J.L. Davis Market Update 6/21/2010

QUOTE OF THE WEEK:

"Many of life's failures are people who did not realize how close they were to success when they gave up." – Thomas Edison

THE MARKETS:

With June shaping up better than May left off, investors dipped their toes back in the tepid waters to help the markets carve out their second straight week of gains. After shedding almost 14% in the past 6 weeks, the S&P has gained back just over 6% in the last two. For the week, the Dow gained 2.3%, the S&P gained 2.4% and the Nasdaq gained 3%.

Working in favor of the rally, we have a variety of technical factors, historical precedents, and signs of a recovering U.S. economy. Working against the rally, we have the European debt situation, fallout of the BP oil spill, poorly performing labor and housing markets, and geopolitical concerns. Basically, a mixed bag.

When you combine the factors above with the knowledge that we are entering the summer doldrums – the time of year when market pros go on vacation and trading volume drops – it’s easy to understand why many analysts and traders predict that any gains in the weeks ahead are likely to be mild. Lower volume levels also tend to intensify volatility and point to less conviction behind trading moves. Scrutiny of current market and economic conditions highlights the need to proceed with caution – good investment advice for almost any time period.

Key things to watch this week:
Tuesday – Existing Home Sales
Wednesday – New Home Sales, FOMC Meeting Announcement
Thursday – Durable Goods Orders, Jobless Claims
Friday – GDP, Consumer Sentiment, Corporate Profits

HEADLINES:

BP's new strategy to clean up its image and the Gulf Coast is to hand the job from its British CEO, widely criticized for insensitive comments and yachting amid the crisis, to its American managing director, Bob Dudley.

Oil and gasoline prices both edged up Friday, extending gains for the week as the driving season picked up speed and more motorists hit the road. Pump prices rose 1.2 cents to a national average of $2.719 a gallon, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 1.5 cents in the past week but are still 13.3 cents less than a month ago. A year ago, the average price was $2.685 per gallon.

Despite the volatile global economy, many households gained or regained millionaire status last year, according to a new report by the Boston Consulting Group. The study finds global wealth increased 11.5 percent in 2009, to $111.5 trillion, just short of 2007 levels. When measuring assets under management -- cash deposits, money market funds, listed securities, and onshore and offshore assets, but not wealth attributed to investors' own businesses, residences, or luxury goods -- the U.S. continued to lead with more than 4.7 million "millionaire households," followed by Japan and China.

The Great Recession drove more families into homeless shelters in 2009 than the previous year, a new federal report has found. Some 170,000 families needed shelter last year, up from 159,000 in 2008, according to an annual survey from the Department of Housing and Urban Development. There were 535,000 people in those families.
With one week down and one week to go on negotiations melding the two Wall Street reform bills, lawmakers have a lot of tough decisions ahead. House and Senate negotiators have set a goal to finish work on reconciling the bills – aimed at preventing the next financial crisis – before President Obama heads to Canada on Friday for two major summits of world leaders. So crunch time is on.

Sources:
Marketwatch
The Wall Street Journal
OnlineBarrons
CNN Money
http://www.google.com/hostednews/ap/article/ALeqM5jdiMmrn-Q-yOTqtE4YYAbKBV6ygQD9GF941G0
http://www.news4jax.com/news/23942638/detail.html
http://finance.yahoo.com/banking-budgeting/article/109838/countries-with-the-most-millionaires;_ylt=AvjGaCwI9e.TI5R_NjxBcepO7sMF;_ylu=X3oDMTFhbjEzZ2oyBHBvcwMzBHNlYwNwZXJzb25hbEZpbmFuY2UEc2xrA2NvdW50cmllc3dpdA--
http://money.cnn.com/2010/06/19/news/economy/Wall_Street_Reform/index.htm http://money.cnn.com/2010/06/16/news/economy/homelessness/index.htm

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.

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Past performance does not guarantee future results.

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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.