Weekly Economic Update, August 9, 2010

UNEMPLOYMENT REMAINS AT 9.5%
The American economy added 71,000 jobs in July but lost 202,000 others (143,000 of those positions were short-term Census Bureau hires). The private sector added 630,000 jobs during the first seven months of 2010; that 90,000 per month is far short of the 150,000 per month that would be commensurate with population growth. The bright spot: economists had presumed the jobless rate would edge up to 9.6% in July.¹

ISM: MANUFACTURING & SERVICE SECTOR GROWING
The Institute for Supply Management’s service sector index rose to 54.3 for July, a nice surprise (economists polled by Bloomberg had forecast a dip to 53.0). The new orders and employment components of the service sector index both showed growth. ISM’s manufacturing index came in at 55.5 for July, beating a Briefing.com consensus forecast of 54.2. (However, the Commerce Department noted that factory orders declined by 1.2% in July following a 1.0% fall in June.)^2.3,4

SAVING OUTPACES SPENDING
Personal spending and personal incomes were both flat last month according to the Commerce Department. The personal savings rate increased again to 6.4% – it has risen monthly since February, and it hasn’t been under 5.0% since October 2008. (During 2007, the personal savings rate averaged just 2.1%.) The good news is that households are accumulating cash reserves; the bad news is that the primary engine of the economy is subdued.⁵

FEWER HOMEBUYING CONTRACTS SIGNED IN JUNE
Pending home sales decreased by 2.6% in June, according to the National Association of Realtors; the number was 19.0% below year-ago levels. The June dip may reflect buyers rushing to sign contracts before federal incentives could expire.⁶

15-YEAR FRMs BELOW 4.0%; 30-YEAR FRMs BELOW 4.5%
Freddie Mac reported the average rate on a 30-year home loan at 4.49% last week; a year ago, the national average was 5.22%. Rates on 15-year FRMs were 3.95% last week, compared to 4.63% at this time in 2009.⁷

STOCKS GAIN FOR SECOND STRAIGHT WEEK
The DJIA rose 1.79% last week, the NASDAQ advanced 1.50%, and the S&P 500 gained 1.82%. At Friday’s closing bell, the S&P 500 was at 1,121.64, the NASDAQ at 2,288.47, and the Dow at 10,653.56.⁸

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of Statler Financial Services, Inc. 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. http://www.montoyaregistry.com http://www.petermontoya.com

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/2010/08/06/news/economy/jobs_july/ [8/6/10]

2 – dailyfinance.com/story/investing/services-sector-index-unexpectedly-rose-in-july/19580447/ [8/4/10]

3 – thestreet.com/story/10823959/1/ism-index-growth-slows-to-555.html [8/2/10]

4 – reuters.com/article/idUSN023868020100803 [8/4/10]

5 – suntimes.com/business/currency/2563780,CST-NWS-savings04.article [8/4/10]

6 – seattletimes.nwsource.com/html/businesstechnology/2012519621_apuspendinghomesales.html [8/3/10]

7 – online.wsj.com/article/SB10001424052748703748904575411193528926092.html [8/6/10]

8 – cnbc.com/id/38596993 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F6%2F09&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F5%2F05&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]

9 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F7%2F00&x=0&y=0 [8/6/10]

10 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/6/10]

10 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/6/10]

11 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

Weekly Economic Update for the Week of April 19, 2010

A little less confidence. The preliminary April Reuters/University of Michigan consumer sentiment survey came in at 69.5, versus 73.6 at the end of March. Interestingly, the survey’s expectations index slipped to its lowest level in 13 months.¹

More minimal inflation. The Consumer Price Index advanced 0.1% in March; with food and energy prices factored out, core CPI was flat. Overall CPI increased by 2.3% during the past 12 months of data.²

Car buying drives retail sales. A 6.7% rise in the demand for autos sent retail purchases 1.6% higher for March. That even beat the 1.3% gain forecast by economists polled by MarketWatch.³

Manufacturing up 0.9% last month. So noted the Federal Reserve last week. Total industrial output rose 0.1% in March; economists surveyed by Dow Jones Newswires thought we would see a 0.8% gain.⁴

Housing starts up 1.6% for March. Besides that statistic, the Commerce Department also announced some other good news: the 5.9% February slip in this category has been revised to a 1.1% gain.⁵

SEC suit sends market down. The Securities and Exchange Commission sued Goldman Sachs Group for securities fraud over the structuring and marketing of a subprime mortgage product Friday, and stock indexes fell, ending six days of gains. The Dow (+0.19%) and NASDAQ (+1.11%) still advanced for the week. The S&P 500 lost 0.19% last week.⁶

(Source: CNBC.com, BigCharts.com, ustreas.gov, bls.gov, 4/16/10)^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.

___________________________________________________________________

These views are those of Peter Montoya Inc., and not Statler Financial Services, Inc., 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. 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. http://www.montoyaregistry.com http://www.petermontoya.com

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 blogs.wsj.com/economics/2010/04/16/consumer-sentiment-turns-down-in-april [4/16/10]
2 thestreet.com/story/10725502/1/cpi-rose-01-in-march.html [4/14/10]
3 theatlantic.com/business/archive/2010/04/us-retail-sales-up-16-in-march/38917/ [4/14/10]
4 foxbusiness.com/story/markets/updateus-march-industrial-production–consensus/ [4/15/10]
5 marketwatch.com/story/march-housing-starts-on-upward-trend-2010-04-16 [4/16/10]
6 cnbc.com/id/36600359 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F16%2F09&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F16%2F09&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F16%2F09&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F15%2F05&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F15%2F05&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F15%2F05&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F17%2F00&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F17%2F00&x=0&y=0 [4/16/10]
7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F17%2F00&x=0&y=0 [4/16/10]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [4/16/10]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [4/16/10]
9 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

Weekly Economic Update for the Week of September 21, 2009

Healthy retail sales numbers. While a 10.6% jump in auto sales spurred the 2.7% August leap in this category, retail sales were up 0.6% for the month with cars and gasoline purchases factored out. Sales were still 5.8% below August 2008 levels.¹

How tame is inflation now? The Consumer Price Index ascended 0.4% in August, according to the Labor Department, after a flat July. But the real story was year-over-year: CPI fell 1.5% from August 2008 to August 2009, influenced by the huge drop in retail gas prices. Core CPI rose 1.4% over that same period, the smallest rise in more than five years.²

Manufacturing may be recovering. The Federal Reserve announced that industrial output increased for the second straight month in August. The 0.8% gain beat the estimate of economists surveyed by Thomson Reuters, who forecast a 0.6% increase. Producer prices climbed an unexpected 1.7% last month (core PPI rose 0.2%) and business inventories shrank by 1.0% in July.^2,3

Housing starts rise 1.5%. The statistic mostly reflects multifamily construction. August apartment starts were up 35.3%; single-family starts fell 3.0%.⁴

Gold & oil advance. While the dollar came back from multi-month lows against the yen and euro last week, gold hit a new 2009 closing high Wednesday ($1,020.20) and settled at $1,010.30 Friday. Oil futures ended the week at $72.04 per barrel.⁵

Stocks climb 2% higher. Last week, the economic data stream added credence to the summer rally. The S&P 500 came in at 1,068.30, gaining 2.45% for the week. The DJIA closed at a new 2009 high on Friday: 9,820.20. The NASDAQ finished at 2,132.86 Friday.⁶

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+11.89	-10.88	-0.90	-0.91
NASDAQ	+35.25	-3.01	+2.33	-2.57
S&P 500	+18.27	-11.46	-1.07	-2.00
Real Yield	9/18	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.68%	1.94%	1.85%	4.06%

(Source: CNNMoney.com, ustreas.gov, bls.gov, 9/18/09)^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 latimesblogs.latimes.com/money_co/2009/09/todays-government-report-that-retail-sales-rose-27-in-august-looks-unambiguously-good-for-the-recession-is-ending-camp.html [9/15/09]
2 cbsnews.com/stories/2009/09/16/business/main5314853.shtml?tag=contentMain;contentBody [9/16/09]
3 money.cnn.com/2009/09/15/markets/markets_newyork/?postversion=2009091516 [9/15/09]
4 latimes.com/business/la-fi-housing-starts18-2009sep18,0,3163133.story [9/18/09]
5 money.cnn.com/2009/09/18/markets/markets_newyork/index.htm?postversion=2009091817 [9/18/09]
6 cnbc.com/id/32918723 [9/18/09]
7 money.cnn.com/data/markets/dow/ [9/18/09]
7 money.cnn.com/data/markets/nasdaq/ [9/18/09]
7 money.cnn.com/data/markets/sandp/? [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F18%2F08&mode=add&symb=DJIA [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F04&mode=add&symb=DJIA [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F99&mode=add&symb=DJIA [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F18%2F08&mode=add&symb=COMP [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F04&mode=add&symb=COMP [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F99&mode=add&symb=COMP [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F18%2F08&mode=add&symb=SPX [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F04&mode=add&symb=SPX [9/18/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F17%2F99&mode=add&symb=SPX [9/18/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [9/11/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [9/11/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield_historical_1999.shtml [9/18/09]
9 bls.gov/news.release/history/cpi_10191999.txt [10/19/99]