Obama Proposes Changes to Education Act

United Press International via Yellowbrix via FastWeb.com

February 22, 2010

New steps to better prepare U.S. students for college and the workplace were outlined by U.S. President Barack Obama Monday during a meeting with governors.

“America’s prosperity has always rested on how well we educate our children — but never more so than today,” Obama told state chief executives visiting the White House. “This is true for our workers, when a college graduate earns over 60 percent more in a lifetime than a high school graduate. This is true for our businesses, when according to one study; six in 10 say they simply can’t find qualified people to fill open positions.”

Obama called for a redesigned Elementary and Secondary Education Act that would include ways to help states implement college- and career-ready standards through improved teacher preparation and development and upgraded classroom instruction.

The administration proposed:

• Requiring states to adopt and certify that they have college- and career-ready standards in reading and mathematics as a qualifying condition for Title I funding.
• Including new funding priorities for states with college- and career-ready standards in place as they compete for federal dollars to improve teaching and learning, and upgrade curriculum in reading and math.
• Encouraging states, school districts and other institutions to better align teacher-preparation practices and programs.
• Supporting expansion of the Race to the Top competition, beyond stimulus funding, by dedicating $1.35 billion in awards to states and school districts.
• Supporting professional development for teachers, leaders and other school instructional staff.

Many of Obama’s recommendations are in his budget request for fiscal year 2011 or in specific programs.

--see disclaimer below--

Market Week: February 22, 2010

The Markets

A three-day run in which the Dow rose an average of almost 100 points a day gave domestic equities a 3% increase for the shortened holiday week, though the Nasdaq lagged the other major indexes. Small caps returned to positive territory for the year, but global equities continued to suffer from uncertainty about the impact of sovereign debt problems abroad. Spreads between yields on short-term and longer-dated Treasury bonds widened briefly after the Federal Reserve upped its discount interest rate (see below).

Market/Index	2009 Close	Prior Week	As of 2/19	Week Change	YTD Change
DJIA	10428.05	10099.14	10402.35	3%	-.25%
NASDAQ	2269.15	2183.53	2243.87	2.76%	-1.11%
S&P 500	1115.10	1075.51	1109.17	3.13%	-.53%
Russell 2000	625.39	610.72	631.62	3.42%	1%
Global Dow	1984.48	1857.02	1893.58	1.97%	-4.58%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.69%	3.78%	9 bps	-7 bps

Last Week's Headlines

• The Federal Reserve Board raised by a quarter percent the interest rate it charges banks for short-term emergency loans. Increasing the discount rate from 0.5% to 0.75% was one of the steps Chairman Ben Bernanke had outlined the week before as part of an "exit strategy" from various types of support the Fed undertook to combat the credit crisis. Though the timing--between meetings--came as a surprise, the Fed reiterated its intention to keep monetary policy "accommodative."
• Consumer inflation ticked up 0.2% in January, putting the annual inflation rate for the last 12 months at 2.6%. Energy costs--primarily gas prices--were responsible for most of the increase. Not counting food and energy, consumer prices fell 0.1% in January (though medical care costs saw their largest increase in a year).
• Inflation at the wholesale level--often considered an indicator of what might be in store for consumers later--was up 1.4% in January, putting the annual rate at 4.6%. It was the third consecutive month in which the rate for the previous 12 months rose. Prices for crude goods were up 9.6% in January, primarily because of higher costs for energy-related raw materials such as petroleum.
• Housing starts in January rose 2.8% from the month before, and were up 21.1% from last January. Building permits were down almost 5% from December, but were still up almost 17% from the same time last year.

Eye on the Week Ahead
Friday will see the first update to the most recent Gross Domestic Product (GDP) number; a substantial revision downward could affect the markets. Housing-related data will be a continuing thread throughout the week. Investors also will be watching to see if Senate Banking Committee Chairman Christopher Dodd unveils a proposed financial regulatory reform package this week.

Key data releases: Home prices (2/23); new-home sales (2/24); durable goods orders (2/25); revised Q4 GDP, home resales (2/26).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--