Uncertainty

It seems that the stock market, the bond market and the world are going through a period of uncertainty. Recently, we have seen a new flight to US government bonds as a safe haven for money from around the world. It is reassuring that the world feels the US is a safe place to have money. The problem seems to be that we who live in the US don’t have the same confidence in our economy. As the second quarter ends, there is uncertainty as to how the economy has performed overall. We have heard this week that consumer spending is up. Corporate spending is up. Productivity is up. On the other hand this Friday we will find out what is happening with unemployment, which has not improved of late, and perhaps get some preliminary numbers on new job creation for June. The uncertainty stems from an attempt to discern if the economy is moving forward with greater profits from companies and more confidence from the consumer, or is stumbling. As of yesterday, the multiple on one year forward earnings for the S&P 500 was 13, where normal would be 18. This discrepancy gives us a clear sign of how uncertain the feeling is about the coming year. We will know a lot more as earnings are reported over the next several weeks. Ed

Flag Day

Each year we have Flag Day and it falls on June 14th. I don’t know why, but I always seem to remember Flag Day. Flag Day commemorates the adoption of the United States Flag on June 14, 1777. I’m not a big history buff, but I do remember this piece of history. It tends to make me remember all of the men and women who have gone before us and have done so much to grow and preserve our freedom and way of life. Most of us, or our families, originally came to the U.S. as foreigners. This has been and remains a land of opportunity. As I read about the turmoil in the world and the economic problems, I can’t help but think how lucky we are to be living in the United States. Yes, we too have our problems, but by comparison we have so much more opportunity, coupled with freedom, than anywhere else in the world. It is up to us to take advantage of this opportunity and freedom and use it wisely. This past month and a half have been difficult, with unemployment continuing its march upward, the oil spill in the Gulf, the turbulence in the stock market, and many other issues. Even so, most of us still go to bed at night well fed and feeling secure. What do you think the expectations of our founding fathers were, back on June 14, 1777? Ed