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Monthly Archives: June 2009

Buyers and Sellers

At the heart of it, markets come down to buyers and sellers. Taking a look at who is buying and who is selling can tell us something about the durability of the stock market’s recent performance and what may lie ahead.

Presently, there are three notable trends in buying and selling in the stock market……..

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Why Financial Planning Matters in the Toughest of Times

Why enlist the services of a financial planner when your holdings are down and you’re facing a host of financial problems? Because as dark as times may seem, you’re actually giving yourself a fresh start in building a stronger financial future.

Indeed, many people don’t make that choice. A recent Financial Planning Association/Ameriprise Financial survey showed that many people try to go it alone when it comes to a financial plan—and they suffer considerably worse performance in their investment and savings goals over time than those who do. The cost of a financial planner may not be prohibitive due to factors we’ll mention below and young people have a particular advantage on their side when using one—time.



Waiting on the Fed

Last week’s economic data for May and June on leading indicators, jobless claims, housing starts and manufacturing supported our view that the U.S. economy was on track to emerge from recession in the second half of 2009. Meanwhile, the inflation data for May continued to show headline deflation and only modest inflation at the core level.

Looking ahead to this week, markets will be focused on another batch of housing data for May (new and existing home sales) and data on business capital spending and consumer spending in May (durable goods orders and personal income and spending). The key event for the week, however, is likely to be the Federal Reserve’s Federal Open Market Committee (FOMC) decision. With Fed policy on hold . . . .

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Markets Self-Correct

The stock market measured by the S&P 500, fell last week for only the third time in 14 weeks. The stock market has rallied about 40% off of the low, but still stands 40% below the peak. Is this modest decline a chance for those that have been waiting to buy on the dips, or should the weakness be seen in a more negative light as the start of a full retest back to March lows?

We believe the markets are undergoing a healthy process of discovering – then retreating from – the thresholds at which key factors may begin to have a material negative direct affect on consumers and businesses. The fact that this process is taking place without explicit policy action demonstrates that the markets may be coming off of the Washington life supports machine.


Planning a Cost-Effective Job Search

Whether you’ve already cleaned out your desk or are expecting your department to be next at work for cuts, in this economy, it definitely makes sense to plan a job search before you actually have to do one.  Call it a response plan.

Here are some basic steps in getting that process started:


Something’s Gotta Give

For much of the past three months we have seen the yield on the 10-year Treasury note and the S&P 500 move up together. They both reflect the improving economic data and conditions for the markets tracked by our Current Conditions Index. However, since the start of June, when the yields definitively moved above 3.5%, stocks and bonds have parted ways, with stocks flattening as yields moved up to 4%.

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Are the Green Shoots Wilting? A Look at Consumer Net Worth

At the margin, last week’s batch of economic data was neither as dramatic nor decisive as the data released during the first week in June. The data included an eclectic mix of data on business inventories, merchandise trade, retail sales and consumer sentiment that provided some insight into the pace and composition of ceconomic growth in Q2 2009. On balance, the data suggested that the U.S. economy was still on track for our base case as outlined in our 2009 Outlook publication. If anything, the data suggested that the decline in real gross domestic product (GDP) in Q2 2009 might be a bit steeper that the consensus now believes (-2.0%), due to another big drawdown in inventories. However, the prolonged weakness in inventory destocking in Q2 helps to set the stage for a positive print on real GDP in Q3. As always, we will continue to monitor the incoming data closely.

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Is the Labor Market Turning the Corner?

Last week’s economic data, including the better than expected May employment report, confirmed that the U.S. economy was still on track for our base case as outlined in our 2009 Outlook publication. At the margin, the better than expected May nonfarm payroll report suggests that growth in the economy as measured by real gross domestic product (GDP) could resume by as soon as the third quarter of 2009. However, for now we are sticking with our base case which calls for a flat reading on real GDP in Q3 and a resumption of growth in Q4 2009. We will continue to monitor the incoming data closely.

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Markets Continue to Fret

We are between the quarterly earnings report seasons and that has left markets free to fret about all sorts of things – economic reports, government policy announcements and actions, bankruptcy filings, various scandals, etc., etc.  Right now it appears that we are “climbing the wall of worry”.

Absent earnings reports for the second quarter, U.S. equity markets have been staging a jittery recovery from the early March lows with the S&P 500 and the NASDAQ now showing positive returns year-to-date, while the Dow is still a bit below.  Sector earnings reports generally improved in Q1, but Financials, Energy, Materials, and Consumer Discretionary are only back to near zero earnings per share from huge Q4 losses.  Consumer Staples, Technology, Healthcare, Telecom, and Utilities avoided Q4 losses and staged modest rebounds in Q1.  I expect, generally speaking, further improvements in Q2 earnings reports—the silver lining to the cloud of weak economic reports.


Will the Auto Sector Turmoil Detour the Economy’s Road to Recovery

Last week, global financial markets braced for the bankruptcy of GM, cheered for a quick end to Chrysler’s bankruptcy, all the while trying to gauge the impact of the automakers’ meltdown on the U.S. economy. Then news on housing last week suggested that the bottoming process in that sector continued, while the release of the regional manufacturing surveys offered hope that the pain of the auto bankrupties may be contained.

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