Doubting the validity of the 5+ year bull market has been a losing venture.

To Our Clients, Advisors and Friends:

Good morning!

In 2 days of testimony before separate Congressional committees last week, Fed Chair
Janet Yellen (on the job for less than 3 ½ months) opined on a variety of subjects.
She called the nation’s housing recovery “disappointing so far this year and (it)
will bear watching.” In spite of a stock market sitting near all-time highs (the

S&P 500 is within 0.7% of its 4/02/14 record close), Yellen stated that the equity
environment “doesn’t suggest that we are in obvious bubble territory.” As her predecessor
Ben Bernanke had repeatedly expressed, Yellen was less upbeat on the USA’s propensity
to overspend: “(due to) a combination of demographics, the structure of entitlement
programs and historical trends in healthcare costs, we can see that, over the long
term, deficits will rise to unsustainable levels relative to the economy” (source:
Federal Reserve).

Doubting the validity of the 5+ year bull market has been a losing venture. The
“gloom-and-doom” prognosticators that have concluded since 2009 that improbable
stock valuations are detached from the health of our actual economy may have sounded
really intelligent but the reality is that the S&P 500 has gained +210% (total return)
since the bear turned into a bull. This rising stock market will not go on forever,
but age alone is not the reason it will ultimately reverse course (source: BTN Research).

Applications for unemployment insurance benefits (aka initial jobless claims) were
reported at 319,000 for the week ending 5/03/14. The weekly average for this statistic
during the 2nd quarter of 2009 was 627,000 (source: Department of Labor).

Notable Numbers for the Week:

1) Four Renters for Every One Homeowner – Americans families formed 423,000 new
households during the 12 months ending 3/31/14. 79% of the new households formed
(333,000) were renters and 21% of the new households formed (90,000) were homeowners
(source: Census Bureau).

2) Not College Material – 72% of Americans at least age 25 have not received a bachelor’s degree or greater from college (source: Bureau of Labor Statistics

3) Was it Necessary? – 37% of employed college graduates are working in jobs today
that required only a high school diploma (source: Department of Labor).

4) Countdown – By the year 2028 (i.e., 14 years in the future), government expenditures
for Social Security, Medicare, Medicaid and net interest expense would consume all
projected federal tax receipts, i.e., the funds needed for all other federal expenditures
will be borrowed (source: Government Accountability Office).

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