Free Market Update for the Week of June 21, 2010

Presented by Mark Lund, The Investor Coach.

QUOTE OF THE WEEK:
“The measure of success is not whether you have a tough problem to deal with,
but whether it is the same problem you had last year.”– John Foster Dulles

Minor deflation takes pressure off the Fed.
The Consumer Price Index retreated 0.2% for May, following a 0.1% decline in April. Energy prices fell 2.9% last month, leading the CPI downward. (Core CPI did advance 0.1% in May.) Across the last 12 months, the CPI has risen 2.0%, with core CPI up 0.9% – the smallest annual gains since 1966. While May’s wholesale prices were 5.3% above levels of a year ago, the Labor Department said that PPI fell 0.3% on the month, which was less than the 0.5% reduction forecast by economists polled by Reuters. Translation: the Federal Reserve has no compulsion to raise interest rates.^1,2

Will gold hit $1,300 this summer?
The precious metal got a little closer to that psychologically significant benchmark on Friday. Gold settled at a new record close – $1,258.30 an ounce. Since the end of 2009, gold prices have gained almost 15%.³

As tax credits expire, housing starts decelerate.
In real estate, the year-over-year numbers often tell the real story, rather than the “weather” indicated by the month-to-month statistics. So we should be encouraged by the fact that May’s housing starts were 7.8% above May 2009 levels. Still, they were down 10.0% from April to their lowest level in five months. The Commerce Department also reported 17.2% fewer permits for single-family home construction in May.⁴

Industrial output & leading indicators rise.
Factory production went north by 1.2% for May. The Conference Board’s leading indicators index gained 0.4% for May after a flat April. Across the last six months, the CB index has seen 3.9% growth.^2,5

Stocks move back into positive territory.
The S&P 500 closed the week at 1,117.51, the DJIA at 10,450.64 and the NASDAQ at 2,309.80. All three marquee U.S. indices went back to being positive YTD last week.⁶

Last week’s riddle: Four cars approach an intersection with four-way stop signs simultaneously, each car coming from a different direction. After stopping, the drivers all accelerate at the same time. However, there is no accident. How is this possible?

Last week’s riddle answer: All four cars make right turns.

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Citations.
1 – marketwatch.com/story/us-may-cpi-falls-02-on-lower-gas-prices-2010-06-17-83600 [6/17/10]
2 – cnbc.com/id/37725637/ [6/16/10]
3 – cnbc.com/id/37768097 [6/18/10]
4 – voices.washingtonpost.com/economy-watch/2010/06/housing_starts_down_in_may.html [6/16/10]
5 – marketwatch.com/story/may-leading-indicators-rise-slower-growth-seen-2010-06-17-104400 [6/17/10]
6 – usatoday.com/money/default.htm [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=6%2F18%2F09&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=6%2F18%2F09&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=6%2F18%2F09&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=6%2F17%2F05&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=6%2F17%2F05&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=6%2F17%2F05&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=6%2F19%2F00&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=6%2F19%2F00&x=0&y=0 [6/18/10]
7 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=6%2F19%2F00&x=0&y=0 [6/18/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [6/18/10]
8 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [6/18/10]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative’s Broker/Dealer. This information should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. www