Presented by Mark Lund, The Investor Coach.

Quote of the week. “Popularity: it is glory’s small change.”– Victor Hugo

“Volcker rule” worries Wall Street. Investors frowned last week as the President talked of rules that would bar banks and bank holding firms from getting involved in hedge funds or conducting proprietary trading operations. Crafted with input from former Federal Reserve chairman Paul Volcker and past SEC head William Donaldson, the new regulatory proposal is likely to face stiff opposition from Senate Republicans.^1,2

Big gain in leading indicators. The Conference Board’s index of leading indicators rose 1.1% in December, with November’s gain revised to 1.0% from 0.7%. The index, a forecast of future economic activity, rose 5.2% across the second half of 2009.³

PPI up 0.2% for December. That gain was much smaller than November’s 1.8% jump. Core producer prices (minus food and energy) were flat last month.⁴

Encouraging housing news. While new home construction decreased by 4.0% in December, housing starts were up 0.2% from a year before, marking the first year-over-year gain since March 2006. Building permits were up 10.9% in December.⁵

30-year loans back under 5%. For the third consecutive week, Freddie Mac measured a decline in average rates on 30-year FRMs: they were at 4.99% last week, down from 5.06% a week prior. 15-year FRMs averaged 4.40%. Rates on 5-year and 1-year ARMs respectively averaged 4.27% and 4.32%.⁶

A quick pullback. Besides the envisioned limits on bank risk, investors got news of China’s instruction to its banks to raise capital ratios. These factors took stocks south: the Dow closed Friday at 10,172.98, the NASDAQ at 2,205.29, and the S&P 500 at 1,091.76.⁷

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 1/22/10)^7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

Riddle of the week. A glass of water has an ice cube in it. If the ice cube fully melts, will the water level increase, decrease or remain the same?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: If it were two hours later than right now, it would be half as long until midnight as it would be if it were an hour later than right now. What time is it?

Last week’s riddle answer: 9:00 p.m.

Citations.
1 curiouscapitalist.blogs.time.com/2010/01/21/a-question-about-the-volcker-steagall-act/?xid=rss-topstories [1/21/10]
2 online.wsj.com/article/SB10001424052748703699204575017300364900036.html?mod=WSJ-Markets-LeadStory [1/21/10]
3 abcnews.go.com/Business/wireStory?id=9622837 [1/21/10]
4 money.cnn.com/2010/01/20/markets/markets_newyork/ [1/20/10]
5 money.cnn.com/2010/01/20/real_estate/housing_starts_building_permits/?postversion=2010012012 [1/20/10]
6 washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012105404.html [1/23/10]
7 cnbc.com/id/35017549 [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F22%2F09&mode=add&symb=DJIA  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F05&mode=add&symb=DJIA  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F00&mode=add&symb=DJIA  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F22%2F09&mode=add&symb=COMP  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F05&mode=add&symb=COMP  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F00&mode=add&symb=COMP  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F22%2F09&mode=add&symb=SPX  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F05&mode=add&symb=SPX  [1/22/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F21%2F00&mode=add&symb=SPX  [1/22/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml  [1/22/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml  [1/22/10]
10 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

These views are those of Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and 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. The 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.

Presented by Mark Lund, The Investor Coach.

Quote of the week. “Laughter is by definition healthy.”– Doris Lessing

How about a too-big-to-fail tax? Last week, President Obama proposed a Financial Crisis Responsibility Fee – a tax on the largest U.S. banks to help repay $117 billion in TARP losses. Would banks respond to this populist move with higher lending fees for customers? Or would executives and shareholders effectively bear the cost? One certainty: designated banks would have to pay the fee for 10 years or longer.¹

CPI slightly up, retail sales slip down. The Consumer Price Index inched north 0.1% in December. That puts it up 2.7% over the last 12 months, with core CPI up 1.8% in that span. Retail sales fell 0.3% last month, with the decline ranging across many sectors; economists polled by MarketWatch had expected a gain of 0.5%.^2,3

Cool consumer sentiment. The preliminary January Reuters/University of Michigan survey came in at 72.8. That was less than the 75.0 economists had hoped for, yet higher than the 72.5 December mark.⁴

Industrial output up again. The Federal Reserve noted a 0.6% advance in December, with utilities behind most of that gain. Industrial production has risen for six straight months.⁵

Oil back under $80 a barrel. Crude futures slipped more than 5% for the week on reduced demand projections with warmer weather. Oil prices fell 1.8% Friday to close at $78.00 per barrel on the NYMEX.⁶

Fears of fees affect the market. The second full trading week of the year was not as great as the first. The Dow lost 0.08%; the S&P 500 retreated 0.78%. Even with these losses, the Dow and S&P wrapped up their best 2-week stretches since mid-November.⁷

(Source: CNNMoney.com, ustreas.gov, bls.gov, 1/8/10)^6,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

Riddle of the week. If it were two hours later than right now, it would be half as long until midnight as it would be if it were an hour later than right now. What time is it?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: There is a kind of sweet bean that never grows in a garden. What is it?

Last week’s riddle answer: The jelly bean.

Citations.
1 csmonitor.com/USA/Politics/2010/0114/Bailout-aftermath-Obama-proposes-fee-on-big-banks [1/14/10]
2 money.cnn.com/2010/01/15/news/economy/consumer_prices_december/ [1/15/10]
3 marketwatch.com/story/retail-sales-drop-03-on-widespread-declines-2010-01-14?dist=beforebell [1/14/10]
4 smartmoney.com/investing/short-term-investing/market-update-friday-jan-15-2010-20844/ [1/15/10]
5 marketwatch.com/story/industrial-output-leans-on-a-cold-shoulder-2010-01-15 [1/15/10]
6 money.cnn.com/2010/01/15/markets/oil/ [1/15/10]
7 cnbc.com/id/34880099 [1/15/10]
8 money.cnn.com/data/markets/dow/ [1/15/10]
8 money.cnn.com/data/markets/nasdaq/ [1/15/10]
8 money.cnn.com/data/markets/sandp/ [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=DJIA [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=COMP [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F15%2F09&mode=add&symb=SPX [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F05&mode=add&symb=SPX [1/15/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F14%2F00&mode=add&symb=SPX [1/15/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [1/15/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [1/15/10]
10 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

These views are those of Peter Montoya Inc., and not the presenting Representative Broker/Dealer, and 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. The 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.

Presented by Mark Lund, The Investor Coach.

Quote of the week. “Wisdom is found only in truth.”– Johann Wolfgang Von Goethe

Jobless rate stays at 10.0%. Hopes were high on Wall Street that unemployment would fall back to single digits, but at least things stayed flat for December. The positives: the 10.0% figure was better than the 10.1% reading economists polled by Dow Jones Newswires expected, and revised November figures showed the economy actually added 4,000 jobs two months ago.¹

Service sector expands. The Institute for Supply Management’s services index came in at 50.1 for December, meaning marginal growth – and a rise from November’s 48.7 mark. ISM’s service sector employment index improved to 44.0 in December from 41.6 a month earlier.²

Interpreting pending home sales. They fell 16.0% in November, but consider some factors. A wave of buyers raced to exploit tax credits in October, so we were primed for a fall – and winter isn’t a prime time to buy or sell. In the big picture, the National Association of Realtors noted that pending home sales for November 2009 were 15.5% above levels of a year before.³

More orders, bigger stockpiles. According to the Census Bureau, factory orders went north 1.1% in November; analysts had expected about half that gain. Wholesale inventories rose 1.5% last month (best month since October 2004) and wholesale sales rose 3.3% (strongest month since January 2008).^4,5

2.68% gain to start 2010. Yes, that was how much the S&P 500 rose in the first trading week of the year. A January effect sent the NASDAQ 2.12% higher and the Dow 1.82% higher as well. Friday morning, the CBOE VIX hit its lowest level in 19 months.^6,7

(Source: CNNMoney.com, ustreas.gov, bls.gov, 1/8/10)^6,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

Riddle of the week. There is a kind of sweet bean that never grows in a garden. What is it?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: A man jumped out of a small plane without a parachute. When he hit the ground, he wasn’t injured at all. Why?

Last week’s riddle answer: The plane was parked on the ground.

Citations.
1 online.wsj.com/article/SB126295679510421517.html?mod=rss_Today%27s_Most_Popular [1/8/10]
2 marketwatch.com/story/us-dec-ism-services-index-rebounds-to-501-2010-01-06?reflink=MW_news_stmp [1/6/10]
3 usnews.com/money/blogs/the-home-front/2010/01/05/housing-market-gets-tax-credit-payback [1/5/10]
4 blogs.barrons.com/stockstowatchtoday/2010/01/05/us-factory-orders-beat-expectations/ [1/5/10]
5 bloomberg.com/apps/news?pid=20601087&sid=a89gE4gDzVao&pos=4 [1/8/10]
6 cnbc.com/id/34771264 [1/8/10]
7 cnbc.com/id/34766998 [1/10/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F8%2F09&mode=add&symb=DJIA [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F05&mode=add&symb=DJIA [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F00&mode=add&symb=DJIA [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F8%2F09&mode=add&symb=COMP [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F05&mode=add&symb=COMP [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F00&mode=add&symb=COMP [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F8%2F09&mode=add&symb=SPX [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F05&mode=add&symb=SPX [1/8/10]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=1%2F7%2F00&mode=add&symb=SPX [1/8/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [1/8/10]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [1/8/10]
10 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

These views are those of Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and 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. The 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.

Presented by Mark Lund, The Investor Coach.

Quote of the week. “Cheers to a new year and another chance for us to get it right.”– Oprah Winfrey

Consumers think positive. The latest index of consumer attitudes from the Conference Board came in at 52.9 last week, surpassing the 52.5 forecast in a Reuters poll of analysts and the 50.6 mark recorded in November. The expectations index (the “how do you feel about the next 6 months” gauge) hit 75.6, the best reading since December 2007.¹

Initial claims suggest happier 2010. They fell again in the Labor Department’s December 26 report, down to 432,000 – the lowest figure since July 2008. Analysts polled by Briefing.com thought they would rise to 460,000. Initial jobless claims have trended downward since late March.²

Mortgage rates & home prices rise. Checking the newly released October Case-Shiller home price index, we see that residential prices rose by 0.4% nationally with gains in 11 of 20 metro areas. The latest index has prices up 3.5% nationally since May. Rates on 30-year FRMs increased for the fourth straight week to 5.14% in Freddie Mac’s last national survey of 2009.^3,4

A very good year for gold and oil. Gold gained 23.96% in 2009, ending the year at $1,096.20 an ounce. Crude oil rose 77.94% in 2009 (and 1.68% last week) to finish the year at $79.36 a barrel. From the end of 1999 to the end of 2009, gold prices rose 278.52% and oil prices gained 210.00%.⁵

And finally … At the close of the final market day of 2009, the DJIA stood at 10,428.05, the NASDAQ at 2,269.15, and the S&P 500 at 1,115.10. All three of the indices posted weekly losses, but Wall Street was savoring the big picture: the great 2009 gains and the 64.83% advance of the S&P 500 since its March 9 close.⁶

(Source: CNNMoney.com, ustreas.gov, bls.gov, 12/31/09)^6,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

Riddle of the week. A man jumped out of a small plane without a parachute. When he hit the ground, he wasn’t injured at all. Why?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: What number should be next in this series: 9, 16, 25, 36?

Last week’s riddle answer: The next number is 49. 3² = 9, 4² = 16, 5² = 25, 6² = 36, and so on.

01-010

Citations.
1 abcnews.go.com/Business/wireStory?id=9440802 [12/29/09]
2 money.cnn.com/2009/12/31/news/economy/initial_claims/ [12/31/09]
3 blog.seattlepi.com/realestatenews/archives/189450.asp [12/29/09]
4 abcnews.go.com/Business/wireStory?id=9455376 [12/31/09]
5 cnbc.com/id/34645043/page/2/ [12/31/09]
6 cnbc.com/id/34645043 [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F24%2F08&mode=add&symb=DJIA [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F04&mode=add&symb=DJIA [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F99&mode=add&symb=DJIA [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F08&mode=add&symb=COMP [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F04&mode=add&symb=COMP [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F99&mode=add&symb=COMP [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=3%2F9%2F09&mode=add&symb=SPX [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F08&mode=add&symb=SPX [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F04&mode=add&symb=SPX [12/31/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=12%2F31%2F99&mode=add&symb=SPX [12/31/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [12/31/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [12/31/09]
9 treasurydirect.gov/instit/annceresult/press/preanre/1999/ofn100699.pdf [10/6/99]

These views are those of Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and 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. The 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.