J.L. Davis Market Update 7/13/2010

QUOTE OF THE WEEK:
"A smile is an inexpensive way to change your looks." - Charles Gordy

THE MARKETS:

We are watching very closely this week for signs the economy and markets may be improving given the extreme selloff in May and June.

Powering a short term rebound last week was optimism about the second-quarter earnings season which is projected to beat expectations. Analysts currently anticipate year-over-year growth of 27%, according to the latest figures from Thomson Reuters. With a measure of confidence restored, we will be watching closely as 21 of the S&P 500 companies report this week. If the earnings season meets expectations, it will likely be good for the psyche of investors as they shift their focus away from global concerns and onto U.S. corporate fundamentals.

To some degree, last weeks modest rebound will be put to the test as the market digests a cornucopia of key economic data scheduled for release this week including retail sales, business inventories, consumer sentiment, CPI, and more. Upcoming earnings and data have the potential to either brighten or dim hopes of an ensuing recovery.

Key things we are watching this week:
Tuesday – International Trade, Treasury Budget
Wednesday – Retail Sales, Business Inventories
Thursday – Producer Price Index, Jobless Claims, Industrial Production
Friday – Consumer Price Index, Consumer Sentiment

HEADLINES:

Spain defeated the Netherlands to win the World Cup soccer final played in South Africa on Sunday, July 11, 2010. Spain won 1-0. At least several hundred thousand fans were expected to line the streets of the capital to celebrate Spain's first ever World Cup title.

Oil spewed largely unchecked once again into the Gulf of Mexico on Sunday as BP crews worked to replace a leaky cap with a new containment system they hope will finally catch all the crude from the busted well. Robotic submarines removed the cap Saturday that had been placed on top of the leak in early June. On Sunday, officials said the work was going according to plan. BP hopes the capping operation will be done within three to six days.

The average price of regular gasoline at U.S. filling stations fell to $2.7259 a gallon as crude oil prices declined and supplies of the motor fuel increased. Gasoline dropped 3.88 cents in the two weeks ending July 9, according to a survey of 2,500 filling stations nationwide by Trilby Lundberg, an independent gasoline analyst in Camarillo, California. In the same two week period, crude oil fell 3.5% and gasoline fell 4.5%.

The average rate for a 30-year mortgage fell to 4.57% last week, the lowest since Freddie Mac, the government-owned mortgage finance company, began collecting data in 1971. Borrowing costs have shrunk in recent weeks as investors concerned about the global economy have piled into the relative safety of US Treasury bonds, pushing yields down.

President Barack Obama's party could lose its House majority in this Fall's elections, his spokesman said Sunday, perhaps trying to jolt Democratic voters with the specter of GOP lawmakers rolling back White House policies. "I think there's no doubt there are enough seats in play that could cause Republicans to gain control. There's no doubt about that," press secretary Robert Gibbs told NBC's "Meet the Press."

Sources:
Marketwatch
The Wall Street Journal Online
Barrons
CNN Money
http://www.ajc.com/sports/fiesta-time-spain-celebrates-568560.html http://www.google.com/hostednews/ap/article/ALeqM5i-yfHJzPLDeBIhG5JDEF6VbaPR8QD9GT10M81
http://www.businessweek.com/news/2010-07-11/u-s-gasoline-drops-to-2-7259-gallon-lundberg-says.html http://www.ft.com/cms/s/0/ab32bc1e-8d0b-11df-bad7-00144feab49a.html http://www.google.com/hostednews/ap/article/ALeqM5iGp8jzk4pJyawzEXFnuwO5C5vBMQD9GT1J580

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

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Consult your financial professional before making any investment decision.

These are the views of Platinum Advisor Marketing Strategies, LLC, not necessarily those of J.L. Davis or Multi Financial Securities Corporation, and should not be construed as investment advice (neither of whom gives tax or legal advice). All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.