Advisors
8100 Turman Ct
Fort Collins, CO 80525
970-776-3306
patwebb@phase2adv.com
http://www.phase2adv.com