www.youtube.com/watch?v=iX9qDBff1eQ

Quote of the week. “Avoid having your ego so close to your position that when your position falls, your ego goes with it.”– Gen. Colin Powell

Before I get into the Business side, I’ve got a little Olympic info to address. Did you hear that they’re taking away the gold medal from downhill Skier Lindsey Vonn who won the race? Apparently, they are giving it to Obama cuz he’s heading downhill much faster than she did!!!

Oh come on! That’s just funny! Thank you Rick for Facebooking that joke. As you can tell, I enjoyed it.

Onto the financial news.

The big financial news of the week is that the fed bumps discount rate up to 0.75%. The exit strategy had to get rolling at some point, yet the Federal Reserve’s Thursday decision to raise the federal funds discount rate came sooner than many analysts expected. Yet the move did not prompt the big selloff some traders had predicted. Stocks posted tiny gains Friday after new CPI data was released.¹

So far inflation remains tame. Core CPI fell by 0.1% in January, in the first monthly decline since 1982. Overall CPI rose 0.2% for the fifth straight month. From January 2009 to January 2010, CPI rose 2.6% with core CPI up 1.6%.²

What this means is that we haven’t started paying the piper for our outrageous government spending. Both the democrats and the Republicans have financed our futures away and there will be a day of reckoning. It just isn’t today.

PPI soars. Producer prices, on the other hand, rose 1.4% for January, spiked by a double-digit increase in costs of gasoline and heating oil. Core PPI advanced by 0.3% last month.³

Good news on housing & factory output. The Commerce Department had housing starts up 2.8% in January. Industrial production rose by 1.0% last month, powered by a gain of almost 5% in the auto industry.⁴

Great days for oil, gold & copper. Oil futures jumped 7.66% last week, putting prices at $79.81 on the NYMEX at Friday’s close. Gold settled at $1,121.30 after a 2.92% weekly advance. Copper trumped that with a 9.03% weekly gain, its best week since last July; copper prices settled at $3.36 per pound Friday.⁵ In today’s real estate market, that might make your plumbing worth more than your house. That just kind of warms your heart doesn’t it?

More big gains on Wall Street. Across four market days, the S&P 500 rose 3.13% to 1,109.17, the NASDAQ gained 2.76% to 2,243.87, and the Dow rose 3.00% to close at 10,402.35 on Friday.¹

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 2/19/10)^1,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be

invested into directly. These returns do not include dividends.

Riddle of the week. In 15 minutes, a dress will dry on a clothes wire. How long would it take you to dry five dresses?

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. The 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.

Citations.

1 cnbc.com/id/35482890 [2/19/10]

2 marketwatch.com/story/core-inflation-drops-on-falling-housing-costs-2010-02-19 [2/19/10]

3 marketwatch.com/story/producer-prices-soar-14-on-energy-costs-2010-02-18 [2/18/10]

4 google.com/hostednews/ap/article/ALeqM5gNiyJ905Ho0Ur96V2TQhsBX19lGwD9DU53SG1 [2/17/10]

5 blogs.wsj.com/marketbeat/2010/02/19/data-points-energy-metals-226/ [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F19%2F09&mode=add&symb=DJIA [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F05&mode=add&symb=DJIA [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F00&mode=add&symb=DJIA [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F19%2F09&mode=add&symb=COMP [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F05&mode=add&symb=COMP [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F00&mode=add&symb=COMP [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F19%2F09&mode=add&symb=SPX [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F05&mode=add&symb=SPX [2/19/10]

6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F18%2F00&mode=add&symb=SPX [2/19/10]

7 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [2/19/10]

7 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [2/19/10]

8 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

www.youtube.com/watch?v=w5-TxwTyErQ

Quote of the week. “Reputation is what other people know about you. Honor is what you know about yourself.”– Lois McMaster Bujold

4Q GDP: 5.7%: That is the preliminary reading from the Commerce Department, and that is the best reading since 3Q 2003. Economists pointed out that much of the increase reflected companies rebuilding their inventories rather than personal spending.¹

Consumers think positive. The final University of Michigan/Reuters consumer sentiment index for January improved 1.6 points to 74.4. Economists polled by Briefing.com felt it would come in at 73.0.²

New concerns about home sales. Both new and existing home sales retreated markedly in December with the threat of federal tax credits being pulled. Existing home sales fell by 16.7% in that month while new home sales slipped 7.6%. In annual terms, residential resales for 2009 were about 5% higher than 2008 totals. Just 373,000 new single-family homes were sold in 2009, the fewest since the government began tracking sales stats in 1963.^3,4

A $5K hiring rebate? Last week, President Obama pitched the idea of giving companies of all sizes a $5,000 credit to offset payroll taxes for each new worker, up to a $500,000 ceiling. Net new hires (increasing employee hours) and salary increases could also make companies eligible. A proposal to enact the plan is now in the Senate.⁵

Dollar hits highest level since August. The buck went on an intraday climb to 90.92 yen and the euro traded below $1.39. The new GDP report helped.⁶

So long to a subpar month. Stocks retreated in the last week of January, with the Dow ending the month at 10,067.33, the NASDAQ at 2,147.35 and the S&P 500 at 1,073.87.⁷

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 1/29/10)^7,8,9,10

Indices are unmanaged, do not incur fees or expenses, and cannot be

 invested into directly. These returns do not include dividends.

Riddle of the week. A plastic bottle filled with cola weighs one liter. What do you need to add to it to make it weigh less than two ounces?

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

Last week’s riddle: A glass of water has an ice cube in it. If the ice cube fully melts, will the water level increase, decrease or remain the same?

Last week’s riddle answer: The water level will stay the same as the ice cube just displaces its weight.

___________________________________________________________________

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If you would like us to add them to our list, please reply with their address
and we will contact them and ask for their permission to be added.

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. The 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.

Citations.

1 pbs.org/newshour/rundown/2010/01/us-economy-expands-at-fastest-rate-in-six-years.html [1/29/10]

2 money.cnn.com/2010/01/29/markets/markets_newyork/ [1/29/10]

3 money.cnn.com/2010/01/27/real_estate/new_home_sales/ [1/27/10]

4 nytimes.com/2010/01/30/business/economy/30charts.html [1/29/10]

5 time.com/time/business/article/0,8599,1957663,00.html?xid=rss-topstories [1/29/10]

6 cnbc.com/id/35136215/ [1/29/10]

7 cnbc.com/id/35017549 [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F29%2F09&mode=add&symb=DJIA [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F05&mode=add&symb=DJIA [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F00&mode=add&symb=DJIA [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F29%2F09&mode=add&symb=COMP [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F05&mode=add&symb=COMP [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F00&mode=add&symb=COMP [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F29%2F09&mode=add&symb=SPX [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F05&mode=add&symb=SPX [1/29/10]

8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F28%2F00&mode=add&symb=SPX [1/29/10]

9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [1/29/10]

9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [1/29/10]

10 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]