gOOd Morning,

The RF to Light index rose 7.2% last week, YTD now +26%. While U.S. unemployment rose to 9.4% in May, job losses slowed sharply. U.S. growth prospects continue to rise, reaffirming expectations that yearly growth will turn positive in the summer months. U.S. inflation continued to rise in May easing fears of both deflation and hyperinflation. The global economic downturn eased further in May, also suggesting that the global economy is stabilizing into midyear. Improvements were driven by the manufacturing sector. A return to economic growth, however, depends on pickup in final demand, which is not yet evident in the data.

Oclaro, Rogers, Finisar, Triquint and Powerwave stocks rose = > 25% last week. While the RF to Light overbought market indicator is far from its peak, the oversold indicator is now close to a sell signal. More likely, the market will go sideways because there is still a lot of cash sitting on the sidelines hoping for lower prices to get in. Once we are back to positive economic growth, the question will be how strong the recovery will be? More likely it will be modest as housing and financial markets will not become strong contributors (as before the crash). The real challenge for the U.S. Government will then become to “mob up” the billions of dollars spent without killing the economy. Nobody knows how it will play out at this time.

Have a nice week. Perhaps I'll see you in Boston at the MTT-S show next week at the Presidio Components booth.

Gunter Vorlop

Publisher, RF to Light 100

gvorlop@comcast.net

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