Market Commentary
September 29th, 2003

The Yield curve continues to project an expanding economy.

Treasury Yield Curve as of today is as follows:

6 Months .93%
2 Year 1.59%
5 Year 2.97%
10 Year 4.07%
30 Year 5.00%

The spread between Treasuries and corporate bonds have narrowed dramatically in the past 6 months. The largest improvement has occurred between Treasures and lower rated bonds. This is one more indication of an expanding economy.

One new found contributor to the expanding the economy is the global growth in the money supply. The global money supply has grown above 15% in the past 2 quarters. When the money supply is up dramatically; global economic output is sure to follow.

High worker productivity and global competition for jobs keeps the outlook for high inflation low. Therefore, long-term interest rates should remain relatively low over the next 2-5 years. However, short-term interest rates (rates of 5 years and under) should be quite volatile.

In order for these basic economic fundamentals to work, we must fix the behind-the-door dealings in Corporate America. Foremost of all, investigations must start at the top of leadership.

In summary, I believe that we are heading into a period that will bode well for stocks. One should be ready for interest rates of maturities of 5 years or less to go up within 5 years.

Sincerely,

Sam Clem
Clem Investments

Past Commentaries:
July 2, 2003
July 28, 2003