The Stock & Bond Markets -
"Every 3 months or so, there's a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then - bam - the whole cycle starts again" wrote Steven Pearlstien in the Washington Post. This analysis seems to be accurate and Shoreline's continues to advise keeping as much as 50% of portfolios in cash equivalents until there are more encouraging signs that the aforementioned cycle is ending.

The bond market continues to correct as inflations appears to be gaining a foothold in a lackluster economy and the Federal Reserve intimates interest rates are likely to rise. Investors concerned about inflation due to increasing food and energy prices should consider shorter-term or inflation-protected bonds.

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Real Estate -
Billionaire Eli Broad, co-founder of homebuider Kaufman and Broad (now KB Homes) said this was the "worst housing recession of [his] adult life" and that a recovery was "several years away." While new home sales did indeed decline (a problem for companies like KB Homes), existing home sales rose 2% from April to May due to lower prices. In California, sales volume increased 18% from May 2007 to May 2008 due to median price decreases averaging 35%. While "all real estate is local," there is a substantial and increasing inventory due to foreclosures. While supplies remain high, prices are likely to remain under pressure. In other words, this is a better time to be a buyer than a seller.