Doug Potash Presents:

MONTHLY ECONOMIC UPDATE

MONTHLY QUOTE
What makes something special is not just what you have to gain, but what you feel there is to lose. Andre Agassi August 2013

THE MONTH IN BRIEF

At the closing bell on July 31, the S&P 500 settled at 1,685.73 thanks to a 4.95% monthly gain another triumph for a bull market that has overcome a host of challenges. This striking July advance came even as fundamental economic indicators sent mixed messages. The Federal Reserve said nothing definite about when it would taper QE3. Overseas, there were hints of a slightly better economic picture in Europe, contradictory signals out of China, and numerous stock market advances.1

MONTHLY TIP
Why should you pay to use money? That is what using a credit card amounts to so using a debit card for daily purchases is wiser. It can help you from living beyond your means.

DOMESTIC ECONOMIC HEALTH

July offered both encouraging and discouraging economic statistics. The Institute for Supply Managements July PMIs seemed to show an economy gaining traction. ISMs manufacturing PMI leapt to 55.4 compared to 50.9 in June, and its service sector PMI jumped to 56.0 from the previous 52.2. The Commerce Department said that consumer spending was up 0.5% in June, corresponding to the projections of economists surveyed by Reuters; consumer incomes rose another 0.3 on the heels of a 0.4% improvement in May. Unemployment declined to 7.4% in July, but the pace of hiring also declined. Non-farm payrolls expanded by 162,000 jobs (compared to 188,000 in June), with retail, bar and restaurant positions representing much of the additions. Durable goods orders had increased 4.2% in June, but they were flat with the volatile transportation category removed. As the quarter ended, the federal government issued its first estimate of Q2 GDP: 1.7%, indicative of the economys slow comeback.2,3,4,5,6 July also offered a mixed picture of consumer confidence. The Conference Boards July poll came in at 80.3, 1.8 points lower than Junes reading and below the expectations of analysts surveyed by MarketWatch. The reading on the University of Michigans final July consumer sentiment index was better 85.1, up a full point from June to its highest level since July 2007.6,7 Prices increased in June, but it seemed more an anomaly than a trend. The Consumer Price Index rose 0.5%, but a 6.3% leap in gas prices was a major factor; the core CPI was up just 0.2%, and annualized core inflation had increased just 1.6%, the smallest amount in two years. Wholesale prices jumped 0.8% in June, though the core Producer Price Index only advanced 0.2%. Retail sales were up 0.4% in June; there was a 1.8% gain in auto purchases and a 2.4% improvement in furniture sales.8,9,10 In early July, the Obama administration decided to postpone the Affordable Care Acts employer health insurance mandate for a year. Businesses with 50 or more full-time employees wont have to provide health insurance to work ers until 2015; retail franchises and restaurant owners welcomed that decision. The move raised big-picture questions about whether all aspects of the ACA (such as the coming online health insurance exchanges) could be implemented on schedule. In mid-July, Federal Reserve chairman Ben Bernanke cited the need for a highly accommodative monetary policy for the foreseeable future, buoying financial markets. The central banks July 31 policy statement offered no hint as to when it would start to reduce its asset purchases, and it termed the current economic expansion modest, which seemed slightly less enthusiastic than its moderate assessment from June.11,12,13

MONTHLY RIDDLE
Mark says he just looked down and saw a forest without trees, a highway without cars and a town without houses. How can all of this be explained?
Last months riddle: What part of a sparrow has the most feathers? Last months answer: The outside.

GLOBAL ECONOMIC HEALTH

Two closely-watched China manufacturing PMIs offered different estimates of the performance of the worlds biggest economic engine. The HSBC PMI came in at just 47.7 for July. The official PMI from Chinas National Bureau of Statistics (which, incidentally, surveys a greater percentage of state-owned enterprises) rose 0.2 for

July, showing a bit of expansion at 50.3. Still, this was nothing special. Neither was Indias July Markit manufacturing PMI reading of 50.1; Markit manufacturing PMIs for South Korea, Vietnam, Australia and Taiwan were all under 50 last month, with Australias dropping 7.6 points. HSBC and Markit service sector PMIs tracking Asian economies also moved lower in July; Indias showed contraction for the first time in 21 months at 47.9, and those for Japan (50.6) and China (51.3) showed slower growth.14,15 As mounting evidence of a slowdown came from Asia, another question emerged in Europe. Was the Eurozone recession coming to a close? The EU manufacturing sector grew in July for the first time since 2010 the Markit PMI hit 50.5, up from 48.7 in June. Germanys manufacturing PMI reached a 5-month peak of 52.1, Frances hit a 17-month high of 49.1, and Italys reached a 26-month high of 49.7. July also saw the fewest eurozone job losses in 16 months, and the German economy saw a net job gain.14,15,16

WORLD MARKETS
Big gains were the order of the month, especially in Europe. The FTSE 100 climbed 6.53%, the DAX 3.98%, the CAC 40 6.79%, the RTSI 2.97% and the STOXX 600 5.11%. In the Asia Pacific region, some losses crept in among the gains: the Sensex slipped 0.26% and the Nikkei 225 0.07%, but that was overshadowed by advances for the KOSPI (2.72%), the KSE 100 (10.98%), the Hang Seng (5.19), the Shanghai Composite (0.74%) and the Asia Dow (1.17%). On our side of the pond, the TSX Composite rose 2.95%, the MERVAL 12.82% and the Bovespa 1.64%.The Global Dow advanced 5.87% in July, the MSCI World Index 5.19% and the MSCI Emerging Markets Index 0.77%.1,17

COMMODITIES MARKETS
The price of NYMEX crude soared 9.15% in July. That put oil at $105.03 a barrel at the end of the month. Natural gas prices, on the other hand, descended 3.25%. Gold settled at $1,313.00 at months end, the culmination of a 7.46% monthly ascent. Silver went +1.45%, platinum +6.77% and copper +2.40%. As for crops, coffee lost 1.37%, but cocoa rose 4.74%, wheat 2.71% and sugar 2.48%. The U.S. Dollar Index lost 1.76% for the month.18,19

REAL ESTATE

On August 1, Freddie Macs Primary Mortgage Market Survey had the average rate on a 30-year fixed home loan at 4.39%, up from 4.29% on July 3 and 3.81% on May 30.20 Existing home sales fell 1.2% in June, with tightening inventory being a factor; still, the National Association of Realtors reported a 13.5% yearly improvement in the median sale price. The May S&P/Case-Shiller Home Price Index recorded a 12.2% overall yearly rise in home prices across 20 cities. New home sales were up 8.3% in June, with a 38.1% year-over-year increase in the sales pace (the best on record since 1992).6,21 Not all the news was so impressive. Pending home sales dipped 0.4% for June, partly reflecting the shrinking inventory of existing properties on the market. As for building permits and housing starts, they both fell in June: building permits sagged 7.5% from May but were up 16.1% annually, while starts dipped 9.9% but were still up 10.4% in 12 months.6,22 The 0.58% rise in conventional mortgage rates across two months was mirrored by other types of home loans. Average rates for 15-year FRMs went from 2.98% to 3.43%; average rates for 5/1-year ARMs and 1-year ARMs were but 2.66% and 2.54% on May 30, yet respectively 3.18% and 2.64% by August 1.20

LOOKING BACKLOOKING FORWARD

To broadly recap, July ended with the DJIA settling at 15,499.54, the NASDAQ at 3,626.37, the S&P 500 at 1,685.73 and the Russell 2000 at 1,045.26 (it rose 6.93% for the month). Fear ebbed: the CBOE VIX fell 20.23% for the month, settling at

13.45 on July 31.1

% CHANGE YTD 1-MO CHG 1-YR CHG 10-YR AVG

DJIA NASDAQ S&P 500

REAL YIELD

+18.28 +20.10 +18.20

7/31 RATE

+3.96 +6.56 +4.95

1 YR AGO

+19.15 +23.37 +22.21

5 YRS AGO

+6.79 +10.90 +7.02

10 YRS AGO

10 YR TIPS

0.38%

-0.69%

1.65%

2.41%
1,23,24

Sources: online.wsj.com, bigcharts.com, treasury.gov - 7/31/13 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

Basically, U.S. stocks just achieved about two years of gains in seven months. This begs a question: how much higher can the S&P 500 climb this year? When 2013 started, especially bullish analysts thought the index might hit 1,700 before 2014 arrived. At the start of August, it was already at that level. When the market is this hot, warnings of a pullback or a correction reliably appear and they certainly have, but few investors seem to be paying much notice to them. With luck, 2013 could wind up a truly exceptional year for Wall Street a year of exceptional gains, aided by an exceptional stimulus, sustained by exceptional confidence. Fall is not far away; how much more upside could this market have? Could the S&P gain another 2-3% by years end? Another 6-7%? Or will unforeseen disturbances and the Feds gradual exit from the bond market invite struggles? So far, this bull market has passed a number of significant tests; if it continues to do so, 2013 will be remembered as a tremendous year for the stock market investor. UPCOMING ECONOMIC RELEASES: For the rest of August, here is how the schedule of news items plays out: June wholesale inventories (8/10), July retail sales and June business inventories (8/13), Julys PPI (8/14), Julys CPI, July industrial output and the August NAHB housing market index (8/15), Julys housing starts and building permits plus the University of Michigans initial August consumer sentiment index (8/16), July existing home sales and the July 31 Fed policy meeting minutes (8/21), the Conference Boards July index of leading indicators and the June FHFA housing price index (8/22), July new home sales (8/23), July hard goods orders (8/26), Junes Case-Shiller home price index and the Conference Boards August consumer confidence survey (8/27), July pending home sales (8/28), the second estimate of Q2 GDP (8/29), and the final August University of Michigan consumer sentiment index and the July consumer spending report (8/30). The Labor Department issues the July jobs report on September 6.
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Doug Potash Disclosure

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the NYSE) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. Moscow Exchange is the largest stock exchange in Russia, located in Moscow, trading equities, bonds, derivatives and currencies. It was officially established on 19 December 2011 through the merger of the two largest Moscow-based stock exchanges, the Moscow Interbank Currency Exchange and the Russian Trading System. The Dow Jones STOXX 600 Index captures more than 90% of the aggregate market cap of European-based companies. The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 wellestablished and financially sound companies listed on the Bombay Stock Exchange (BSE). Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges. The Karachi Stock Exchange (KSE) is Pakistan's largest and one of the oldest stock exchanges in South Asia by market capitalization. The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The Asia Dow measures the Asia equity markets by tracking 30 leading blue-chip companies in the region. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The price-weighted MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The Global Dow is a 150-stock index of corporations from around the world created by Dow Jones & Company. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.

1 - online.wsj.com/mdc/public/page/2_3024-m_globalstockindexes.html [7/31/13] 2 - ism.ws/ISMReport/NonMfgROB.cfm [8/5/13] 3 - tinyurl.com/lh438e5 [8/2/13] 4 - chron.com/news/us/article/US-employers-add-162K-jobs-rate-falls-to-7-4-pct-4702834.php [8/2/13] 5 - briefing.com/investor/calendars/economic/2013/07/22-26 [7/26/13] 6 - marketwatch.com/Economy-Politics/Calendars/Economic [8/1/13] 7 - tinyurl.com/ke8ykkl [7/26/13] 8 - forbes.com/sites/afontevecchia/2013/07/16/spiking-gasoline-prices-push-cpi-inflation-higher-but-weak-core-fuels-taper-uncertainty/ [7/16/13] 9 - briefing.com/investor/calendars/economic/2013/07/08-12 [7/12/13] 10 - usatoday.com/story/money/business/2013/07/15/retail-sales-rise-in-june-on-autos/2517443/ [7/15/13] 11 - kansascity.com/2013/07/03/4328512/qa-on-impact-of-health-law-delay.html [7/3/13] 12 - tinyurl.com/msb38q6 [7/10/13] 13 - nasdaq.com/article/closing-update-us-stocks-end-mixed-after-fomc-meeting-minutes-cm263222 [7/31/13] 14 - tinyurl.com/knwt8rt [8/1/13] 15 - telegraph.co.uk/finance/economics/10223494/Eurozone-recession-will-end-this-quarter-as-businesses-return-to-growth.html [8/5/13] 16 - tinyurl.com/mwakh4v [8/5/13] 17 - mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [7/31/13] 18 - money.cnn.com/data/commodities/ [7/31/13] 19 - online.wsj.com/mdc/public/npage/2_3050.html?mod=mdc_curr_dtabnk&symb=DXY [8/5/13] 20 - freddiemac.com/pmms/ [8/5/13] 21 - bloomberg.com/news/2013-07-24/new-home-sales-in-u-s-rise-more-than-forecast-to-five-year-high.html [7/24/13] 22 - census.gov/construction/nrc/pdf/newresconst.pdf [7/17/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F31%2F12&x=0&y=0 [7/31/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F31%2F12&x=0&y=0 [7/31/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F31%2F12&x=0&y=0 [7/31/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F31%2F03&x=0&y=0 [7/31/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F31%2F03&x=0&y=0 [7/31/13] 23 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F31%2F03&x=0&y=0 [7/31/13] 24 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/5/13]

Doug Potash, CRPC

Partner

Premier Planning Group 115 West Street, Suite 400 Annapolis, Maryland 21401 http://www.premierplanninggroup.com/#!doug-potash/c8x7 Phone: 443-837-2550 Cell: 443-994-1897 Fax: 410-216-9515

Doug Potash is a Registered Representative offering securities through Cambridge Investment Research, Inc., Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a federally registered investment advisor. Cambridge and Premier Planning Group are not affiliated.