Weekly Economic Update for the Week of May 24, 2010

C.W. Copeland & Associates presents

Weekly Economic Update for the Week of May 24, 2010

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Quote of the week. “To succeed in life, you need three things: a wishbone, a backbone and a funny bone.”– Reba McEntire

Attention on Europe(and the Senate). The euro thankfully rose for three straight days last week, after hitting a four-year low after German chancellor Angela Merkel commented that the EU/IMF debt bailout had “done no more than buy time” to fix the crisis. Thursday evening, the Senate passed its version of the financial industry reform bill; the next step is reconciliation with the House version. Stocks were hit hard early in the week, but managed Friday gains; a late rally took the Dow north 125 points.^1,2,3

Consumer, producer prices retreat. This was surprising: the CPI declined 0.1% in April as energy prices fell by 1.4%. The PPI also decreased 0.1%. The Commerce Department reported a 0.9% year-over-year increase in the CPI, well below the Federal Reserve’s annual inflation target of 1.5-2.0%.^4,5

Indicators streak ends. The Conference Board’s index of leading indicators slipped 0.1% last month, the first dip since March 2009. Economists surveyed by Thomson Reuters had forecast a 0.2% increase.⁶

Housing starts rise, permits fall. Overall housing starts increased by 5.8% in April to the highest level since October 2008, with a 10.0% rise in single-family construction. However, the Commerce Department had building permits down by 11.5% - an effect of expiring federal tax credits.⁷

Bulls try to hold their ground. All three major U.S.indices slipped between 4-5% last week. However, the S&P rose 1.50% Friday to end the week at 1,087.69. At Friday’s close, the Dow was at 10,193.39 and the NASDAQ at 2,229.04.⁸

% Change	Y-T-D	1-Yr Chg	5-Yr Avg	10-Yr Avg
DJIA	-2.25	+22.93	-0.53	-0.33
NASDAQ	-1.77	+31.49	+1.78	-3.37
S&P 500	-2.46	+22.44	-1.71	-2.23
Real Yield	5/21	1 Yr Ago	5 Yrs Ago	10 Yrs Ago
10YrTIPS	1.33%	1.67%	1.67%	4.34%

(Source: CNBC.com, BigCharts.com, ustreas.gov, bls.gov, 5/21/10)^9,10,11,12

Indices are unmanaged, do not incur fees or expenses, and cannot be

invested into directly. These returns do not include dividends.

Riddle of the week. The railings on a 60-yard-long walkway have ornamental sculptures every 12 yards on both sides, starting at the east and west ends of the walkway. How many total sculptures are there on the walkway?

Contact my office or see next week’s Update for the answer.

Last week’s riddle: What number logically comes next in this series: 2, 3, 5, 9, 17, __.

Last week’s riddle answer: 33. (The difference between the two numbers is progressively multiplied by 2 and added to the next number.)

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Citations.

1 - guardian.co.uk/business/2010/may/17/euro-four-year-low-debt-crisis [5/17/10]

2 - money.cnn.com/2010/05/21/markets/markets_newyork/index.htm [5/21/10]

3 - marketwatch.com/story/us-stocks-turn-positive-boosted-by-financials-2010-05-21 [5/21/10]

4 - blogs.barrons.com/stockstowatchtoday/2010/05/19/cpi-has-surprise-dip-led-by-energy-prices [5/19/10]

5 - online.wsj.com/article/SB10001424052748703691804575254091622651542.html [5/20/10]

6 - thenewstribune.com/2010/05/20/1194127/leading-indicators-drop-01-percent.html [5/20/10]

7 - investors.com/NewsAndAnalysis/Article.aspx?id=534355 [5/18/10]

8 - blogs.wsj.com/marketbeat/2010/05/21/data-points-us-markets-246/ [5/21/10]

9 – usatoday.com/money/default.htm [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=5%2F21%2F09&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=5%2F21%2F09&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=5%2F21%2F09&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=5%2F20%2F05&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=5%2F20%2F05&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=5%2F20%2F05&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=5%2F22%2F00&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=5%2F22%2F00&x=0&y=0 [5/21/10]

10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=5%2F22%2F00&x=0&y=0 [5/21/10]

11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [5/21/10]

11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [5/21/10]

12 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

C.W. Copeland
"Your Personal CFO"
C.W. Copeland & Associates
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