Weekly Economic Update for the Week of October 26, 2009

Fewer “For Sale” signs. Existing home sales set a record in September – they rose by 9.4%, spurred by the federal credit for first-time buyers. (That $8,000 credit is valid through November 30.) September’s sales pace was the hottest in two years and the median sales price fell at the slowest pace in a year, according to the National Association of Realtors.¹

Leading indicators rise notably. The Conference Board’s Leading Economic Index went north 1.0% in September, marking the sixth straight monthly increase. The LEI monitors developments in categories such as jobless claims, housing permits, interest-rate spreads and consumer confidence.²

PPI drops. In September, inflation was not a factor at factories. Producer prices dropped 0.6% (core PPI fell 0.1%). PPI has seesawed positive and negative across the last three months of data.³

Housing starts rise. However, the 0.5% September increase announced by the Commerce Department was less than economists anticipated. Housing permits decreased in September for the second time in three months.³

Gold, copper, oil all advance. Gold prices gained $4.90 last week to finish at $1,055.60 an ounce Friday. Prices have risen 15.72% across the last three weeks. Copper had its best week since mid-July, posting a 6.57% gain last week. Oil prices advanced $1.48 per barrel last week to settle at $80.50 Friday.⁴

Slight losses for stocks. The S&P 500 lost 0.7% last week, while the NASDAQ ended down 0.1% for the same time span. The DJIA retreated 0.2% last week to close at 9,972.18 Friday.⁵

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+13.63	+14.74	-0.44	-0.48
NASDAQ	+36.62	+34.33	+2.50	-2.35
S&P 500	+19.52	+18.88	-0.29	-1.71
Real Yield	10/23	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.51%	2.67%	1.64%	4.14%

(Source: CNNMoney.com, ustreas.gov, bls.gov, 10/23/09)^6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

___________________________________________________________________

These views are those of Peter Montoya Inc., and not Statler Financial, 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations.
1 bloomberg.com/apps/news?pid=20601103&sid=a4.DIzmpog2A [10/23/09]
2 npr.org/blogs/thetwo-way/2009/10/leading_indicators_up_again.html [10/22/09]
3 bloomberg.com/apps/news?pid=20601087&sid=aDFJnk7txix0 [10/20/09]
4 blogs.wsj.com/marketbeat/2009/10/23/data-points-energy-metals-150/ [10/23/09]
5 cnbc.com/id/33452868 [10/23/09]
6 money.cnn.com/data/markets/dow/ [10/23/09]
6 money.cnn.com/data/markets/nasdaq/ [10/23/09]
6 money.cnn.com/data/markets/sandp/? [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F23%2F08&mode=add&symb=DJIA [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F04&mode=add&symb=DJIA [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F99&mode=add&symb=DJIA [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F23%2F08&mode=add&symb=COMP [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F04&mode=add&symb=COMP [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F99&mode=add&symb=COMP [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F23%2F08&mode=add&symb=SPX [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F04&mode=add&symb=SPX [10/23/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F22%2F99&mode=add&symb=SPX [10/23/09]
7 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/23/09]
7 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/23/09]
8 treasurydirect.gov/instit/annceresult/press/preanre/1999/ofn100699.pdf [10/6/99]

NO SSI INCREASE FOR 2010

The Social Security Administration (and the IRS) leave benefits and retirement plan contribution limits unchanged.

SSI will remain flat for the first year since 1975. Social Security benefits are keyed to inflation. So what happens when year-over-year inflation becomes negative? No cost-of-living adjustment (COLA) occurs to increase your Social Security income. On October 15, the Social Security Administration announced that there would be no COLA for 2010. (The 2009 SSI COLA was 5.8%, the largest boost since 1992.)¹

“What do you mean, negative inflation?” That’s the question some SSI recipients are asking. Aren’t prices seemingly going up at the grocery store every day – and going up everywhere else?

Unfortunately, the federal government doesn’t measure consumer inflation with a price check on aisle six. It uses the Consumer Price Index (CPI), which is really an estimation of the average prices of consumer products we buy. There is also core CPI, which excludes food and energy costs.

From September 2008 to September 2009, overall CPI fell by 1.3%. Across that span, overall food prices actually fell 0.2% and prices on dairy products and fruits and vegetables respectively dropped 9.5% and 6.4%. Food prices only account for about a seventh of CPI, and rents actually constitute about 40% of the “prices” measured by core CPI. In September, rents fell in the United States for the first time since 1992. (We also have a decline in retail gasoline prices from last fall to this fall.)^2,3

With year-over-year inflation negative, the SSA has no logical reason for a COLA. Yet roughly two-thirds of America’s seniors live on less than $20,000 a year, some entirely on SSI.¹

Another stimulus check? President Obama is urging Congress to authorize one-time $250 stimulus payments to Social Security and Supplemental Security income recipients, veterans, railroad retirees and government retirees. That $250 would equal about 2% of the average annual SSI benefit for a retiree. These checks would be mailed sometime in 2010 to about 57 million people. Recipients could not qualify for multiple checks.⁴

Retirement plan contribution limits will stay the same. These are also inflation-indexed. On October 15, the Internal Revenue Service chimed in with a statement that 401(k) contribution limits will remain at $16,500 for 2010. The maximum contribution limits for other types of defined-contribution and defined-benefit retirement plans will also remain the same for 2010.^5,6

While we’re referencing the IRS, some other important figures aren’t changing next year. The standard deduction will remain at $11,400 and $5,700 for joint and single filers; it will go up $50 to $8,400 next year for heads of household. The yearly gift tax exclusion will stay at $13,000 for 2010, and the value of a personal exemption will remain at $3,650.⁷

No COLA … but more purchasing power? A former deputy Social Security commissioner who now works for the conservative American Enterprise Institute contends that the average retiree will actually have $725 more in purchasing power in 2010 thanks to falling prices and the freeze in Medicare Part B premiums (which will not increase in 2010 for most Social Security recipients). A senior policy analyst for the non-partisan Center on Budget and Policy Priorities told the Christian Science Monitor that if Social Security income was wholly determined by consumer prices, SSI recipients would have their checks cut by 2.1% next year.⁸

What can you do in response here? Even if you are really wealthy, your SSI is a big chunk of money. If you were hoping for a COLA and want and need to have more money on hand for 2010, this is the time of year to meet with a financial advisor or tax advisor who may work with you and help you plan to find it.

These are the views of Peter Montoya Inc., not Statler Financial, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations
1 baltimoresun.com/business/bal-bz.cola16oct16,0,2468505.story [10/15/09]
2 bloomberg.com/apps/news?pid=20601103&sid=awvcLZFBUdhk [10/15/09]
3 bls.gov/news.release/cpi.t01.htm [10/15/09]
4 latimes.com/business/la-na-obama-seniors15-2009oct15,0,6276604.story [11/15/09]
5 irs.gov/newsroom/article/0,,id=214321,00.html [10/15/09]
6 irs.gov/newsroom/article/0,,id=214321,00.html [10/15/09]
7 google.com/hostednews/ap/article/ALeqM5jva4VYYkvx3LKvGF-2CY81N9q1dwD9BBPJGG0 [10/15/09]
8 features.csmonitor.com/politics/2009/10/16/do-seniors-on-social-security-deserve-that-raise-next-year/ [10/16/09]

Weekly Economic Update for the Week of October 19, 2009

A consumer rebound? While U.S. retail sales fell 1.5% in September without the C.A.R.S. program, there was a hidden positive. Minus automotive purchases, total retail sales rose 0.5% last month. Economists polled by Briefing.com had forecast a 2.1% overall sales decline and +0.2% sales ex-auto.¹

The latest on inflation. In September, the U.S. Consumer Price Index rose 0.2%. Core CPI also rose 0.2%. From September 2008 to September 2009, CPI fell 1.3% while core CPI rose 1.5%.²

No 2010 SSI COLA. Chalk it up to CPI: Social Security incomes will stay flat next year. Last week, President Obama lent his support for a $250 one-time stimulus check for those receiving SSI and federal pensions. Basic Medicare Part B premiums won’t go up in 2010 either. Neither will 401(k) contribution limits, according to the I.R.S.³

A consumer confidence asterisk. Analysts polled by MarketWatch expected a 72.0 preliminary reading from the Reuters/University of Michigan consumer sentiment index this month. Instead, the index came in at 69.4, which weighed on stocks Friday.⁴

Oil gains 9.4% in a week. Demand is certainly back – crude futures closed at a 52-week high of $78.53 per barrel on the NYMEX Friday.⁵

Industry is healthy. Last week, the Federal Reserve noted that industrial output rose 5.2% in 3Q 2009. This represents the first increase since the recession began and the best quarter in four years.⁵

Dow reaches 10,000. It didn’t stay there Friday: it gained 1.3% last week, but settled at 9,995.91 at the bell. The S&P 500 closed the week at 1,087.68, and the NASDAQ wrapped up Friday at 2,156.80.⁶

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+13.90	+11.32	-0.01	-0.02
NASDAQ	+36.76	+25.56	+2.57	-2.10
S&P 500	+20.42	+14.92	-0.37	-1.28
Real Yield	10/16	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.45%	3.02%	1.70%	4.14%

(Source: CNNMoney.com, ustreas.gov, bls.gov, 10/16/09)^7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

___________________________________________________________________

These views are those of Peter Montoya Inc., and not Statler Financial, 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations.

1 money.cnn.com/2009/10/14/news/economy/September_retail_sales/?postversion=2009101409 [10/14/09]
2 msnbc.msn.com/id/33344177/ns/business-businessweekcom/ [10/15/09]
3 baltimoresun.com/business/bal-bz.cola16oct16,0,2468505.story [10/15/09]
4 marketwatch.com/story/consumer-sentiment-drops-in-oct-2009-10-16 [10/16/09]
5 marketwatch.com/story/oil-futures-tap-fresh-one-year-high-atop-78-2009-10-16 [10/16/09]
6 cnbc.com/id/33347221 [10/16/09]
7 money.cnn.com/data/markets/dow/ [10/16/09]
7 money.cnn.com/data/markets/nasdaq/ [10/16/09]
7 money.cnn.com/data/markets/sandp/? [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F16%2F08&mode=add&symb=DJIA [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F04&mode=add&symb=DJIA [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F99&mode=add&symb=DJIA [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F16%2F08&mode=add&symb=COMP [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F04&mode=add&symb=COMP [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F99&mode=add&symb=COMP [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F16%2F08&mode=add&symb=SPX [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F04&mode=add&symb=SPX [10/16/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F15%2F99&mode=add&symb=SPX [10/16/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/16/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/16/09]
9 treasurydirect.gov/instit/annceresult/press/preanre/1999/ofn100699.pdf [10/6/99]

Weekly Economic Update for the Week of October 12, 2009

Service sector grows again. Some great news from a closely watched indicator: last month, America’s service sector grew for the first time since August 2008. The Institute for Supply Management’s service sector index rose to 50.9 last month from 48.9 in August.¹

Metals make headlines. For most of last week, the dollar was weak, and that helped gold. Gold prices rose 4% on the week, settling Friday at $1.048.60 an ounce after reaching a new record peak ($1,056.30) on Thursday. Silver futures closed Friday at $17.69 an ounce. At the end of last week, gold was +18.6% for 2009. Other metals YTD as of last Friday? Silver, +56.6%; platinum, +42.3%; palladium, +71.6%.^2,3

Trade gap unexpectedly narrows. Surprise: our trade deficit unexpectedly slimmed down from $31.9 billion in July to $30.7 billion in August. The August data showed U.S. exports hitting a peak for 2009.⁴

More mall purchases. For the first time since July 2008, we have seen a year-over-year rise in sales among major retailers. Analysts expected mall sales to drop 1% last month, but the International Council of Shopping Centers reported a 0.6% gain for September.⁵

15-year FRMs averaging 4.33%. Freddie Mac has tracked these mortgages since 1991, and this is a new record low. A year ago, the average was 5.63%.⁶

What a difference a year makes. Bulls ruled Wall Street last week and we saw amazing Mon-Fri gains – the S&P 500 advanced 4.51%, the DJIA 3.98%, and the NASDAQ 4.45%.⁷

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+12.40	+14.99	-0.38	-0.74
NASDAQ	+35.65	+30.04	+2.28	-2.59
S&P 500	+18.63	+17.76	-0.90	-1.98
Real Yield	10/9	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.56%	2.79%	1.78%	4.14%

(Source: CNNMoney.com, ustreas.gov, bls.gov, 10/9/09)^8,9,10

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

___________________________________________________________________

These views are those of Peter Montoya Inc., and not Statler Financial Services, 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations.
1 washingtonpost.com/wp-dyn/content/article/2009/10/05/AR2009100503631.html [10/6/09]
2 money.cnn.com/2009/10/09/markets/gold/?postversion=2009100914 [10/9/09]
3 reuters.com/article/usDollarRpt/idUSN098081020091009 [9/8/09]
4 forbes.com/2009/10/09/briefing-americas-open-markets-economy-trade.html [10/9/09]
5 nytimes.com/2009/10/09/business/09shop.html?em [10/9/09]
6 inman.com/news/2009/10/9/mortgage-rates-breaking-records [10/9/09]
7 cnbc.com/id/33246500 [10/9/09]
8 money.cnn.com/data/markets/dow/ [10/9/09]
8 money.cnn.com/data/markets/nasdaq/ [10/9/09]
8 money.cnn.com/data/markets/sandp/? [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F9%2F08&mode=add&symb=DJIA [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F04&mode=add&symb=DJIA [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F99&mode=add&symb=DJIA [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F9%2F08&mode=add&symb=COMP [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F04&mode=add&symb=COMP [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F99&mode=add&symb=COMP [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F9%2F08&mode=add&symb=SPX [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F04&mode=add&symb=SPX [10/9/09]
8 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F8%2F99&mode=add&symb=SPX [10/9/09]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/9/09]
9 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/9/09]
10 treasurydirect.gov/instit/annceresult/press/preanre/1999/ofn100699.pdf [10/6/99]

Weekly Economic Update for the Week of October 5, 2009

Big jump in consumer spending. The C.A.R.S. program drove a 1.3% increase in personal spending for August – the biggest monthly leap north in this category since August 2001. Personal wages went up 0.2% for the second straight month.¹

Consumer worries persist. The jobless rate hit 9.8% for September, as employers cut 263,000 positions from payrolls. (The healthcare sector added 19,000 jobs last month.)² The Conference Board Consumer Confidence Index came in at 53.1 for September, down from 54.5 for August.³

Manufacturing sector expands. The Institute for Supply Management’s manufacturing index indicated growth in that sector for the second straight month, with a reading of 52.6. However, economists polled by Reuters had expected a 54.0 reading in September, up from last month’s 52.9.⁴

Home prices rise, mortgage rates fall. The latest S&P Case-Shiller indexes showed home prices rising for the third month in a row in July (+1.6%). Freddie Mac’s October 1 survey had interest rates for 30-year FRMs averaging 4.94% nationally.^3,5

Oil starts the month impressively. Oil futures gained 5.95% last week; diesel and gasoline futures respectively gained 5.34% and 6.41%. (Retail pump prices averaged $2.47 per gallon of unleaded last week, compared to $3.60 per gallon a year ago.) In metals, gold and silver posted small weekly advances – gold rising 1.28% on the week, silver up 1.06%. In crops, sugar prices shot up 11.72% last week.⁶

Industry & jobs data impact stocks. The DJIA and S&P 500 both lost 1.84% last week; the NASDAQ slipped 2.05%. The economic calendar is light this coming week, with the ISM services index the most notable report.⁶

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+8.10	-9.49	-1.38	-0.76
NASDAQ	+29.87	+3.61	+1.09	-2.52
S&P 500	+13.50	-7.99	-1.88	-2.01
Real Yield	10/2	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.54%	2.17%	1.83%	4.14%

(Source: CNNMoney.com, ustreas.gov, bls.gov, 9/25/09)^7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

___________________________________________________________________

These views are those of Peter Montoya Inc., and not Statler Financial Services, 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations

1 bloomberg.com/apps/news?pid=20601068&sid=aSbaO.gu.aps [10/1/09]
2 latimes.com/business/la-fi-jobs3-2009oct03,0,2971924.story [10/2/09]
3 online.wsj.com/article/SB125422914801649093.html?mod=WSJ_hpp_sections_realestate [9/30/09]
4 forbes.com/feeds/afx/2009/10/01/afx6955121.html [10/1/09]
5 freddiemac.com/pmms/ [10/2/09]
6 cnbc.com/id/33145027 [10/2/09]
7 money.cnn.com/data/markets/dow/ [10/2/09]
7 money.cnn.com/data/markets/nasdaq/ [10/2/09]
7 money.cnn.com/data/markets/sandp/? [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F2%2F08&mode=add&symb=DJIA [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F04&mode=add&symb=DJIA [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F99&mode=add&symb=DJIA [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F2%2F08&mode=add&symb=COMP [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F04&mode=add&symb=COMP [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F99&mode=add&symb=COMP [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F2%2F08&mode=add&symb=SPX [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F04&mode=add&symb=SPX [10/2/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=10%2F1%2F99&mode=add&symb=SPX [10/2/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/2/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/2/09]
9 treasurydirect.gov/instit/annceresult/press/preanre/1999/ofn100699.pdf [10/6/99]

Don’t forget these 2009 tax breaks!

Plan to exploit them before they expire.

The year goes by, you get busy … and tax-saving opportunities slip away. So as a reminder, this article is here to reacquaint you with some of the notable federal tax breaks offered this year.

The first-time homebuyer credit. This is the up-to-$8,000 credit available in 2009 to anyone who hasn’t owned a home during the previous three years. (It is subject to phase-outs at certain income levels.) The home you buy has to be your principal residence, and you have to buy it before December 1, 2009. The credit does not have to be paid back.¹

The IRA charitable rollover. This is the move that lets your IRA trustee make a tax-free direct transfer of up to $100,000 from your IRA to a charitable organization. This option is scheduled to go away in 2010. You must be age 70½ or older to do this.²

3 don’t-miss deductions for businesses. When it comes to new cars and light trucks used for business means, the maximum first-year depreciation deduction has been increased by $8,000 for cars placed in service before 2010. The Section 179 deduction (that’s the one that lets you write off the costs of certain new and used business assets during their first year of use) is still at $250,000 for 2009, instead of the prior $133,000. The first-year bonus depreciation break of $50,000 is still in place for 2009, and even the biggest businesses can take advantage of it.³

The new car sales tax deduction. Okay, “cash for clunkers” is over, but you still may be able to deduct state and local sales and excise taxes if you buy a car, motorhome, motorbike or light truck. You can itemize the deduction or just add it to the amount of your standard deduction.⁴

A major tuition tax break. In 2009, you can claim an above-the-line deduction for “qualified tuition and related expenses” relating to the enrollment or attendance of you, your spouse or your dependent at an eligible college or university. While it is subject to phase-outs at higher income levels, the deduction can be as large as $4,000.⁴

The classroom teacher credit. Are you a primary or secondary school teacher? If you were an educator who worked more than 900 hours on campus in 2009, you can claim an above-the-line deduction for up to $250 of personal expenses for schoolbooks and school supplies that see classroom use. You don’t even have to itemize.⁴

COBRA continuation. Did you get laid off this year? Were you insured under an employer-sponsored health plan? Well, you may qualify for up to nine months of (COBRA) coverage. As for the company where you worked, it can claim a credit for the COBRA subsidy it extends to you.⁴

$2,400 in unemployment income tax-free. That’s right: this year, the first $2,400 of federal unemployment compensation benefits you receive are excluded from gross income.⁴

An extra deduction for state and local property taxes. Do you usually claim the standard federal deduction? If that’s your plan, this year you can take an additional deduction for state and local property taxes. The ceiling is $500, $1,000 if you are filing jointly.⁵

The capital gains tax break. If you are in the 10% or 15% tax bracket, note that the current tax rate for long-term capital gains is 0% – and it is slated to stay at 0% through 2010.⁶

The homebuilder tax credit. Do you build homes? If so, you may claim a credit of up to $2,000 for each qualified energy-efficient home constructed and acquired from you for use as a residence. This credit is set to expire December 31, 2009; President Bush’s signature extended it into this year.⁷

And of course, the exemption from required IRA distributions. The federal tax mandate requiring IRA owners age 70½ to take Required Minimum Distributions (RMDs) was suspended for 2009, but it will be reinstated for 2010. Worth noting: in 2010, anyone will be able to convert a traditional IRA into a Roth IRA.^4,8

This is just a sampling. There are other tax breaks out there during this unusual year for the federal tax code, and it is worth asking your accountant or advisor to do some research and/or collaborate to find you as many as possible.

These are the views of Peter Montoya Inc., not Statler Financial Services, Inc. and should not be construed as investment advice. Statler Financial Services does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 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.

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

 

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 Citations.
¹ federalhousingtaxcredit.com/2009/glance.php [9/18/09]
² irs.gov/newsroom/article/0,,id=203313,00.html [2/4/09]
³ smsmallbiz.com/taxes/4_Stimulus_Plan_Tax_Perks_for_Businesses.html [3/4/09]
⁴ articles.moneycentral.msn.com/Taxes/CutYourTaxes/12-tax-breaks-get-em-while-you-can.aspx?page=1 [7/20/09]
⁵ hrblock.com/press/Article.jsp?articleid=22617 [1/28/09]
⁶ forbes.com/2008/02/13/capital-gains-taxbreak-pf-education-in_dp_0212investopedia_inl.html [2/13/08]
⁷ acca.org/blog.php?id=303 [1/6/09]
⁸ usatoday.com/money/perfi/columnist/block/2009-08-31-roth-ira_N.htm [8/31/09]