A lot of 7's this week of December 7th; the markets and a little history

Quote of the Week:
"A gigantic fleet...has massed in Pearl Harbor. This fleet will be utterly crushed with one blow at the very beginning of hostilities...Heaven will bear witness to the righteousness of our struggle" - Rear-Admiral Ito - November 1941


A while back, we were given permission from our friend and client, Gennie, to share her recollections of Pearl Harbor as a little girl. We generously thank her, and think you may, too:

"...I was 12 years old and in the 8th grade in the fall of 1941. We were well aware of the conflict raging overseas. A number of young men we knew had joined branches of the service. My cousin who was a radio man in the Army Air Force (The Air Force was not a separate branch of the service in 1941) had been killed in a training flight over Georgia, in November.

"We had a radio that was battery operated; we listened to it briefly, each day, usually for the morning, noon and evening news casts. Sometimes on a winter night we would listen to an hour program. There were (only) 3 or 4 radios in the valley where we lived. My Dad turned on the noon news on December 7th. He called to us, "...Come and listen!" The broadcast was very noisy and the reporters very emotional, but we learned what was happening at Pearl Harbor.

"Our teacher, in our one room school house, asked my parents if the school could come to our house to hear President Roosevelt's speech on the 8th. Those who had ridden horses rode down to the house and my Dad made two trips with the pick-up to bring the rest. The teacher didn't have a car. Several neighbors also joined us.

"We sat on the floor of our living room. It was very quite even before the president begun to speak. I believe even the youngest knew our world would never be the same.

"By spring, most eligible young men were in the service. Recruiters were pleased to get recruits from rural areas, because most knew how to drive and had some knowledge of machinery. Many men from high population areas had never driven. Women and girls joined the younger boys in the fields. As rationing kicked in, it brought many changes. The ones I remember most were gasoline, tires, sugar, coffee, meat, butter and shoes. Shoe rationing did not end until the spring of 1947.

"There are many things about World War II that are not well documented. If you have not read about the submarine that shelled the west coast, do look it up I do not need to be reminded to "Remember Pearl Harbor!"

Thank you, Gennie for sharing your story. Now to the markets....**


Market Week: December 5, 2011

The Markets

Santa showed up early this year thanks to a 490-point leap in the Dow on Wednesday, fueled by holiday shoppers and six of the world's central banks. The rally helped give the S&P its best week since March 2009 and the Russell 2000, which has suffered much of the year, its fifth best week ever. It also pushed the Dow back into positive territory for the year as it once again surpassed the 12,000 mark. The Nasdaq came closer to breaking even year-to-date, and even the Global Dow saw solid gains.


Last Week's Headlines
• The addition of 120,000 jobs in November cut the unemployment rate to 8.6%. That's the biggest single monthly decline in more than
13 years, and puts unemployment at its lowest level since March 2009. However, roughly half of the decline in unemployment resulted from people leaving the workforce altogether. Including workers who are underemployed, have stopped looking for jobs, or are working part-time involuntarily, the unemployment rate is still 15.6%, though that also is lower than October's 16.2%. The Bureau of Labor Statistics said private employers added 140,000 jobs, many of them in retail, leisure/hospitality, and services, while 20,000 local, state, and federal government jobs were cut.
• The Federal Reserve agreed to make it easier for central banks in Europe, Japan, Canada, the United Kingdom, and Switzerland to swap local currencies for dollars. The move is designed to increase liquidity in the global financial system, particularly in Europe. Meanwhile, both German Chancellor Angela Merkel and French President Nicolas Sarkozy called for revisions to the European Union treaty that would permit greater fiscal oversight of member countries' budgets and impose stronger sanctions against lax fiscal discipline.
• Italy had to pay almost 8% on three-year bonds auctioned last week; it was the third time in a week when yields at auction were higher than 7%. However, French bond yields declined and Spain was able to sell out its auction of sovereign debt.
• The National Retail Federation said 17 million more shoppers hit Black Friday weekend sales this year, and they spent an average of 6.4% more than they did last year. Estimates of Cyber Monday sales also were up.
• American business productivity was up 2.3% in the third quarter, and 0.9% higher than a year ago, according to the Bureau of Labor Statistics. Both worker hours and hourly compensation were 1.4% higher than in Q3 2010; however, when inflation is factored in, hourly compensation was actually 2.3% lower than last year.
• Home prices as measured by the S&P/Case-Shiller national index remained lackluster during the third quarter. Though they were up 0.1% from the previous quarter, they were 3.9% lower than in Q3 2010. Even so, that was less than Q2's 5.8% year-over-year decline. Meanwhile, new home sales were up 1.3% in October compared to the previous month, and 8.9% ahead of October 2010.
• After attempting to rein in inflation over the last year by repeatedly increasing both interest rates and the amount of reserves its banks must hold, China unexpectedly changed course and cut its bank reserve requirement by half a percent for the first time since 2008, which could potentially stimulate lending.


Eye on the Week Ahead

German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in advance of Friday's eurozone summit to discuss tighter regulation and integration of budget oversight among eurozone countries. Also, the European Central Bank will meet Thursday, and some action on interest rates could result. Finally, after last month's disappointing results, German bond auctions will be watched.

Key dates and data releases: factory orders, U.S. services sector (12/5); international trade, consumer sentiment (12/9).



Data sources: Includes data provided by Brounes & Associates; historical performance based on data from the Stock Trader's Almanac 2011 . All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.


Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2011