The announcement today of criminal fraud charges against Goldman Sachs sent shockwaves through the stock markets and especially the financial sector.

In our view the events probably do not signal a change in the current market cycle. However, Lowe fs will be carefully monitoring the situation to ensure that it is containable. While it is significant to have a major Wall Street player such as Goldman criminally charged, investors were likely looking for any reason to pause the recent gains and take profits off the table. In other words, if it had not been Goldman, something else could have easily triggered the stock market pulling back.

Over the past week earnings have been driving the market higher as we had expected. Most companies are exceeding analyst estimates as they report earnings. Investors cheered the transportation sector as the strong earnings reported by CSX and UPS were interpreted that freight is moving and the economy is expanding. Consumer orders are translating into the shipping of goods.

Lowe fs sees March and April and possibly May as strong months for the economy and expansion.

The lurking danger is that the consumer spending is being done at the expense of savings and it is NOT the result of income coming from new jobs. We see unemployment remaining near 9.5% through 2010. It is still the restraining factor for this recovery.

Consumer spending may not be able to sustain the current pace of growth through the end of the year. In fact, we anticipate a slowing as we move into the fall. We MUST have improving jobs and growing incomes to sustain the economic growth.

People are euphoric right now and spending. Consumers are taking and planning trips they did not take last year. Let us say again, that without improvement in unemployment the economic growth could run out gas in the 3rd or 4th quarter. Economic growth should not be negative, just less.

Our conclusion? We think the likelihood of a double dip recession in 2010 is extremely small. In fact, we do not think it will occur. 2011 remains a wild card however.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us. Generally accounts less than $150,000 are not actively managed. An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Important Disclosures

• Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us.
• No diversification can completely protect against market risk or other risk factors with investing. A diversified portfolio could still lose money.
• An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Foreign investing carries additional risk such as currency risk, political risk and different accounting standards.

*Lowe fs is a registered investment advisor.