Highest consumer confidence since January 2008

That is what the final University of Michigan/Reuters survey for June reveals. The index came in at 76.0, an improvement from the final 73.6 reading for May. (For the record, the survey has averaged 84.5 across the past ten years.) The poll’s index of consumer expectations (the “better or worse six months from now?” question) improved 1.0 points to 69.8.¹

Home sales swoon in May

New and existing home sales plunged dramatically last month as federal homebuying credits left the picture. Economists expected new home sales numbers would dip, but the 32.7% decline announced by the Commerce Department surprised Wall Street and the real estate industry. The National Association of Realtors stated that existing home sales were down 2.2% last month.²

Durable goods orders fall, but corporate profits revised north

The Commerce Department noted an overall 1.1% decline in durable goods orders for May; minus transportation orders, there was actually a 0.9% gain in the category. It put 1Q GDP slightly lower at +2.7% in its final 1Q snapshot, but it also revised 1Q corporate profits north to +8.0%. Corporate earnings were 34.0% better than a year before – the largest year-over-year climb in 26 years, and a signal that both hiring and business investment are due to accelerate. The consensus 2Q forecast of a Wall Street Journal survey estimates second-quarter GDP will come in at +3.6%.^1,3,4

BP, financial reform concerns weigh on Wall Street

The DJIA wrapped up Friday at 10,143.81, ending a rough week. The S&P 500 closed at 1,076.76 Friday, while the NASDAQ closed at 2,223.48. All three indices wound up in the red for 2010 as of Friday’s close, but the Russell 2000 remained positive (+3.15% YTD).⁵

Last week’s riddle: A man claims he was 88 years old two days ago, and yet he also tells you that he will turn 91 next year. How can this be?

Last week’s riddle answer: He talks to you on New Year’s Day and his birthday is on December 31. So two days ago (12/30), he was 88. On 12/31, he turned 89. His 90th birthday occurs on 12/31 of this year, and he will turn 91 next year.

This information should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www.montoyaregistry.com www.petermontoya.com

Minor deflation takes pressure off the Fed.
The Consumer Price Index retreated 0.2% for May, following a 0.1% decline in April. Energy prices fell 2.9% last month, leading the CPI downward. (Core CPI did advance 0.1% in May.) Across the last 12 months, the CPI has risen 2.0%, with core CPI up 0.9% – the smallest annual gains since 1966. While May’s wholesale prices were 5.3% above levels of a year ago, the Labor Department said that PPI fell 0.3% on the month, which was less than the 0.5% reduction forecast by economists polled by Reuters. Translation: the Federal Reserve has no compulsion to raise interest rates.^1,2

Will gold hit $1,300 this summer?
The precious metal got a little closer to that psychologically significant benchmark on Friday. Gold settled at a new record close – $1,258.30 an ounce. Since the end of 2009, gold prices have gained almost 15%.³

As tax credits expire, housing starts decelerate.
In real estate, the year-over-year numbers often tell the real story, rather than the “weather” indicated by the month-to-month statistics. So we should be encouraged by the fact that May’s housing starts were 7.8% above May 2009 levels. Still, they were down 10.0% from April to their lowest level in five months. The Commerce Department also reported 17.2% fewer permits for single-family home construction in May.⁴

Industrial output & leading indicators rise.
Factory production went north by 1.2% for May. The Conference Board’s leading indicators index gained 0.4% for May after a flat April. Across the last six months, the CB index has seen 3.9% growth.^2,5

Stocks move back into positive territory.
The S&P 500 closed the week at 1,117.51, the DJIA at 10,450.64 and the NASDAQ at 2,309.80. All three marquee U.S. indices went back to being positive YTD last week.⁶

Last week’s riddle: Four cars approach an intersection with four-way stop signs simultaneously, each car coming from a different direction. After stopping, the drivers all accelerate at the same time. However, there is no accident. How is this possible?

Last week’s riddle answer: All four cars make right turns.

So, here is the text version:

Quote of the week. “Your assumptions are your windows on the world. Scrub them off every once in awhile, or the light won’t come in.” – Alan Alda

Retail sales down 1.2% in May. What happened? Perhaps consumers took a break after spending notably in March and April. Auto sales slipped 1.7%; hardware store sales fell 9.3%, possibly influenced by the expiration of homebuyer tax credits.¹

Consumer sentiment rises. Consumers may have bought less recently, but according to the University of Michigan/Reuters consumer sentiment poll, their confidence has increased. June’s preliminary reading was 75.5 – a rise from the final 73.6 May mark. The barometer of current economic conditions reached 82.9; it hasn’t been this high since March 2008.²

Wholesale, business inventories increase. The Commerce Department reported 0.4% gains in both categories for April. Business inventories hit their highest level since last June; wholesale inventories were up for a fourth consecutive month.^2,3

Gold touches $1,250 level. The precious metal hit a new intraday peak last week ($1,254.50) and settled at $1,230.20 per ounce Friday. Gold gained 1.03% last week, and other metals did better: silver futures rose 5.39% and palladium futures were up 4.07%. Copper also advanced 3.00% for the week.⁴

S&P 500 gains 2.51%. Welcome news: from Monday to Friday, the index had its best week since early March. The NASDAQ gained 1.10% and the DJIA gained 2.81% last week, with the Dow settling at 10,211.07.⁵

Riddle of the week. Four cars approach an intersection with four-way stop signs simultaneously, each car coming from a different direction. After stopping, the drivers all accelerate at the same time. However, there is no accident. How is this possible?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: Many people assume that a particular four-word phrase appears on every type of U.S. coin – but they are wrong. What four words do appear on every U.S. coin?

Sorry Mike, “In God We Trust” is not correct.  It is only “United States of America”

Last week’s riddle answer: United States of America

The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www.montoyaregistry.com www.petermontoya.com

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

Jobless rate ticks down 0.2%. The news didn’t impress Wall Street: while May’s unemployment rate fell to 9.7% and the economy added 431,000 jobs, 390,000 of them represented temporary U.S. Census Bureau hires. Still, the number was better than the 9.8% reading economists expected.¹

ISM: continuing expansion in key sectors. For the tenth straight month, the Institute for Supply Management’s manufacturing index showed growth, though May’s 59.7 reading came under April’s 60.4 mark. The Institute’s non-manufacturing index read 55.4 again for May; it has shown the service sector expanding for the last five months.^2,3

April sees rise in pending home sales. Spurred by the federal tax credit deadline, more buyers rushed to sign contracts. The National Association of Realtors reported its pending home sales index at 110.9 for April, a 6.0% gain from March and the highest reading since October.⁴

Factory orders up 1.2%. The April increase reported by the Commerce Department was actually below the 1.8% gain forecast in a Reuters poll of economists; March’s gain was revised up to 1.7%.⁵

Stocks fight for stability. The Dow closed below 10,000 Friday as Wall Street dissected the May jobless report and glimpsed new headlines about Hungary facing a potential debt crisis. It was a volatile week and ultimately a losing week, with the Dow ending at 9,931.22, the NASDAQ at 2,219.17 and the S&P 500 at 1,064.88.⁶

Riddle of the week. Many people assume that a particular four-word phrase appears on every type of U.S. coin – but they are wrong. What four words do appear on every U.S. coin?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: Yesterday was Wednesday’s tomorrow. Tomorrow is Sunday’s yesterday. Given those circumstances, what day would today be?

Last week’s riddle answer: Friday

Personal spending flat for April. However, wages rose 0.4% and disposable personal incomes went up 0.5% (the biggest increase in almost a year). April was the first month since September in which consumer spending didn’t increase.^1,2

Home sales rise. Federal tax credits expired in April, and these numbers reflect it: the Commerce Department said new home sales were up 14.8% for the month (they were also 47.8% above April 2009 levels). The National Association of Realtors noted a 7.6% gain in existing home sales in April.³

Sentiment indexes improve. The final University of Michigan/Reuters survey for May hit 73.6, up from a 72.2 reading in late April. The Conference Board’s consumer index hit 63.3, a level unseen since September 2008.⁴

Durable goods orders rise 2.9%. The Commerce Department report showed transportation orders behind the April gain, which topped the 1.3% increase forecast by economists.⁵

Hopefully, June will be better. The poorest month for equities since November 2008 finally ended. The DJIA closed May at 10,136.63. As for the NASDAQ and S&P 500, they stood respectively at 2,257.04 and 1,089.41 as the Memorial Day weekend began (Wall Street resumes trading on Tuesday). Even after the May selloff, the Russell 2000 was +5.79% on the year through the weekend.⁶

Riddle of the week. Yesterday was Wednesday’s tomorrow. Tomorrow is Sunday’s yesterday. Given those circumstances, what day would today be?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: The railings on a 60-yard-long walkway have ornamental sculptures every 12 yards on both sides, starting at the east and west ends of the walkway. How many total sculptures are there on the walkway?

Last week’s riddle answer: 12 sculptures total, as there are 6 per side if they occur every 12 yards (0-12-24-36-48-60).

Attention on Europe (and the Senate). The euro thankfully rose for three straight days last week, after hitting a four-year low after German chancellor Angela Merkel commented that the EU/IMF debt bailout had “done no more than buy time” to fix the crisis. Thursday evening, the Senate passed its version of the financial industry reform bill; the next step is reconciliation with the House version. Stocks were hit hard early in the week, but managed Friday gains; a late rally took the Dow north 125 points.^1,2,3

Consumer, producer prices retreat. This was surprising: the CPI declined 0.1% in April as energy prices fell by 1.4%. The PPI also decreased 0.1%. The Commerce Department reported a 0.9% year-over-year increase in the CPI, well below the Federal Reserve’s annual inflation target of 1.5-2.0%.^4,5

Indicators streak ends. The Conference Board’s index of leading indicators slipped 0.1% last month, the first dip since March 2009. Economists surveyed by Thomson Reuters had forecast a 0.2% increase.⁶

Housing starts rise, permits fall. Overall housing starts increased by 5.8% in April to the highest level since October 2008, with a 10.0% rise in single-family construction. However, the Commerce Department had building permits down by 11.5% – an effect of expiring federal tax credits.⁷

Bulls try to hold their ground. All three major U.S. indices slipped between 4-5% last week. However, the S&P rose 1.50% Friday to end the week at 1,087.69. At Friday’s close, the Dow was at 10,193.39 and the NASDAQ at 2,229.04.⁸

Riddle of the week. The railings on a 60-yard-long walkway have ornamental sculptures every 12 yards on both sides, starting at the east and west ends of the walkway. How many total sculptures are there on the walkway?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: What number logically comes next in this series: 2, 3, 5, 9, 17, __.

Last week’s riddle answer: 33. (The difference between the two numbers is progressively multiplied by 2 and added to the next number.

www.youtube.com/watch?v=Nvi2nOCj1Lc

Quote of the week. “Education is not the filling of a pail, but the lighting of a fire.”– William Butler Yeats

Gold soars, euro slips, rumors plague EU. Wall Street watched Europe closely last week; investors initially loved the almost-trillion-dollar debt rescue plan from the International Monetary Fund and the European Union, but then wondered if its austerity measures would slow growth. The euro hit an 18-month low Friday as rumors floated that certain EU nations might ditch the currency. Gold, meanwhile, settled at $1,227.80 an ounce Friday – prices are up about 16% since early February.^1,2

Retail sales up 0.4% in April. This marks seven consecutive months of gains. Additionally, the Census Bureau said April 2010 retail sales figures were 8.8% improved from April 2009.³

Reuters: a gain in consumer sentiment. In May’s preliminary Reuters/University of Michigan poll, the index read 73.3, better than April’s 72.2. The survey’s one-year inflation expectations index read 3.1%, the highest mark in 11 months.⁴

Industrial output on the rise. On Friday, the Federal Reserve noted a 0.8% gain in industrial production for April. This follows up a 0.2% advance recorded in March.³

Up, down … up, down … and finally, up. Big swings ruled the market last week – but make no mistake, it was a winning week for equities. At the Friday close, the Dow stood at 10,620.16 after a 2.31% advance across five trading days. Last week, the NASDAQ rose 3.58% while the S&P 500 gained 2.23%. The Russell 2000 gained 6.28% last week.⁵

Riddle of the week. What number logically comes next in this series: 2, 3, 5, 9, 17, __.

Post your answer on the blog below.

Last week’s riddle: At a class reunion, everyone shakes hands exactly once with every person present. That results in a total of 28 handshakes. In total, how many people are at the reunion?

Last week’s riddle answer: 8 people. (8 x (8 -- 1): 2 = 28) or (7 + 6 + 5 + 4 + 3 + 2 + 1 = 28)

www.youtube.com/watch?v=5trmnQJ4gPo

Generating Leads Video

Getting Appointments

Quote of the week. “You’re born an original. Don’t die a copy.”– John Mason

More jobs, more jobseekers. While U.S. firms added 290,000 jobs in April -- the most in 49 months – the unemployment rate climbed to 9.9% last month. That reflected more Americans looking for work. Revised Labor Department figures show the economy adding an average of 143,000 jobs per month so far in 2010.¹

Consumer spending leaps 0.6%. Great news: March saw the biggest gain in that category in five months. The Bureau of Economic Analysis also reported a 0.3% gain in wages.²

The Institute for Supply Management’s manufacturing index rose to 60.4 in April from 59.6 in March, and its service sector index stayed at 55.4 in April. Both numbers signal growing sectors. Additionally, factory orders increased by 1.3% last month (this category has shown a gain in 11 out of the last 12 months).^3,4

Pending home sales up again. That makes it two months in a row of gains in this category: the National Association of Realtors said the number of sales contracts increased by 5.3% in March, more than the 5.0% gain that analysts had envisioned.⁴

Stocks battle volatility, technology. Trading snafus and worries about debt in Europe aggravated the market last week. The Dow was down 5.71% for the week, the NASDAQ 7.95% and the S&P 500 6.39%. On the NYMEX, oil prices fell $11.04 last week to $75.11 per barrel. Gold gained $29.90 last week to settle at exactly $1,210.00 an ounce Friday.^5,6

Riddle of the week. See Video.

Last week’s riddle: I have keys that will open no locks. I have a space and a lock that’s a key. You can enter but you can’t leave, and yet -- you can escape. What am I?

Last week’s riddle answer: A computer keyboard. The lock that’s a key is the Caps Lock, Num Lock or Scroll Lock

www.youtube.com/watch?v=HvR5_VaYaao

Quote of the week. “The basic difference between being assertive and being aggressive is how our words and behavior affect the rights and well-being of others.”– Sharon Anthony Bower

Good solid growth. On Friday, the Commerce Department estimated 1Q GDP at +3.2%, marking the third positive quarter in a row. What drove the gain? Consumer spending was up 3.6% in the quarter, and business spending on equipment and software increased by 13.4%.¹

Year-over-year gain in home prices. That’s what the February S&P/Case-Shiller Home Price Index revealed. Across 20 cities, prices rose 0.6% from February 2009 levels. This is the first yearly advance recorded by the index since December 2006, though prices were down 0.9% from January.²

The latest consumer barometers. One went north, another south: the final Reuters/University of Michigan consumer sentiment index for April dipped to 72.2, down from 73.6 in March but above the 71.0 forecast by analysts polled by Bloomberg News. The Conference Board’s April survey rose to 57.9 from March’s 52.3 – this is the best mark since September 2008.^3,4

Gold’s major gain. Across last week, gold prices climbed $27.00 to settle at $1,180.10 per ounce Friday. April was gold’s best month since November. Oil futures advanced $1.03 last week, ending Friday at $86.15 a barrel on the NYMEX.⁵

A trying week for stocks. Last week, Standard & Poor’s downgraded the debt ratings of Spain, Portugal and Greece; federal prosecutors also moved to investigate Goldman Sachs. The Dow lost 1.8% on the week to end at 11,008.61 Friday. The NASDAQ and S&P 500 also had down weeks. However, the monthly numbers for April were as follows: DJIA, +1.40%; NASDAQ, +2.64%; S&P 500, +1.48%.^6,7

Riddle of the week. I have keys that will open no locks. I have a space and a lock that’s a key. You can enter but you can’t leave, and yet -- you can escape. What am I?

Contact my office or see next week’s Update for the answer.

The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www.montoyaregistry.com www.petermontoya.com

A little less confidence. The preliminary April Reuters/University of Michigan consumer sentiment survey came in at 69.5, versus 73.6 at the end of March. Interestingly, the survey’s expectations index slipped to its lowest level in 13 months.¹

More minimal inflation. The Consumer Price Index advanced 0.1% in March; with food and energy prices factored out, core CPI was flat. Overall CPI increased by 2.3% during the past 12 months of data.²

Car buying drives retail sales. A 6.7% rise in the demand for autos sent retail purchases 1.6% higher for March. That even beat the 1.3% gain forecast by economists polled by MarketWatch.³

Manufacturing up 0.9% last month. So noted the Federal Reserve last week. Total industrial output rose 0.1% in March; economists surveyed by Dow Jones Newswires thought we would see a 0.8% gain.⁴

Housing starts up 1.6% for March. Besides that statistic, the Commerce Department also announced some other good news: the 5.9% February slip in this category has been revised to a 1.1% gain.⁵

SEC suit sends market down. The Securities and Exchange Commission sued Goldman Sachs Group for securities fraud over the structuring and marketing of a subprime mortgage product Friday, and stock indexes fell, ending six days of gains. The Dow (+0.19%) and NASDAQ (+1.11%) still advanced for the week. The S&P 500 lost 0.19% last week.⁶

Riddle of the week. A room holds two sisters with their two brothers, two mothers with their two sons, two maidens with their two mothers, two grandmothers with their two granddaughters, two fathers with their two daughters, and two husbands with their two wives … yet there are only six people in the room, all legitimately born. How is this possible?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: What five letters (with no letters used more than once) can be arranged in three ways to make three separate words – the first with one syllable, the second with two syllables, the third with three syllables?

Last week’s riddle answer: AIDES – 1 syllable, ASIDE – 2 syllables, IDEAS – 3 syllables