30 Nov 2001

Posted at 15:46h in The Friday Brief by
Often, the fear of the monster lurking in the darkness is greater than the actual sight of it.  The monster’s out, the U.S. is in recession.  The National Bureau of Economic Research on Monday said the U.S. entered a recession in March even though contraction did not actually show up until the third quarter.  A common definition of a recession is two consecutive quarters of economic contraction, but the NBER, considered the official arbiter, relies on a variety of factors to determine the state of the economy.  Most expect contraction in the fourth quarter of this year as well.  On that news the markets actually rallied for a couple of days. 

16 Nov 2001

Posted at 15:53h in The Friday Brief by
On Tuesday of this week the government announced that U.S. retail sales rose more in October than in any month in the government's 10 years of record-keeping.  Consumers spent money at auto dealers, department and discount stores, and building supply outlets.  Sales surged 7.1%, almost three times analysts' expectations, after falling 2.2% in September. The Commerce Department's report also showed sales excluding a record increase in purchases from car dealers rose 1% after falling 1.5% in September. The rise in vehicle sales was a result of no-interest financing offered by automakers.  General Motors has announced a continuation of their 0% program through January 15th. 

09 Nov 2001

Posted at 15:57h in The Friday Brief by
Over long periods of time the stock market outperforms bonds by a substantial margin.  But, it should come as no surprise that bonds were the winners over the past two years.  In fact, bonds have outperformed the S&P 500 by a 60% premium, the strongest difference in seventy years (1931 and 1932).  Tom Galvin of Credit Suisse First Boston notes that the year following the strong bond performance, stocks posted a 54% return in 1933 as the cycle reversed.  A similar story of good treasury returns during two consecutive bad years for equities came during 1973 and 1974.  That period was followed by greater than 60% returns in 1975-76.  The left-hand graph below reveals just how significant the signs are that we are at a critical turning point for stock and bond investors.  If the cycle repeats, the next twelve months could bring strong returns to stock investors. 

02 Nov 2001

Posted at 16:05h in The Friday Brief by
Just like the Yankees, this market refuses to give up.  Down two games to none, the Yankees faced the possibility of a sweep by the upstart Arizona Diamondbacks as they came back to New York for game three of the World Series.  But with faith, determination, and more than a little luck, they homered their way back into the series, winning all three of their games in front of the home crowd.  In the last two games, the Yank hitters overcame the Diamondbacks in the ninth innings as they capitalized on the weakness of Arizona’s relief pitcher staff.