Weekly Market Commentary

The Markets

There was good news and there was bad news but, by the end of the week, a wave of pessimism had swept gains away, causing markets to finish lower.

In the good news department, Greece adopted an austerity program that made it eligible to receive financial support from the European Union and International Monetary Fund, according to Barron’s. Relief that a Greek default had been avoided was soon offset by concern about the health of Italian banks. On Friday, extreme share price volatility caused trading in shares of specific banks to be suspended, according to The Wall Street Journal. Although the reason for the volatility was unclear, it raised new concerns about Europe’s financial condition.

In the United States, the Commerce Department reported that durable goods orders were more robust than expected, according to Reuters. The Commerce Department also raised its estimate of gross domestic product (GDP) growth during first quarter from 1.8% to 1.9%. This was positive news; however, it did little to soothe worries that the U.S. economy might be slowing. GDP growth during the previous quarter was 3.1%.

Even Federal Reserve officials appeared to be riding the wave of pessimism. On Wednesday, at the conclusion of a two-day policy meeting, the Fed announced that recovery was continuing at a moderate pace; however, economic growth was slower than expected, according to CNNMoney. The U.S. central bank reduced its forecasts for GDP growth during the current year and for 2012.

This week, the Federal Reserve’s second round of quantitative easing (QE2) ends. According to a recent survey by Reuters, investors expect the end of the stimulus program to affect stocks, bonds, gold, and currencies. This may create uncertainty and choppiness in markets over the near term.

Data as of 6/24/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.2%	0.9%	18.1%	-1.2%	0.3%	0.4%
DJ Global ex US (Foreign Stocks)	-0.3	-2.1	17.7	-3.6	1.6	5.1
10-year Treasury Note (Yield Only)	2.9	N/A	3.1	4.1	5.2	5.1
Gold (per ounce)	-1.5	7.4	22.5	19.4	21.0	18.7
DJ-UBS Commodity Index	-2.2	-4.2	22.3	-12.1	-1.5	4.3
DJ Equity All REIT TR Index	-0.4	6.9	25.7	3.3	2.7	10.6

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

Traveling to China or Europe soon? Make sure your credit card has cutting-edge security or you may find yourself short of funds. That’s because high levels of credit card fraud have caused financial institutions in other countries to improve card security.

Credit card fraud is on the rise around the world, according to a 2010 survey by ACI Worldwide that was reported in InformationWeek. The survey canvassed 4,200 people in North America, Europe, Asia, Brazil, and the Middle East. When the results were tallied, the survey showed that almost one-third of credit and debit card users around the world had experienced credit fraud during the past five years. The percentage varies significantly by region. In China, 43% of consumers have experienced card fraud; in the United States, 33%; and in the Netherlands, just 11%.

According to ConsumerReports, the percentage of Americans experiencing card fraud is expected to grow because the credit and debit cards we use rely on old technology -- storing unencrypted data on a magnetic stripe on the back of the card. This makes the cards more vulnerable to being skimmed and counterfeited. ConsumerReports also stated that only the United States and a few African countries continue to rely on this technology.

One of the new standards for security, in many countries, is the smart card, which combines an embedded microprocessor with a PIN to make point-of-sale transactions more secure, according to The New York Times. Cards that have radio frequency chips, which allow “contactless transactions,” also provide improved security, according to the article. All the user has to do is wave the card at a payment terminal to make a purchase.

If you are planning to travel abroad, it is a good idea to contact your financial institution and request a smart card. Your magnetic stripe cards may not be accepted by some retailers, and simply won’t work at automated ticket kiosks like those found in train stations, on gas pumps, and at parking garages, according to ABCNews.

Weekly Focus – Think About It

“The charity that is a trifle to us can be precious to others.” --Homer

Best regards,

Jeff Sorensen

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM not affiliated with Triad Advisors.

* This newsletter was prepared by Peak Advisor Alliance.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

Weekly Market Commentary

The Markets

Like a computer owner who successfully reboots after experiencing a blue screen, investors heaved a sigh of relief on Friday as the Dow Jones Industrials and Standard & Poor’s 500 Indices eked out gains for the week ending six straight weeks of losses. According to Reuters, markets gained after leaders in Germany and France suggested they would provide additional support to prevent Greece from defaulting on its debt. While the announcement soothed investors somewhat, the deal has yet to be accepted by opposition parties in the Greek government. As a result, concerns remain that a Greek default could destabilize the Eurozone and create a global domino effect, according to The Wall Street Journal. These worries may be overblown, the news source said, as Greece accounts for just 2% of the Eurozone's gross domestic product (GDP).

The International Monetary Fund (IMF) reduced its outlook for GDP growth in the United States from 2.8% to 2.5% on Friday, according to Reuters. While many interpreted this news negatively, the IMF’s news release stated that its global growth forecast remained largely unchanged as developing countries continue to show robust growth. Olivier Blanchard, the Fund’s Economic Counselor, said he believed the U.S. slowdown was “a bump in the road rather than something more worrisome.”

Regardless, investors’ optimism remained tepid. The majority of U.S. stocks that performed well last week were in defensive sectors, such as utilities and consumer staples, according to The Wall Street Journal. Reuters said that risk aversion helped drive the value of gold and the Swiss Franc, which is thought to be a safe-haven currency, higher during the week while the value of commodities fell. Bloomberg attributed some of the decline in commodities prices to expectations that slower global growth would reduce demand for raw materials.

Oil prices also declined during the week in response to worries about slower economic growth, according to Barron’s. This may make Americans happy, who are planning driving vacations, if it translates into lower gas prices. However, their enjoyment may be short-lived as Barron’s also said that some forecasters predict a rebound in America’s growth by year end. That could increase demand for crude oil and push prices higher once again.

Data as of 6/17/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.1%	1.1%	13.9%	-2.0%	1.0%	0.1%
DJ Global ex US (Foreign Stocks)	-1.4	-1.9	16.9	-4.8	1.8	5.2
10-year Treasury Note (Yield Only)	2.9	N/A	3.2	4.2	5.1	5.2
Gold (per ounce)	0.5	9.0	23.5	20.4	21.9	18.9
DJ-UBS Commodity Index	-4.0	-2.1	23.5	-11.5	-1.0	4.2
DJ Equity All REIT TR Index	1.9	7.3	18.6	2.2	2.8	10.6

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable or not available.

How confident are you about retirement? The market volatility of the past few years has negatively affected many Americans earnings, savings, and investments. It has also diminished their confidence about being able to retire comfortably. According to the Employee Benefits Research Institute’s 2011 Retirement Confidence Survey, American workers are more pessimistic about their ability to retire comfortably than at any time since the survey began about 20 years ago.

The lack of confidence may actually be good news, according to EBRI, because it means Americans may be waking up to the realities of retirement including the need to save more than they are currently. According to the survey about one-third of workers tapped their retirement savings to pay for day-to-day expenses during 2010 and many of them didn’t have much saved in the first place. Just 59% of workers are currently saving for retirement and one-half of them have less than $25,000 tucked away, according to the survey.

Work is the new retirement. This new awareness of the cost of retirement may be one reason that many people -- of all ages and income levels -- are planning to work after they retire. A recent Gallup Poll found that about 80% of Americans plan to work during retirement. Most plan to work part-time, although some say they may need to work full-time just to make ends meet.

The silver lining, for those who were looking forward to a retirement of full-time leisure, is that people who continue to work during retirement often experience better health than those who don’t work, according to studies cited on LiveScience.com. As long as the work remains low stress, retirees who labor are less likely to suffer from major diseases such as cancer, high blood pressure, and cardiovascular disease. They are also less likely to become depressed.

If you’ve been rethinking your retirement, you’re not alone. If you would like a sounding board or want to discuss options, please give us a call.

Weekly Focus – Think About It

After the Constitutional Convention of 1787, Dr. James McHenry, one of Maryland’s delegates, reported that Ben Franklin was asked, “Well, Doctor, what have we got: a republic or a monarchy?”  Ben answered, "A republic, if you can keep it."

Best regards,

Jeff Sorensen

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM not affiliated with Triad Advisors.

* This newsletter was prepared by Peak Advisor Alliance.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

Weekly Market Commentary

The Markets

To rework one of the Beatles most famous songs, our economy is traveling “The Long, Winding and Bumpy Road."

After doubling in value by the end of April from the March 2009 low, the Standard & Poor’s 500 index has now declined for six straight weeks, according to Minyanville and The Wall Street Journal. While the doubling in stock prices is quite impressive, the economy hasn’t kept up. Currently, we’re experiencing “bumps” along the economic road including a double-dip in housing prices, weak first quarter economic growth, a high unemployment rate, and ballooning government debt, according to The Wall Street Journal.

Our modest economic recovery is in line with what PIMCO dubbed “The New Normal” in 2009. Back then, PIMCO suggested we would experience 3-5 years of a bifurcated world economy. Specifically, they expected advanced countries to endure a period of sluggish growth, persistently high unemployment, public debt and deficit issues, increased regulation, and continuous pressures for private sector deleveraging. By contrast, they expected emerging economies to prosper with high growth rates and a closing of the income and wealth gap relative to advanced economies.

So far, their New Normal scenario is generally playing out across the world.

The latest bumps have kept our policy makers up at night trying to figure out how to drive our economy forward and create more jobs. This month’s ending of the Federal Reserve’s $600 billion bond-buying program known as QE2 will remove one form of monetary stimulus and possibly expose the economy to more volatility, according to MarketWatch. Rather than pick up the slack, Congress is having difficulty coming to terms on fiscal policy that might rev up the economy.

Like Nero fiddling while Rome burns, our economy is drifting out to sea and in need of strong leadership across the political spectrum to get it back to port.

Data as of 6/10/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.2%	1.1%	16.4%	-2.2%	0.5%	0.1%
DJ Global ex US (Foreign Stocks)	-2.4	-0.4	23.6	-4.2	2.1	5.0
10-year Treasury Note (Yield Only)	3.0	N/A	3.3	4.1	5.0	5.3
Gold (per ounce)	-0.7	8.4	25.6	20.3	20.2	19.0
DJ-UBS Commodity Index	-0.2	2.0	33.4	-9.0	-0.6	4.5
DJ Equity All REIT TR Index	-4.0	5.3	20.9	1.2	2.4	10.6

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable or not available.

WHAT IF YOU HAD A MAGIC NEWSPAPER and were able to read tomorrow’s economic news today? Do you think you could successfully invest with that information?

It would make investing a lot easier, right? Well, maybe not.

Super investor Warren Buffett famously said, “If (Federal Reserve Chairman) Ben Bernanke whispered in my ear exactly what he's going to do tomorrow, it wouldn't change anything I'm going to do today,” according to CNBC. The problem is it’s difficult to know how the market will interpret any given piece of information.

Take oil prices as an example. If we whispered in your ear that oil prices would fall $2 per barrel tomorrow, do you think that would be bullish or bearish for the stock market? In reality, it probably depends on the reason for the fall.

Generally speaking, falling oil prices are good for the economy because it lowers the cost of gas and may allow consumers to spend more money, which could lead to higher corporate profits. With that backdrop, if oil prices fell due to oversupply, it might be bullish for the stock market because consumers would have more money to spend. However, if oil prices fell due to a slowing economy, the stock market might sell-off because some consumers would lose their jobs and reduce spending, according to CNBC.

So, even if you knew what was going to happen to oil prices tomorrow, you’d still need to know the “why” behind the price change to predict its impact on the stock market. And oil is just one example. Think about the myriad of economic indicators, corporate announcements, political wrangling, regulatory actions, and other things that happen each week that could affect the stock market. Trying to track all these factors and accurately discern their impact on the market would be futile. 

Call us old-fashioned, but we’d rather stick to our investment process than spend time trying to guess the Federal Reserve’s next move or the impact of a $2 change in oil prices. It’s process rather than prognostication.

Weekly Focus – Think About It

“All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.”

                                                                  --John Kenneth Galbraith

Best regards,

Jeff Sorensen

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM not affiliated with Triad Advisors.

* This newsletter was prepared by Peak Advisor Alliance.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.