POSITIVE economic news reports exceeded NEGATIVE economic news in last
week’s developments.  

Below is a succinct list of last week’s
events:

Positives:

1)
Draghi follows up last week’s call to arms with more color on what he’ll do
next if needed and we await Spain and Italy’s SOS.
2) German July unemployment data in line with estimates.
3) Euro zone Purchasing Managers Index services index revised up to 4 month
high but remains below 50 at 47.9.
4) July Payrolls rise 163k vs est of 100k, most since Feb.
5) Institute of Supply Manager services index ticks up to 52.6 from 52.1 but
components mixed with Employment falling below 50 for 1st time this yr.
6) July retail comps rise more than expected helped by pre Bureau of
Transportation Statistics  discounting.
7) Initial Jobless Claims total 365k vs est of 370k.
8) Consumer confidence up more than 3 pts with those that plan on buying an
auto within 6 mo’s rising to the most on record dating back to ’67.
9) Consumer Sentiment’s May home price index rises more than expected m/o/m,
although still down y/o/y.
10) US savings rate rises to 4%, highest since Aug ’11.
11) Bernanke says no to peer pressure and stands pat.

Negatives:

1)
Manufacturing Purchasing Managers’ Index’s in China, India, South Korea and
Taiwan all drop.
2) US Institute for Supply Management remains below 50 for 2nd straight month.
3) UK Purchasing Manager Index falls 3 pts to 45.4.
4) Final euro zone Purchasing Manager Index falls to lowest since June ’09.
5) US unemployment rate rises to 8.3% in July from 8.2% as the household survey
falls 195k.
6) REAL US consumer spending in June fell .1% coincident with rise in the
savings rate.
7) June EU unemployment rate at 11.2%, matching high.

Source:  The Big Picture

Last week, U.S. Stocks and Foreign Stocks and Bonds increased. 
During the last 12 months, STOCKS outperformed BONDS.   

Source:
Morningstar Workstation. Past performance is no guarantee of future
results.  Indices are unmanaged and cannot be invested into
directly.  Three, five and ten year returns are annualized excluding
dividends.

“Nothing
GREAT was ever achieved without enthusiasm.”

Ralph Waldo Emerson

As I write this on Sunday
evening, the Supreme Court has not yet announced its decision on the
constitutionality of the Patient Affordable Care Act (aka ObamaCare). I think
this decision could be the biggest single Supreme Court decision in my
lifetime.  Its decision will have far reaching, possibly severe effects
upon many aspects of our lives, not just healthcare.  And the news media –
where is it concentrating its reporting today?  Rubio, Fast & Furious,
Sandusky, the brand of beer at the ball park, etc., etc.,…..But, very little
coverage or information about the importance of the Supreme Court
decision.  Very disappointing.

Last week NEGATIVE economic news exceeded POSITIVE economic news.  The
markets reacted with additional volatility although they finished little
changed.  

Below is a succinct list of last week’s
events:

Positives:

1)
Spanish bond yields fall about .5% across their curve. Italian yields lower but
not as much. Will the European Financial Stability Facility and then the
European Stability Mechanism buy sovereign bonds? Portuguese 10 yr yield falls
1% and 2 yr down 1.9% on the week
2) June Euro region mfr’g and services composite index unchanged at 46, well
below 50 and points to clear slowing but was a touch better than expected
3) Lack of a negative rather than a positive but Syriza loses in Greece
4) National Association of Home Builders home builder survey hangs at 5 yr high
at 29 but remains still well below breakeven of 50
5 From construction standpoint, housing permits rise to most since Sept ’08.

Negatives:

1)
German business confidence index falls to lowest since Mar ’10 in June
2) German investor confidence in their economy shows biggest one month drop
since Russian debt mess in Oct ’98
3) German mfr’g Purchasing Managers Index falls to lowest since June ’09
4) French business confidence falls to lowest since Mar ’10
5) Italian consumer confidence drops to record low (dating back to ’96)
6) Switzerland and Denmark both sell short term debt with negative yields,
great for them, sign of panic and fear on the part of the buyers
7) HSBC preliminary June Chinese mfr’g falls to 48.1 from 48.4, a 7 month low
8) India’s struggle with inflation prevents Royal Bank of India from cutting
rates to help slowing economy
9) Philly mfr’g falls to -16.6 from -5.8, well below estimate of zero and
follows weakness in NY region
10) Initial Unemployment Claims at 387k, 4th week in a row 380k+ and 4 week
average rises to highest of the year
11) May Existing Home Sales total 4.55mm annualized, a touch light and number
of months supply moves to most since Nov ’11.  Source:  The Big
Picture

Last week, Foreign Stocks increased.  U.S. Stocks and Bonds
declined.  During the last 12 months, BONDS slightly outperformed STOCKS.

QUESTION:  How much
should I keep in liquid accounts for an emergency fund?

ANSWER:  Financial
advisors use the following rule of thumb:  for 2 wage earner families,
keep 3 months of living expenses in liquid accounts as an emergency fund. 
For one wage earner families, or retirees, keep 6 months in such
accounts.  Emergency funds are used for those UNPLANNED expenditures that
pop up from time to time.  LIQUID accounts are cash, checking &
savings accounts and other investment accounts which can be converted to cash
quickly- within 21 days- and easily with very little loss of value.  Why
within 21 days?  If an emergency arises, consumers can use a credit card
to satisfy immediate cash needs, and then liquidate emergency funds within 21
days to pay off the credit card before interest accrues.

NOTE: 
Financial planning advice such as the above is general in nature and cannot be
used for all situations.  Before applying this to your own unique
circumstances, we recommend contacting your financial advisor to double-check
how to apply the information to your situation.