Week of April 30, 2007

The Markets
 
Like people viewing an optical illusion, many investors were left wondering exactly what they were seeing last week.

Economic news showed slowing economic growth, and yet a leading index reached new record highs.  According to Barron’s, first quarter Gross Domestic Product growth was 1.3%, which was below analysts’ expectations.  The University of Michigan Consumer Confidence Survey showed that sentiment had slipped.  Housing market reports showed weakness in March when sales of existing homes dropped.  Exports declined.  And yet the Dow Jones Industrial Average hit record highs throughout the end of last week, passing the 13,000 mark.  What gives?  Was it just good old American optimism?

Nope!  It was strong first quarter earnings reports. Investors responded well to earnings news from companies like GE, Caterpillar, AT&T, Pfizer, and Microsoft, many of which posted unexpectedly good gains for the first quarter, and drove the market higher.

Strong first quarter earnings and a record high Dow don’t have everyone cheering, though.  Uncertainty about the strength of the U.S. economy has many investors anticipating a choppy year ahead.  Barron’s annual Big Money poll found that just 46% of professional investors are bullish, down from 64% last fall.  No one is rushing into the bearish camp; the number of bearish investors remained fairly constant at about 17%.

Source: Yahoo! Finance, Barrons Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, 5-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

have you heard? soon you may be able to turn on the lights by touching your wall—and that is just the tip of the iceberg.  Experts predict that nanotechnology may change our world in some very significant ways.  What does the future hold?

Stain-resistant clothing:  You may not realize it, but already some clothing manufacturers are imbedding nanoparticles in pants to make them stain-repellent.  This may be appreciated by mothers everywhere, but dry cleaners, detergent makers, and producers of stain removal products may be less enthusiastic.

Elimination of theft:  Ever heard of SmartDust?  It’s the stuff that someday may allow you to turn on lights by touching the wall.  Apparently, it could be embedded in all of your belongings.  Then, if anything is transported from its rightful place without permission, alarms will go off.  SmartDust has more esoteric applications, too.  Scientists say it could help detect the onset of disease in humans.

Morphing furniture:  Tired of your minimalist contemporary furniture?  When furniture is built out of Foglets (nanorobots that shift shape as directed), you will be able to change the structure of your sofas, tables and chairs at will.  Utility Fog has lots of potential applications.  Remember the television cartoon ‘The Jetsons?’  Someday soon, you may be able to do lots of the things they could do.

If nanotechnology sounds like the stuff of science fiction, it is.  Nanotechnology theories and applications have inspired generations of writers in that genre.  But just because you read about it in a science fiction novel, doesn’t mean that it won’t be reality some day.

Weekly Focus – If you’re a fan of adventure movies, you’ve undoubtedly heard of bullion. It’s the treasure everyone is after—but it’s not jewels or land. Bullion (not to be mistaken for bouillion, which is soup) is a term that applies to precious metals. Bullion could be gold, silver, platinum, or palladium stored in bars, plates or ingots. In a bullion economy—like that of the Vikings—the weight and purity of precious metals was far more important than their shape.

Bullion can be a bit unwieldy, but countries still rely on it today. The United States Bullion Depository—also known as Fort Knox—contains about 4,570 tons of gold bullion.

Best regards,

Fredrick J. Livingston, CLU, CFP

Securities offered through LPL Financial, Member NASD/SIPC

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* 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.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.