Washington, and Your Weekly Update

This Week's Quote:
“The alternate domination of one faction over another, sharpened by the spirit of revenge natural to party dissention, which in different ages & countries has perpetrated the most horrid enormities, is itself a frightful despotism.”~George Washington


J.L. Davis Thoughts This Week:

Wooden teeth or not, Mr. Washington appeared to believe that certain things could really put a bite on the Nation.

George’s warnings were made quite clear in his Farewell Address in 1796. This beautiful missive, written to “Friends and Citizens” is still read on the floor of the U.S. Senate annually (and you can find it with the link below). In it, Washington urges citizens to set aside sectional issues and political factionalism, as well as pay heed to other dangers, in order to further the common interests of the nation.

Artfully stated, Washington drew on the talents of both James Madison and Alexander Hamilton in the drafting and editing of the address. A few snippets:

On the party system: "It serves to distract the Public Councils, and enfeeble the Public Administration....agitates the Community with ill-founded jealousies and false alarms; kindles the animosity of one....against another....it opens the door to foreign influence and corruption...thus the policy and the will of one country are subjected to the policy and will of another."

On the benefits of a national government: "The unity of government...is a main pillar in the edifice of your real independence...of your tranquility at home, your peace abroad; of your safety; of your prosperity; of that very liberty which you so highly prize."

On religion: "Where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths, which are the instruments of investigation in Courts of Justice?

On debt: "...cherish public credit. One method of preserving it is to use it as sparingly as possible...avoiding likewise the accumulation of debt....it is essential that you...bear in mind, that towards the payments of debts there must be Revenue, that to have Revenue there must be taxes; that no taxes can be devised, which are not...inconvenient and unpleasant..."

On foreign relations: "It is our true policy to steer clear of permanent alliances with any portion of the foreign world..."

On the military: "...avoid the necessity of those overgrown military establishments, which, under any form of government, are inauspicious to liberty, and which are to be regarded as particularly hostile to …Liberty."

In that we prefer to stay “apolitical”, we leave it to others to decide the political bent of Washington’s admonitions. What we see is pretty clear: the father of our country wanted one people, united and free. It seems wise to remember the brilliance and foresight of the founders and be thankful we live in the United States. It’s a great country, isn’t it?**

http://www.senate.gov/artandhistory/history/minute/Washingtons_Farewell_Address.htm
http://www.gpo.gov/fdsys/pkg/GPO-CDOC-106sdoc21/pdf/GPO-CDOC-106sdoc21.pdf
http://www.freerepublic.com/focus/f-news/2068315/posts
http://www.earlyamerica.com/earlyamerica/milestones/farewell/


The Markets

As the East Coast struggled to recover from Sandy, financial markets came back from their two-day hiatus down but not out. Despite some volatility on Thursday and Friday, domestic indices ended the week essentially flat. Meanwhile, a stronger U.S. dollar contributed to Friday's decline of roughly $38 an ounce in the spot price of gold

Last Week's Headlines

• Estimates of the damage done by last week's superstorm, including not only property damage but lost revenue from business activity, reached as high as $50 billion. Some economists warned that Sandy's economic impact could cut as much as 0.5% from the nation's gross domestic product in the fourth quarter, though rebuilding efforts also could add to GDP in subsequent quarters.

• The U.S. economy added 171,000 jobs in October and job growth in the previous two months was revised upward, according to the Bureau of Labor Statistics. However, the unemployment rate ticked up slightly from 7.8% to 7.9%, in part because more people once again sought to enter the labor force.

• There was more good news from the housing market as home prices continued to rise in August, though at a slightly slower pace than the month before. The 0.9% increase in the S&P/Case-Shiller 20-city index, which followed July's 1.6% increase, put prices at their highest level since September 2010, and up 2% from August 2011.

• Consumers spent more in September, according to the Commerce Department, but they may have been dipping into their savings to do so. While spending was up 0.8%, the personal savings rates fell to 3.3% of income--the third straight month of declines in the savings rate. Meanwhile, personal incomes were up 0.4%, although they were essentially unchanged after accounting for taxes and inflation.

• U.S. manufacturing also saw some encouraging signs. New factory orders grew more during September--4.8%--than in any month in more than a year, according to the Commerce Department. Business productivity rose 1.9% in the third quarter--about the same pace as in Q2--and the number of hours worked was up 1.3%. Almost all of the gains came in the services sector rather than manufacturing, which has been hurt by reduced global demand. However, in October, the Institute for Supply Management's index of manufacturing activity saw a second month of accelerating expansion, rising to 51.7% (anything above 50% represents growth).


Eye on the Week Ahead

Let the games begin: Financial markets are likely to begin assessing how the election results might affect the January 1 fiscal cliff and renewed debate over the debt ceiling. Also, both the European Central Bank and Bank of England will meet, and the Greek parliament will vote on fresh austerity and budget measures.

Key dates and data releases: U.S. services sector (11/5); balance of trade (11/8).


Data sources: Includes data provided by Brounes & Associates. 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.

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 2012