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Conference Call

Conference Call. November 19, 2006. The Economy. Housing markets have not reached a bottom yet New housing starts fell 14.6% in October lowest level since July 2000 Building Permits  leading indicator for housing starts permits fell 6.3% in October  the largest decline in 7 years

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Conference Call

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  1. Conference Call November 19, 2006

  2. The Economy • Housing markets have not reached a bottom yet • New housing starts fell 14.6% in October • lowest level since July 2000 • Building Permitsleading indicator for housing starts • permits fell 6.3% in Octoberthe largest decline in 7 years • Housing starts are down 27.4% YTD • Building permit are down 28% YTD

  3. The Economy • Consumer prices seem to be better recently • CPI declined 0.5% in Octobersecond straight monthly decline • Decline was due to falling prices for gasoline and automobiles • The core CPI rose 0.1% in Octobersmallest increase in 8 months • Core CPI is up 2.7% YTD • Federal Reserve still is not satisfied with numbers • Median CPI, another way to measure CPI without excluding food and energy prices, is up 3.6% YTD • The Federal Reserve believes consumer prices are relatively stable when they rise less than 2% yearly

  4. The Market • The major stock indexes were up for the 2nd week • Decline in energy prices are cause of rally in stock prices • Crude oil has declined 25% since July • How much more can global energy prices fall? • Investors hope the Fed will cut short-term interest rates to stimulate economy

  5. The Markets • Best-performing sectors in Q306 are Consumer Discretionary, Information Technology, and Materials • Historically, these sectors have led the stock market after Fed cut interest rates • Stock investors are ahead of Fed in this business cycle • Business cycle model still in Easeoff, but economy may be close to changing to the Plunge phase

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