Weekly Economic Update for the Week of May 26, 2008

These views are those of Peter Montoya Inc., and not WealthStrong, and should not be construed as investment advice.

Quote of the week. “Love truth, and pardon error.” – Voltaire

A crude question. In the commodities market, analysts wondered: would oil supply keep up with oil demand? The Energy Department’s Energy Information Administration reported a 5-million-barrel reduction in U.S. crude inventories last week, and the International Energy Agency also forecast diminishing world oil output in coming years.¹ These factors sent oil up to $135.09 a barrel Thursday; it ended the week at $132.19 on the NYMEX.²

Resales dip downward. The pace of existing home sales dropped 1% in April, according to the National Association of Realtors, with the median price 8% below that of April 2007. More troubling was the glut of unsold residences – 4.55 million, or 11.2 months worth of inventory at the April sales pace.³

Leading indicators edge forward. The Conference Board’s index of leading U.S. economic indicators moved north 0.1% in April. Economists polled by Briefing.com had forecast no gain at all. The index gained in both March and April after five straight monthly declines.⁴

Mixed inflation data. Last week, the Labor Department reported that the Producer Price Index only rose 0.2% for April, below economists’ estimates. But core PPI climbed 0.4% during the month, double the 0.2% economists had expected.⁵

Market retreats. Wall Street had its poorest week since February, attributable in part to poor housing data and ever-rising energy prices. The major indexes lost 3.3-3.9% on the week.⁶

% Change	Y-T-D	1-Year	5-Yr Avg
DJIA	-5.92	-8.38	+9.02
NASDAQ	-7.83	-5.42	+12.38
S&P 500	-6.29	-10..64	+9.49

(Source: USAToday.com, CNNMoney.com, 5/23/08) ^{7, 8}

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

Riddle of the week. Three playing cards lie face down on a table. A jack is to the left of a queen. To the left of a spade is a diamond. A king is left of a heart. A spade is right of a king. What are the three cards?

Last week’s riddle: A right-handed glove is inverted so it can be worn on the left hand. Is the material that was touching the palm of the right hand now touching the palm or the top of the left hand?

Answer: The palm of the hand.

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. 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. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

Citations.
¹ ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD90QNL680 [5/22/08]

² bloomberg.com/apps/news?pid=20601091&sid=aFEx4gTjk6Y8&refer=india [5/23/08]

³ bloomberg.com/apps/news?pid=20601087&sid=amCt0FoZgzKY&refer=home [5/23/08]

⁴ money.cnn.com/2008/05/19/news/economy/leading_indicators/?postversion=2008051916 [5/19/08]

⁵ forbes.com/markets/2008/05/20/briefing-opener-ppi-markets-econ-cx_ss_0520markets12.html [5/20/08]

⁶ bloomberg.com/apps/news?pid=20601103&sid=a.Pl4n0GQBhk&refer=news# [5/23/08]

⁹ usatoday.com/money/default.htm [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%2F07&mode=add&symb=DJIA [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%2F03&mode=add&symb=DJIA [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%9F07&mode=add&symb=NASDAQ [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%2F03&mode=add&symb=NASDAQ [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%2F07&mode=add&symb=SPX [5/23/08]

¹⁰ money.cnn.com/quote/historical/historical.html?pg=hi&close_date=5%2F23%2F03&mode=add&symb=SPX [5/23/08]