September 13th, 2010: Obama Proposes New Tax Credits

Chad J. Karl Presents: WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE: “The secret of being boring is to say everything.” – Voltaire

WEEKLY TIP: Exercise is not only wise, it may also prove economical. In the long run, just keeping fit may save you thousands of dollars (or more) in medical bills that an unhealthy person may incur.

WEEKLY RIDDLE: Where does today come before yesterday?

Last week’s riddle: The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?

Last week’s answer: Beetle.


September 13, 2010

OBAMA PROPOSES NEW TAX CREDITS: Last week, President Obama recommended three new tax measures to Congress and the American people – an extension of the Bush-era tax cuts for all but the wealthiest Americans, an immediate deduction for any capital investment that companies make during 2010 or 2011, and a permanent and expanded R&D credit for businesses. In response, Senate Minority Leader Mitch McConnell (R-KY) called it “a last-minute, cobbled-together stimulus bill” that would not improve a “complete lack of confidence” on Main Street in Democratic Party economic policy.1,2

TRADE DEFICIT SHRINKS: 14% A report from the Commerce Department says that America’s trade deficit narrowed to $42.8 billion in July, $7 billion less than the June figure. This is a good sign for 3Q growth. It was the biggest month-over-month reduction since February 2009. The report also noted a 1.8% jump in exports, the best monthly gain seen in that category since August 2008.3

WHOLESALE INVENTORIES GROW: Surpassing forecasts, wholesale stockpiles increased by 1.3% in July. That is the best month in two years for this indicator. Durable goods stockpiles maintained by wholesalers increased by 1.0%, and the inventory-to-sales ratio reached its best level since February 2010.4

BEIGE BOOK OFFERS MIXED NEWS: The Federal Reserve’s latest snapshot of economic conditions in its 12 districts found “economic growth at a modest pace” in five of them: Kansas City, Dallas, San Francisco, St. Louis and Minneapolis. “Positive developments or net improvements” were also noted in the Boston and Cleveland districts. No improvement was seen in the New York, Richmond, Atlanta, Philadelphia or Chicago districts.5

SHORT WEEK BRINGS ANOTHER ADVANCE: In the four market days following Labor Day, the S&P 500 rose 0.46% to 1,109.56. The Dow stayed positive for 2010, rising another 0.14% resulting in a Friday close of 10,462.77. As for the NASDAQ, it gained 0.39% to pull up to 2,242.48 at the closing bell Friday. It was a week of thin volume and mild economic “weather” with no great impact on Wall Street. As of Friday’s close, the S&P 500 was up about 5.7% for the month; the NASDAQ and DJIA were respectively up about 4.5% and 6.1% for September. Next week, we have the latest retail sales and industrial output reports and new CPI and PPI data.6

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+0.33
+8.68
-0.40
-0.65
NASDAQ
-1.18
+7.60
+0.62
-4.24
S&P 500
-0.50
+6.27
-2.13
-2.55
REAL YIELD
9/10 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
1.02%
1.59%
1.64%
4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 9/10/106,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.


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«RepresentativeDisclosure»

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. 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. www.montoyaregistry.com www.petermontoya.com

Citations.
1 - cnbc.com/id/39096574 [9/10/10]
2 - content.usatoday.com/communities/theoval/post/2010/09/obama-pitches-new-plan-for-roads-runways-and-rail-lines/1 [9/6/10]
3 - thestreet.com/story/10856254/1/us-trade-deficit-narrows-14-in-july.html [9/9/10]
4 - bloomberg.com/news/2010-09-10/wholesale-inventories-in-u-s-rise-the-most-in-two-years-on-demand-rebound.html [9/10/10]
5 - npr.org/blogs/thetwo-way/2010/09/08/129728343/economy-had-widespread-summer-slowdown-fed-reserve [9/8/10]
6 - cnbc.com/id/39102559 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F10%2F09&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F10%2F09&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F10%2F09&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F9%2F05&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F9%2F05&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F9%2F05&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F11%2F00&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F11%2F00&x=0&y=0 [9/10/10]
7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F11%2F00&x=0&y=0 [9/10/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [9/10/10]
8 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [9/10/10]
9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]