Free Market Update for the Week of July 19, 2010

Presented by Mark Lund, The Investor Coach.

QUOTE OF THE WEEK:
“To be humble to superiors is duty, to equals courtesy, to inferiors nobleness.”– Ben Franklin

Consumer prices decrease a bit; consumer sentiment drops notably
In June, the Consumer Price Index fell for the third month in a row, heading south 0.1%. Analysts thought the June reading would be flat. The Labor Department noted that core CPI did rise 0.2% last month, largely due to rent costs increasing. The last time CPI went negative for three straight months was October-December 2008. Separately, the preliminary July Reuters/University of Michigan consumer sentiment index came in at 66.5 compared to 76.0 in June – analysts expected a number in the mid-seventies.¹

Dodd-Frank bill off to Obama’s desk
The Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act Thursday by a 60-39 vote, with President Obama’s signature expected next week. The legislation is intended to protect consumers in the financial arena and prevent a repeat of TARP. Detractors think it gives too much power to regulators and might even open the door for further bailouts. House Minority Leader John A. Boehner (R-OH) called it “killing an ant with a nuclear weapon.”²

Shops sell less in June
Retail sales were down 0.5% last month, according to the Commerce Department, marking the second straight month of retreat. Additionally, business inventories gained 0.1% for June (the fifth monthly gain in a row for that category).³

Producer prices fall 0.5% last month
The trend here may look deflationary: as with the CPI, this was the third straight monthly decline. However, the Bureau of Labor Statistics noted that core PPI increased by 0.1% for June.⁴

Friday selloff means a down week
Stocks were doing well last week until the market saw the latest consumer confidence and big-bank revenue reports. As a consequence, a seven-day Dow win streak ended. The S&P 500 lost 1.21% last week, concluding Friday’s market day at 1,064.88. The NASDAQ only lost 0.79% to 2,179.05 and the DJIA slipped 0.98% last week to settle Friday at 10,097.90.⁵

Last week’s riddle: Name the number that is 5 greater than the number which is one-fifth of one-fifth of one-half of 1050.

Last week’s riddle answer: 26. (As in 1050 ÷ 5 = 525 ÷ 5 = 105 ÷ 5 = 21 + 5 = 26.)

Citations.
1 – reuters.com/article/idUSTRE65M2WK20100716 [7/16/10]
2 – latimes.com/business/la-fi-financial-reform-20100716,0,2303004.story [7/16/10]
3 – online.wsj.com/article/SB10001424052748703792704575366743747967242.html [7/15/10]
4 – theatlantic.com/business/archive/2010/07/producer-prices-fell-by-05-in-june/59799/ [7/15/10]
5 – cnbc.com/id/38282532 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%16F2%2F09&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F16%2F09&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F15%2F05&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
6 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F17%2F00&x=0&y=0 [7/16/10]
7 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/16/10]
7 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/16/10]
8 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

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.