Weekly Update

The Markets   Equity markets backed up for the week as mounting data suggested the U.S. recovery, and potentially the global recovery, is going to a long, tough slog. The uncertainty among investors caused a sell-off in equity and positive flows into gold and short-term fixed income. T-bill yields declined to just 0.05% with yields dropping below zero briefly on Thursday. Low interest rates and a declining dollar have enabled equity investors to push prices up and have led to a disconnect between equity and fixed income markets. It appears that equity market participants are more enthusiastic about the recovery than fixed income investors. At some point in the near future, one group will be proven correct. It would appear equity investors are beginning to grow concerned that it won’t be them. Market/Index 2008 Close Prior Week As of 11/20/09 Week Change YTD Change DJIA 8776.39 10270.47 10318.16 0.47% 17.57% S&P 500 903.25 1093.48 1091.38 (0.01)% 20.83% MSCI World 920.226 1158.26 1145.72 (1.08)% 24.50% Russell 2000 499.45 586.26 584.68 (0.27)% 17.06% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 2.24% 3.45% 3.36% (9) bps 112 bps Last Week's Headlines ·      Leading indicators rose for the seventh consecutive month but only by 0.3%. ·        New home construction fell 10.6% to the lowest level in six month and 30.7% below the pace of one year ago. ·        Core CPI increased only 0.2% suggesting inflation is in check. ·        Industrial production rose for the fourth consecutive month by 0.1% which was less than expected.     Upcoming Items of Interest   Despite a short week, there will be an abundance of economic data reported this week. First up is existing home sales on Monday. Tuesday we’ll see the latest GDP report, consumer confidence and the Federal Open Market Committee meeting minutes. On Wednesday, we’ll get durable-goods orders, personal income and spending, and new home sales. Keep in mind that roughly 70% of GDP is comprised of consumer spending. So the consumer confidence and personal income and spending reports will be important. The other data will highlight the economic recovery. Data source: 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. Headlines and upcoming items of interest are pulled from published reports of Vanguard, Briefing.com and Reuters. Past performance is no guarantee of future results. 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 MSCI World Index is a free-float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.