BROAD MARKET SUMMARY:
The U.S. markets were closed last Monday in honor of Memorial Day, bringing the month of May to a close on a short trading week. As the first quarter earnings season has come to yield less and less notable corporate headlines, investors are left to read the tea leaves of the economic data. Domestic oil supply was down this week, but the price of oil fell anyway. The reason for the price decline seems to be the decreased supply was an anomaly while an analysis of global demand for the commodity shows cracks in the foundation. So, oil prices fell.

GDP for Q1 was revised upward showing not only is it confirmed the U.S. was not recessionary in the first quarter, but that the revision actually took the reading further into positive territory. This doesn’t mean the economy is totally out of the woods, as many economists are looking forward to what Q2 numbers might show, but for now the most recent reading is of positive GDP.

New home sales for April were higher than expectations and rose month-over-month. Of course this is exciting news as many Americans have the majority of their net worth (and monthly cash outflow) in their residences, but this one data point doesn’t mean the tide has turned. Nonetheless, traders saw the good in the report this week.

On the bad side of the news briefs, consumer confidence came in lower than it’s been in over a decade. Skyrocketing oil prices have made it more expensive to drive of course, but his has also increased the cost of nearly every good and service that is consumed. Pair that with a bleak employment situation and the current real estate and credit turmoil for a dismal report. Meanwhile, a couple of guys you should at least consider their viewpoints are concerned with a domestic recession. Thank you Mr. Greenspan and Mr. Buffett, your comments will now be taken into consideration.

INDEX	5/30 Close	5/23 Close	% Chg
DJIA	12,638.32	12,479.63	+1.27%
S&P 500	1,400.38	1,375.93	+1.78%
NASDAQ	2,522.66	2,444.67	+3.19%

West Texas Intermediate Crude closed at $127.35/bbl.
Gold Futures closed at $891.50/oz.

Next FOMC Meeting: June 24 & 25, 2008 - Tuesday/Wednesday

Notable Economic Data This Week:
•  Consumer Confidence for May came in lower than last month and below expectations at 57.2.
•  New Home sales rose in April month-over-month and above forecasts.
•  Crude inventories unexpectedly fell sharply this week.
•  Q1 GDP has been revised upward to 0.9%, still below normal growth rates, but well above recession levels.

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ECONOMIC NEWS UNDERPINS TRADING THIS WEEK:
Slowing global energy demand was said to be the reason oil prices took a break from its relentless march upward. This week the price of oil closed lower than last week, quite a strange occurrence when a report of supply being thinner than expected was released by the U.S. government this week. The strain on personal spenders’ pocketbooks and the economic turmoil were cited as causes for slowing demand. On the other hand, supply in the U.S. took the biggest fall since Hurricane Katrina supposedly due to “temporary delays in crude oil tanker off-loadings”. Strength in the greenback also helped bolster the price of oil, as it is quoted in New York and a stronger dollar erodes the purchasing power of foreign currencies relative to previous levels.

Consumer confidence is at a 16-year low. 57.2 was the reading for May reflecting record high oil prices, weakening job conditions, and excessive gasoline charges. This outlook shows little hope in a turnaround in the economy anytime soon.

Alan Greenspan told the Financial Times he feels there is a greater chance of a recession then not, but conceded the probability has waned in recent weeks. He states a severe recession is now less likely and that it is too early to tell if the worst is behind us yet. Conversely, Warren Buffett is on the trail saying the U.S. is already in a recession which will turn out to be longer and deeper than many expect. He clarified that he isn’t referencing the traditional economist definition of two consecutive quarters of negative growth, rather that the consumers are feeling the pain and it is changing their spending patterns. I think all of us know where he is coming from. There is not one person I know who is not feeling the pain, except Warren Buffett and his friends.

As some speculate whether Q2 is going to come in with negative GDP and tilt toward recessionary reporting, the Q1 number was revised upward. Q1 GDP was initially announced at 0.6% but is revised up to 0.9%. Still not a barnburner of a quarter, the period showed stronger growth and performance than many economists saw coming. However it would be a tough task to avoid any recession feelings given the deep housing slump, the credit crunch, and soaring oil prices. Have stranger things happened?

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FEW COMPANIES MADE HEADLINES:
LG Electronics might be selected to spend between $4billon and $8billion. Also in the running are Haier out of China, Controladora Mabe from Mexico, Electrolux in Sweden, and Arcelik in Turkey. These are the front-runners in the process of buying the appliance business from General Electric (GE). The division saw sales of $7.2billion just last year, and the sale from GE is part of a radical strategic realignment designed to help improve stock price performance.

The so-called “financial crisis” isn’t hurting the share price of MasterCard (MC) much these days. Hitting all-time highs of over $300 per share, the company stated is expectation of double digit revenue growth for 2008. Notably about half of MasterCard’s business is outside of the U.S. and the company is expecting domestic dollar volume to slow. A testament to its powerful business model, long-term net revenue growth is targeted at 12-15% per year and profit margins are expected to come in between 20-30 percent. In 2007 MC saw revenue of over $4billion with profit over $1billion. All I can really say is "WOW!"

Is 11-3 a good record for a heavyweight? That’s where Merck (MRK) stands on the verdicts from trials against its once popular painkiller Vioxx. Just this week, courts in Texas and New Jersey overturned appeals to give the advantage to the heavyweight drug maker. There are still a few fights ongoing in courts around the country in pending cases against Vioxx, which Merck took off the shelves in September 2004 when the company itself suspected some potential problems.

Nasdaq performance was helped in part by Dell (DELL), which reported strong revenues out of Asia and greater sales of notebook computers fueling sales and profit past consensus estimates for Q1. Marvell (MRVL) also helped boost the index with its handy drubbing of street expectations with very strong revenues. The company also used strategic cost-cutting measures to move into a profitable position for Q1.

There is a sale over at J. Crew. Shares of the retailed fell after analysts downgraded the stock based upon decreased expectations for 2008 profitability. Also, the company warned Q2 will likely not live up to current expectations either.