J.L. Davis Weekly Update 6/13/2011

Quote of the Week:
"I talk and talk and talk, and I haven't taught people in 50 years what my father taught by example in one week."
Mario Cuomo

This coming week, Jeremy and Beth are expecting the arrival of their first born little girl, Sloane Elizabeth Davis. Though we don't know exactly when Sloane will choose to arrive, we do know one thing, Father's Day won't be quite the same for Jeremy from now on. And neither will anything else.

This weekend, if we're lucky, we'll all acknowledge our Dads, living or passed, and maybe hear from our progeny. If we're really lucky, we'll have our families around us. After viewing the obligatory new neckties, or gadgets, we might enjoy a nice meal prepared just for us. Then, us Dads will probably relax and do what it is that we always do - contemplate things a bit.

In writing this, I've started already. On personal reflection this week, with Sloane waiting to appear, it's fun remembering both of those seminal moments when I actually became a father. The marvel I felt in the presence of those little ones the first time. I remember being struck with the overwhelming love, and the feeling that I had to become the best person I could be, not for me, but for them.

Here's hoping the Father's Day in your family is a special one, too. We'll keep you posted on the developments in the Davis family.**

The Markets

Another painful week, capped off by Friday's 172-point drop in the Dow, extended equities' slow, steady slide. Over the last six weeks, the S&P has fallen 6.8%, while the Dow is down 6.7%. The Nasdaq and Russell 2000 have fared even worse, losing almost 8% and
10% respectively since the beginning of May; along with the Global Dow, both have now given up all their year-to-date gains. Meanwhile, the yield on 10-year Treasuries remained under 3%.

Last Week's Headlines

• Consumer debt rose in April at an annualized rate of 3.1%, according to the Federal Reserve. The increase was the seventh consecutive monthly increase, and was primarily the result of higher non-revolving credit such as car, student, and personal loans rather than credit card debt, which fell during the month.
• Four of the Federal Reserve's twelve districts reported slowing economic growth over the last two months, but the rest saw continuing moderate expansion; the Dallas region even recorded accelerating growth, according to the Fed's "beige book" report. However, in the "no surprises here" department, real estate and oil prices continued to be a problem nationwide.
• OPEC members failed to reach an agreement on whether to increase oil production to compensate for the Libyan conflict's impact on that country's oil output. However, Saudi Arabia reportedly said it would increase its production to ensure adequate global supplies.
• The U.S. trade deficit fell to its lowest level of the year in April, according to the Bureau of Economic Analysis. Reduced demand for oil--the result of higher prices and a weaker economy--coupled with supply-chain disruptions caused by Japan's multiple disasters cut imports, while exports increased. The combination cut the trade deficit to $43.7 billion from $46.8 billion in March.
• As the U.S. continued to live on borrowed time with regard to its debt ceiling, Fitch Ratings warned that the nation's debt would be put on watch for a downgrade if the issue isn't resolved by early August.

Eye on the Week Ahead

Inflation numbers will be closely watched, while retail sales will suggest the consumer's willingness to spend. The quarterly options expiration at week's end could bring volatility.
Key dates and data releases: wholesale inflation, retail sales (6/14); consumer inflation, industrial production, international capital flows
(6/15); housing starts (6/16); quadruple witching options expiration, leading economic indicators (6/17).


Data source: 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. 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 Forefield Inc. Copyright 2011