weekly update 0 1346077799 by 5bcY1j3


									                     Evaluating the Summer Rally
                           Weekly Update – August 27, 2012

After another slow trading week, markets closed slightly down, with the S&P losing
0.50%, the Dow dropping 0.88%, and the Nasdaq losing 0.22%.1 With the S&P 500
edging close to another record high, you might be wondering how much higher markets
can go in this ‘sugar high’ rally. We’ve been asking this question too, and while we
typically dislike getting too much into technical analysis, we want to discuss a technical
indicator that could shed some light on the answer.

When determining whether equities are approaching a peak or floor, many analysts turn
to the Chicago Board Options Exchange Market Volatility Index (VIX), a measure of the
volatility of S&P 500. Historically, the VIX has been an uncanny forecaster of market
tops and bottoms; whenever volatility (as measured by the VIX) is low, the S&P has
reached a decisive peak, and then fallen. Last week, the VIX hit a multi-year low of
13.45 (anything under 20 is considered low), and we believe that given the lack of
economic support for further gains, equities could be poised for a pullback.2 Cutbacks in
business spending, pressure on food prices, and a weak manufacturing sector mean
that the domestic recovery is anything but guaranteed. Weak numbers from China and
Europe indicate that our trading partners will be dealing with their own economic
troubles for months or years to come. This leads us to believe that the summer rally is
fundamentally driven by trader expectations around further global quantitative easing.
Recent jawboning by Fed officials, European leaders, and EU central bankers is largely
to blame for the recent rally.

So if there is a pullback, what could it mean? How much equities retreat and when they
do so will depend on a number of factors, such as the murky global economic outlook,
September Federal Reserve meeting, and upcoming elections. In terms of headwinds,
we can expect the continued contraction of the European markets to present further
challenges, as will a potential hard landing in China. On the flip side, investors could
see a boost after the next FOMC meeting, as it looks increasingly likely that the Fed will
undertake further quantitative easing. Much will also depend on what action legislators
take to address the fiscal cliff. Although it is reasonable to expect an end to our summer
market romance, we believe there will be many opportunities for growth further down
the road.

To wrap it all up, please remember that short-term gyrations in the market are expected
and usually have had little relevance to long-term investment performance. When
markets pull back, it can sometimes feel like riding an elevator to the basement, but
market losses are rarely evenly dispersed across all sectors. In every market
environment there are investment opportunities to be had, and we strive to find those
opportunities and putting them to work in our clients’ portfolios.

Monday: Dallas Fed Mfg. Survey
Tuesday: S&P Case-Shiller HPI, Consumer Confidence
Wednesday: GDP, Pending Home Sales Index, EIA Petroleum Status Report, Beige
Thursday: Jobless Claims, Personal Income and Outlays
Friday: Chicago PMI, Consumer Sentiment, Factory Orders
                   Data as of                           Since
                                       1-Week                        1-Year      5-Year      10-Year
                   8/24/2012                           1/1/2012
                Standard &
                                       -0.50%          12.21%        19.83%      -0.92%       5.00%
                Poor's 500
                DOW                    -0.88%           6.14%        16.60%      -1.50%       4.83%
                NASDAQ                 -0.22%          17.84%        24.40%       3.83%      12.23%
                MSCI EAFE              -0.38%           7.64%         3.46%      -4.52%
                Treasury Note           1.82%            N/A          2.26%       4.63%       4.23%
                (Yield Only)
     Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
            Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
               Indices are unmanaged and cannot be invested into directly. N/A means not available.


Durable goods order rise in July. Overall, durable goods rose a seasonally-adjusted
4.2%, beating expectations of a 2.5% increase. However, excluding the volatile
transportation category, long-lasting goods actually fell 0.4%, indicating that the
manufacturing sector is still suffering. Core capital goods, products like computers,
industrial machinery and steel, a key measure of business investment, fell 3.4%, a
steep drop that indicates businesses are scaling back investment in the slow economy. 3

Unemployment claims rise by 4,000. The number of first-time unemployment
beneficiaries rose last week to a seasonally-adjusted 372,000, showing that the jobs
recovery remains modest and uneven. While hiring continues to improve, it grew more
slowly in August than July.4

New homes sales grew 3.6% in July. The gain in sales matches the two-year high the
housing market reached in May, indicating that housing is recovering steadily. Although
housing sales have leaped 25% in the last year, we are still well below the levels that
economists consider healthy. One trend slowing housing sales is a relative lack of
available new homes; inventory levels dropped in July to the lowest on record. 5

Spain in unofficial talks with Eurozone about bailout. Although they have not yet
made an official bailout request, Spanish officials are negotiating with Eurozone leaders
to have government debt purchased by the existing rescue fund and are asking the
ECB to intervene in secondary markets to lower bond yields.6


"Nothing is predestined: The obstacles of your past can become the gateways that lead
to new beginnings.” – Ralph Blum


                                             Lemon Semifreddo
   This luxurious dessert is deceptively simple, making it perfect for a easy meal with
                         friends. Recipe from RealSimple.com.

6 large egg yolks
1 tablespoon finely grated lemon zest plus 1/2 cup lemon juice
1/2 teaspoon kosher salt
1 1/2 cups sugar
2 cups heavy cream
1/4 cup sliced almonds

1) Set a fine-mesh sieve over a medium bowl. In a heatproof medium bowl, whisk
   together the egg yolks, lemon zest and juice, salt, and 1 cup of the sugar. Set the
   bowl over (not in) a saucepan of simmering water and cook, stirring constantly, until
   the lemon mixture becomes opaque and has thickened slightly, 12 to 15 minutes.
2) Pour the lemon mixture through the sieve into the bowl. Place a piece of plastic wrap
   directly on the surface of the lemon mixture and refrigerate until completely cool, at
   least 2 hours.
3) Using an electric mixer, whip the cream and the remaining ½ cup of sugar on
   medium until soft peaks form, 2 to 3 minutes. In 3 additions, gently fold the whipped
   cream into the lemon mixture. Pour into an 8-by-4-inch loaf pan or another 6-cup
   pan, cover, and freeze until firm, at least 4 hours.
4) Meanwhile, heat oven to 375° F. Spread the almonds on a rimmed baking sheet and
   toast, tossing once, until golden brown, 4 to 6 minutes.
5) Serve the semifreddo sprinkled with the almonds.


                                  Short Game Swing
Think long, slow, and smooth for your short game. Precision is important around the
green, so there isn't much margin for error. It's vital that you maintain a steady, smooth
rhythm and tempo for every short shot you hit. Forcing yourself to make a short swing
because you have to move the ball a short distance throws off your timing.

Instead, try counting through each short shot you hit: "One, two, three." Count “one” as
you start the club away from the ball, "two" when you reach the top of the swing, and
"three" as you swing through. From 40-yard pitch shots to delicate chips off the apron,
maintain this same count. If you do, you'll find it much easier to make consistent


                                               Manage Your Lifestyle

Many successful business people turn as much attention to their personal lives as they
do their businesses. Lifestyle management involves the slow addition of health-
improving activities and the removal of negative influences in your life. Rather than
embarking on crash diets and large-scale changes of life, consider the slow, gradual
approach to building healthy habits like exercise, diet, and personal downtime.


                                              Go Potted, Not Clipped
We all know that you don’t attend a social gathering empty-handed. Instead of bringing
cut flowers to your next dinner date or party, bring a potted plant. Cut flowers are often
grown internationally and flown to florists around the world, creating a significant carbon
burden. They may also be grown in areas which have been cleared of natural flora and
fauna, contributing to the loss of critical biodiversity. By opting for a locally-grown potted
plant, you avoid participating in a damaging cycle and will contribute to the clean air and
pleasure a living plant provides.

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect
against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets

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 Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock
Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the
performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia
and Southeast Asia.

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.

The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB
members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted
and weighted to produce the HMI.

The Pending Home Sales Index, a leading indicator of housing activity, measures housing contract activity, and is based on
signed real estate contracts for existing single-family homes, condos and co-ops. The PHSI looks at the monthly
relationship between existing-home sale contracts and transaction closings over the last four years. The results are
weighted to produce the index.

The Chicago Board Options Exchange Market Volatility Index (VIX) is a weighted measure of the implied S&P 500 volatility.
VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the
upcoming 30-day period, which is then annualized.

The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a
representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a
composite index.

The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several
individual leading economic indicators, which are weighted to produce the complete index.

Google 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

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market
valuations, prepayments, corporate events, tax ramifications and other factors.

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