GPM - Griffin Portfolio Management Corp.

Recap of the Five Trading Days ended Thursday February 2, 2012

Stocks: generally higher: S&P 500: +0.5% (week) / +5.4% (YTD)
Treasuries: prices ended mixed: 10 year yield at 1.86%, -10 bps
High Yield Bonds: modest gains
Crude Oil: $96.36, -3.34 per barrel (March)
Natural Gas: $2.55, -0.05 per mcf (March)
Q4 GDP grew 2.8% (First estimate)

Charts: S&P 500 / Dow 30 / NASDAQ / Interest Rates / GDP / PPI / CPI / Housing / New Jobs

					Average Annual Return
	1 wk	1 mo	3 mos	YTD	1 Yr	3 Yrs	5 Yrs	10 Yrs
Historical % Returns	__%	__%	__%	__%	__%	__%	__%	__%
Short-Term Treasury Fd (Vanguard - VFISX)	0.0	0.2	0.4	0.2	2.5	2.2	4.1	3.7
Intermediate Treasury Fd (Vanguard - VFITX)	0.4	0.7	1.4	0.7	10.9	5.9	7.8	6.3
Intermediate Inv Grade Bond Fd (Vanguard - VFICX)	0.9	2.4	2.3	2.4	9.8	12.3	7.3	6.3
High-Yield Bond Fd (Vanguard - VWEHX)	0.7	3.3	4.4	3.3	8.2	17.8	6.6	7.1
S&P 500 Stock Index Fd (Vanguard - VFINX)	0.6	5.5	7.7	5.5	3.7	19.6	0.3	3.6
Small Cap Stock Index Fd (Vanguard - NAESX)	2.4	9.6	10.6	9.6	3.8	27.0	2.9	7.8
International Stock Index Fd (Vanguard - VGTSX)	1.7	9.4	5.3	9.4	-9.2	17.7	-2.1	7.3
Data includes reinvested income (10 Yr thru prior month-end)

Stocks ended higher for a fifth consecutive week. The large cap S&P 500 rose 0.5%, after advancing 0.3% in the prior week. Returns on other benchmark indices ranged from -0.2% (Dow Jones 30 Industrials) to +3.4% (Russell Micro Cap). Small caps continued to outperform large and mid caps. Airlines and biotechs led sectors generally higher, while utilities and retailers posted losses. Global exchanges also advanced, with Turkey and Brazil leading the way.

Stocks closed mixed last Friday after fourth quarter GDP numbers came in lighter than expected, +2.8% from last year. The week was loaded with influential economic data. Markets moved lower Monday on weak consumer spending. Disappointing S&P/Case-Shiller home price data, combined with Chicago PMI and consumer confidence reports, that were slightly below expectations, caused stocks to end mixed Tuesday. The S&P 500 ended the month with its best January since 1997. Equities pushed higher Wednesday on solid ADP private payrolls and a round of manufacturing data that showed real strength in the U.S. and signs of steadying in China and Europe. Stocks took a breather Thursday following a decline in jobless claims ahead of today's employment report.

Today (Friday 2/3), stocks opened sharply higher following a much stronger than expected January employment report. The unemployment rate fell to 8.3% from 8.5% in December. The Institute for Supply Management's non-manufacturing index also showed a surge in employment and new orders, which boosted stocks further.

Treasury bond prices ended mixed for a second consecutive week. Long term maturities posted sharp gains and outperformed short and intermediate term bonds, which lost ground. Corporate bond prices also rose and generally outperformed treasuries of comparable maturities. Mortgage-backed securities registered slight gains. As shown in the chart below, after declining sharply during late summer, Treasury yields have steadied around 2.0% (ten year note) over the past two months. Corporate bonds continue to offer historically high yields compared to Treasuries and, we believe, offer attractive potential returns.

High Yield Bonds (HYB) ended higher, posting gains for a seventh consecutive week. Both mutual funds and closed end funds advanced. HYB funds saw a ninth consecutive week of inflows. HYB price gains and steady Treasury yields over the past two months have caused HYB spreads to narrow. Estimates of future defaults remain relatively low. GPM continues to believe that, at current prices, HYBs are attractively valued.

S&P 500 with 20 & 50 day moving average

10 Year Treasury Yield: 1.86%, -10 bps

Prior Weeks:

1/26

Following strong earnings reports from tech bellwethers, Microsoft and IBM, but disappointing results from Google, stocks pared early losses late in the trading session last Friday. Investor attention this week has been focused on Greek debt talks and fourth quarter earnings, which have been decent thus far. Markets were cautiously mixed Monday and Tuesday as Greek debt restructuring negotiations continued. Wednesday saw early weakness, as disappointing forecasts from chip makers, Advanced Micro Devices and Nvidia, overshadowed a record setting quarter from Apple. Stocks surged midday after the Fed announced it would keep rates near zero through late 2014. On Thursday, stocks took a breather after solid durable good orders could not offset disappointing initial jobless claims and new home sales.

1/19

Stocks closed lower last Friday following disappointing results from JP Morgan Chase and rumors of an imminent S&P downgrade of debt issued by certain Euro Zone countries. Solid Chinese economic data and a pick up in manufacturing, as evidenced by the Empire State survey, gave markets a boost Tuesday. Stocks continued higher Wednesday on rumors that the IMF plans to boost its lending capacity by $500 billion and a solid earnings beat from Goldman Sachs. Reports of better than expected earnings from Bank of America, Morgan Stanley, and eBay, Inc., prompted further gains Thursday and reinforced confidence that the US recovery remains intact. A large decline in jobless claims provided additional support.

1/12

Stocks closed mixed last Friday after the December employment report showed 200,000 new jobs were created, and the unemployment rate fell to 8.5%. Optimism over the report was tempered as investors questioned whether the total was bloated by unusually heavy hiring of temporary couriers for the holidays. Following positive lending data from China, markets had modest gains Monday. Upbeat outlook from aluminum producer, Alcoa, and speculation of Chinese monetary easing gave stocks a boost Tuesday. Equities took a breather Wednesday following four days of gains and confirmation from Microsoft that PC sales were soft in Q4. On Thursday, borrowing costs fell sharply at bond auctions by Spain and Italy, which helped offset an unexpected rise in US jobless claims. The S&P 500 closed at it's highest level since August 1, 2011.

01/05

Stocks closed slightly lower last Friday on light trading ahead of the long, holiday weekend. Following reports from China and Australia that manufacturing output is expanding, markets posted broad gains Tuesday. After Italy's largest bank said it will sell shares to strengthen its capital position Wednesday, stocks sold off on worries that more European banks will follow amid the debt crisis. Equities marched higher Thursday after another decline in U.S. initial weekly unemployment claims and stronger than expected ADP private payrolls data.

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This document is intended exclusively for clients of Griffin Portfolio Management Corp. (GPM), an Investment Advisor, registered with the Securities & Exchange Commission. The information contained herein is provided as general information to clients of GPM and reflects the views and opinions of GPM at the time of writing. This information should not to be construed as an offer or solicitation to buy or sell any of the securities herein named or as an offer to provide investment advisory services by GPM.