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US house prices showed their first monthly gain in three years in May offering another sign that the stricken residential real estate market is stabilizing. Home prices unexpectedly climbed by 0.5% from April to May, but were off by 17.1% year-on-year, according to the closely watched Case-Shiller index, released on Tuesday. The monthly rise was the first since prices peaked in July 2006, while the annual drop marked the fourth straight month that the rate of decline slowed after 16 consecutive months of record falls.

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China’s stocks rose again last week driving the benchmark index to a fourth monthly advance, after Tsingtao Brewery Co. reported higher profit and copper prices jumped. “With the economy in recovery, we will see a turnaround in corporate earnings,” said Li Jun, a strategist at Central China Securities Holdings Co. in Shanghai. Still, he only expects a pick up in profits in the fourth quarter. The Shanghai Composite Index which tracks the bigger of China’s exchanges rose 7.75, or 0.3%, to 2,475.94. The measure added 4.4% in April, as record new lending and expectation that growth will be revived drove up share prices. The Shanghai Composite has jumped 36% so far in 2009; it is the 2nd best performer among 90 global gauges tracked by Bloomberg. The measure has advanced on optimism a 4 trillion Yuan (US$585B) stimulus package and record new loans will prevent a slump in the world’s 3rd largest economy.

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Warren Buffett conceded that his holding company, Berkshire Hathaway, turned in its worst performance on record as the financial crisis drew the world’s economy into a deepening recession, and gave investors little reason to believe a turnaround is imminent.

In his annual letter to Berkshire shareholders, Mr. Buffett recounted how frozen credit markets dovetailed with tumbling home and stock prices to imperil many of the world’s biggest banks and produce “a paralyzing fear that engulfed the country.” “By yearend,” he wrote, “investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”The billionaire also urged his legions of followers to remember that the stock market usually rises; the Standard & Poor’s 500 Index has produced annual increases in 75% of the past 44 years, and may do so again even if the downturn persists. “We’re certain, for example, that the economy will be in shambles throughout Y 2009, and, for that matter, probably well beyond.

But that conclusion does not tell us whether the stock market will rise or fall,” he wrote. Regardless, Mr. Buffett wrote, Berkshire will stick with a strategy that has produced an annual compounded growth in book value of 20.3%: maintaining its “Gibraltar-like” financial strength, improving the competitive position of its existing businesses and making new acquisitions that bolster earnings.

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US inflation slowed to 50-yr low last year as industrial output fell for the first time since 2002, raising the specter of deflation. Consumer confidence is also at depressed levels suggesting that the economy could take longer to recover from the downturn that augurs to be the longest and perhaps deepest since World War II. The US Consumer Price Index dropped 0.7 percent in December for a 3rd straight monthly decline, capping a year in which prices advanced only 0.1 percent, the weakest 12 month reading since December 1954, according to the US Labor Department.

Weakening economic activity worldwide has depressed commodity prices, pulling headline inflation figures down sharply and the core US inflation, sans the volatile food and energy costs, is also slowing, increasing the risk of deflation. Deflation is a sustained decline in price levels, and is regarded as dangerous because it stifles economic growth.

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Nasdaq Indexes

Nasdaq became a formalized market in 1971. The name used to stand for “National Association of Securities Dealers Automated Quote” system, but now it’s simply “NASDAQ” (as if it’s name like Ralph or Eddie). Nasdaq indexs are similar to other indexes in style and structure. The only difference is that, well they cover companies trade on Nasdaq. The Nasdaq have two index (both reported in the financial pages):

Nasdaq Composite Index:

Most frequently quoted on the news, the Nasdaq Composite Index covers the more than 5000 companies that trade Nasdaq. The companies encompass variety of industries, but the index’s concentration has primarily been technology, telecom, and Internet industries. The Nasdaq Composite Index hit an all-time high of 5048 in March 2000 before the worst bear market in its history occurred. The index dropped a whopping 60 percent by 2003 to approximately 2000.

Nasdaq 100 Index:

The Nasdaq 100 tracks the 100 largest companies in Nasdaq. This index is for investors who want to concentrate on the largest companies, which tend to be especially weighted in technology issues, which means it provides extra representation of technology related companies such as Microsoft, Adobe, and Symantec.

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