Is the picture of economic recovery reminiscent of "Dorian Gray?"

Stock Indexes:

The Dow Jones industrials closed Friday at 15,010.51, up 45.77 points but for the week lost 0.47%. The S&P 500 (CME:ESV13) closed at 1,663.50, up 6.54 and for the week managed a gain of 0.46%. The Tech heavy Nasdaq closed Friday at 3,658, up 19 points and gained 1.53% for the week. Market participants are watching for any changes in the U.S. Federal Reserve quantitative easing policy and the markets react accordingly. One of the major features on Friday was the announced retirement of Microsoft CEO Steve Ballmer, which produced a rally in Microsoft stock of 7.3%. Rising U.S. interest rates are received by investors as a sign of U.S. economic improvement, however, we of course disagree and once again advise investors with large equity holdings to implement strategic hedging programs. We have developed such programs over the years and are ready and willing to provide such assistance in determining the structure of such programs.

Currencies:

The U.S. Dollar Index (NYBOT:DXZ13) closed Friday at 81.64, down 14.9 points or 0.2%. The decline in July new home sales and in government bond yields prompted the dollar selling. High interest rates promote dollar investment attraction and lower rates detract. The gains in currencies against the dollar included the euro up 32 points to $1.3390, the Swiss franc 37 points to $1.0871, the Canadian dollar 25 points to .95c, and the Australian dollar 36 points to 89.69c. The Japanese yen lost 11 ticks to 0.010139, and the British pound lost 4c to $1.5567. Some support for the continuing QE policy by the President of the Atlanta Fed against the San Francisco Fed Bank President for a pullback left participants with no clear direction. We have favored the dollar for some time and recently suggested taking profits "off the table." We are on the sidelines for now since the wide price swings are not conducive to trading by our retail clients.

Energies:

October Crude oil (NYMEX:CLV13) closed Friday at $106.24 per barrel, up $1.21 but were still off 0.8% from the prior week. The sharp decline in July new U.S. home sales expected to delay any "tapering" of the Federal Reserve monetary stimulus and helped energy prices recovery from early week losses. The ongoing concern, however, of the Egyptian crisis of possible disruptions of the transportation of crude through the Suez Canal is providing a "fear factor premium" to crude prices so we are on the sidelines for now. Our overall view is that crude prices are too high in relation to our view of a continuing global economic slowdown.

Copper:

December copper closed Friday at $3.3560 per pound, up 2.15c on short-covering in front of the weekend tied to Fridays gain in equities. However, for the week copper lost 0.4% as questions remained over the U.S. housing market and demand for industrial metals by the U.S. and China. We are on the sidelines but overall bearish toward copper.

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