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MarketPulse MORTGAGE RATES FALL — TO NO AVAIL The average interest rate on a week, according to the Mort30-year fixed-rate mortgage gage Bankers Association. You fell to a record low 3.91 permight think that people were cent last week. But mortgage distracted by the holidays and applications also fell, down 2.6 so they weren’t applying for percent from the previous new mortgages or to refinance their existing ones at a lower rate. But Michael Fratantoni, the MBA’s vice president of research and economics, says the weak job market and consumers’ struggles with credit are to blame. And many of those who want to refinance have found that they don’t have enough equity in their homes to draw on. “Low rates are not enough,” Fratantoni says.

BUYBACK BONANZA What would you do with nearly $1 trillion? Strong profit growth means S&P 500 companies were sitting on a collective $998.6 billion in cash at the end of September. That’s up from $976.1 billion three months earlier, and it doesn’t include banks and others that hold cash as part of their normal business. Americans in the unemployment line wish they would use the cash to hire workers, but much of it is going to repurchasing stock. S&P 500 companies bought back $118.4 billion last quarter in stock, up 49 percent from a year earlier. They bought more during the quarter than they issued because of stock options, says S&P Indi-

JOB MARKET IMPROVES — BUT NOT FOR FINANCIAL FIRMS The government has reported a fits the last few weeks. That’s a drop in the number of people who sign that companies are laying off applied for unemployment benefewer workers. But the good news isn’t extending to the financial industry, according to outplacement firm Challenger Gray & Christmas. Challenger says financial companies announced more than 56,000 job cuts through November. That’s more than twice the 21,430 in the same period of 2010. CEO John Challenger forecasts more job cuts in the financial business into the first quarter of 2012. One reason: The weak economy and volatile stock market means less business for investment banking and trading operations.

ces. That means earnings will be spread over a smaller number of shares in the fourth quarter.

Total stock buybacks by S&P 500 companies billions of dollars

118

110

109

95 90

86

80

80

78 65 55 50

1Q 2Q 3Q 4Q 1Q 2Q 3Q 2010 2011 Source: S&P Indices

AP

Staying nimble The great bull market for bonds is coming to a close, and stocks will remain volatile for years, says Barry James, president of James Advantage Funds. But he says investors can still make money in the interim. There will still be small rallies within the malaise that will benefit investors. His Balanced Golden Rainbow fund invests in both stocks and bonds. It ranks among the top 2 percent of its category for 10-year returns.

InsiderQ&A

James

Mortgage rates hit new low

Stocks for a stronger dollar

The dollar is rising on anxiety about Europe’s debt crisis. That means U.S. companies earn less when money made overseas is translated back into dollars. But a rising dollar makes no difference to a company that does business only in the U.S. It also can benefit companies like oil refiners. Here are stocks that can do well when the dollar is up:

InterestRates

Money market mutual funds

Altria (MO)

UnitedHealth (UNH)

CVS Caremark (CVS)

Southern Co. (SO)

Altria sells cigarettes like Marlboros exclusively in the U.S. It’s selling fewer cigarettes because fewer people smoke. But it has raised prices and cut costs. Investors like it because its dividend yield is more than double the average of S&P 500 stocks.

The health insurer’s business is entirely in the U.S. Financial analysts like its prospects. It has expanded into businesses like pharmacy benefits management, which helps employers cut prescription drug costs. Some analysts expect those businesses to double in the long term.

CVS’s drugstores are in the U.S. and Puerto Rico. It should benefit as drugs lose U.S. patent protection the next few years. It earns more from generics than from name-brand drugs. New generics could add up to 15 cents in earnings per share in 2012, Citi investment research says.

All of the utility’s revenue comes from the U.S., and customers continue to use power regardless of the economy. Southern has a 4.1 percent dividend yield, nearly twice the average of S&P 500 stocks. Utilities are attractive because their dividend yields are higher than bonds yields.

Your fund is now 50 percent stocks, after being only 35 percent in the spring. Why the increase? We have interest rates, which are very favorable. The (dividend) yield on the S&P 500 is better than a 10-year Treasury. The Fed is essentially saying: Take a risk and see what happens. It’s pushing people to find something with some higher potential. So if you can get paid the same as a bond and have the potential for a bigger return, that’s a positive. For bonds, do you think we can expect another strong year like 2011? No, no, no, no. This is the thing that scares me when it comes to bonds: the history after a great year. In 2008, long-term Treasurys were up over 30 percent. In 2009, they were down 21 percent. So far in 2011, we’re up 30 percent so .... historically, the (average return) is still positive after big gains, but not much. Have interest rates hit bottom? Right now, we think there’s still room for rates to go down more. That goes back to the dollar and safety. (Investors have flocked to the safety of Treasurys because they’re worried about Europe’s debt crisis). The great bond bull market over the last 30 years is coming to a close, but we may not be there yet, and it always goes longer than you expect. So we could get down to 1.5 percent on the 10-year Treasury, maybe lower, you know with panic in Greece. What stock industries look good now? We’ve been positive on utilities and staples. We’re just starting to pull back on utilities. They’ve had a great year this year. Staples we still like, companies like an Eli Lilly or Pfizer. We want to see earnings. Not projected earnings, because nobody is very good at that. But if they’ve had a history of good earnings, that’s a tale that we like to follow. And we look at something called price strength – how is the stock doing versus the market. We like stocks that are outperforming the market over the last year. It doesn’t bother us if a stock gets to a new high. Hey, that’s great. It can keep going. The problem is most people sell their winners, and all they have left is a portfolio of losers. In any given portfolio, it’s only a few of the positions that pull the whole portfolio along. And if you keep cutting the heads off your flowers, all you’ve got is a garden of weeds.

Friday close: $29.84 Price-earnings ratio: 5

Friday close: $51.35 Price-earnings ratio:11

Friday close: $40.99 Price-earnings ratio:16

Friday close: $45.90 Price-earnings ratio:19

(based on last 12 mos)

(based on last 12 mos)

(based on last 12 mos)

(based on last 12 mos)

Dividend yield: 5.5% Revenue (first nine months) 2010 $18.4B 2011 $17.7B Net income (first nine months) 2010 $3B 2011 $2.6B Stock change this year: 21%

Dividend yield: 1.3% Revenue (first nine months) 2010 $70B 2011 $76B Net income (first nine months) 2010 $3.6B 2011 $3.9B Stock change this year: 42%

Dividend yield: 1.6% Revenue (first nine months) 2010 $71B 2011 $78.8B Net income (first nine months) 2010 $2.4B 2011 $2.4B Stock change this year: 18%

Dividend yield: 4.1% Revenue (first nine months) 2010 $13.7B 2011 $14B Net income (first nine months) 2010 $1.8B 2011 $1.9B Stock change this year: 20%

COMPANY

TICKER

52-WK RANGE FRIDAY $CHG %CHG %CHG %RTN RANK %RTN LOW HIGH CLOSE 1WK 1WK 1MO 1QTR YTD 1YR 1YR 5YRS* PE YLD

Air Products

APD

72.26 6

98.01

86.05

3.51

4.3

s

s

-5.4 —2.78

2

6.2

15

2.7

Amer Water Works

AWK

25.00 0

31.89

32.09

0.83

2.7

s

s

26.9 +29.88

1 16.1a

18

2.9

Amerigas Part LP

APU

36.76 6

51.50

44.34

0.71

1.6

s

s

-9.2 —3.13

3

12.3

19

6.7

Aqua America Inc

WTR

19.28 7

23.79

22.02

0.45

2.1

s

s

-2.0

+.13

2

1.5

22

3.0

Arch Dan Mid

ADM

23.69 4

38.02

29.06

1.36

4.9

s

s

-3.4 —1.64

2

0.2

9

2.4

AutoZone Inc

AZO

246.26 9 343.90 330.30

4.30

1.3

s

s

21.2 +21.48

1

23.2

16

...

Bank of America

BAC

Bk of NY Mellon

BK

Bon Ton Store

BONT

CVS Caremark Corp

CVS

Cigna Corp

CI

CocaCola

KO

4.92 1

15.31

5.60

0.40

7.7

s

t -58.0—56.81 5 -28.0

...

0.7

17.10 2

32.50

20.08

0.96

5.0

s

s -33.5—31.69 4 -10.0

9

2.6

2.23 1

17.49

3.34

0.10

3.1

s

t -73.6—71.65 5 -35.5

31.30 0

41.19

40.99

3.44

9.2

s

s

17.9 +19.53

1

36.16 5

52.95

43.13

0.75

1.8

s

s

17.6 +17.85

1

-0.1

9

0.1

61.29 9

71.77

69.94

2.50

3.7

s

s

6.3 +9.52

2

10.1

13

2.7

Comcast Corp A

CMCSA 19.19 6

27.16

23.84

0.51

2.2

s

s

9.0 +9.43

2

-2.4

17

1.9

Community Bk Sys

CBU

21.67 8

28.95

27.40

0.69

2.6

s

s

-1.3 +1.87

2

6.8

14

3.8

Community Hlth Sys

CYH

14.61 1

42.50

17.22

0.48

2.9

t

s -53.9—53.45 5 -14.1

6

...

Entercom Comm

ETM

4.61 3

13.63

6.42

0.51

8.6

s

s -44.6—44.27 4 -21.2

6

...

Fairchild Semicond

FCS

10.25 2

21.02

12.20

0.46

3.9

s

s -21.8—19.95 4

-6.0

9

...

Frontier Comm

FTR

4.79 1

9.84

5.12

0.20

4.1

t

t -47.4—38.21 4

-7.1

Genpact Ltd

G

13.09 4

18.16

14.90

0.24

1.6

s

s

2 24.6a

19

1.2

Harte Hanks Inc

HHS

7.00 5

13.74

9.78

0.29

3.1

s

s -23.4—20.60 4 -15.9

14

3.3

Heinz

HNZ

46.99 9

55.00

54.15

1.66

3.2

s

s

9.5 +12.73

1

6.8

18

3.5

Hershey Company

HSY

46.24 0

61.23

61.00

1.60

2.7

s

s

29.4 +30.04

1

6.1

23

2.3

Kraft Foods

KFT

30.21 0

37.54

37.74

1.25

3.4

s

s

19.8 +22.02

1

3.8

21

3.1

Lowes Cos

LOW

18.07 8

27.45

25.27

0.25

1.0

s

s

+.98

2

-2.3

18

2.2

M&T Bank

MTB

66.40 5

91.05

76.89

4.14

5.7

s

s -11.7 —6.41

3

-5.6

11

3.6

McDonalds Corp

MCD

72.14 0

99.50 100.15

2.66

2.7

s

s

1

20.4

20

2.8

NBT Bncp

NBTB

17.05 7

24.98

22.27

0.74

3.4

s

s

-7.8 —6.07

3

0.8

13

3.6

Nexstar Bdcstg Grp

NXST

4.59 6

10.28

7.89

0.36

4.8

s

s

31.7 +31.72

1

10.9

...

...

PNC Financial

PNC

42.70 8

65.19

58.57

3.48

6.3

s

s

-3.5 —.65

2

-2.2

9

2.4

PPL Corp

PPL

24.10 9

30.27

29.65

0.91

3.2

s

s

12.7 +17.61

1

0.3

11

4.7

Penna REIT

PEI

6.50 4

17.34

10.47

0.34

3.4

s

s -27.9—24.75 4 -15.0

...

5.7

PepsiCo

PEP

58.50 7

71.89

66.57

1.86

2.9

s

s

1.9 +4.42

3.6

17

3.1

Philip Morris Intl

PM

55.85 0

78.55

78.75

3.92

5.2

s

s

34.5 +39.03

1 27.4a

17

3.9

Procter & Gamble

PG

57.56 9

67.72

66.67

1.53

2.3

s

s

3.6 +5.34

2

3.4

17

3.1

Prudential Fncl

PRU

42.45 4

67.52

50.92

2.85

5.9

s

s -13.3—11.81 3

-8.1

7

2.8

SLM Corp

SLM

10.91 5

17.11

13.87

0.46

3.4

s

s

2 -21.9

15

2.9

SLM Corp flt pfB

SLMBP 39.30 1

60.00

40.10

0.80

2.0

t

t

-8.5

Southn Union Co

SUG

23.85 9

44.65

42.19

-0.02

0.0

s

s

75.3 +77.55

1

10.0

21

1.4

TJX Cos

TJX

42.55 0

64.45

65.31

3.17

5.1

s

s

47.1 +48.42

1

18.7

19

1.2

UGI Corp

UGI

24.07 6

33.53

29.25

1.06

3.8

s

s

-7.4 —3.99

3

4.4

14

3.6

Verizon Comm

VZ

32.28 0

39.49

39.98

1.20

3.1

s

s

11.7 +18.35

1

7.4

16

5.0

WalMart Strs

WMT

48.31 0

59.66

59.99

1.72

3.0

s

s

11.2 +14.65

1

7.6

14

2.4

Weis Mkts

WMK

36.52 0

42.20

41.72

1.54

3.8

s

s

3.4 +8.45

2

3.8

16

2.9

-2.0 —2.17

0.8

30.5 +33.42

10.2 +10.44

2

...

6.4

0.0

...

6.0

16

1.6

34 14.6

... 11.5

Notes on data: Total returns, shown for periods 1-year or greater, include dividend income and change in market price. Three-year and five-year returns annualized. Ellipses indicate data not available. Price-earnings ratio unavailable for closed-end funds and companies with net losses over prior four quarters. Rank classifies a stock’s performance relative to all U.S.-listed shares, from top 20 percent (far-left box) to bottom 20 percent (far-right box).

Stock Screener

SOURCE: FactSet

COMPANY

TICKER

CLOSE

52-WEEK LOW HIGH

1-YEAR CHANGE

Emerson

EMR

$46.97

$39.50

$64.56

-22.2%

Honeywell

HON

54.19

41.22

62.28

Rockwell Auto. ROK

72.45

50.36

SPX

59.22

40.66

SPW

Credit Suisse analyst say could be among them: • Emerson makes motors and drives used in industrial automation, such as steam valves used in sanitizing equipment for beer making. • Honeywell recently said Russia’s largest mineral fertilizer producer will use its simulator as Data through Dec. 21 *1= buy; 2 = hold; 3= sell

0.01 0.10 $ 2,500 min (888) 785-5578

1WK

2.31 3.88 3.82 4.89 8.47 1.01

0.02 -0.02 0.01 -0.04 -0.17 0.03

FRIDAY YIELD

1WK

0.01 0.16 0.03 0.29 0.98

0.01 0.01 0.00 0.06 0.18

t s t s s

s s s s s

-0.12 -0.15 -0.15 -0.36 -1.08

0.15 0.34 0.20 0.83 2.39

0.07 0.01 0.16 0.78

10-year T-Note 2.02 30-year T-Bond 3.05 Money fund data provided by iMoneyNet Inc.

0.17 0.20

s s

s -1.37 s -1.42

3.72 4.77

1.72 2.72

Broad market Lehman Triple-A corporate Moody’s Corp. Inv. Grade Lehman Municipal Bond Buyer U.S. high yield Barclays Treasury Barclays

3-month T-Bill 1-year T-Bill 6-month T-Bill 2-year T-Note 5-year T-Note

CHANGE 1MO 3MO 1YR t s t t t t

s s s s t r

52-WK HIGH LOW

-0.72 -1.12 -0.28 -0.61 0.84 -1.11

3.29 5.31 4.22 5.95 10.15 2.46

CHANGE 1MO 3MO 1YR

2.15 3.73 3.36 4.87 6.61 0.96

52-WK HIGH LOW

MutualFunds TICKER

FRIDAY NAV

WK CHG

American Funds BalA x ABALX American Funds BondA m ABNDX American Funds CapIncBuA m CAIBX American Funds CpWldGrIA m CWGIX American Funds EurPacGrA m AEPGX American Funds FnInvA m ANCFX American Funds GrthAmA m AGTHX American Funds IncAmerA x AMECX American Funds InvCoAmA m AIVSX American Funds NewPerspA m ANWPX American Funds WAMutInvA m AWSHX BlackRock GlobAlcA m MDLOX BlackRock GlobAlcC m MCLOX BlackRock GlobAlcI MALOX Dodge & Cox Income DODIX Dodge & Cox IntlStk DODFX Dodge & Cox Stock DODGX Fidelity Contra FCNTX Fidelity DivrIntl d FDIVX Fidelity Free2020 FFFDX Fidelity GrowCo FDGRX Fidelity LowPriStk d FLPSX Fidelity Spartan 500IdxInv FUSEX FrankTemp-Franklin Income A m FKINX FrankTemp-Franklin Income C m FCISX FrankTemp-Mutual Euro Z MEURX FrankTemp-Templeton GlBond A mTPINX FrankTemp-Templeton GlBondAdv TGBAX Harbor IntlInstl d HAINX Oakmark EqIncI OAKBX PIMCO AllAssetI PAAIX PIMCO ComRlRStI PCRIX PIMCO LowDrIs PTLDX PIMCO TotRetA m PTTAX PIMCO TotRetAdm b PTRAX PIMCO TotRetIs PTTRX PIMCO TotRetrnD b PTTDX Permanent Portfolio PRPFX T Rowe Price EqtyInc PRFDX T Rowe Price GrowStk PRGFX T Rowe Price HiYield d PRHYX T Rowe Price MidCpGr RPMGX Vanguard 500Adml VFIAX Vanguard 500Inv VFINX Vanguard GNMAAdml VFIJX Vanguard InstIdxI VINIX Vanguard InstPlus VIIIX Vanguard MuIntAdml VWIUX Vanguard STGradeAd VFSUX Vanguard Tgtet2025 VTTVX Vanguard TotBdAdml VBTLX Vanguard TotBdInst VBTIX Vanguard TotIntl d VGTSX Vanguard TotStIAdm VTSAX Vanguard TotStIIns VITSX Vanguard TotStIdx VTSMX Vanguard Welltn VWELX Vanguard WelltnAdm VWENX Vanguard WndsrII VWNFX Wells Fargo AstAlllcA f EAAFX

18.26 12.47 49.09 32.15 35.82 35.56 28.86 16.74 27.17 26.52 28.51 18.23 17.00 18.31 13.20 29.19 102.30 67.72 25.56 13.56 81.27 35.88 44.75 2.09 2.11 18.78 12.46 12.43 52.30 27.16 11.95 7.39 10.30 10.85 10.85 10.85 10.85 46.41 23.23 32.04 6.47 53.06 116.47 116.47 11.15 116.39 116.40 13.98 10.62 12.59 10.93 10.93 13.09 31.49 31.49 31.48 31.57 54.53 26.24 12.15

+.33 -.09 +.42 +.96 +.97 +1.27 +.61 +.20 +.72 +.75 +1.05 -.04 -.06 -.20 +.13 +3.17 +1.84 +.78 +.24 +2.05 +1.01 +1.63 +.04 +.04 +.52 +.10 +.11 +1.64 +.72 +.11 +.20 -.03 -.05 -.05 -.05 -.05 +.52 +.92 +.96 +.04 +1.68 +3.58 +3.61 -.04 +4.25 +4.25 +.01 -.01 +.29 -.13 -.13 +.97 +.96 +.97 +.68 +1.18 +1.01 +.18

4WK

RETURN/RANK 1YR 5YR

+6.2 +.2 +5.7 +6.7 +5.4 +8.4 +6.3 +7.1 +8.1 +6.0 +9.8 +3.7 +3.7 +3.7 +.5 +6.7 +10.2 +5.9 +5.2 +4.1 +5.7 +7.0 +9.1 +5.8 +5.7 +7.4 +2.4 +2.4 +7.0 +5.7 +2.2 -.7 +.6 +1.0 +1.0 +1.0 +1.0 +.9 +10.0 +6.8 +3.2 +6.9 +9.1 +9.1 +.3 +9.1 +9.1 +1.5 +.1 +5.8 -.2 -.2 +6.1 +9.1 +9.1 +9.1 +6.4 +6.4 +9.7 +2.0

+4.5/A +6.4/B +3.0/A -7.3/C -12.9/C -1.2/D -4.2/D +5.8/A -1.4/D -7.0/C +7.5/A -2.5/C -3.2/C -2.2/C +4.4/E -15.6/E -3.5/D +.2/B -13.1/C -.8/D +.6/B +.8/A +2.7/A +2.8/B +2.3/C -10.1/A -1.3/E -.9/E -10.7/A +1.1/C +3.1/A -5.0/B +1.9/B +3.7/E +3.8/E +4.1/E +3.8/E +4.4/A +.3/C -.4/B +3.2/C -.8/B +2.8/A +2.6/A +7.8/A +2.8/A +2.8/A +9.2/B +2.1/B +.2/B +7.5/A +7.5/A -13.2/C +1.7/B +1.7/B +1.6/B +4.2/A +4.3/A +3.3/B +1.1/

+2.5/B +3.4/E +1.0/C -.6/B -1.1/A +.7/A -.4/D +1.8/B -.7/C +.9/A +.3/A +3.8/B +3.0/B +4.1/B +6.2/B -3.3/A -3.9/E +2.8/A -4.3/C +1.2/B +4.1/A +2.3/B -.1/B +2.8/C +2.2/D -.5/A +9.2/A +9.5/A -.5/A +4.4/A +5.6/A +2.3/A +5.1/A +7.3/A +7.5/A +7.8/A +7.5/A +8.7/A -.7/B +1.4/C +6.5/A +5.7/A /B -.1/B +6.8/A /B /B +4.9/B +4.3/B +1.4/B +6.3/B +6.3/B -3.2/B +.6/A +.6/A +.4/B +3.5/A +3.6/A -1.1/B +2.3/

Rank: Fund’s letter grade compared with others in the same performance group; an A indicates fund performed in the top 20 percent; an E, in the bottom 20 percent.

Stocks on autopilot China’s cheap labor is getting more expensive. Wages in China are rising by 15 percent to 20 percent per year, Credit Suisse analysts say. That means Chinese manufacturers are losing their cost advantage over factories in other countries. So they’re looking at robots and other automation to replace human workers and lower their costs. Foxconn Technology Group, for example, is building a manufacturing complex in Taiwan to make factory automation equipment. Several U.S. companies will likely benefit as more factories around the world turn to automation. The table to the right shows stocks that

0.01 0.10 $ 2,500 min (800) 544-6666

FRIDAY YIELD

U.S. BOND INDEXES

GROUP, FUND

LocalStocks

MIN INVEST PHONE

YIELD

PRIME FED Taxable—national avg RATE FUNDS Fidelity Select Money Market FRIDAY 3.25 .13 Tax-exempt—national avg 6 MO AGO 3.25 .13 Alpine Municipal MMF/Investor 1 YR AGO 3.25 .13

TREASURYS

Over the last 10 years, stocks are close to where they started. What do you see going forward? We see another five to 10 years of this sideways (market). I wish it weren’t so, and eventually that’s going to change. And that doesn’t mean that we can’t have a 100 percent rally in that time frame. But we don’t think we’re in the clear yet for a new, big bull market. You need to be active in adjusting your equity levels, your fixed income levels, not be a passive, just buyand-holder.

The average rate on the 30-year fixed mortgage fell to 3.91 percent, an all-time low. It had been at 3.94 percent a week earlier, which tied a record low. Mortgage rates tend to follow Treasury yields, and the 10-year yield is hovering just above 2 percent. Investors have bought Treasurys because they want something safe. When demand for Treasury notes rise, prices go up, and yields fall.

p

DIV. YIELD

AVG. PRICE-EARNINGS BROKER RATIO (based on RATING* last 12 mos.)

3.5%

1.7

14

1.7

2.7

1.3

16

98.19

2.3

2.3

1.7

15

87.13

-15.3

1.7

1.5

17

part of its training program for plant operators. • Rockwell Automation makes motors, drives and other products used in bread-making, automotive and other plants. • SPX makes pump units used in margarine plants, among other products.

Dow industrials

+3.6% WEEKLY

p

Nasdaq

+2.5% WEEKLY

LARGE-CAP

p

S&P 500

+3.7% WEEKLY

p

SMALL-CAP

Russell 2000

+3.6% WEEKLY

p p

+9.5%

p q

+7.3%

p p

+9.2%

p q

+12.3%

MO +6.2%

YTD

MO -1.3%

YTD

MO +0.6%

YTD

MO -4.6%

YTD


TL Stocks, 12/23