MacGray Matter-August 2, 2010

THE ROLLER COASTER RIDE BACK UP:

After a horrible June, the domestic equity markets ended a very positive July. The Dow Jones Industrials was up 0.40% for the week ending up 7.54% for July. The S&P 500 was down 0.10% for the week, ending a July that was up 7.23%. The NASDAQ Composite was down 0.65%, ending July up 7.3%.  All three indices are hovering near break even for the year.

EARNINGS GOOD, GDP..NOT SO MUCH: 

Second-quarter earnings reports continue to be positive, with Merck, Samsung, Chevron, Honda and FEDEX (see below) some of the big names announcing very positive reports. However, the second quarter GDP report was disappointing. The report on GDP for the second quarter of 2010 showed a gain of 2.4%. That was a big drop from the 3.7% rise in the first quarter. There was strength in business investment, which was up 17%, but consumers increased their spending by less than 2%. Consumer confidence data continues to move downward, which explains why consumer spending is not picking up.

LAZY PEOPLE:  

Businessweek.com recently analyzed some data from the Bureau of Labor Statistics in order to determine which state has the laziest people. They meant “lazy” as a measure of leisure time spent doing sedentary activities compared with activities that require more physical effort. The winner was Louisiana, with Mississippi and Arkansas coming in second and third. Lest you think that it was all southern states that led the way, Delaware and New York cracked the top 20. To give you some idea what the average person does in the laziest state, in Louisiana, individuals (age 15 and older) sleep on average 8 hours and 44 minutes, watch 3 hours and 5 minutes of television, socialize for 54 minutes and “relax” for 29 minutes. The average American sleeps 8 hours and 35 minutes, watches television for 2 hours and 38 minutes, socializes 44 minutes, and relaxes for 18 minutes. The “least” lazy state is North Dakota. For more, see here.

USING LEFTOVER COLLEGE FUNDS TO PAY SCHOOL LOANS?  Withdrawals from a 529 College Savings plan are tax-free if the money withdrawn is used for “qualified higher education expenses,” or QHEE. The list of eligible expenses includes tuition, mandatory fees, books, supplies, equipment. It also includes a capped amount of room and board if the beneficiary is at least a half-time student. However, QHEE does not include student loan repayments. Some may argue that student loans merely represent the expenses incurred by the student in past years and should be counted as QHEE when the loans are repaid. The IRS apparently does not buy this argument and will count a student loan only for the year when the loan is taken out to pay the eligible expenses, not for the year the loan is repaid.

AS FEDEX GOES..: FEDEX is often seen as a bellwether company. If shipping is increasing then FEDEX will do well. If shipping in increasing, it is a sign of increased activity, so the argument goes. FEDEX reported last Monday that it expects to earn between $1.05 and $1.25 per share for the first quarter ending Aug. 31. That’s up sharply from a previous forecast of 58 cents per share.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713