“This was one of the best weeks for economic news in months. Every single economic growth indicator
came in above its estimate: The NAHB housing sentiment index at 55 against 53 estimate, Housing starts
well above expectations (as well as permits); Jobless claims dipping below 300k, the Markit PMI
estimate well above expectations, and existing home sales and the Leading Economic Indicators also
above forecasts. To boot, the CPI came in at or below expectations. Furthermore, oil and commodity prices
continued to decline. Gasoline prices have now retraced more than half of their 58 cent climb from $3.18
a gallon last November to $3.70 in May. Despite stronger growth indicators, interest rates remained tame.
It is not at all surprising that stocks would rally sharply under these circumstances. There is a sense that the
economy is now strengthening to a 3+% growth path and earnings are likely going to show a healthy
increase this year. The rally is particularly noteworthy since August has been the weakest month for
stocks over the last 20 years, eclipsing September, which is the weakest month when we include all the Dow
data back to the late nineteenth century.”

Any questions?