04/23/2007

Dow Wow Wow!

Hello:

The Dow Jones Industrial Average (DJIA) set records this past week with the S&P 500 Index following along. With Real Estate looking less shiny, and with the bond market less dull, stocks appear to be the asset class of choice for now. But what could be driving earnings?

A weaker dollar, in combination with foreign economies with higher growth rates, is helping to boost the earnings of large multinational companies, many of which are part of the DJIA. We believe there is a high possibility that our economy is re-experiencing the beginning of a Reagonomics scenario similar to 1980-1985. We see the dollar dropping in value versus major foreign currencies, with the Federal Open Market Committee (FOMC) not rushing to raise interest rates in order to prop it up. We see high gasoline prices leading the US consumer to consider smaller vehicles and sources of alternative energy.

Although such a scenario would be difficult on companies relying on imported products, this may be the beginning of a very robust economy once we resolve this soft landing we are purported to be experiencing.

This is the final year for the Charitable IRA rollover. If you are over 70 1/2, and wish to make a donation to a non-profit, you have the opportunity to send up to $100,000 directly from you IRA to the charity and not pay federal tax on the distribution. Please consult your tax preparer as to whether you would benefit from this opportunity.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager