www.youtube.com/watch?v=Qxl0_sUbRus

Quote of the week. “Nothing in life is to be feared. It is only to be understood.”– Marie Curie

Reforms become law. President Obama signed his long-envisioned health care reforms into law on March 23, a truly dark day for America and proof that we have long since turned the corner from being the land of the free.  Obama will sign the amendments to the bill into law on March 30. Most of the major changes will take effect after the next Presidential election, when health insurance will become compulsory for nearly all Americans. Those that will be excluded from this will be Native American’s, Inmates and those with religious objections. I think we are going to see a lot more with religious objections. After all, if there is one thing that politicians have taught us is that it all depends on your definition of the word “religious.” Right President Clinton? Of course, new taxes will help fund the reforms which means that nothing you hold sacred is safe from the government, because after all, any money that we get to keep after a hard days work is a privilege from the state and federal governments, not a God given right.^1,2,3

But let’s talk about some good news. Home sales still underwhelming. I seam to remember a campaign slogan, it is the economy stupid.  Anyway, existing home sales dipped 0.6% for February while new home sales slipped 2.2% to another all-time low (although data only goes back to 1964). So were there any positives in the new Commerce Department report? Yes. The median sale price of new homes was about 5% above where it was a year ago.⁴

A gain in durable goods orders. The 0.5% rise in February was accompanied by news that durable goods inventories increased by 0.3%, the best such gain since December 2008.⁵

USDI surges north. When the U.S. Dollar Index is up 1.10% for the week (and 4.82% for the month), what happens with gold and oil? Well, gold and oil prices respectively fell 0.30% and 1.20% last week, with crude futures at exactly $80.00 per barrel at Friday’s close on the NYMEX.⁶

S&P 500 climbs 5.62% in 4 weeks. Stocks had another fine week from March 22-26, with the NASDAQ advancing 0.87%, the Dow 1.01% and the S&P 500 0.58% as part of a great 4-week run.⁷

Now the riddle of the week:

Last week’s riddle: Is there a number made of eleven tens of thousands, eleven thousands, eleven hundreds and eleven units? If so, what is it??

The answer: Yes -- the number is 122,111. 110,000 + 11,000 + 1,100 + 11 = 122,111

This week’s riddle. Two-and-a-half artists spend two-and-a-half hours painting two-and-a-half models on two-and-a-half canvases. How many artists would be necessary to paint 24 models on 24 canvases in 20 hours?

www.youtube.com/watch?v=5P7Uz-Wt-CA

Quote of the week. “Getting people to like you is merely the other side of liking them.”– Norman Vincent Peale

Pete Mitchell here. I’ve got your weekly economic update for march 15^th, but before I get to that, let me just share with you how disgusted I am with our state and federal government. As you may or may not know, tax returns for corporations are due today. As I was doing these for my companies, I always like to through the numbers into my personal return to see what the damage is.

All I can say is that it is time for a revolution. This country was founded in part because our fore fathers where sick of having their livelihood stolen from their families.

My hard work should not be used against me and taken by a corrupt system. I am furious at our tax system and the thief that goes on by our state and federal governments.

Let me get off that soapbox before it is too late. 

Good news at the cash register. Commerce Department data showed retail purchases up by 0.3% in February despite all the snow, sleet and rain, and 3.9% above where they were a year earlier. Most retail sales sectors had month-over-month increases.¹

Signs of rising demand. Business sales increased by 0.6% in January (business inventories were flat). January 2010 business sales were 6.8% better than a year before. Other Commerce Department data shows wholesale sales jumping by 1.3% in January and wholesale stockpiles decreasing by 0.2%.^2,3

Consumer confidence wavers. The preliminary Reuters/University of Michigan consumer sentiment survey is in for March. The index reads 72.5, down from a final 73.6 in February. However, things have improved notably from March 2009 when the gauge stood at 57.3.⁴

Gold & oil retreat. Gold had its poorest week since mid-January as prices dipped 2.93% last week to settle at $1,101.50 Friday on the COMEX. Oil fared better, losing just 0.32% across five days. Oil futures were $81.24 a barrel at Friday’s NYMEX close.⁵

Nice gains on Wall Street. Stocks pulled off weekly gains during a stretch of five trading days with only mild volatility. The DJIA advanced 0.55% last week, while the S&P 500 rose 0.99% and the NASDAQ gained 1.78%. The S&P 500 closed Friday at a 17-month high: 1,149.98.⁶

Now for the riddle of the week.

Last week’s riddle: What should the last entry be in the following sequence of numbers … 9|18, 8|46, 7|94, 6|63, 5|52, 4|__?

The answer: Each sequence represents the square root of a number with digits reversed (9 is the square root of 81, 8 is the square root of 64, and so on). So the missing number is 61 (4 is the square root of 16)

It looks like we have a ringer with Debbie Miller. She racks up another win. Last time she ventured a guess was to win movie tickets. It looks like that might be her hot button.

Presented by Pete Mitchell

www.youtube.com/watch?v=5Y1-hNPToBk

Quote of the week. “A person will be just about as happy as they make up their minds to be.”– Abraham Lincoln

Let’s kick of this update with Jobs information. 9.7% and holding. The Labor Department reported only 36,000 net job losses last month, so the jobless rate was flat for February, unless you were one of the 36,000 that lost their job, then it was pretty close to 100%. Economists had widely assumed the unemployment rate would inch upward due to winter weather affecting construction and retail industries.¹ As I’ve been saying for a while, we are not out of this, not even close.

There was good news this past week, there was a major boost in factory orders. They rose 1.7% in January, according to Commerce Department data. This is the best number in four months and follows a 1.5% advance for December.²

Pending home sales sink. What does the 7.6% fall for January indicate? It would seem to signal that the extended tax credits have become less magnetic to buyers. Let’s hope sales hold up this spring as the Fed ceases its purchases of mortgage-linked securities.³

Gold, copper, oil go higher. Copper prices rose 4.10% last week to $3.41/lb. Gold gained $16.50 last week (1.48%) to settle at $1,134.80 an ounce Friday. Crude futures rose $1.84 last week (2.31%) to $81.50 per barrel on the NYMEX at Friday’s close.⁴

March of the bulls? Wall Street was buoyed by the unchanged jobless rate on Friday, and the Dow climbed 122.06 to cap off its 2.33% weekly gain. The S&P 500 did even better: a 3.10% rise on the week to 1,138.70 at the closing bell on Friday. The NASDAQ? It advanced 3.94% on the week to 2,326.56.⁵

Now for the Riddle of the Week.

Last week’s riddle: Al gives Jane three boxes, one labeled DIAMONDS, one labeled PEARLS and one labeled DIAMONDS OR PEARLS. He tells her that all three boxes are labeled incorrectly and that one box contains diamonds, one pearls and the other emeralds. Al then tells Jane that if she can guess the contents of any box without opening it, she can keep the contents. How many boxes must Jane open to do this, and/or how many boxes can she keep?

The answer: Jane keeps everything and does not need to open any box. Since each box is labeled incorrectly, the box labeled “Diamonds or Pearls” must contain emeralds. Therefore the box labeled “Pearls” must contain diamonds, and the box labeled “Diamonds” must contain pearls.

Way to go to Mike Hathaway. I think this gives you win number 2!

This week’s riddle is: What should the last entry be in the following sequence of numbers … 9|18, 8|46, 7|94, 6|63, 5|52, 4|__?

I think this riddle is worth 2 unrestricted movie passes at any Regal theater. Leave your answer on the blog below and the first to get it correct, wins!

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

The month in brief. We saw a very pleasant 180º from January. New M&A action, nice corporate profits and the possibility of a rescue for Greece helped the market. By the end of February, 457 companies in the S&P 500 had issued 4Q earnings reports, with earnings per share about 154% above a year ago.¹ The S&P 500 had its best February since 1998, rising to 1,104.49.²

Domestic economic health. Consumer spending increased, even though consumer confidence didn’t. Personal spending advanced by 0.5% in February, and the Commerce Department also noted a 0.7% gain in inflation-adjusted purchases of durable goods and a dip in the personal savings rate to October 2008 levels. It suggested consumers were shopping enthusiastically.³ Yet consumer confidence indices went south: the Reuters/University of Michigan index went from 74.4 to 73.6 and the Conference Board barometer went from 46.0 from 55.9.⁴

How about the manufacturing and service sectors? The February data showed more growth. ISM’s manufacturing index came in at 56.5, and its service sector index read 53.0 (up from 50.5 in January.)^5,6

As for consumer and producer prices, something really notable happened: core CPI fell by 0.1% in January. It was the first monthly decline since 1982. Overall CPI rose 0.2% for January. PPI rose 1.4% in January, 0.3% factoring out food and energy costs.⁷

In Washington, it appeared to be reconciliation or nothing when it came to health care reform. (Since 1980, reconciliation has been used 22 times in Congress and succeeded 19 times, one of those results being the Bush administration tax cuts.)⁸ Sen. Harry Reid (D-NV) introduced a jobs bill that would exempt employers from payroll taxes on new hires for the rest of 2010. Its fate was uncertain in the House.⁹

In February, the Federal Reserve took a small but notable step away from the emergency tactics put in place during the recession. It unexpectedly raised the discount rate from 0.50% to 0.75% – a little move that luckily didn’t send a big shock wave through the stock market.¹⁰

Global economic health. Would the Eurozone ride to the rescue of Greece? At the close of the month, it formally asked Greece for a plan to control its debt. Meanwhile, some economists speculated that the nation would be bailed out by some kind of unprecedented EU action. The respected Markit Economics PMI survey showed manufacturing increasing in Europe at the fastest rate in over two years; Eurozone joblessness also ticked down 0.1% to 9.9% in February.¹¹

Japan’s jobless rate was 4.9% in February, down from 5.1% a month earlier. Its GDP, which had been flat in 3Q 2009, came in at +1.1% for 4Q 2009. New data showed that China’s economy grew by 8.7% in 2009. Impressive? Certainly. Yet look at Taiwan: we learned last month that its economy was growing at an annualized rate of 18.0% during 4Q 2009.^12,13,14

World financial markets. It was truly a mixed bag last month – some indices had great gains, others big losses. Some gains in the Asia-Pacific region: Shanghai Composite, +2.10%; Hang Seng, +2.42%; Australia All Ordinaries, +1.18%; Sensex, +0.44%. Losses in that region: South Korea’s Kospi, -0.49%; Nikkei 225, -0.71%. In Europe, the FTSE 100 gained 3.20% while the DAX and CAC 40 respectively declined -0.18% and -0.82%. Russia’s always volatile RTSI was -4.51%. The best-performing and worst-performing indices of the month were the benchmark indices of Mexico (+4.09%) and Turkey (-9.05%). The MSCI Emerging Markets Index declined by 0.27% in February, while the MSCI World Index gained 1.77%.^2,15

Commodities markets. The broad commodities market staged a rebound last month – and the dollar kept strengthening. The U.S. Dollar Index gained another 1.12% in February to go +3.20% on the year. On the NYMEX, the big mover was oil, which had its finest month since May 2009, advancing 9.29%to erase some severe January losses. Other fuels did well last month: RBOB gasoline futures gained 8.64% and diesel fuel gained 8.00%.²

In metals, copper shot up another 7.58%. Other metals logged nice gains in February: gold rose 3.31%, silver 1.91%, platinum 2.25% and palladium 5.11%.²

It was winter, and when it came to crops, there was volatility. Pork bellies performed better than any other notable commodity in February, posting a 12.02% gain. Other commodities had banner months: soybean oil, +9.82%; wheat, +9.55%; copper, +7.58%. Sugar futures cratered, dropping 21.07% on the month. Orange juice was +5.51% last month and +11.27% through the first sixth of 2010.²

Housing & interest rates. Snow or no snow, the January numbers weren’t pretty. Existing home sales fell 7.2% from the previous month – on the bright side, they were 11.5% above January 2009 figures.¹⁶ New home sales dropped 11.2% to a record low adjusted annualized sales rate of 309,000 units – and that was a 6.9% descent from year-ago levels.¹⁷

We all knew mortgage rates would rise; it was just a question of when. Last month turned out to be “when”. By the end of February, rates on 30-year FRMs averaged 5.05%. As for averages on other kinds of mortgages, the percentages were as follows: 15-year FRMs were averaging 4.40%, rates on 5-year hybrid ARMs were averaging 4.16% and rates on 1-year ARMs averaged 4.15%.¹⁸

Oh yes, Fannie Mae asked for $15.3 billion more from the Treasury to keep its net worth in the plus column. It also announced plans to buy up as many as 200,000 delinquent home loans out of mortgage-backed security trusts in March.^19,20

Major indexes. Stocks made up a lot of ground last month. It was not only the S&P 500’s best February in 12 years, but also the NASDAQ’s best February since 2000. At the end of February, the real yield on the 10-year TIPS was at 1.48% – right where it was at the end of 2009.^2,21

March outlook. We had some really nice signals at the start of the month – consumer spending increasing by the biggest monthly amount since mid-2008, a mid-50s ISM manufacturing index reading, and some strong M&A activity, all welcome after some very poor numbers concerning housing and consumer confidence in preceding days. The market ultimately decided to pay attention to mergers and earnings in February and take some of its collective mind off economic challenges. Will that trend continue this month? The markets have weathered the sovereign debt crisis nicely, and seem resilient enough to handle all but the biggest geopolitical shocks. Worth noting: at the start of March, the Dow, NASDAQ and S&P 500 had each crested their 50-day moving averages.²²

The major economic releases for the balance of March: January factory orders and pending home sales (3/4), February’s jobless data (3/5), January wholesale inventories (3/10), February retail sales, January business inventories and the University of Michigan’s February consumer sentiment index (3/12), February industrial production (3/15), February housing starts and building permits (3/16), February PPI (3/17), February CPI and the Conference Board’s February leading indicators (3/18), February existing home sales (3/23), February new home sales and durable goods orders (3/24), February consumer spending (3/29), the Conference Board’s February consumer confidence survey and the Case-Shiller home price index for January (3/30), and February factory orders (3/31).

Riddle of the month. A rope ladder hangs over the side of a docked ship and dips into the water. The rungs are 15.75″apart, all equally distanced. At low tide, two of the ladder’s rungs are underwater. At high tide, which is exactly 3.5′above low tide, how many rungs will be underwater?

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

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=k2aFW4yQ8Ac

Quote of the week. “Live out of your imagination, not your history.”– Dr. Stephen Covey

Retail sales increase. Friday, the Census Bureau estimated retail sales up 0.5% for January, with a 4.7% year-over-year gain from January 2009. Of course it really wasn’t that hard to beat 2009’s numbers. Do you remember 2 Christmas’s ago? We were all pretty sure the world was coming to an end? Anyway, the half-percent gain topped the +0.3% forecast of economists polled by Briefing.com.^1,2

How are things off the sales floor? According to the Commerce Department, wholesale inventories shrank by 0.8% in December. Factory inventories were reduced by 0.1%, and retail stockpiles stayed flat (so to speak). U.S. companies had 1.26 months supply of goods on hand, the lowest figure since June 2008. You can hear factories humming.³

Consumer sentiment declines a bit. February’s preliminary Reuters/University of Michigan index of sentiment came in at 73.7. Late last month, the index was at 74.4. On the other hand, it was down at 56.3 one year ago. The gauge of current economic conditions hit 84.1, the highest mark in 23 months.⁴

A quick check on gold, copper & oil. They all advanced last week. Gold gained $37.30 over five days to close Friday at $1,089.50 an ounce (a 3.54% weekly gain). Copper rose 7.88% across its best week since July. Crude oil futures finished at $74.13 per barrel on the NYMEX Friday after a 4.13% weekly gain.⁵

NASDAQ gains 2%. That index outperformed the DJIA and S&P 500, rising 1.98% across a choppy yet winning week for all three major U.S. indices. The NASDAQ closed Friday at 2,183.53. The S&P 500 and DJIA both ascended 0.87% last week to finish respectively at 1,075.51 and 10,099.14 Friday. The U.S. stock markets will be closed February 15 for the Presidents’ Day holiday.⁶

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 2/12/10)^6,7,8,9

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

invested into directly. These returns do not include dividends.

Now the part everyone has been waiting for, the riddle of the week.

Last week’s riddle: A family has a mother, father and four daughters. Each daughter has one brother. How many people are in the family?

Answer: Seven people. Each of the daughters have one brother, there is not one brother for each daughter.

Congratulation to Stephen Shepard who was not the first to get the answer correct, but was the first to get the answer correct and follow directions. You’ll be getting that Starbucks gift card in the mail shortly.

Now for this week’s riddle of the week. I am used to bat with, yet I never get a hit. I am near a ball, yet it is never thrown. What am I?

If you know the answer, post it below on this blog and I’ll let you know if you have won this week’s prize.

Citations.

1 census.gov/retail/marts/www/marts_current.html [2/12/10]

2 blogs.barrons.com/stockstowatchtoday/2010/02/12/january-retail-sales-beat-sp-futures-down/ [2/12/10]

3 businessweek.com/news/2010-02-12/inventories-at-u-s-companies-unexpectedly-fall-as-sales-rise.html [2/12/10]

4 reuters.com/article/idUSTRE61B2XI20100212 [2/12/10]

5 blogs.wsj.com/marketbeat/2010/02/12/data-points-energy-metals-222/? [2/12/10]

6 cnbc.com/id/35371644 [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F12%2F09&mode=add&symb=DJIA [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F05&mode=add&symb=DJIA [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F00&mode=add&symb=DJIA [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F12%2F09&mode=add&symb=COMP [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F05&mode=add&symb=COMP [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F00&mode=add&symb=COMP [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F12%2F09&mode=add&symb=SPX [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F05&mode=add&symb=SPX [2/12/10]

7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=2%2F11%2F00&mode=add&symb=SPX [2/12/10]

8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [2/12/10]

8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [2/12/10]

9 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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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]