MONTHLY QUOTE“The beautiful thing about learning is that no one can take it away from you.”
– B.B. King




Statistically, women are poised to outlive men. If a woman has a male partner or spouse, her retirement plan should recognize that possibility.




What part of a sparrow has the most feathers?

Last month’s riddle:
A petri dish sits before you, hosting a large colony of bacteria that began with one cell at 8:00am. Once a minute, every bacterium divides into two. It is now exactly 8:25am and the petri dish is half full. When will it be full?

Last month’s answer:

In one minute.

July 2013

Sometimes the direction of the stock market can change on a few sentences, even a few words. That was certainly the case on June 19, when Federal Reserve Chairman Ben Bernanke mentioned the possible end of QE3 in 2014 and the prospect of reducing the central bank’s monthly bond purchases later in 2013. A global selloff occurred after his remarks, and the S&P 500 lost 1.50% for June. Still, the major U.S. indices fared pretty well compared to foreign benchmarks. It was a miserable month for commodities, particularly gold. You could find plenty of positives in the housing sector, even with home loan rates ascending. While stocks retreated last month, most investors remained confident in the bull market’s strength.1,2

June brought a lot of good news about the economy, even as Wall Street groaned about the prospect of the Fed tapering QE3. The Institute for Supply Management’s June manufacturing PMI jumped north 1.9 points to 50.9, indicating renewed expansion. The latest Labor Department jobs report had employers adding 175,000 new jobs in May, although the unemployment rate crept up to 7.6%. Consumer spending had improved in May (up 0.3% with household incomes rising 0.5%), and consumer confidence rose in June– the month’s final survey from the University of Michigan came in at 84.1, approaching a six-year peak, while the Conference Board’s June poll rose to 81.4, its best mark since January 2008. Retail sales grew 0.6% in May.3,4,5,6,7

Inflation was again trivial: the Consumer Price Index had advanced just 0.1% for May and but 1.4% in a year. Producer prices, on the other hand, went north 0.5% in May. Durable goods orders jumped 3.6% in May.8,9,10

Judicial rulings, legislative inaction and commentary from opinion leaders also made economic news last month. The Supreme Court struck down Section 3 of the Defense of Marriage Act (which had stopped same-sex marriages from being federally recognized), paving the way for gay and lesbian couples to file joint federal tax returns and access partner health insurance benefits, and gain eligibility for Social Security survivorship benefits. Congress did not find a solution to prevent interest rates on federally funded student loans from doubling to 6.8% on July 1, translating to a $2,600 average hit to a student borrower. (Capitol Hill legislators were talking about a retroactive fix, however.) The International Monetary Fund publicly urged the Federal Reserve to maintain QE3 at current levels at least until the end of 2013 while cutting its 2014 forecast for U.S. growth to 2.7%. Standard & Poor’s upgraded America’s credit outlook to “stable” from “negative”, significantly reducing the chance of another U.S. credit rating downgrade like the one it issued in 2011.9,11,12,13

 * Quantitative Easing is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Eurozone unemployment reached a new all-time high last month at 12.1%; eurozone consumer inflation hit 1.6% in June, compared with 1.4% in May and 1.2% in April. Germany was the bright spot – its jobless rate was down at 5.3% in June. The eurozone Markit PMI rose half a point to 48.8 in June – not good, but a 16-month peak. Ireland and Spain had manufacturing PMIs of 50 or better; those of Italy, Germany and France were all under 50 (meaning sector contraction).14,15

China has recently coped with a dangerous “shadow” banking system: high-interest, off-balance-sheet loans linked to real estate and stock speculation. In June, the Chinese government tried to discourage such informal lending by allowing cash conditions to tighten, while instructing the nation’s banks to depend less on short-term borrowing and improve their capital ratios. The People’s Bank of China let short-term interest rates surpass 7% at one point in June. This led to a four-year low for Chinese stocks and fears of a credit freeze. The central bank intervened and provided cash infusions to ward off that last threat, but still maintained its stance. China’s Markit PMI declined to a 9-month low of 48.2, while the government’s “official” PMI slipped to 50.1, a 4-month low. Markit manufacturing PMIs showed expansion in India (50.3) and Indonesia (51.0) and contraction in Taiwan (49.5) and South Korea (49.4).16,17,18

Name a consequential stock index, and you will name an index that pulled back in June. The S&P 500’s loss wasn’t so bad next to these others: FTSE 100, -8.08%; DAX, -6.15%; CAC 40, -7.69%; Micex, -4.76%; FTSE Eurofirst 300, -7.56%; Nikkei 225, -4.43%; KOSPI, -6.19%; Sensex, -3.79%, Hang Seng, -9.25%; Shanghai Composite, -14.74%; TSX Composite, -4.87%; Bovespa, -15.31%;  MSCI Emerging Markets Index, -6.79%; MSCI World Index, -2.61%.19,20

* Investing in foreign securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.i COmposite : the TSX Composite (-2.30%), the  gan’


A strengthening dollar, some sentences from Ben Bernanke and anxieties about demand in China and other emerging markets made June a rough month for commodity futures. The June gains: oil, +1.54%; soybeans, +4.21%; cotton, +5.15%. In the loss column: copper, -7.87%; silver, -11.94%; platinum, -8.37%; gold, -10.79%; wheat, -5.66%; cocoa, -1.54%; coffee, -5.02%; sugar, -2.65%; natural gas, -14.42%. NYMEX crude ended June at $96.56; gold sank to a two-and-a-half-year low on the month’s last COMEX trading day, settling at $1,211.60. Even the U.S. Dollar Index lost some ground in June – 0.29%, to be precise.21,22

*The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

The National Association of Realtors said existing home sales rose 4.2% for May, with the median price at $208,000 (15.4% better than a year before). NAR also said that pending home sales had climbed 6.7% in May to the highest level since December 2006. As for new home buying, the Commerce Department reported a third straight monthly gain – 2.1%. April’s edition of the S&P/Case-Shiller Home Price Index showed a 12.1% annualized increase in home prices across 20 metro markets, which was the index’s best yearly gain since March 2006. U.S. housing starts were up 6.8% in June while building permits were down 3.1%.5,10,23,24

Was the door closing on the days of cheap mortgages? On June 27, Freddie Mac announced that the average rate on the 30-year FRM was at 4.46%, up from 3.81% on May 30. Other home loan types also showed major interest rate increases during that interval. The average rate on the 15-year FRM rose from 2.98% to 3.50%, rates on the 5/1-year ARM averaged 3.08% compared to 2.66%, and rates on the 1-year ARM went from 2.54% to 2.66%.25

Even with June’s losses, the Dow racked up its best first half of a year since 1999. The S&P 500 advanced more in the year’s opening half than it had in 15 years. The Russell 2000’s June loss wasn’t so bad – just 0.68%. Note the (once again) positive real yield on the 10-year TIPS.2

















S&P 500






6/28 RATE










Sources:,, – 6/28/132,26,27

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

These returns do not include dividends.

While the Fed will taper its easing effort at some point and eventually wrap it up, it is still buying $85 billion of bonds per month in the near term and a fair amount of faith remains in the current bull market’s longevity. A recent USA TODAY article cited some interesting data from Ned Davis Research Group (NDR): since 1963, it has taken bear markets an average of 24 months to arrive after the Fed has tightened. In the year after such policy moves, the broad U.S. stock market was up 73% of the time, and up 3.4% on average. Of course, the stock market has violated all kinds of historical “norms” in the past decade, and few bears would have imagined all-time peaks for the Dow and S&P 500 just four years after stocks lost half their value. Optimism may be muted in the wake of the Fed’s inevitable decision, but it hasn’t disappeared.1,10

UPCOMING ECONOMIC RELEASES: Here are the key economic news items scheduled for July: the ISM May non-manufacturing index, the June ADP employment report and the June Challenger job-cut report (7/3), the Labor Department’s June jobs report (7/5), the June 19 Fed policy meeting minutes and data on May wholesale inventories (7/10), the June PPI and the University of Michigan’s initial July consumer sentiment survey (7/12), June retail sales and May business inventories (7/15), June’s CPI and NAHB housing market index (7/16), June housing starts and building permits and a new Fed Beige Book (7/17), the Conference Board’s June index of leading indicators (7/18), June existing home sales (7/22), the May FHFA housing price index (7/23), June new home sales (7/24), June durable goods orders (7/25), the final University of Michigan consumer sentiment poll for July (7/26), June pending home sales (7/29), May’s Case-Shiller home price index and the Conference Board’s July consumer confidence survey (7/30), and then on July 31, a Federal Reserve policy announcement, the initial estimate of Q2 GDP and the comparatively early arrival of the July ADP employment report. The numbers on June consumer spending will appear on August 2.


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«RepresentativeDisclosure»This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.


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.


The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.


The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. Moscow Exchange is the largest stock exchange in Russia, located in Moscow, trading equities, bonds, derivatives and currencies. It was officially established on 19 December 2011 through the merger of the two largest Moscow-based stock exchanges, the Moscow Interbank Currency Exchange and the Russian Trading System.


The FTSEurofirst 300 Index is part of the FTSEurofirst Index Series and the FTSEurofirst 300 Indices, which are tradable indices measuring the performance of European portfolios.


Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges.


The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE).


The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong.


The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.


The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization.


The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange.


The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies.


The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets.


The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 assistance is needed, the reader is advised to engage the services of a competent professional.



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