Monthly Newsletter

July 2010

Issue #1 June review

1. Macroeconomics ................................................................................................................................... 1
2. Rates....................................................................................................................................................... 1
3. Currencies.............................................................................................................................................. 1
4. Stock Indices ......................................................................................................................................... 2
5. History .................................................................................................................................................... 2
6. Basic Materials ...................................................................................................................................... 4
7. Faces of Austerity ................................................................................................................................. 5
8. Industrial commodities ......................................................................................................................... 6
9. Insights................................................................................................................................................... 9

Rates Macroeconomics
FED - 0.25% Month of Austerity
ECB - 1% Month of June in the global economy has been very hectic. Greek
crisis still not quiet, Hungary has already touched on the serious troubles
BoE - 0.5% and Spain as well.
BoJ - 0.1% The heads of state rushed to rescue countries, the G20 came to the
BoCh - 5.31% meetings. The fear returns.
June will be remembered as the month for global austerity.
Meeting in Luxembourg, European finance ministers discussed the
Currencies proposal for a new European Financial Stability Facility, able to sell debt
backed by guarantees from governments and use the money raised to
EUR/USD - 1.2311
make loans to countries in need. Countries would be offered loans only
USD/JPY - 91.4400 under strict budget austerity conditions such as those imposed on Greece,
GBP/USD - 1.4731 a stipulation pressed by Germany.

USD/CAD - 1.0243 Chancellor Angela Merkel unveiled a major austerity package aimed
at finding savings of more than €85 billion by 2014, but it was immediately
USD/CHF - 1.1311 criticized by the opposition and trade unions, which pledged that they
USD/CNY - 6.8333 would unite to fight cutbacks they claimed would undermine the country’s
generous social welfare system.
Economists surveyed by The Wall Street Journal are sticking with their
forecasts for slow but steady growth in the U.S. economy through the
middle of 2011 despite recent turmoil in European debt markets. But their
outlook is clouded by growing worries about Europe and the vitality of the
U.S. job market.
A double-dip recession is possible in several European countries if
investors lose faith in efforts to control debt, the World Bank said on
Thursday. Government finances in high-income countries in Europe,
France, the US and the UK are currently on an “unsustainable path,” said
Andrew Burns, the World Bank’s manager of global macroeconomics.

1
 Leaders of the world’s biggest economies (G20) agreed on a timetable
Stock Indices for cutting deficits and halting the growth of their debt, but also
acknowledged the need to move carefully so that reductions in spending
Dow Jones Industrial did not set back the fragile global recovery. (Full austerity document you
Average can find here: http://www.scribd.com/doc/33638043/20100628-summit)

A key trend in recent months was the decline in the euro. The
townward movement was riggered as confidence was undermined by
sovereign debt crises in several countries in the eurozone and by the
prospects of stronger growth in the United States than in Europe. The euro
fell by 14.5% against the dollar in the first half, and by more than 19% from
S&P 500 INDEX the November 2009 high of $1.51 (BNPParibas).

Indicators of United States

NASDAQ COMPOSITE
History
The Great Depression
The Great Depression was a severe
worldwide economic depression in
the decade precedingWorld War II.
The timing of the Great Depression
varied across nations, but in most
countries it started in about 1929 and
lasted until the late 1930s or early
1940s. (wikipedia.org)
Recent economic data confirmed the expected slowdown in the
recovery. It was clear that the support provided by stocking behaviour and
budget stimulation packages was bound to erode. Even so, the markets
were taken by surprise by the decline in manufacturing ISM, which
dropped from 60.4 to 59.7 in May and then to 56.2 in June. The jobs
report had the same effect, even though the decline was foreseeable given
the temporary nature of massive hiring for the census, with a net gain of
400,000 public jobs in May and a loss of 208,000 jobs in June. Job
creations were more moderate in the private sector (83,000 in services and
9,000 in industry) not enough to avoid a decrease of total employment by
125 000. The rate of unemployment dropped from 9.9% to 9.5% that was
essentially due to a 0.5 point decline in the participation rate to 64.7%.
Household confidence plunged to 52.9 in June after a three month rally to
62.7 in May. The deterioration can be seen in both future expectations
(71.2 vs 84.6) and the present situation (25.5 vs 29.8). The perception of
job market conditions also deteriorated for the second consecutive month
and unsurprisingly, plans to purchase homes and big ticket items
also contracted (BNPParibas).
The United States economy expanded 2.40 percent over the last year,
as measured by the year-over-year change in Gross Domestic Product
(GDP YoY). Unlike the commonly used quarterly GDP growth rate, the
annual GDP growth rate takes into account a full year of economic activity,
thus avoiding the need to make any type of seasonal adjustment. The
United States Gross Domestic Product is worth 14093 billion dollars or
22.73% of the world economy, according to the World Bank.

The United States Government Bond Yield for 10 Year Notes stands
at 2.92 percent.

2
The inflation rate in the United States was 1.10 percent in June of
2010.

The unemployment rate in the United States was 9.50 percent in

June of 2010.

The United States had a government budget deficit in 2010

equivalent to 9.30 percent of the Gross Domestic Product (GDP).

The United States reported a balance of trade deficit equivalent to

42.3 Billion USD in May of 2010.

3
Basic Materials

The demand for oil and gold rose in June. While platinum and silver
demand has decreased.

4
Faces of Austerity

5
Invest with Finviz

Industrial commodities
The demand for industrial commodities decreased in June.
It’s a bad sign for economy’s recovery.

6
Subscribe for a free
weekly newsletter

7
8

Blue chip
A blue chip stock is the stock of a
well-established company having
stable earnings and
extensive liabilities. Blue chip stocks
pay regular dividends, even when
business is faring worse than usual.
The term is derived from casinos,
where blue chips represent the
greatest value among the many
colors of chips.
(wikipedia.org)
Insights
Stocks and ETFs for your portfolio
The best stocks to your long-term portfolio are Blue Chips in July.
no Dow Jones Industrial Average index’s stocks are the world's best-
known Blue Chips. Here they are:
1. 3M-MMM
2. Alcoa-AA
3. American Express-AXP
4. AT&T-T
5. Bank of America-BAC
6. Boeing-BA
7. Caterpillar-CAT
8. Chevron Corporation-CVX
9. Cisco Systems-CSCO
10. Coca-Cola-KO
11. DuPont-DD
12. ExxonMobil-XOM
13. General Electric-GE
14. Hewlett-Packard-HPQ
15. The Home Depot-HD
16. Intel-INTC
17. IBM-IBM
18. Johnson & Johnson-JNJ
19. JPMorgan Chase-JPM
20. Kraft Foods-KFT
9
 21. McDonald's-MCD
22. Merck-MRK
23. Microsoft-MSFT
24. Pfizer-PFE
25. Procter & Gamble-PG
26. Travelers-TRV
27. United Technologies Corporation-UTX
28. Verizon Communications-VZ
29. Wal-Mart-WMT
30. Walt Disney-DIS

But if you prefer ETFs, SPDR Dow Jones Industrial Average ETF
(DIA) is a good idea for you.

10