August 5, 2011 Market Update

Good afternoon,

I have attached Empire’s Performance to the end of July. Only the bond, income and money market funds are positive for the month. When we go to the 6 month performance we see the balanced fund as well as the US equity marginally positive. And the three above noted funds are positive at 6 months as well.

However, if you turn on the news tonight, all the talking heads will be speaking of the past week in the markets and in particular what happened yesterday and today.   Yesterday the Canadian index dropped 3.4% and today it is down a further 1.75% today . Down almost 8% for the week.

The US indexes are not faring any better. The S&P fell 4.8% yesterday closed flat today.  But down almost 9% for the week.  

But what we will all be interested in knowing is what is driving this now.  Mr. David Rosenberg wrote in his daily newsletter on Wednesday that he is convinced that the US is already in its next recession. His concern continues to be the lack of jobs in the US as well as the debt in the rest of the world, particularly European debt.   In today’s newsletter he writes that the Canadian outlook is a little better than that of the US but as we all know, if the American economy slows down than we do as well.  And if in fact things slow down as much as is predicted by some than our commodity rich economy will also suffer.

There is a bright side to all this.  The Empire Bond fund is up just over 2% for the month. That’s to yesterdays close.

What should we do is always a good question to ask at these times.

First, as far as your investments with us are concerned, I would suggest that we do nothing at all but just sit back and see what this develops into.

As to your personal life and in particular your personal financial life, once more, at risk of sounding really old and boring, I would say, continue to pay down your debt aggressively, hold onto your job if you have one, do not be surprised if there is some downward pressure on your personal income and be prepared for that scenario.

For those of you interested in charts, I have attached a chart of the bond index I track as well as the S&P index and in case  anyone cares, the silver index.  Silver may be on its second leg down for those of you who are watching precious metals.

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