Market Report

Headlines Obama unveiled new healthcare overhaul proposal Greece Prime Minister said country is not looking for a bailout SEC voted 3-2 to curb short selling China blocked Hummer sale New home sales fell to 309k in January Jobless claims rose to 496k Bernanke delivered semi-annual testimony Fed raised discount rate to 0.75%

Market Overview The stock market remains relatively choppy following the correction we saw at the beginning of February.  Economic data continues to point to recovery, although the consumer confidence index fell to 46% - down 11% from January.  There is continuing improvement in manufacturing (which tends to lead the economy) and industrial production. Housing remains a concern - building permits were down almost 5% in January and new home sales fell 11% to their lowest level on record.  Billions of dollars of 'option ARMs' come due this year, which could renew pressure on foreclosures. Initial jobless claims (a leading indicator) after falling rapidly have leveled off at a still-troubling level. The Federal Reserve has the delicate task of unwinding its massive stimulus efforts.  It has ended its purchases of US Treasuries and raised the discount rate from 0.50% to 0.75%.  While long term concerns about inflation are valid - the consumer price index (a measure of inflation) actually declined in January for the first time since 1982.  In response to the crisis, the Fed aggressively provided stimulus (see the Figure below).  At this point, the economic recovery in the US looks stronger than Europe or Japan - which is increasing the value of the dolar.  Economists forecast the United States to post strong growth of 3.0% in the first quarter of 2010, while expecting the eurozone and Japan to grow at a slower 0.9% each. Growth in China is expected to remain strong, although China's governement has made moves to slow it's booming economy. Greece continues to face difficulties (despite support for Greece by the EU members).  Greece has pledged to cut its deficit from 13% of GDP to 9% - this may be difficult and will slow the recovery. Market Figures

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