LPL Quarterly Market Insight Chart Book 2nd Qtr 2011

LPL FINANCIAL RESEARCH

Market Insight
Quarterly Chart Book
Second Quarter 2011

Member FINRA/SIPC


The Quarterly Market Insight Chart Book is intended to provide unbiased
context to the markets and economy. The Chart Book provides a factual
framework to discuss the issues most relevant to investing using simple
to understand charts of key data. The Chart Book can be helpful in
addressing key topics such as economic growth in the United States and
abroad, job growth, stock market valuations, corporate profits, inflation,
monetary policy, commodity prices, and bond yields. This data is intended
to help investors understand performance, recognize risks, and identify
opportunities.
There are two sections to the chart book. The main section features
charts that will regularly appear in each quarterly edition. The second
section features topical charts most relevant to the current environment
that will vary from quarter-to-quarter.

LPL Financial Member FINRA/SIPC 2


Table of Content

4 Gross Domestic Products (GDP) Growth Rate 23 High-Yield Bond Spreads & Default Rate
5 Emerging Market Gross Domestic Product (GDP) Growth 24 10-Year Treasury Yield & 10-Year Treasury Yield Minus Core CPI
6 Budget Deficit Percent of Gross Domestic Product (GDP) 25 Investment-Grade Corporate Spread & Yield
7 Unemployment Rate 26 Emerging Market Debt (EMD) Spread & Average Yield
8 Non-farm Job Growth 27 30-Year Municipal Yields as a Percentage of Treasuries
9 Wages and/or Personal Income/Personal Spending 28 Trade Weighted Dollar
10 Home Sales 29 Leading Economic Indicators
11 Home Prices 30 Treasury & Muni Yield Curves
12 Vehicle Sales
13 Current Conditions Index (CCI)
14 Current Conditions Index (CCI) Components
15 Consumer Price Index (CPI) Second Quarter Key Themes
16 Commodity Price Index 32 The Debt Ceiling
17 Institute for Supply Management (ISM) Index 33 The Impact of the Earthquake in Japan on the Global Economy
18 Consumer Sentiment 34 Selling Municipal Bonds
19 Federal Funds Rate with Futures Implied Going Out One Year 35 China’s Economy: Inflation & China’s Central Bank
20 Federal Reserve (Fed) Balance Sheet 36 The Federal Reserves Next Steps
21 S&P 500 EPS Historical & Estimates for the Next Four Quarters 37 ISM & S&P 500 Performance
22 Historical S&P 500 PE Ratio Trailing & Forward 38 Classic Bubble Comparison



Gross Domestic Product (GDP) Growth Rate

Real Gross Domestic Product: Quantity Index
(Percent Change From Prior Quarter, Annual Rate)
%
8 8

4 4

0 0

-4 -4

-8 -8
00 01 02 03 04 05 06 07 08 09 10
Source: Bureau of Economic Analysis /Haver Analytics 07/08/11

(Shaded area indicates recession)
Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's
borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public
consumption, government outlays, investments and exports less imports that occur within a defined territory.
Tracking# 734362 Exp. (7/13)


China: Gross Domestic Product (GDP) Growth
China: Gross Domestic Product at Current Prices & Exchange Rates

% Change - Year to Year Bil.US$

30

25

20

15

10

5
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: China National Bureau of Statistics/Haver Analytics 07/08/11

International investing involves special risks, such as currency fluctuation and political instability, and may not be suitable for all investors.
An emerging market is a nation that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets
and the existence of some form of market exchange and regulatory body.
Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific
time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays,
investments and exports less imports that occur within a defined territory. LPL Financial Member FINRA/SIPC 5
Tracking# 734366 Exp. (7/13)


Budget Deficit Percent of Gross Domestic Product (GDP)
Federal Surplus/Deficit {-} as Percentage of GDP
Fiscal Year, %

2.5

0.0

-2.5

-5.0

-7.5

-10.0
65 70 75 80 85 90 95 00 05 10
Source: Office of Management and Budget /Haver Analytics 07/08/11

Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's
borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public
consumption, government outlays, investments and exports less imports that occur within a defined territory.
Tracking# 734363 Exp. (7/13)


Unemployment Rate
Civilian Unemployment Rate: 16 yr +
Seasonally Adjusted

12

10

8

6

4

2
50 55 60 65 70 75 80 85 90 95 00 05 10
Source: Bureau of Labor Statistics /Haver Analytics 07/08/11

The unemployment rate is the percentage of the total labor force that is unemployed but actively seeking
employment and willing to work.

Tracking# 734364 Exp. (7/13) LPL Financial Member FINRA/SIPC 7


Non-farm Job Growth
Change in Total Private Employment

Seasonally Adjusted, Thousands

500

250

0

-250

-500

-750

-1000
01 02 03 04 05 06 07 08 09 10 11
Source: Bureau of Labor Statistics /Haver Analytics 07/08/11

Non-farm payroll employment is and economic indicator released by the U.S. Department of Labor. It is comprised
of goods producing, construction and manufacturing companies.



Wages and/or Personal Income/Personal Spending
Personal Income
% Change - Year to Year Seasonally Adjusted Annual Rate, Bil.$
Personal Outlays
% Change - Year to Year Seasonally Adjusted Annual Rate, Bil.$
10.0 8

7.5 6

5.0 4

2.5 2

0.0 0

-2.5 -2

-5.0 -4
00 01 02 03 04 05 06 07 08 09 10
Sources: Bureau of Economic Analysis /Haver Analytics 07/08/11

Personal spending is the amount of expenses an individual has accounted for during the year. It includes
mortgage payments, car payments, medical bills and shopping costs.



Home Sales
Existing 1-Family Home Sales: United States
Seasonally Adjusted Annual Rate, Thousands
New 1-Family Houses Sold: United States
Seasonally Adjusted Annual Rate, Thousands
6750 1400

1200
6000

1000
5250

800

4500
600

3750
400

3000 200
01 02 03 04 05 06 07 08 09 10
Sources: NAR, CENSUS /Haver 07/08/11


Existing home sales is a measure of the number and price of sales of single-family homes other than new constructions. It is considered an
economic indicator of the availability and affordability of mortgages and real estate in the United States. It is also considered a lagging
indicator as it tends to react after changes in mortgage interest rates. Existing home sales tend to rise after a decline in mortgage rates and
fall when the opposite happens. The U.S. National Association of Realtors publishes existing home sales monthly.
Tracking# 734376 Exp. (7/13)


Home Prices
S&P/Case-Shiller Home Price Index: U.S. National

% Change - Year to Year Not Seasonally Adjusted, Q1-00=100

20

10

0

-10

-20
90 95 00 05 10
Source: S&P, Fiserv, and MacroMarkets LLC /Haver Analytics 07/08/11

The S&P/Chase-Shiller U.S. National Home Price Index tracks the growth in value of real estate by following
the purchase price and resale value of homes that have undergone a minimum of two arm's-length
transactions. The index is named for its creators, Karl Chase and Robert Shiller.
Tracking# 734373 Exp. (7/13)


Vehicle Sales
Light Weight Vehicle Sales {Autos+Light Trucks}
Seasonally Adjusted Annual Rate, Mil. Units

22.5

20.0

17.5

15.0

12.5

10.0

7.5
90 95 00 05 10
Source: Bureau of Economic Analysis/Haver Analytics 07/08/11

Vehicle sales is the number of domestically produced units of cars, SUVs, minivans, and light trucks that are
sold. These sales are reported on the first business day of the month.
Tracking# 734374 Exp. (7/13)


Current Conditions Index (CCI)

The Current Conditions Index is a weekly measure of the conditions that underpin our outlook for the markets and economy. The CCI provides
real-time context and insight into the trends that shape our recommended actions to manage portfolios. This weekly index is not intended to be a
leading index or predictive of where conditions are headed, but a coincident measure of where they are right now. We want to track the
conditions in real-time to aid in investment decision making. Please see the weekly Current Conditions Index publication for specifics surrounding
the make-up of the CCI. LPL Financial Member FINRA/SIPC 13

Tracking# 734375 Exp. (7/13)


Current Conditions Index (CCI) Components

The Current Conditions Index (CCI) components are made up of 10 indicators that provided a weekly, real-time measure of the conditions in the
economic and market environment. We standardized these components compared to their pre-crisis 10-year average, equally weighted their
standardized scores, and aligned the resulting index with zero at the start of 2009. These components capture how the conditions are evolving
from a wide range of angles. Each component is important and measures a different driver of the environment. Please see the weekly Current
Conditions Index publication for specifics surrounding the make-up of the CCI. LPL Financial Member FINRA/SIPC 14

Tracking# 734379 Exp. (7/13)


Consumer Price Index (CPI)
CPI-U: All Items
% Change - Year to Year SA, 1982-84=100
CPI-U: All Items Less Food and Energy
% Change - Year to Year SA, 1982-84=100
16

12

8

4

0

-4
65 70 75 80 85 90 95 00 05 10
Sources: Bureau of Labor Statistics /Haver Analytics 07/08/11

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services.
Tracking#734382 Exp. (07/13)


Commodity Prices
KR-CRB Spot Commodity Price Index: All Commodities

1967=100

600

500

400

300

200
90 95 00 05 10
Source: Commodity Research Bureau /Haver Analytics 07/08/11

The CRB Index is an unmanaged index, which cannot be invested into directly. Past performance is no guarantee of future
results.
The Commodity Research Bureau (CRB) Index is an index that measures the overall direction of commodity sectors. The
CRB was designed to isolate and reveal the directional movement of prices in overall commodity trades.
The fast price swings in commodities and currencies will result in significant volatility in an investor's holdings.

Tracking# 734380 Exp. (07/13)


Institute for Supply Management (ISM) Index

ISM Manufacturing: PMI Composite Index
Seasonally Adjusted, 50+=Increasing

75

70

65

60

55

50

45

40

35
30

25
90 95 00 05 10
Source: Institute for Supply Management /Haver Analytics 07/08/11

The ISM index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM
Manufacturing Index monitors employment, production inventories, new orders, and supplier deliveries. A composite
diffusion index is created that monitors conditions in national manufacturing based on the data from these surveys.
Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI index is
based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment
environment.
Tracking# 734381 Exp. (07/13


Consumer Sentiment
University of Michigan: Consumer Sentiment

Not Seasonally Adjusted, Q1-66=100

120

100

80

60

40
90 95 00 05 10
Source: University of Michigan /Haver Analytics 07/08/11

The University of Michigan Consumer Sentiment Index (MCSI) is a survey of consumer confidence
conducted by the University of Michigan. The Michigan Consumer Sentiment Index (MCSI) uses telephone
surveys to gather information on consumer expectations regarding the overall economy.
Tracking# 734383 Exp. (07/13)

Federal Funds Rate
with Futures Implied Rates Going Out One Year
Federal Open Market Committee: Fed Funds Target Rate

%

10

8

6

4

2

0
90 95 00 05 10

Source: Federal Reserve Board /Haver Analytics 07/08/11

The Federal Funds Rate is the interest rate at which a depository institution lends immediately available
funds (balances at the Federal Reserve) to another depository institution overnight.



Federal Reserve (Fed) Balance Sheet
All Fed Res Banks: Total Assets
End Of Period, Bil.$

3000

2500

2000

1500

1000

500

0
90 95 00 05 10

The Federal Reserve Balance Sheet is the breakdown of the assets and liabilities held by the Federal
Reserve.

Tracking# 734388 Exp. (07/13)

S&P 500 EPS Historical
& Estimates for the Next Four Quarters

$120

$100

$80

$60

$40

$20

$0
1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012
Source: LPL Financial, Thomson Financial, Bloomberg data 7/11/11
The S&P 500 is an unmanaged index, which cannot be invested into directly. Past performance is no guarantee of future results.
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks representing all major industries.
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an
indicator of a company's profitability. Earnings per share is generally considered to be the single most important variable in determining a
share's price. It is also a major component used to calculate the price-to-earnings valuation ratio.



Historical S&P 500 PE Ratio Trailing & Forward

S&P 500 Forward PE Ratio S&P 500 Trailing PE Ratio
35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010

1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source: LPL Financial, Thomson Financial, Bloomberg data 7/11/11
The S&P 500 is an unmanaged index, which cannot be invested into directly. Past performance is no guarantee of future results.
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in
the aggregate market value of 500 stocks representing all major industries.
The P/E ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial
ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with
lower P/E ratio.
Tracking# 734387 Exp. (07/13)


High Yield Bond Spreads & Default Rate

Source: Barclays, Moody’s, LPL Financial 6/30/11
All Indices are unmanaged and cannot be invested into directly.
High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those
graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and
change in price.
High-Yield spread is the yield differential between the average yield of high-yield bonds and the average yield of comparable maturity Treasury bonds.
The Default Rate This rate can be used in reference to two main things: The rate of borrowers who fail to remain current on their loans. It is a critical piece of
information used by lenders to determine their risk exposure and economists to evaluate the health of the overall economy. And, The interest rate charged to
a borrower when payments on a revolving line of credit are overdue. This higher rate is applied to outstanding balances in arrears in addition to the regular
interest charges for the debt.
Tracking# 734390 Exp. (7/13)

10-year Treasury yield & 10-year Treasury Yield
Minus Core Consumer Price Index (CPI)

10-Year Treasury Note Yield at Constant Maturity Real Yield
Average,% 10-yr Treasury Yield Less Core CPI (YOY)

6 3.5

3.0
5

2.5

4
2.0

Period Average
1.5
3

1.0

2
02 03 04 05 06 07 08 09 10 11 0.5
Source: U.S. Treasury /Haver Analytics 07/08/11
02 03 04 05 06 07 08 09 10 11
Source: Haver Analytics 07/08/11

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer
goods and services.
Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity,
offer a fixed rate of return and fixed principal value. However, the value of a fund shares is not guaranteed and will fluctuate.
Tracking# 734391 Exp. (7/13)


Investment-Grade Corporate Spread & Yield

Source: Barclays, LPL Financial 7/8/11
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.
Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional
risks based on the quality of issuer coupon rate, price, yield, maturity and redemption features.
Tracking# 734392 Exp. (7/13)


Emerging Market Debt (EMD) Spread & Yield

Source: Barclays, LPL Financial 7/8/11
The Barclays Global EM Bond Index is unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.
International and emerging markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based
on the investment's cost, its current market value or its face value.
Tracking# 734393 Exp. (7/13)


30-year Municipal Yields as a Percentage of Treasuries
30-year AAA Municipal Yield as a Percentage of Treasuries

225

200

175

150

125

100

75
03 04 05 06 07 08 09 10 11

Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as
interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may
apply.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to
availability and change in price.
Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held
to maturity, offer a fixed rate of return and fixed principal value. However, the value of a fund shares is not guaranteed and will fluctuate.
An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
Tracking# 734394 Exp. (7/13)


Trade Weighted Dollar

Nominal Trade-Weighted Exch Value of US$ vs Major Currencies
Mar-73=100

160

140

120

100

80

60
75 80 85 90 95 00 05 10

Trade weighted dollar is a representation of the foreign currency price of the US dollar or the export value of
the US dollar.
Tracking# 734395 Exp. (7/13)


Leading Economic Indicators
ECRI Weekly Leading Index

% Change - Year to Year 1992=100

30

20

10

0

-10

-20

-30
70 75 80 85 90 95 00 05 10

ECRI's Weekly Leading Index (WLI) is a composite index constructed of seven USA weekly economic series (M2, JOC-ECRI industrial
materials price index, initial unemployment insurance claims, mortgage applications, S&P 500, 10-yr Treasury bond yield, and bond quality
spread). The limited availability of weekly data constrains the number of variables in the composite index, but this has not hurt the WLI's
predictive power. LPL Financial Member FINRA/SIPC 29

Tracking# 734396 Exp. (7/13)


Treasury & Muni Yield Curves

US Treasury Yield Curve AAA Municipal GO
5.00
5.00
4.50 4.50
4.00 4.00
3.50 3.50
3.00 3.00

Yield
2.50
Yield

2.50
2.00
2.00
1.50
1.50
1.00
1.00
0.50
0.00 0.50
2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040
0.00

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040
Maturity Maturity

Source: Factset 07/08/11
An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.
Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be
subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.
Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return
and fixed principal value. However, the value of a fund shares is not guaranteed and will fluctuate.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.
Yield Curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve
compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or
bank lending rates. The curve is also used to predict changes in economic output and growth.

Tracking# 734397 Exp. (7/13)


The Debt Ceiling Has Been Raised Numerous
Times Over the Past 25 Years
Public Debt Outstanding: Statutory Debt Limit
End Of Period, Tril.$
Treasury Securities Outstanding
Tril.$
15.0

12.5

10.0

7.5

5.0
02 03 04 05 06 07 08 09 10 11
Sources: U.S. Treasury /Haver Analytics 07/08/11

The Statutory Debt Limit was established under the Second Liberty Bond Act of 1917 that limits the amount of public debt that can be
outstanding. The Statutory Debt Limit, or debt ceiling, prevents the U.S. Treasury from issuing new debt once the limit has been reached.
However, the debt limit can be raised, and has often been raised, with approval from the U.S. Congress.
Tracking #74238 Exp. (07/13)


Markets Probably Underestimated the Impact of the Earthquake in Japan on the Global
Economy, but Now Conditions in Japan Have Begun to Improve Noticeably (Japan GDP)

Japanese Purchasing Managers Index
(Index Greater Than 50, Japanese Manufacturing Expanding
Index Less Than 50, Japanese Manufacturing Contracting )
65

60

55

50

45

40

35

30

25
Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11
Jan-04

Oct-04
Jan-05

Oct-05
Jan-06

Oct-06
Jan-07

Oct-07
Jan-08

Oct-08
Jan-09

Oct-09
Jan-10

Oct-10
Jan-11
Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10
Source: Bloomberg 07/11/11
Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific
time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays,
investments and exports less imports that occur within a defined territory. LPL Financial Member FINRA/SIPC 33
Tracking #742384 Exp. (07/13)


Selling Municipal Bonds

300%
Debt to GDP
250%

200%

150%

100%

50%

0%
California
Average State

United States

Portugal

Greece

Japan
Illinois

Source: LPL Financial, Center for Budget and Policy Research, Bureau of Economic Analysis 2/07/11
Debt-to-GDP is a measure of a country's federal debt in relation to its gross domestic product (GDP). By comparing what a country owes and
what it produces, the debt-to-GDP ratio indicates the country's ability to pay back its debt. The ratio is a coverage ratio on a national level.
Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest
rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.
Tracking #742385 Exp. (07/13)


As China’s Economy has Cooled, Inflation has Heated UP,
Prompting Higher Rates From China’s Central Bank
China: Real GDP: Year-to-Year Percent Change
%, (left scale)
China: Consumer Price Index
Not Seasonally Adjusted, year/year % change, (right scale)
14 10

8
12
6

10 4

2
8
0

6 -2
01 02 03 04 05 06 07 08 09 10 11
Sources: China National Bureau of Statistics /Haver Analytics 07/08/11

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers
for a market basket of consumer goods and services.
Tracking # 742389 Exp. (07/13)

The Federal Reserve’s Next Steps: LPL Financial Research’s
take on the Potential Process for Unwinding QE

Step 1 June 2011 End of QE2: Fed stops buying Treasuries to expand its balance sheet

Step 2 Second half 2011 Fed maintains size of balance sheet by reinvesting interest payments and maturing
debt

Step 3 2012 and beyond Fed begins to not reinvest allowing the balance sheet to start to contract
Fed begins to hike interest rates
Fed begins selling bonds

Quantitative Easing is a government monetary policy occasionally used to increase the money supply by buying government
securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions
with capital in an effort to promote increased lending and liquidity.

Tracking #742390 Exp. (07/13)



ISM & S&P 500 Performance Moves in Step

65 ISM S&P 500 YOY% 50%

40%
60
30%

55 20%

10%
50
0%

-10%
45
-20%
40 -30%

-40%
35
-50%

30 -60%
1997 1999 2001 2003 2005 2007 2009 2011

Source: LPL Financial, Bloomberg data 6/1/11
The ISM index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index
monitors employment, production inventories, new orders, and supplier deliveries. A composite diffusion index is created that monitors conditions in
national manufacturing based on the data from these surveys.
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing all major industries and cannot be invested into directly.. Past performance
is no guarantee of future results.
Tracking # 742394 Exp. (07/13)


Classic Bubble Comparison

1200%
NASDAQ 3/16/1990

1000%
Oil Price 6/26/1998

800% S&P 500 Homebuilders 6/30/1995

Gold Price 1/4/2002
600%

400%

200%

0%

-200%
0 1 2 3 4 5 6 7 8 9 10 11 12
Year of Bubble

Source: LPL Financial, Bloomberg Data 5/9/11
Bubble describes an economic cycle characterized by rapid expansion followed by a contraction.
The fast price swings in commodities and currencies will result in significant volatility in an investor's holdings.
Precious metal investing is subject to substantial fluctuation and potential for loss.
Tracking #742393 Exp. (07/13)


Important Disclosure
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or
recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. All performance
referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

This research material has been prepared by LPL Financial.
The LPL Financial family of affiliated companies includes LPL Financial and UVEST Financial Services Group, Inc., each of which is a member of FINRA/SIPC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and
makes no representation with respect to such entity.
Tracking# 742279 | Exp (7/13)


LPL Quarterly Market Insight Chart Book 2nd Qtr 2011

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