April 18, 2010

Its the economy and unemployment that matter, not one driving the other. There has been much debate in recent weeks as to wether or not the economic recovery is real if unemployment remains high, or if the high unemployment rate will cause the economic recovery to reverse? In the view of the members of the Gary Goldberg Financial Services Investment Committee, we believe that job creation matters greatly, however consumer sentiment and spending will be more significant. We operate in an economy that is nearly 70% consumer spending driven. Last week, the economic news was quite favorable. Factory output was higher, consumer spending has been climbing, new housing starts and permits are up, and department store credit card usage is up. These are all clear signs that Americans are increasing there spending and feeling better about the future than they did a year ago. In our view, this will translate into employers creating new jobs relatively quickly (probably by this summer), which will further push the economy ahead. That said, we do not believe that its "smooth sailing" from here on forth. Earnings season so far has been good, and we expect it to stay that way. However, scandals and charges like the ones leveled against Goldman Sachs on Friday, will increase nervousness and volatility in the market. Investors will be well suited to keep a generally defensive investment strategy.