Commentary

Weekly Econotes Fixed Income Report Market Commentary Words of Wealth

Econotes

	November 14, 2008	Retail sales decreased 2.8% in October – the largest one-month drop on record dating back to 1967. The rate of change in the Weekly Leading Index fell to a new record low of 25.9% during the week ending November 7.
	November 7, 2008	The economy slumped at a remarkable pace in September and October. Job losses accelerated, and the unemployment rate hit a new high for this cycle. The mood among purchasing managers turned deeply negative.
	October 31, 2008	Real GDP fell 0.3% in the third quarter. The decline probably will be revised lower and almost certainly will be followed by a larger decrease in the fourth quarter.
	October 24, 2008	The prices of gold, oil and equities headed lower on the week, reflecting accumulating concerns about a global recession and its implications for corporate profits. Superficial improvement in the Leading Economic Index and existing home sales was largely ignored.
	October 17, 2008	Recession hit with a fury in September. Retail sales and industrial production caved. Housing construction fell again. And the mood of consumers turned down.
	October 10, 2008	In a data-light week, fear filled the void, leading to unprecedented volatility and declines in equity prices. Developments reflected ongoing efforts to arrest the panic that has gripped financial markets for several weeks.
	October 3, 2008	Labor markets deteriorated notably in September and purchasing managers in manufacturing reported one of the sharpest drop-offs in activity on record, leaving no doubt about the seriousness of the ongoing economic downturn.
	September 26, 2008	Leading economic indicators deteriorated in the latest week, but consumer confidence improved and the downward trend in home sales flattened.
	September 5, 2008	The large decrease in employment and rise in the unemployment rate in August confirms the economy is in recession.
	August 29, 2008	Real GDP growth was revised up to 3.3% in the second quarter from the initial report of 1.9%. The upward revision reflected much stronger foreign trade than originally estimated and a smaller decrease in business inventories.
	August 22, 2008	The recent deterioration in leading economic indicators points to more economic weakness ahead.
	August 15, 2008	The July surge in consumer prices marks the end of the recent increase in inflation. Today’s 5.5% inflation rate could be as low as 2.5% by next summer.
	August 8, 2008	Economic news points to a 2% federal funds rate target as far as the eye can see. The deterioration in labor markets appears to have intensified. The special tax rebates have had only a modest effect on real consumer spending so far.
	August 1, 2008	Weak economic growth and falling employment continued through the second quarter and into the third.
	July 25, 2008	The importance of housing for recovery of the economy and financials markets was evident in the reactions to reports on sales of existing and newly built homes in June.
	July 18, 2008	Major monthly economic indicators remained mixed during June, but left intact the impression of an economy struggling from the ongoing adjustments in housing and a further tightening in credit availability and terms.
	July 11, 2008	Far from being inflationary, monetary policy is neutral or even modestly disinflationary. The elevated rate of inflation is the temporary result of high energy prices, and will give way to lower inflation over the next two years.
	July 3, 2008	The June Employment Situation Report removed any doubt about whether the economy is in recession. Private sector payrolls have declined in each of the last seven months – a pattern observed only during recessions in the past.
	June 27, 2008	Tax rebates propped up personal income and consumer spending in May, and housing sales provided a hint that the downturn is slowing. Even so, consumer confidence caved to new long-time lows and equities swooned.
	June 20, 2008	The Fed’s policy-making committee will meet June 24-25. We expect no change in the federal funds rate target. While concerned about faster inflation becoming factored into expectations, policy-makers will no doubt take note of continuing signs of economic weakness.
	June 13, 2008	A promising bounce in May retail sales and solid upward revisions to March and April raised the prospects for second quarter economic growth. The mood among consumers and owners of small businesses remained especially gloomy.
	June 6, 2008	A very bleak employment report for May more than offset modestly positive news from purchasing managers announced earlier in the week. The economy faces more deterioration before it improves.
	May 30, 2008	Real GDP was a little stronger in the first quarter than originally reported, but the mood of consumers darkened notably in May.
	May 23, 2008	The leading economic index was stable for another month, but existing home sales continued to slide. The minutes from the Fed’s April policy making meeting reinforced expectations that the next rate change will be an increase before year end.
	May 16, 2008	Although viewed as better than expected, the economic data released this week were uninspiring. Retail sales were soft and industrial production gapped lower.
	May 9, 2008	The economic picture improved a bit in a data-light week. Yet it is not clear how consumers and businesses will escape the high and rising price of oil and the ongoing tightening of lending standards by banks.
	May 2, 2008	Real GDP grew 0.6% in the first quarter – the same as in the fourth quarter. Most analysts look for a decline in the second quarter. Employment fell for the fourth straight month in April but by a smaller amount.
	April 25, 2008	The GDP Derby is in full swing, and we will have a winner on April 30 when the Commerce Department releases its advance estimate for first quarter economic growth. Analyst estimates range from modestly negative to modestly positive.
	April 18, 2008	Economic data looked a little better this week, and better-than-feared corporate earnings led to increases in equity prices and bond yields. Our recession call still stands, however, owing to the deterioration in key cyclical indicators.
	April 11, 2008	To the extent that expectations matter, the economy is in deep trouble. The outlook of consumers and small business owners deteriorated to critical levels in March and early April, suggesting that economic conditions could worsen before getting better.
	April 4, 2008	Employment fell for the third month in a row in March, indicating that the first business cycle recession since 2001 is almost certainly underway. Manufacturing continued to contract in March, and construction fell again in February.
	March 28, 2008	The economic news in a data-filled week was decidedly negative. Personal income growth continued to falter in February with implications for consumer spending. Consumer confidence fell sharply for the second straight month in March to a long-time low.
	March 21, 2008	Economic news worsened this week, with the latest reports on manufacturing turning negative and the composite leading economic index slipping further into recession territory. The Fed reduced the federal funds rate by 75 basis points to 2.25%, as expected.
	March 14, 2008	Weak February retail sales reinforced already-substantial evidence of slower economic activity. The smaller-than-expected rise in consumer prices during the month tempered concerns about inflation. The Fed is likely to reduce the federal funds rate target by 75 basis points to 2.25% on Tuesday.
	March 7, 2008	There is always room for hope. But the February employment report reduced to an imaginary thread the chance that the economy will avoid recession this year.
	February 29, 2008	Signs of economic weakness mounted further last week. Home sales were weak again in January. Personal income and consumer spending softened in January, and consumer confidence deteriorated in February.
	February 22, 2008	The drumbeat of negative economic reports continued during a relatively light data week. More bad news on housing accompanied an inflation report that generated additional concern. Leading indicators have deteriorated further, and the Philadelphia Fed survey of businesses uncovered deteriorating conditions in the region.
	February 15, 2008	The economy continued to deteriorate this week. Consumer and business confidence fell to recession levels. January retail sales and industrial were both weak.
	February 8, 2008	Will they? Won’t they? How far will they go? Our analysis says that, at 3%, the federal funds target is still above equilibrium. In other words, despite the steep drop in short-term interest rates, monetary policy is still tight. The implication is that this phase of the interest rate cycle has further to go – at least for short-term interest rates.
	February 1, 2008	Economic data leaned back toward the recession path this week. Employment fell in January, marking the first monthly decline since August 2003. Real GDP growth was a below-consensus 0.6% in the fourth quarter.
	January 25, 2008	The Fed finally closed in on the neutral level for the federal funds rate by cutting its target by 75 basis points on Tuesday. It appears likely that the target will be taken below our estimate of neutral in the months ahead.
	January 18, 2008	Talk of economic stimulus is a sideshow, at best. Coincident indictors, such as industrial production and retail sales, continued to falter while leading indicators are slumping badly.
	January 11, 2008	High oil prices led to a sharp one-month deterioration in the trade balance during November. Holiday retail sales posted the weakest year-over-year gain in five years during November-December. The Federal budget benefited from continued strong growth in individual income tax revenues.
	January 4, 2008	The jump in the unemployment rate during December is an unequivocal sign of recession.
	December 31, 2007	Even in the holiday-shortened week, the economic news was bleak. Housing deteriorated further, and jobless claims creeped closer to a critical level.
	December 24, 2007	It’s beginning to look a lot like recession. Despite some more better-than-expected economic reports, the economy continues to edge toward a business cycle downturn.
	December 17, 2007	Expected Fed ease and a disappointing policy statement combined with solid economic reports and a nasty inflation report to unsettle financial markets.
	December 10, 2007	Employment increased by 94,000 jobs in November, matching the six-month average. Manufacturing held steady.
	December 3, 2007	Real GDP growth during the third quarter was revised up to 4.9%. Despite the very strong pace of growth during the last half year, the consensus is for weak growth through at least next spring.
	November 26, 2007	While compelling, the evidence in favor a near-term recession still lacks some key elements. Initial jobless claims need to rise above at least 350,000, the growth rate of ECRI’s short leading index needs to fall further into the red, and the ISM purchasing managers index needs to drop below the neutral level of 50.
	November 19, 2007	Outside of employment, the major economic reports for October have been weak. After payrolls increased 166 thousand in the month, retail sales were soft and industrial production fell.
	November 12, 2007	Economic data were mixed last week, as positive news from purchasing managers at non-manufacturing firms was offset by declines in measures of consumer confidence.
	November 5, 2007	Real GDP grew 3.9% in the third quarter, following 3.8% in the second quarter. Forecasters still expect a slowdown in the current quarter, but employment growth of 166,000 in October indicates that labor markets entered the period with momentum.
	October 29, 2007	Weak housing data and disappointing durable goods orders for September set the tone headed into FOMC meeting on Tuesday and Wednesday. We expect a quarter-point cut in the funds rate.
	October 22, 2007	The deterioration in residential construction activity continued in September and into October. Industrial production weakened in August and September. The Fed’s Beige Book reflected weaker economic activity in late summer.
	October 15, 2007	The tone of economic indicators has improved lately. Strong September retail sales reveal that consumer spending made a major contribution to third quarter economic growth. Jobless claims have improved, but the year-long upward trend in continuing claims bears watching.
	October 8, 2007	Labor markets have weakened this year, but by nowhere near as much as the preliminary August report indicated. The rise in the unemployment rate to 4.7% in September from the low of 4.4% six months ago is a legitimate concern.
	October 1, 2007	Personal income held its ground in August, while spending softened. Housing construction and sales deteriorated. The inventory of unsold homes increased and prices weakened.
	September 24, 2007	The Fed reduced its federal rate target by 50 basis points at its September 18 meeting. The yield curve has steepened about as much since June as it did in the 1995 and 1998 easing episodes. Appreciable additional easing will require pronounced economic weakness and no notable rise in inflation.
	September 17, 2007	In combination with the decrease in employment during August, weak retail sales and industrial production all but guarantee a cut in the federal funds rate target this week.
	September 10, 2007	Employment fell in August for the first time since 2003, sparking concerns about recession.
	September 3, 2007	Real GDP growth was revised up to 4.0% for the second quarter. Consumers have begun to rebuild savings.
	August 27, 2007	Economic data were okay last week, and developments in credit markets dominated the headlines. Durable goods surprised on the upside, as did new home sales. Jobless claims still bear watching.
	August 20, 2007	With market turmoil and Fed drama occupying center stage, economic data were a sideshow. Retail sales and industrial production showed that economic momentum carried into the third quarter.
	August 13, 2007	A light data week provided plenty of excitement. The Fed added liquidity on Friday to facilitate trading. Trends in productivity and labor costs have deteriorated notably since 2003.
	August 6, 2007	The four consecutive monthly increases in the unemployment rate during April-July by a total of 0.25 percentage points is the most serious warning yet for the economic expansion.
	July 30, 2007	Real GDP expanded 3.4% in the second, as expected, up from 0.6% in the first quarter. Growth during 2004-2006 was revised down 0.3 percentage points to 3.2%. Housing deteriorated further in June, clouding prospects for the second half.
	July 23, 2007	The increase in manufacturing production telegraphed by purchasing managers for several months finally occurred in June. Consumer price inflation edged closer to the Fed’s comfort zone. But Fed chairman Bernanke made clear the number one concern is that inflation fails to moderate.
	July 16, 2007	Retail sales decreased 0.9% in June, retracing much of the 1.5% increase the month before. For the quarter, sales increased 5.0% annualized. Consumer sentiment improved notably in early July, possibly due to recent declines in gasoline prices and strong gains in the stock market.
	July 9, 2007	Employment increased by 132,000 jobs in June, and the unemployment rate stayed at 4.5%. Purchasing managers issued upbeat reports, indicating that the economic rebound gained steam in late spring.
	July 2, 2007	Forecasters estimate that second quarter real GDP growth was between -1.5% and +4.0%. They see moderate growth for the remainder of this year and accelerating growth to about the long-run rate next year.

Fixed Income Report

	November 14, 2008	Equities finished the week sharply lower as did oil prices. Treasury yields declined slightly and the yield curve steepened. Money markets conditions showed little additional improvement.
	November 7, 2008	Friday’s bleak news on the employment situation confirmed the U.S. is in the midst of a severe recession. Treasuries rallied as equities came under pressure midweek. Signs of thawing continued in the money markets but normalcy is a way off yet.
	October 31, 2008	The Fed cut rates as expected. Yet, Treasury yields increased as equity markets rebounded strongly to salvage the month from becoming the worst in history. The level of anxiety subsided somewhat, and next week’s election may reduce uncertainty further.
	October 24, 2008	Fears of global recession spurred massive deleveraging and flight from risk which spared few global markets. Given this backdrop, the Fed is expected to cut rates at its meeting this week.
	October 17, 2008	Extreme volatility continued. After enjoying one of the best days, then suffering one of the worst days in history, equities ended the week higher. Money markets showed some signs of thawing, but more is needed. Markets still expect the Fed to lower rates at the end of the month.
	October 10, 2008	World stock markets experienced panic selling as the turmoil in money markets intensified. Central banks responded with coordinated rate cuts, to little avail. Yet Treasury yields increased on the week. Expect volatility amid more government intervention and uncertainty as to what will unfreeze credit markets.
	September 26, 2008	Markets remained in limbo as politicians in Washington continued to wrangle over the details of the bail-out package. Credit markets remained frozen despite the best efforts of central banks to inject liquidity. Expect volatility to continue.
	September 19, 2008	A week of unprecedented events left Wall Street reeling. The federal government proposed drastic measures to try to get ahead of the financial hurricane. Markets recovered by week’s end, but many questions remain.
	September 12, 2008	Turmoil in the financial markets continued as the week began with the government take-over of Fannie and Freddie and ended with rumors of the impending demise of investment bank Lehman. The Fed meets this week and is widely expected to keep rates unchanged.
	September 5, 2008	A weak employment report pushed Treasury yields to five-month lows, but rumors of a government takeover of Fannie and Freddie caused a sharp reversal.
	August 29, 2008	Markets ended the week little changed amid light pre-holiday trading. Activity should pick up this coming week with the release of key monthly economic data. The Fed is expected to stay on hold at least through year end.
	August 22, 2008	Interest rates were little changed as rumors continued to swirl regarding the ultimate fate of Fannie and Freddie. Commodities rebounded somewhat and equities finished lower.
	August 15, 2008	The route in commodities continued this week on worries of a spreading global slowdown. The dollar also strengthened. Treasuries rallied as markets reduced inflation expectations.
	August 8, 2008	Bonds were little changed while equities rallied strongly on falling oil prices and a strengthening dollar. The Fed left rates unchanged, as expected.
	August 1, 2008	Bonds were aided by relatively weak economic news while equities gyrated wildly throughout the week only to end little changed. The Fed meets on Tuesday, and markets expect no change in rates.
	July 25, 2008	Rates ended slightly higher in another volatile week. Falling oil prices brought some confidence to markets, putting pressure on bonds and helping equities. Markets still expect the Fed to increase rates before year end.
	July 18, 2008	Treasury yields finished higher in yet another volatile week. The federal government announced measures to prop up mortgage giants Fannie Mae and Freddie Mac and banks announced better than expected earnings, sending financial stocks and the broader market higher. Oil prices ended sharply lower.
	July 11, 2008	Treasury yields ended an extremely volatile week little changed as rumors swirled about the imminent demise of mortgage giants Freddie Mac and Fannie Mae. Equities swooned further into bear market territory and oil prices set another new high.
	July 3, 2008	Treasury yields dropped to three week lows as equities entered bear market territory and the employment report signaled continued economic weakness. Oil prices continued marching higher.
	June 27, 2008	The Fed left rates unchanged as expected but markets were unhappy with the statement. Equities and the dollar sold off sharply. Commodities rallied with oil hitting another historic high.
	June 20, 2008	Markets slightly dialed back expectations of imminent Fed tightening as bad news from financials spread even into regional banks. The Fed meets this coming week. Markets expect no change to rates but the wording of the statement will be watched carefully.
	June 13, 2008	Treasuries got hammered this week as the Fed joined other central banks in talking tough on inflation. The economy and financial markets have stabilized enough for the central bank jaw-boning to staunch rising inflation expectations.
	June 6, 2008	Friday’s fireworks provided by sky-rocketing oil prices and a sharp increase in the unemployment rate pushed equities sharply lower and bond prices higher. Markets are torn between oil-driven inflation concerns and a weak economy. The Fed is likely on hold for now.
	May 30, 2008	Interest rates rose in May for the second month in a row. Hawkish Fed officials, rising commodities and a more buoyant equity market promoted the premature assumption that the worst is over.
	May 23, 2008	Interest rates finished the week little changed after volatility throughout the week on skyrocketing oil prices and skittish equities. The Fed indicated concern about inflation, and markets took notice.
	May 16, 2008	Interest rates bumped along near the upper end of the trading range as economic releases generally were not as bad as feared and equities found their footing. Markets are now pricing in tighten-ing as the higher probability by year end, which seems a bit premature.
	May 9, 2008	Surging oil prices and more bad news from the financial sector brought back some of the flight to safety bid in Treasuries. Markets reduced expectations of tightening later this year. Steady policy is the most likely course.
	May 2, 2008	The yield curve flattened with short rates rising as the week’s economic news was not as bad as advertized. The Fed delivered a 25 basis point cut on Wednesday as expected. Markets now expect this move to be the last of the cycle.
	April 25, 2008	Stronger equities, increased corporate bond supply and a rising dollar conspired to push interest rates higher this week as the flight-to-quality inspired run in Treasuries reversed itself. Markets now expect the Fed’s 25 basis point move at next week’s meeting to be the last.
	April 18, 2008	Bonds were hammered this week as confidence returned to markets. Equities rallied and bond yields rose sharply. Markets now expect only 25 basis points out of the Fed at the next meeting.
	April 11, 2008	Bad news sprouted anew this week, sending equities lower and fixed income prices higher. Even the Fed admitted that a recession is likely. Markets are priced for a final 50 basis points in Fed rate cuts, which would put the trough for this cycle at 1.75%.
	April 4, 2008	Interest rates ended the week higher as some stability returned to markets. Friday’s release of weak March employment reminded participants that the economy is in recession.
	March 28, 2008	Treasury yields across the maturity spectrum bounced back during the week of March 28, as concerns of imminent financial market meltdown subsided. The Treasury coupon curve steepend slightly and credit spreads widened a bit further.
	March 21, 2008	Volatility in the financial markets continued unabated this week as equities, fixed income and commodities markets were buffeted by the turmoil in the credit markets and the Fed’s unprecedented response.
	March 14, 2008	The turmoil in the credit markets reached a crescendo this week with news on Friday that Bear Stearns required a bail-out from the Fed via J.P. Morgan Chase. Markets now expect up to 100 basis points of easing when the Fed meets on Tuesday.
	March 7, 2008	The February employment report all but confirmed the U.S. economy is in recession. A new round of liquidity concerns sent the Fed scrambling to supply funds to the banking system. Markets expect another aggressive move out of the Fed at the next FOMC meeting on March 18.
	February 29, 2008	Yields fell sharply and equities faltered badly last week as recession fears dominated. Oil prices topped inflation-adjusted highs and the dollar weakened to all-time lows.
	February 22, 2008	Treasury yields ended the holiday-shortened week slightly higher which belied volatility seen during the week. The yield curve gyrated as oil prices broke through $100 and signs of recess-ion mounted, ending slightly flatter in consolidative fashion.
	February 15, 2008	The yield curve steepened again this week as short rates declined while long rates increased. Weak economic numbers point to more Fed easing while longer term market participants fret about the inflationary implication of aggressive Fed action.
	February 8, 2008	Signs of recession mounted. The Treasury yield curve steepened as short rates price to more rate cuts while investors showed little interest for the 30 year bond auction.
	February 1, 2008	Markets had a semblance of normalcy this week even with another 50 basis point easing from the Fed and a weak employment report. Equities steadily improved, rates stabilized somewhat and the yield curve steepened.
	January 25, 2008	The Fed surprised the markets by lowering rates 75 basis points in a rare inter-meeting move. Markets still expect them to move again at next week’s meeting. But questions arose about the Fed’s motivation for easing.
	January 18, 2008	The bad news continued unabated this week, adding to the pain in equities. By week’s end, Washington got involved as President Bush outlined a stimulus package. Rates declined further and the yield curve steepened.
	January 11, 2008	Negative news continued this week pushing equities to nine-month lows and Treasury yields to levels not seen since 2004. The Fed renewed its commitment to counter the crisis with additional cuts.
	January 4, 2008	The New Year started off on a very sour note for financial markets as poor economic news sparked a tailspin in equities and pushed Treasury yields still lower.
	December 31, 2007	Treasuries enjoyed yet another flight to quality burst as negative economic news combined with renewed geopolitical tension to push yields lower. Yields are likely to end the year near their lows as markets grapple with the magnitude of the mortgage-induced slowdown.
	December 24, 2007	More negative news out of the financial sector coupled with light pre-holiday trading caused a volatile week in both equities and fixed income markets. Trading is likely to remain volatile through the holidays.
	December 7, 2007	Slightly better than expected employment news and a modest recovery in equities pushed Treasury yields to their first weekly increase in eight weeks. The Fed meeting on Tuesday will set the tone for markets going into year end.
	November 30, 2007	Markets spent the month of November pricing in a recession as Treasury yields plunged, credit spreads rose and equity prices fell sharply. The Fed seems to have gotten the message.
	November 23, 2007	Yields plunged yet again this week as credit concerns overwhelmed markets and equities collapsed under the weight of the bad news.
	November 16, 2007	Yields continued declining this week as credit markets were spooked by more mortgage related write-downs and worries that the contagion was spreading to the broader economy.
	November 9, 2007	Yields tumbled again this week as ongoing credit concerns spooked equities. The dollar hit historic lows again as foreign investors fear continued turmoil in the U.S. will result in more Fed easing.
	November 2, 2007	Better economic news was overshadowed by new rumors of losses at major brokerage firms this week. The Fed lowered the fed funds rate as expected but did not telegraph further rate cuts.
	October 26, 2007	Treasuries held on to most of recent gains this week despite stronger equities, a weaker dollar and higher commodity prices. The Fed is expected to lower rates next week.
	October 19, 2007	The flight to quality in Treasuries returned with a vengeance this week as housing and credit related problems reared their ugly heads again. Equities collapsed, the dollar hit new lows and oil reached over $90.
	October 12, 2007	The odds of a rate cut at the upcoming FOMC meeting diminished amid growing signs of financial stability and a resilient economy. Equities, gold and oil all traded near recent highs, reinforcing the view that the Fed will take a pass in October.
	October 5, 2007	Friday’s employment report threw a wrench in market expectations for Fed easing as revisions erased the prior month’s job losses. Fixed income markets sold off sharply. A range-trading environment may ensue as markets sort out the lasting impact of this summer’s financial market turmoil.
	September 28, 2007	Treasuries were buffeted by conflicting signals this week. Economic news was mixed while the dollar made new historic lows against the euro and gold prices reached multi-decade highs.
	September 21, 2007	The Fed surprised the markets on Tuesday with an aggressive easing move. Equities and commodities rallied sharply while fixed income markets were mixed and the dollar weakened to new lows against the euro.
	September 14, 2007	Rates increased this week as financial conditions stabilized somewhat. All eyes will be on the Fed this week. Markets expect at least 25 basis points of easing.
	September 7, 2007	Much weaker than expected employment news out on Friday virtually assures an easing by the Fed at its next meeting on September 18. The markets are looking for 50 basis points with more to come before year end.
	August 31, 2007	Treasuries rallied this week as volatility continued in the equity markets and concern about the housing market continued unabated.
	August 24, 2007	The flight to quality in Treasuries subsided somewhat as conditions in the money markets stabilized and equities recovered. The worst may be over for now, but volatility is as close as the next headline detailing hedge fund losses or real estate woes.
	August 17, 2007	In an unexpected move on Friday, the Federal Reserve lowered the discount rate by 50 basis points, admitting that the “downside risks to growth have increased appreciably.” Markets reacted favorably to the news but will likely be looking for more from the Fed.
	August 10, 2007	Treasury rates ended a tumultuous week higher as central banks around the world filled their role as “lender of last resort” and pumped liquidity into the markets to forestall a true liquidity crisis precipitated by growing credit market concerns. The markets are not likely to be satisfied with a temporary injection of liquidity.
	August 3, 2007	Treasuries rallied again this week on continued credit market concerns and equity market weakness. New lows in rates were set on the 2-year Treasury as market participants revisit the likelihood of Fed easing.
	July 27, 2007	The flight-to-quality in Treasuries accelerated last week as a massive repricing of credit risk spilled over into the equity markets which experienced their worst week in five years.
	July 20, 2007	Treasuries rallied this week as investors reassessed their appetite for risk. More rumors circulated regarding the fallout from the subprime debacle, and credit spreads widened amid signs that investors were balking at debt deals to fund private equity transactions.
	July 13, 2007	Treasury rates ended lower in a volatile week as the market wrestled yet again with the potential economic fallout from subprime mortgages. Fed Chairman Bernanke will testify before Congress next week. He is expected to downplay potential fallout from subprime losses and reiterate concern about inflation.
	July 6, 2007	Fixed income markets finished the holiday-shortened week under pressure. Better economic news and the lack of continued flight-to-quality eroded the recent support for Treasuries. The Fed will likely be on hold for some time to come.
	June 29, 2007	Treasuries ended an otherwise difficult quarter on a positive note as the flight to quality bid got a boost from sub-prime mortgage concerns and renewed terrorism risk. The Fed stayed on hold this week, maintaining its focus on inflation.

Market Commentary

	October 24, 2008	Extreme equity market deterioration has investors selling shares with irrational voracity. Record high Investor Fear makes it time to cautiously add positions.
	October 10, 2008	During the week, the S&P 500 Index dropped 18.2% to close at 899.22. This was the worst calendar week since before 1950 when the S&P 500 began. The closing price was its lowest mark since April 25, 2003. At a precipice in the market, weigh the case for bears and bulls before taking careful action.
	September 26, 2008	Add Washington Mutual to the mix of massive corporate failures this month. Meanwhile, Congress debates an economic rescue plan. That debate should critically recognize the road that led us here. Thereby, answering how to avoid its repeat.
	August 29, 2008	The SEC decided U.S. accounting should follow international financial reporting standards in place of GAAP. Abrogating rules-based GAAP for principles-based IFRS circumvents existing convergence efforts and risks damage to quality of financial reporting systems.
	August 15, 2008	Geopolitical events shape our world and affect the risk implicit in investments. The Georgian conflict and political unrest in Pakistan increase uncertainty and may reverse the tide of globalism.
	April 26, 2008	This week, we witnessed the passing of two venerable Central Ohio institutions. Wendy’s agreed to be acquired by Triarc, and Worthington Industries founder John H. McConnell passed. Such events give cause to reflect on the entrepreneurial spirit of capitalism and equity markets.
	February 29, 2008	2008 economic and market prospects appear dim. By avoiding common mistakes, investors stay on track toward long term goals. A disciplined approach to writing options can turn market volatility in your favor.
	December 7, 2007	President Bush unveiled a plan aimed at rescuing the economy from the mortgage mess. By shifting the burden from parties of private contracts to investors and taxpayers, the plan will likely prolong the problem and increase future borrowing costs.
	October 26, 2007	Efficient markets fairly compensate investors for risk. Investors appear to have fairly priced risk today, but trouble may arise if risk increases.
	September 8, 2007	U.S. stock market prices declined following Friday's preliminary August employment report from the U.S. Department of Labor that showed job losses at 4,000.
	July 2007	Equity prices rose sharply in April and May before falling in June. The total return to the S&P 500 Index was 6.3% during the spring quarter. Bond yields moved notably higher over the quarter, matching year ago levels.

Words of Wealth

	October 3, 2008	Passage of the Paulson/Bernanke rescue plan has attracted considerable debate. Laden with congressional pork, it raises doubt whether it solves the crisis.
	August 22, 2008	Back-to-School season is a good time to visit education savings plans. Before using popular yet complex 529 Plans, consider how a new IRS anti-abuse provision may affect your accounts.
	August 8, 2008	When depository institutions falter, protecting savings and investments is increasingly relevant. How and where you own assets can increase your insurance coverage limits.
	August 1, 2008	Auto companies cut back leasing activities. We recommend resisting the temptation to lease a new car and instead consider money saving alternatives and financing methods.
	December 21, 2007	Investing, like traveling, is about the journey and destination. Your route makes a financial plan; your mode of transportation acts as an asset class; and your driving style forms a strategy. Decide where you want your portfolio to take you. Then, buckle up and go!

Commentaries by J. W. Coons Advisors, LLC contain information based on sources that are believed to be reliable, but the accuracy of data and conclusions is not
guaranteed. The views expressed in these reports are subject to change without notice, and are not offers or solicitations with regard to the purchase or sale of securities.

J.W. Coons Advisors, LLC
1151 Bethel Road, Suite 204,
Columbus, Ohio 43220
(614) 459-4001
jcoons@coonsadvisors.com
© 2005-2008 J.W. Coons Advisors, LLC