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New Book on Investments  

Just One ThingVantage C.E.O. Mark Finn is pleased to be a featured contributor to a new book on investments, Just One Thing: Twelve of the World's Best Investors Reveal the ONE Strategy You Can't Overlook. Edited by John Mauldin, the book promises to provide "the personal guidance of an outstanding group of recognized financial experts, each offering the single most useful piece of advice garnered from years of investing. Never before has such an esteemed assembly of financial gurus offered their most valued insights in such a succinct manner—and in a single volume. In marvelously readable essays of uncommon clarity, each contributor presents the most precious kernel of advice—just one thing—that he would pass on to his own children and his children’s children."

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First Quarter 2009 Performance Review and Outlook for the Economy  
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The economy shrank by 6.14% in the first quarter, based on the preliminary announcement by the Bureau of Economic Analysis. The dismal performance of the economy in the first quarter follows a similar decline of 6.34% in the fourth quarter, which was revised downward from its preliminary announcement. The economy has had three negative growth quarters in a row. Unemployment, which normally lags GDP movements, reached 8.9% in April. Capacity utilization in the economy fell below 70% for the first time in the history of the data series. Lower energy prices and sluggish demand have kept inflation low. The core consumer price index (CPI) increased 1.8% and the top of the line CPI actually fell 0.4%. Deflationary pressures along with rapid expansion of the money supply combined to push interest rates to historic lows. The Fed Fund rate has remained stable at 0.13% since October of last year. The current 3-month Treasury bill yield is 0.15% with a 0.85% on the 2-year bond and 1.95% on the 5-year bond.

A slight improvement in sentiment provides the only glimmer of good news in the current economic climate. The University of Michigan Sentiment index has improved, as has the ISM manufacturing index. However, there is a long way to go on all sentiment measures to get back out of the contraction zone in the index measures. At best, the economy is approaching a bottom, but a long hard recovery is more likely than a quick response to policy initiatives. The full effect of short-term stimulus plans will take effect later in 2009. Banks stabilization initiatives have had time to show positive results, but the consumer will take a longer time to get on board with the recovery. The second quarter of 2009 is likely to be slightly below zero with positive GDP growth unlikely until the fourth quarter. Even so, the economy is not going to approach the 2.5% long run GDP potential of the economy until 2010. Unemployment is likely to increase throughout 2009 reaching a high of 9.5%. Inflation remains dormant, but specific prices such as gasoline will take a bite out of consumer budgets.

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The views expressed in this document do not constitute investment advice or recommendations by Vantage Consulting Group or its staff. This commentary is provided for informational purposes only, and is not an offer or recommendation of shares or investments, or a prediction of any future performance.

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