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Summer is in full force worldwide, with the World Cup having just concluded (I didnt really consider many of the matches hot, but much of the world did) and the Tour de France, with Lance Armstrong bringing his career to a close, entering its most competitive days.

Stateside, we have already seen brutally hot temperatures grip the East Coast and two tropical systems have appeared, made landfall and gotten our attention about what might be on the horizon for further tropical activity. Stocks ended the 2nd quarter acting as if they had to douse those high temperatures and storms like a professional firefighter. It was a bad quarter for equity investors. But, then, just like the cold front which brought relief to the East Coast, markets heated up in the first week of July and gained back virtually half of what was lost in the second quarter.

So, is this the new trend? S&P 500 earnings in earnest are going to be announced beginning this week and they might surprise to the upside. In fact Alcoa and Intel have led the pack with some good second quarter numbers. However, their collective guidance has been muted. You see, in spite of the headlines of increased optimism, the economy looks more like a cool front than a heat wave. There are some pockets of good, namely retail sales were not as gloomy as predicted, and it looks like the Federal Reserve will keep interest rates low, even through 2011. In addition, gasoline prices are still moderately low, thereby making summer travel affordable.

However, the great divide is beginning to show in this rather weak recovery. Namely, big firms are sitting on boatloads (I know, not a real investment term) and can still obtain financing, at least in many cases. Small and mid-size firms are struggling to obtain any financing to hire or expand. Furthermore, one statistic I recently came across indicated that more Americans than ever have credit scores below 600, so obtaining financing for them has become more difficult and if they can get it, more expensive.

In spite of the continuance of low interest rates, the housing market still remains sluggish. The recently expired (after being extended) home buyer tax credit pushed sales nicely, but now that its over, it remains to be seen where new demand will come from. In fact, prices, after rising somewhat in most regions of the country are now flat lining, if not falling again.

Unemployment remains sticky. Many folks celebrated when the June unemployment rate dropped to 9.5%, but as it turned out, that number was deceptive in that many folks have simply quit, not their jobs, but looking for jobs. This is not a good sign and puts the pressure on the economy for a jobless recovery. It isnt that these jobless recoveries never happen, but when they do, they are quiet and not as strong as a normal recovery should be, especially with the deep Recession we just finished.

As we enter the dog days of summer, I hope these markets continue heating up, but I am not confident in the short term that this mini-rally can continue. I am not predicting a dramatic drop, but I envision stocks in somewhat of a trading range for the remainder of the summer. When we approach the November elections, I believe the market will seek some direction depending on the outcome of those Congressional elections.

I will conclude with a short, but important comment about estate taxes. Tuesday, we learned that legendary Yankees owner, George Steinbrenner died. Whats noteworthy of his death is that the reported value of his estate is somewhere north of $1 Billion. Even if this estimate is not exact, his net worth was most likely significant, but his estate tax bill appears to be zero, due to the quirky nature of the estate tax law in 2010. If The Boss had died in 2009, his estate tax bill might have eclipsed $500 Million!! I hedge in saying that as its possible that Congress could make any changes in the law retroactive in 2010. In any event, Mr. Steinbrenners death should help clients focus on their own estate plans and speak with me or their attorney and preferably both to review their existing plans to compare the potentially new and old estate tax rates to see what results might be produced. We are in an era of high uncertainty and although no estate plan can cover every tax alternative, your plan should at least cover the aspects of estate tax which are most bothersome to you.

Finally, our family will be away on vacation from July 20-28. As always, calls will be forwarded to my cell phone, but I may not always be accessible and e-mails may not be answered immediately. However, I will check messages regularly and will return a message as soon as I am able.