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Monthly Archives: December 2009

Current Conditions Index

The LPL Financial Current Conditions Index rose by 0.1 to 1.5, making another new high for the year. The CCI has had a late year growth spurt over the past several weeks. The index reflects current conditions aligned with the high end of our base case outlook, established at the end of last year, for mid-teen gains in the stock market an mid-single digit gains in the bond market in 2009, as measured by the S&P 500 index and the Barclays Aggregate Index respectively. The markets have already achieved these gains. However, the CCI implies the economy and markets are on track for an outcome somewhat better than our original base case outlook for 2009.

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The Decade Ahead

Investors are ending the year bidding a fond good-bye to 2009 and good riddance to the decade of the 2000s. After the stock market’s steady rise in the 1980s and 1990s, the volatility and losses of the 2000s made for an unpleasant experience for many investors.

Just how bad was the past decade? The 2000s were the worst decade in history for the S&P 500. In the 2000s, the S&P 500 total return (including dividends) is down about 11%, or an annualized loss of -1% for the decade. That is worse than the -.01% annualized loss during the Great Depression decade of the 1930s.

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Outlook for 2010

The data released over the course of last week continues to support our view on the economy, labor market, the Fed, and inflation for Q4 and 2010. We continue to expect real GDP growth of between 4.0% and 4.5% in Q4 (consensus is 3.0%) and growth in the 3-4% range for the full year 2010, with stronger 3-5% growth in the first half and slower 2-3% growth in the second half.

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The Return of Headline Inflation

Taken together, last week’s set of economic reports sent markets participants scrambling to raise their Q4 GDP estimates from around 3% to closer to 4%. Our own forecast for Q4 (3 to 3.5%) is too low as well. Better than expected data on export growth in October, inventory restocking in October, retail sales in November, and data released in early December suggesting a downward revision to Q3 GDP growth were the key drivers behind the renewed optimism for Q4. Even the news on the nation’s budget deficit in November was better than expected, although the deficit remains politically uncomfortably high. In addition, the four-week average on jobless claims continued to decline in early December, further raising the odds that the economy will begin to create jobs in early 2010.

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7 Steps to Create a Self-investment Plan

The end of the year is a good time to think about how you’ll handle your financial investments, but it’s also a good time to consider how you’ll handle your number one investment — you.

With the stresses of work and other responsibilities, people often forget about treating themselves well, but the notion of investing in you goes beyond giving yourself a little time off or a treat at the mall. If you’ve ever wondered if your job could be better, if you could be earning more money, or if you simply could be happier, it makes sense to develop a plan to get there.

Here are first steps in creating a self-investment plan:


Data Suggest at Solid Finish for U.S. GDP Growth in 2009

Last Week’s busy slate of economic data and events supported our view that the U.S. economy will post a 3.0 to 3.5% growth rate (as measured by real Gross Domestic Product) in Q4 2009, and that growth will continue at or above that pace over the first part of 2010. There were certainly some disappointing data points last week, among them:

* The below 50 reading on the Institute of Supply Managment’s service sector index for November.
* The weaker than expected chain store sales data for November.
* A further drop in consumer confidence in early December.
* The sharp downward revisions to construction activity in August and September suggest that Q3 GDP will be revised down further.

However, there was better than expected news last week………

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Busy Week Ahead of November Job Reports

As this week’s Weekly Economic Commentary was being published, market participants were busy digesting the details of last week’s barrage of mostly better than expected economic data, along with the early results from the first weekend of the 2009 holiday shopping season. Last week’s package of economic data included reports on:

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Current Condition Index

The LPL Financial Research Current Condition Index (CCI) is an objective and transparent measure of how the conditions are evolving relative to our base case, bear, and bull cases defined in our Outlook 2009 publication. This weekly index is not intended to be a leading index or predictive of where conditions are headed, but merely a coincident measure of where they are right now. We want to track the conditions in real time to aid investment decision making. There are thousands of indicators-some lead the economy, some lag, while others merely offer a lot of statistical noise. We chose to create our own index tailored to the current environment to provide the clearest and most useful way to track how conditions are aligned with the expectations embedded in our investment recommendations.

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Protect Your Legacy. Update Your Estate Plan

If you don’t have an estate plan in place, a will, a trust, a health care proxy and the like, now — regardless of your age or life stage — would be a good time to put your affairs in order. But if you already have an estate plan in place, do you know when you should be updating it?

Here are 12 things to consider: