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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Diamonds and Dogs

5/31/11

We have gotten through May without too much damage. Similar to last year, May has been a rough month for investors as stocks fell for the past four weeks and will close negative for the 31 days. For the year, stocks are still strongly in the plus column as corporate balance sheets and corporate profits have come in better than expected. With 0% interest rates as the wind behind their sails, stocks are the go-to investment choice so far this year. Throw in a third year of a presidents' first term, which outperforms by 2X, and stocks seem compelling. On the negative side, European financial turmoil, Middle East unrest, and higher oil prices are a drag. Additional fallout from the Japanese nuclear disaster (the earthquake is now 4X as costly as Hurricane Katrina) and a potential dramatic interest rate spike weigh on all investments. So where do we go from here? Sideways may be the most logical choice for the next 2-3 months as positives negate negatives. Interestingly, at the end of June we will see the expiration of QE2, or the Fed's last ditch effort to keep rates negative (due to effects of inflation) and desperately search for a catalyst to growth in the economy. Light up the barbeque and settle in for what could be an uneventful summer for stocks.

Diamonds and Dogs market commentary is a journal of daily observations on anything that happens to be of interest to our author. Obviously, our primary focus is the stock market and world economic events, but for this page we have no defined topics. We want this page to be dedicated to the interests, concerns, and possibly to the financial gain of our clients and friends. All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.