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Strong Earnings Promote New Highs
Weekly Update - May 13, 2013
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In This Issue
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The Markets:
Markets turned out another solid performance last week as all three major indices reached new highs. With minimal economic data for investors to chew on, earnings drove most of the market action last week. On Tuesday, the S&P 500 set a new high while the Dow notched its first close above the 15,000 mark. Industrials, technology, and consumer discretionary stocks led the gains while utilities and consumer staples dropped. For the week, the S&P 500 added 1.19%, the Dow gained 0.97%, and the Nasdaq increased 1.72%.[1]
As we near the end of earnings season, 90% of S&P 500 companies have reported in, with 67% beating earnings expectations. If all remaining companies post numbers in line with estimates, earnings will be up 5.3% over the first quarter of 2012. However, most companies are still missing their revenue estimates, with only 46% beating their own revenue projections. Next week, a handful of major retailers are due to report, which, along with Monday's retail sales report, will give sector analysts a lot to think about.[2]
After markets closed for the weekend, Federal Reserve officials announced their strategy for unwinding QE3, their unprecedented $85 billion per month bond-buying program. While they didn't confirm the timing of intended moves, officials said they plan to reduce bond purchases in careful, measured steps as they monitor the job market and inflation. Because it doesn't look like the Fed intended this announcement to mark the end of quantitative easing, it appears they meant to signal their flexibility in managing the programs in the months ahead.[3]
Looking ahead, the bulls could keep running next week as long as economic reports on labor, retail sales, industrial production, and manufacturing don't disappoint. However, with equities reaching new highs, there are plenty of opportunities for weakness to end the run. If investors think that markets are overbought, some consolidation might occur. The market activity thus far suggests that investors are betting on increasing economic growth, and the Fed's announcement seems to indicate that officials aren't too worried about the U.S. economy at this time. As always, we'll keep an eye on the action and will keep you informed.
ECONOMIC CALENDAR:
Monday: Retail Sales, Business Inventories
Tuesday: Import and Export Prices
Wednesday: Producer Price Index, Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Housing Market Index, EIA Petroleum Status Report
Thursday: Consumer Price Index, Housing Starts, Jobless Claims, Philadelphia Fed Survey
Friday: Consumer Sentiment
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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.
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Headlines:
Late mortgage repayments drop in Q1. A strengthening housing sector, rising home prices, and steady gains in the jobs market are helping U.S. homeowners stay current with their mortgage payments. The percentage of homeowners behind in payments fell by 21% in the first quarter as compared to the same period in 2012.[4]
U.S. income inequality may be reaching turning point. Economists believe that rising college enrollment rates and wider adoption of technology may begin erasing the income gap between the haves and the have-nots. Increasing numbers of Americans earning college degrees and falling prices for computers may allow more people to earn higher wages in the years to come.[5]
April U.S. budget surplus largest in five years. Increased tax revenues and an improving economy allowed the federal government to post a monthly surplus of $113 billion. In comparison, the surplus in April 2012 was $59 billion.[6] There is usually a surplus in April because the government receives an inflow of tax payments. But tax receipts this April are 28% higher than last year, and the surplus is nearly twice as high.[7]
High U.S. oil exports mean higher gasoline prices. Summer gas prices may be lower than they were last year, but increased exporting of domestic crude oil overseas means that they probably won't get much lower. Analysts estimate that the average gasoline price this summer will be $3.53 per gallon, 16 cents lower than last summer and much lower than the peak of $3.78 reached in February.[8]
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"Try not to become a man of success but a man of value."
- Albert Einstein
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Strawberry Avocado Salsa with Cinnamon Chips
A delicious summer appetizer from cookinglight.com
Ingredients:
2 teaspoons canola oil
6 (6-inch) whole-wheat flour tortillas
2 teaspoons sugar
1/2 teaspoon ground cinnamon
1 1/2 cups finely chopped peeled ripe avocado (about 2)
1 cup finely chopped strawberries
2 tablespoons minced fresh cilantro
1 teaspoon minced seeded jalape�o pepper
2 teaspoons fresh lime juice
3/8 teaspoon salt
Directions:
- Preheat oven to 350�.
- To prepare chips, brush oil evenly over one side of each tortilla. Combine sugar and cinnamon; sprinkle evenly over oil-coated sides of tortillas. Cut each tortilla into 12 wedges; arrange wedges in a single layer on two baking sheets. Bake at 350� for 10 minutes or until crisp.
- Combine avocado and remaining ingredients; stir gently to combine. Serve with chips.
Tip: Make the chips in advance, cool completely, and store in an airtight container until ready to serve.
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Choose the Right Club 
Good players know there's more to selecting the right club than just length. Factors like natural shot tendencies, wind, hazards, and whether or not hidden dangers lurk in prime landing areas are important considerations. But most importantly, a better player looks at what type of approach shot is to follow. The hole may be only 365 yards long, but with a good drive, that leaves a touchy 70- to 80-yard approach. So the right play would be to avoid awkward distances and hit a 3-wood, leaving a full wedge approach.
Lastly, a good strategy is to acknowledge that a shot with a 3-wood has a greater likelihood of hitting the fairway than a driver shot does. And with today's new groove rules, hitting the fairway has become more important than ever. Tip from Golf Tips Mag.
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Stay Social!
There's an increasing body of research that shows that socializing improves mental acuity and can give your immune system a boost. Keeping contact with friends, neighbors, activity partners, and other social groups are a great way to improve your quality of life and have fun.
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Go With the Flow
To save on your water bill, install an efficient showerhead that uses just 1� gallons of water per minute rather than 2� gallons used by many new showerheads. With this change, a family of four could save about $88 a year on water and energy costs with gas water heating and $135 a year with electric, according to the DOE Federal Energy Management Program.
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Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
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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 Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
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.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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