30 Apr 2009

Posted at 16:29h in The Friday Brief by
The S&P 500 index rose 10% in April, for its largest monthly increase since 2000, despite a steady stream of negative to mixed economic data. Its near-two-month rally has added 29% to the index’s value. The story was more mixed for bonds as short term rates fell and long term increased. But the clear message is that both the bond and stock markets are positioning for recovery. Even Thursday’s announcement that Gross Domestic Product fell by a whopping 6.1% had no significant impact on the markets.

24 Apr 2009

Posted at 16:36h in The Friday Brief by
After six weeks of market gains, we stalled at the beginning of this one. Leading economic indicators released on Monday indicated no clear signals of improvement which promptly sent the S&P 500 down 4.3%. It appeared that investors had lost their willingness to look beyond the bad news toward the possibility of economic recovery. But optimism returned on Tuesday with a significant rally on comments from Treasury Secretary Mr. Geithner that most banks were sufficiently capitalized. Market strength continued throughout the week as one earnings or economic report followed another with enough positive insight to stoke the bulls. State Street's institutional investor confidence index jumped 10 points in April to 79.6. The report, which analyzes trading volumes, said monthly flows into U.S. stocks are in the 98th percentile.

10 Apr 2009

Posted at 16:30h in The Friday Brief by
In the process of investing we spend a great deal of time in linear thinking. We measure, we weigh, we time, and we project. We draw lots of lines as we make our assertions and projections. The regulatory agencies require us to disclaim that past results do not guarantee future results, but we all, to various degrees, subscribe to that very notion. The multi-billion dollar marketing machine we’ll simply call Wall Street spends millions of dollars a day drawing lines which analyze, dissect, compare, measure, and highlight past results. There is an implication that the more colorful and complicated these reports are the better equipped we are to decide their appropriateness for the future.  

03 Apr 2009

Posted at 16:33h in The Friday Brief by
There are two categories of policy available to the government to influence an economy; monetary and fiscal. Fiscal policy employs government spending and taxation. Monetary policy, primarily overseen by the Federal Reserve and the Treasury is used to control and manipulate the supply and the cost (interest) of money in order to regulate the growth in the economy and the stability of prices. Of the nearly $12 trillion lent, promised and spent so far, Fed Chair Ben Bernanke’s program to drive down mortgage rates is delivering on its promise. Fixed 30-year mortgage rates are now down to 4.78% according to Freddie Mac. They are down for the second week in a row.