The market continues to fight an uphill battle even though the economic news is not all that bad. The Commerce Department reported this morning that orders for manufactured products rose by 1.3 percent in July. The figure was higher than the 0.8 percent predicted by economists polled by Thomson Financial/IFR; the department also upwardly revised its June reading to an increase of 2.1 percent. This follows good reports last week of better than expected consumer spending and consumer confidence.

There has also been a nice pullback in commodities which has helped alleviate some inflation worries, and oil’s slide should be good news for our economy and stock market. Unfortunately it hasn’t, which has me a bit concerned. What it likely shows is that dropping commodity prices, especially oil, is dropping because demand is waning due to a global economic slowdown. The rise in the U.S. dollar would seem to confirm that the rest of the world has been drastically affected by our slowdown and theirs’ is to follow. Therefore, at this point, caution continues to be the key. Yesterday?

Stock Market: Yesterday’s rather spectacular flame-out of the rally certainly is a little disconcerting. Even though the economic information being released is pretty good, the market action has not been. We’d rather be safe than sorry so we’ll be changing things up a bit, moving away from international exposure and moving towards high income and dividend opportunities. We will also be using a Bear Market Fund called the Prudent Bear Fund, which goes up when the market goes down, as a hedge against continued weakness. There are some very attractive dividend opportunities out there, so add what you can to your portfolio right away.

Real Estate: There seems to be a lot of confusion in this area. Most believe that real estate always goes up. It does not. Don’t be fooled again. The current downturn in housing is not just a correction or a reaction to overbuilding or even just the credit crisis. It is the peak in an entire generations buying power. The Baby Boomers are done buying houses. The generation behind them, Generation X is barely 1/3 their size, and they simply cannot absorb all of the houses that Boomers live in, never mind the ones they speculated on when the Fed flooded the market with free money. Housing starts are finally down to a level where the huge inventory can start to move, so a floor is in sight. However, for investment opportunities, we are still likely 5 years away until the Boomers’ kids start to buy their first homes.

Mortgage: The slowing economy has brought mortgage rates down to very attractive levels. If you need to refinance or are buying something new, now is the time to get financing. Call me and I’ll help find you the best loan program.

Commodities: Although it is too soon to get (back) in to commodities, the commodity cycle is not over. If you want more details on this, let me know. I’ve already rambled on enough here.

Call me with any comments or questions 916-925-8900.

Cheers –Keith

Keith Springer is President of Capital Financial Advisory Services, a registered investment advisor, providing Wealth Management and Mortgage Consulting Services.  For more information on how to build and maintain a solid retirement plan, please contact Keith at
916-925-8900 or Keith@KeithSpringer.com